Hands in the Cookie Jar — The Saga of Net Neutrality™

— Author’s note: I apologize for the length of this post.  Source links have been added in parenthesis.–

It’s a story that has been told so many times that it is worth wondering if more people know about it than don’t.  Comcast, being one of the yeeeevil Telecom corporations with no desire greater than that of getting more money, strapped Netflix to the rack until they were willing to pay an extortioner’s fee to deliver their content to Comcast users; going so far as to intentionally throttle Netflix’s connection to the Comcast network unless they paid up.  So the problem got worse and worse until Netflix finally caved, bit the pillow, and paid Comcast’s blood money.  Here’s the problem… it’s not that simple.  

First off, Netflix is a bandwidth hog — that shouldn’t be a shock, as streaming in 720p requires a ton of information over the network — what is a shock, however, is that (according to the New York Times) Netflix can account for as much as a third of all internet traffic during peak hours.  In order to handle all the traffic, Netflix contracts with a number of third-party Content Delivery Networks (CDN’s) to host all the content that is streamed by ISP subscribers.  Several of these CDN’s (specifically Cogent and Level 3) were not being charged any kind of access fee by Comcast, and there was a simple understanding among them that as more Comcast users requested more content from those CDN’s, Comcast would add servers to increase the bandwidth available for those CDN’s to use.  Then Netflix contracted with them, causing the data load demand to triple or quadrouple overnight.  Understandably, Comcast didn’t want to foot the bill alone for having to multiply their available bandwidth.  Thus, Comcast went to those CDN’s and demanded payment to defray the cost of upgrading their bandwidth availability — if they didn’t, those same costs would have needed to be paid by… you guessed it, Comcast’s customers.  That’s right.  Comcast, one of the most hated companies on planet earth, had a choice: raise money to upgrade their network by charging their customers more or by demanding a terminal traffic fee from content providers.  They chose to charge the content providers — ie, the content that was taxing their network in the first place.  It is into this breach that Netflix came up with an awesome idea… let’s skip the CDN’s entirely and go directly into Comcast’s servers.

Netflix came up with the workaround, Comcast gave them a price, and they struck a deal. (CNET-Netflix Reaches Streaming Deal)  Now, the joint statement from Comcast and Netflix referred to this as a “mutually beneficial interconnection agreement” — which is a hefty turnaround from the salvos being fired by the Netflix CEO just months beforehand (CNET-Reed Hastings Criticizes Comcast) — but more importantly, The New York Times noted that people close to the deal characterized this as a “common” agreement. (NYT-Netflix and Comcast Reach Streaming Deal)  It should also be noted that Netflix has now taken the framework of it’s deal with Comcast and negotiated similar deals with Time Warner Cable, AT&T and Verizon (Quartz–The Inside Story)… none of which reported the same slowdown that Comcast users did.  If Comcast worked an evil deal to con Netflix out of their money, why would Netflix then make essentially the same deal with every other major ISP in the US?  Even more so, if Netflix is all about getting regulations to ensure that Service Providers can’t establish payment deals for direct connections because it creates an “unfair competition space”, why did it then negotiate a partnership with iiNet in Australia to have its content exempted from the ISP data caps? (Pando–The Hypocrisy of Netflix Down Under)

Simple Answer: it’s all about that money.

Comcast didn’t want to increase its charge to its own customers to upgrade their networking capability to cope with the sudden increase in video demand from third-party Content Distributor Networks, so it tried to charge the CDN’s themselves, who then demanded more money from Netflix.  Netflix decided to cut the CDN’s out of the process and pay Comcast directly, then sparked the Net Neutrality argument through the Trojan Horse of Comcast’s deal to take over Time Warner Cable in an effort to not have to pay Comcast.  In essence, it’s the biggest smash-and-grab in the history of networking: Netflix strikes deals for direct connection to the ISP’s, cries to the FCC about having to pay for direct access to ISP’s, and waits for the FCC to rule that those deals are invalid… after Netflix has established direct connections to the ISP’s.  This isn’t about Net Neutrality — it’s about making sure that no one can do what Netflix did other than Netflix.

America is a nation founded on two basic principles: The Greater Fool and the Useful Idiot. The Greater Fool is the idea that I can get ahead by picking on some sucker who will pay more (or take less) for a good or service than I will. The Useful Idiots are those who will footsoldier a movement without looking too deeply or thinking too hard. Net Neutrality™ is an FCC Ruling that showed both in full plumage.

What did Net Neutrality advocates want?  Quite simply, Net Neutrality advocates wanted legislation saying that ISP’s couldn’t discriminate against service providers by intentionally impeding access to legal websites and services.  Would you be shocked if I told you that the FCC Ruling does nothing of the kind?  Good, because it doesn’t.

The FCC’s Net Neutrality posture has been tried before.  In fact, the FCC has had “Net Neutrality” rules struck down in both 2011 and 2014 — a fate that seems fairly likely for the current ruling as well.  As the Internet bcame a “thing” back in the mid-90’s, the Telecommunications Act of 1934 was updated to be brought more into line with modern technology.  Why is that a big deal?  Because the Telecommunications Act of 1934 (which correctly identified landline telephone networks as a Title II “public utility”) was the law that led to the creation of the AT&T Bell monoply of the telecom industry.  However, as the bickering grew over what to do with the internet (especially as it related to “dial up service”), the Clinton Era FCC declined to classify the internet as a Title II utility — choosing instead to list it as a Title I “information service” and putting it outside the reach of FCC regulation.  The FCC, under then-Chairman Bill Kennard, said in a statement that “classifying Internet access services as telecommunications services could have significant consequences for the global development of the Internet. We recognize the unique qualities of the Internet, and do not presume that legacy regulatory frameworks are appropriately applied to it.” (FCC Report to Congress — April 10, 1998)  The FCC then CONFIRMED that same position in 2002, 2005, 2006, and 2007 as the various broadband internet services came into existence — including taking that position all the way to the Supreme Court and winning. (ATT Public Policy Blog — The Reclassification Myth)

So now the FCC has done a complete 180 on it’s own established regulatory policy and reclassified internet access as a Title II Telecommunications service.  What does this mean?  it means that the internet is now going to be regulated with the same authority that created the Ma Bell fiasco in the late 80’s.  In case you need even more evidence that this is a bad idea, ask yourself this: how many people do you know that have a cell phone (Title I) instead of bothering with a land line (Title II)?  Even more so, how many people would rather talk on Skype, Vonage, or any other VoiP service instead of paying for long distance?  Title II is a death sentence for innovation and progress.  Under Title II, the FCC has complete regulatory power over all things internet-related: per bit-pricing, acceptable use, maximum upload/download speeds, data caps, “unreasonable competition” jurisdiction… all of it.  For example: did you know that if the Internet had always been a Title II utility, Wal Mart could have sued Amazon for “unreasonable competition”?  Alta Vista and Excite could have been felled by the yellowpage distributors.  Google is now in danger of being sued by Time Warner for the select implementation of Google Fiber.  USA Today could put the squeeze on Yahoo for distributing news reports. (WSJ– The Great Internet Power Grab)  And this is all before even beginning to slog through the wave of litigation that is going to be filed by just about every tech company on earth over this ruling.

Netflix’s desire for a large money grab gave the FCC a context which which to seize power that previous iterations of the Commission had denied to itself. In a Rules for Radicals Administration, that flower was all too tempting to not pluck. The worst part? The hordes of the easily duped who afforded the government a new broad-base jurisdiction to crush the single greatest economic engine humanity has ever created, because a company wanted to seize market-share.  As it turns out, Net Neutrality™ isn’t all it’s cracked up to be.  The FCC didn’t pass a ruling embracing a free and open internet — they passed a ruling ensuring that the previously free internet is now under the microscope of DC Bureaucrats.

Adam

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~ by xristosdomini on March 3, 2015.

One Response to “Hands in the Cookie Jar — The Saga of Net Neutrality™”

  1. This is a terrific piece! Thanks so much for doing the research and sharing your assessment.

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