There’s an appealing simplicity to “all-you-can-eat” service plans. But at the buffet, there’s a natural limit to how much any individual can consume. Just think what would happen if a few large-volume eaters with virtually limitless appetites started slurping up virtually all the food at the buffet as fast as the restaurant could put it out. The rest of the diners either would face slim pickings, or would have to pay a lot more for the ticket to the buffet line, essentially subsidizing the mega-eaters, so the restaurant could afford to put out a lot more food. All of a sudden, “all-you-can-eat” wouldn’t seem like such an appealing arrangement.

Broadband Internet service in the United States has been sold as an all-you-can-eat offering, but that pricing system is showing some cracks. Time Warner Cable in January announced a trial of usage-based pricing, albeit in just one town. This week BroadbandReports.com was reported that Comcast is considering implementing a monthly usage cap, with overage charges for those who exceed the cap more than once. Usage caps are common in other countries.
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Following on its earlier announcement of plans to collaborate with BitTorrent, Comcast this week issued a press release signaling its intention to collaborate with another peer-to-peer (P2P) technology provider, Pando Networks. There are two main parts to the Pando announcement.

First, Comcast and Pando hope to lead an “industry-wide effort” to create a “P2P Bill of Rights and Responsibilities” for P2P users and ISPs. We’ll have to see how this evolves, but establishing a set of best practices in this area could well be useful. It is important, for example, to ensure that users have control over how their P2P applications work, as in what files get shared, how and when the P2P application uses computer resources, etc.; the press release suggests that the question of “what choices and controls” consumers should have will be a central focus. So if Comcast and Pando succeed in getting broad buy-in to their ideas, this could be a productive discussion.
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Comcast, in a joint statement with BitTorrent, announced plans for a significant change in the way it responds to network congestion. As noted in a recent post , revelations last year that Comcast sometimes interferes with its subscribers’ P2P upload traffic sparked fears that carriers might play favorites and prompted complaints that led to a pending FCC proceeding on the question of “network management.” CDT isn’t eager to have the FCC adopt formal rules on network management, but having carriers affirmatively degrade selected traffic poses real risks to innovation and competition.

The Comcast/BitTorrent announcement is therefore a welcome development. Comcast now says by the end of the year it will “migrate” to congestion management techniques that are “protocol agnostic.” This sounds a lot like what CDT suggested in its comments to the FCC — namely, that network management practices involving any form of traffic degradation should be evenly applied, rather than singling out specific services or applications. It also sounds like a real departure from the technique Comcast described in its comments, which had Comcast targeting specific P2P applications that had been identified as causing congestion problems in the past.
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Following revelations that Comcast sometimes interferes with its subscribers’ P2P upload traffic, the Internet neutrality debate is currently focused on “network management” — actions that ISPs take to “manage” traffic on their networks. ISPs say that to make their networks run well for all concerned, they need flexibility to employ network management tools as they see fit. Critics argue that ISPs shouldn’t degrade P2P, or other selected traffic, in the name of network management, because having ISPs play favorites poses risks to competition and innovation.

On the heels of the Comcast news, the FCC was asked by a number of concerned parties to step in and decide the legitimacy of different kinds of network management practices. The FCC, in turn, asked the those interested in the issue to weigh in with their opinions by submitting formal comments to the agency. It also took the unusual step of holding an out-of-town hearing on the topic earlier this week in Boston. Meanwhile, Congressman Markey recently introduced a new Internet neutrality bill.

CDT submitted its second round of comments to the FCC yesterday, which respond to arguments made by others in the first comment round. CDT’s its initial set of comments were submitted February 13.

CDT is skeptical of the FCC’s jurisdiction to regulate the details of ISPs’ network management practices, and our comments caution the agency against launching an effort to write formal rules. At the same time, CDT believes some kinds of network management practices are suspect and could indeed give the ISP increased gatekeeper control.

We’re not talking here about practices aimed at fighting spam, malware, or security threats — as yesterday’s comments emphasize, that’s a different category of activity and it really should be considered separately. For traffic management aimed at dealing with congestion and “bandwidth hogs,” however, certain principles are important. This kind of traffic management should apply evenly to all traffic, based on objective criteria; should be clearly disclosed; and should comply with core internetworking standards. While CDT doesn’t want to see the FCC adopt formal rules, our comments to the agency suggest that it provide some principle-level guidance — for example, by adding the concept of nondiscrimination to its broadband Policy Statement.

Rep. Ed Markey, (D-MA), Chairman of the House Telecommunications Subcommittee, introduced an Internet neutrality bill on Feb. 13th that would establish pro-neutrality principles as expressions of U.S. policy. It also calls on the FCC to do a detailed assessment of how current broadband providers’ practices are consistent or inconsistent with those principles. Unlike some previous bills, Markey’s bill would not establish a binding set of rules or prohibitions for broadband providers.

Enacting this bill would be a good step forward in the neutrality debate. First, the bill makes a strong statement that U.S. policy should favor the continued maintenance of a free and open Internet, with users — rather than network operators — determining what content, applications, and devices will succeed in the marketplace. Second, it expressly writes the objective of a free and open Internet into the Communications Act, the core statute governing national communications policy. And third, in contrast to the “no regulatory action needed whatsoever” lobby, it expressly endorses the adoption of “baseline protections” to guard against the risk of network operators taking a new role as Internet gatekeepers.
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Some residential Verizon Internet subscribers have recently noticed a curious result when they accidentally mistype a Web site address in their Web browsers: rather than receiving an error message, or being re-directed to a search engine page that has been configured by the browser to handle misspelled URLs, they end up at a Verizon search page. This occurs because Verizon has changed the way it uses the Domain Name System (DNS) to translate misspelled user-typed URLs; the company essentially creates a new default setting that overrides functionality at the network endpoints, and re-directs the user to its own site.

Most users will likely find this to be a fairly minor issue since they will eventually find the site they were looking for regardless of what their browsers return when a DNS look-up fails. But there are some problems with what Verizon is doing: the departure from agreed-upon DNS technical standards may impair the functionality of certain network-based applications, and Verizon is overriding consumer choices without providing meaningful alternatives.
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Today’s Verizon Wireless announcement that it will open its network to third party devices represents a major shift with tremendous potential to spur innovation. The likely eventual result is a wide variety of new devices taking advantage of wireless connectivity over Verizon’s mobile network — and not just phones with cool new features or designs, but potentially devices with entirely novel functions, like, say, networked automobiles, shipping packages, or even refrigerators. Combining the ubiquitous nature of the wireless network with the creativity and imagination of the broad technology developer community may yield any number of innovative ways to incorporate network-based functions into non-telephone devices. In response to a question during a press briefing, a Verizon Wireless official expressly said that if an innovator in his garage can develop a device that meets the basic technical specs, the device can connect to the Verizon network. This is precisely the kind of openness that’s allowed small innovators to turn the Internet into such a dynamic platform, but has been lacking on U.S. mobile networks to date.

What prompted the groundbreaking announcement? I suspect it was partly competition with AT&T and Apple’s iPhone. The iPhone, available in the U.S. only on AT&T’s network, is showing that people will switch carriers to get a cool new device. Verizon Wireless may have decided that the best way to compete with AT&T’s iPhone advantage is not to try to build a new blockbuster phone of its own in-house, but rather to let a thousand flowers bloom — and let innovators across the country create applications and devices that Verizon hopes will drive users to its network.

But Verizon’s decision was also likely related to the recent policy debate over openness. Early in 2007, Columbia law professor Tim Wu released a paper highlighting problems with the more closed model the mobile phone companies were following. VoIP provider Skype filed a petition with the FCC advocating the application of “Carterfone” rules — the rules that decades ago forced AT&T to allow use of third party phone equipment with the traditional telephone system — to mobile carriers. A major fight also erupted about whether to include openness requirements as part of the usage rules for key 700 MHz spectrum soon up for auction, and the FCC did in fact choose to include some openness provisions. There were congressional rumblings as well, including a hearing on wireless innovation and competition prompted by AT&T’s exclusive iPhone deal with Apple. All of this shined a major spotlight on questions about innovation in the wireless marketplace, increased public awareness of the limits of mobile phones and mobile services, and very likely played a significant role in prompting Verizon Wireless executives to consider a different policy.

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The last few weeks have seen two scuffles relevant to the Internet neutrality debate. Verizon Wireless initially refused to facilitate certain automatic text messages from the abortion rights group NARAL on the ground that they were “controversial,” even though the messages would only go to opt-in NARAL supporters. More recently, the Associated Press and others have reported that Comcast impairs some of its broadband subscribers’ P2P communications by sending “reset” packets that effectively terminate individual communications (though Comcast claims the communications can be restarted later).

In many ways, these two incidents are very different. The Verizon Wireless incident concerned text messages on a mobile phone network, not the Internet. Moreover, Verizon Wireless reversed course, blaming the initial decision to reject NARAL’s messages as a mistaken application of a “dusty internal policy.” In Comcast’s case, the issue concerns broadband Internet service and the company shows no inclination to back down from what it defends as important network management activity. Another difference is that the carrier’s decision in the Verizon Wireless case turned on the specific content of the communications (i.e., the controversial topic of abortion), whereas Comcast’s policies appear to target protocols viewed as bandwidth hogs.

But both cases highlight the need for more transparency. This is something on which all sides of the neutrality debate ought to be able to agree. It’s one thing to argue about whether carriers should be subject to some type of government rules limiting discrimination. But it’s quite another to argue that it’s just fine for carriers to discriminate in secret, with no public disclosure of their policies. After all, opponents of regulation generally say that competition in the marketplace, together with the backstop of antitrust law, will provide a sufficient check against harmful types of discrimination. But the marketplace can’t provide any discipline, and the public can’t express its marketplace preferences, if there is no public access to information about what different carriers actually do.
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The New York Times (registration required) reported yesterday that Verizon Wireless refused to allow an opt-in text messaging program from an abortion rights advocacy group. Verizon, to its credit, quickly reversed course, blaming the incident on an “incorrect interpretation of a dusty internal policy.” The reversal came as a relief, though not a great surprise. From the moment the story started drawing significant news coverage, it was hard to imagine that Verizon Wireless would stand by its initial decision. Abortion is a controversial topic, but the messages from Naral Pro-Choice America would have gone only to subscribers who signed up for them. And while Verizon may want to keep hate speech and spam off its network, there’s no reason to think Naral’s messages would come close to either category.

Anyway, Naral will now be allowed to run its text-messaging program. And Verizon will surely take a careful look at its policies and where they are intended to apply. Verizon Wireless reportedly had told Naral that its policy barred message programs that “promote an agenda” or “may be seen as controversial.” In contrast, the later-released Verizon statement spoke approvingly of text messaging being “harnessed by organizations and individuals communicating their diverse opinions” and being used “to communicate broadly.” CDT would like to see Verizon Wireless adopt an express policy reflecting those views, and make that policy public. Text messaging is a popular and effective means of communication, and there would be no good reason to allow its use for purely commercial interaction while sharply limiting it for other legitimate realms of discourse.

The bigger question, though, is how this incident bears on the ongoing “Internet neutrality” debate. I suspect both sides will say it supports their position.

Most obviously, neutrality proponents can cite this as an example of discrimination by a network operator. The network in this case was a mobile phone network, but it is not hard to imagine analogous scenarios involving the Internet. The incident highlights the wide latitude that the current legal framework gives carriers to decide when and how to treat certain traffic, based on the identity of the sender or the subject matter of the message. For text messaging, as for email or other Internet communications, network operators aren’t subject to common carrier requirements — so Verizon Wireless was and continues to be free to reject messaging efforts by Naral or anyone else.

Opponents of government-imposed neutrality policies can argue, however, that the Verizon Wireless incident illustrates the ability of the marketplace to control discriminatory behavior. The argument would go like this. Sure, once in a while some carrier — whether through error or by design — may take some action that discriminates against certain content. But the flap that Verizon Wireless quickly faced shows that such actions aren’t tenable. If the content is something that at least some subscribers actually want, publicity and related market pressures will force a quick reversal.
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USA Today recently reported that the Federal Communications Commission (FCC) may be poised to bar apartment buildings and condominiums from signing exclusive deals with cable companies. A number of phone companies (who are moving into video) are unhappy about being prevented from offering service to the apartment/condo dwellers. The aim of FCC action would be to ensure that residents of these buildings retain the ability to select the video-programming provider of their choice.

Of course, apartment dwellers have the ability to move if they don’t like the building’s policy regarding cable choices. Meanwhile, the owners of apartment buildings have a marketplace incentive to accommodate consumer preferences, in order to be more attractive to potential residents.

Yet apparently, these marketplace pressures don’t entirely prevent exclusive deals from limiting consumer choice. Here’s a guess as to why. People have many factors to focus on when choosing an apartment, so it’s easy to overlook the issue of openness to multiple video choices. And once a resident moves in, they’re hardly likely to endure the huge hassle of moving again just because they’d like the choice of a different video-programming provider.

Anyone see an analogy here to the Internet neutrality debate?

Ok, it’s not a perfect analogy. But think about it. The ISP is like the apartment building. It’s got a bunch of subscribers (akin to residents) who are going to be reluctant to leave, because doing so is a hassle. Companies wanting to offer online applications to those subscribers (akin to companies seeking to offer cable to residents) need to traverse the ISP’s facilities. So the ISP is the exclusive gateway to access those potential customers. There may be limits on the extent to which it can leverage that gateway control without prompting a subscriber revolt. But an ISP may well conclude that so long as it does not completely deny access to a major category of applications (akin to an apartment building blocking all cable TV providers from serving the building), it has considerable ability to steer those subscribers to a specific application provider over its rivals.

Sure, changing apartments may be more of a hassle than changing broadband providers. But then again, most consumers still have very few options for broadband — whereas most local housing markets offer a variety of apartment buildings. In both cases, consumers aren’t likely to quickly and frequently switch. So once subscribers/residents have settled in, their ISP/apartment building has an effective monopoly over access to them. It’s not clear to me — and in the cable and apartment context, apparently not clear to the FCC either — that market forces automatically will prevent all possible efforts to leverage that monopoly power at the expense of consumer choice.