FCC to open the door for ISPs to charge content providers for improved service

“The Federal Communications Commission is expected to pass revised Internet regulations Thursday that could open the door for Internet service providers to start charging content providers for improved service,” Kaja Whitehouse reports for The New York Post. “That could mean Netflix [and similar services] could be forced to pay more for keeping its video stream flowing — a cost that could then be passed on to consumers.”

“The FCC’s commissioners will gather in Washington at 10:30 a.m. to vote on whether this should be allowed as part of a broader proposal to regulate Internet traffic,” Whitehouse reports. “The proposal is expected to pass in a 3-to-2 vote, with the two Republican commissioners dissenting, sources told The Post.”

“FCC Chairman Thomas Wheeler has been under pressure to craft a proposal that could pass muster with his fellow commissioners since his last draft fell flat last month,” Whitehouse reports. “Silicon Valley and consumer-advocate groups raised a firestorm of protest over the draft, with many accusing Wheeler of ‘killing the Internet.'”

“Comcast’s David Cohen on Wednesday blasted the ‘almost hysterical reaction’ to the first round of proposed rules, saying pay-for-priority is already in motion,” Whitehouse reports. “Speaking at a conference in Midtown Manhattan, Cohen said billing content providers based on usage will be normal in five years. ‘Whatever it is, we’re allowed to do it,’ he said.”

Read more in the full article here.

MacDailyNews Take: As we wrote back in August 2006:

We don’t presume to know the best way to get there, but we support the concept of “Net Neutrality” especially as it pertains to preventing the idea of ISP’s blocking or otherwise impeding sites that don’t pay the ISP to ensure equal access. That said, we usually prefer the government to be hands-off wherever possible, Laissez-faire, except in cases where the free market obviously cannot adequately self-regulate (antitrust, for example). Regulations are static and the marketplace is fluid, so such regulation can often have unintended, unforeseen results down the road. We sincerely hope that there are enough forces in place and/or that the balances adjust in such a manner as to keep the ‘Net as neutral as it is today.

And as we followed up in September 2009:

That we have the same Take over three years later should be telling. Government regulations are not a panacea, neither are the lack thereof. It’s all about striking a proper balance where innovation can thrive while abuses are prevented.

Make that “the same Take over seven years later.”

[Thanks to MacDailyNews Reader “Lynn Weiler” for the heads up.]

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  1. Let’s be entirely clear here. What Mr. Thomas Wheeler, puppet pawn of the media oligarchy, has proposed is SLOWING DOWN all of the Internet that does not pay an EXTORTION FEE to the ISPs. This is the death of Net Neutrality and the birth of CORPORATE RULE of the Internet. It is nothing less.

    But propaganda will propagate!

    What is already MANDATED to happen, which the ISPs don’t like, is to CATCH UP the USA to the REST OF THE WORLD with faster bandwidth.

    Here in the USA we:
    1) Pay too much
    2) Too little bandwidth

    SHAMEFUL. And this puppet pawn wants to make it EVEN WORSE.

    1. Absolutely. There is no incentive in this approach to ever increase general bandwidth, as long as they can extort more money from those who need bandwidth (consumers eventually pay the extorted fees) while keeping general system-wide bandwidth as slow as possible. And guess what, if the consumer wants the bandwidth to receive the content, they’ll pay for it again, directly to their ISP.

      I’m beginning to think the entire system that’s supposed to control big entities from overpowering individuals is broken. This rule is one example from the FCC. yesterday, the USPTO granted a patent to Amazon for photographing things against a white background, something commercial photographers have been doing since the ’70s, at least. What is going on in this country?

      1. I was astounded at the stupidity of the Amazon patent. The methods of photographing against a white background are ancient history. I learned exactly what the patent covered in photo school in 1987. Clearly, we have a broken government in the USA. Respect for the US government is at an all time low and deservedly so. This has been a growing problem for decades and has reached the point of blatantly obvious self-destruction of my government.

    2. Let me get this straight… U.S. consumers are already overpaying for bandwidth and data rate. In fact, with mobile devices we pay for data rate, then pay more for total bandwidth before being throttled. In fact, we often pay even more to either attach more than one device to a single data plan, or establish individual accounts for each device.

      *Now* the controllers of the internet backbone (many of whom I suspect also control the consumer end-points of the Internet system) want to assess additional charges on the website providers for giving priority to their content. Keep in mind that you or I may be far more interested in the content originating with content providers who cannot afford to pay.

      This is like a severe intestinal disorder – nasty stuff happening at both ends. If these companies get too greedy, then we will simply have to radically change the system.

      1. ‘The Controllers’ are NOT the controllers unless puppet pawn Mr. Thomas Wheeler gets his way, which of course is THEIR way.

        The mobile industry is quite fascinating because AGAIN bandwidth is NOT being expanded despite the technology to expand it having been around for YEARS now. It’s called “4G” as in the REAL “4G”. (That’s versus the scam ‘4G’ which is nothing more than high end 3G. Literally.) Example: LTE Advanced. The tech is done! It’s a standard! And no one is touching it because the corporate oligarchy doesn’t WANT to expand bandwidth. They want to GOUGE customers for LOW bandwidth, just like the Internet. Isn’t that joyful?

        These companies are ALREADY beyond greedy. They’re ABUSIVE. That’s not just money grubbing. That’s well into the range of PSYCHOPATHY. Isn’t that also joyful?

        That is the state of bad biznizz today. It’s the modern plague. They’ve already radically changed the system into a disease.

  2. Guess somebody needs to get a competitive edge so they send a beaurcratic shill in Washington to legalize it. I’m not sure what has changed about this situation.

    This legislation has nothing to do with speeding up or anything like. It has everything to do with those that want better must pay more. It’s our new government model of doing business. He’s under pressure because somebody in business is tired of waiting for this to happen and they’ve already bought and paid for it and it hasn’t been delivered.

  3. What is even more insidious is Comcast coming out and saying that within five years they expect to have data caps on all their internet services across the entire U.S. (For those who don’t know about data caps: if you go over a specified number of bytes per month [adding in both upload and download data each month] then you pay an extra fee to raise that cap slightly. Go over that raised limit and you pay an even higher fee to raise it slightly again.)

    Here’s the crux of it: Comcast has three primary services: internet, cable TV and phone. What’s covered under the data cap? Internet and internet only. What services come under that? Everything from Netflix to YouTube to iCloud usage to web browsing. What does *NOT* come under the data cap as it is currently described (and implemented in some states)? Cable TV. What services come under cable TV? Comcast’s own Video on Demand service.

    Bottom line: you can pay Comcast $$$ for each movie you watch through Comcast’s Video on Demand service or you can pay Comcast $$$ in order to see several movies a month through Netflix or similar service (plus pay Netflix too). AND, Comcast can charge (under the proposed new rules) Netflix and others an additional fee to not get stuck with much, much slower delivery services.

    This definitely smacks of anti trust issues. Comcast is using its monopoly (in many, many areas it is a government sanctioned monopoly) in cable TV to extend its control over data services and prop up its Video on Demand service. Monopolies are in many cases perfectly legal, like what local governments to when grant a monopoly to a utility or other service in order to get that service to all constituents. However, to my knowledge, using a monopoly position to extend that monopoly’s dominance to other services and/or prop up other services is always illegal.

    The FCC should tell Comcast that Comcast must stop all data caps (or at least set them *extremely* high so that only those truly abusing the system get hit by them) and stop selectively hitting content providers with additional fees for a “fast lane” on the internet — or else the FCC will do everything in its power to stop the proposed Comcast/Time Warner Cable merger.

    Is that likely to happen? Not with the current people running the FCC. Not a chance.

  4. All bits are created equal! No content should get favourable treatment over other content. Give the users what they want and have already paid for without interference.

  5. Reading the posts above causes me to think there is some confusion about what net neutrality is (or maybe I dont know the whole picture).

    Data caps and throttling individual usage is wide spread and apparently legal. A company like Netflix uses gobs of bandwidth and if you are unable to enjoy Netflix it is not because ISP has throttled your data, it’s because ISP has throttled Netflix upload capacity. Well, maybe this is where I dont see the whole picture because maybe ISP are throttling Netflix stream to the individual, too (but I dont think so).

    Comcast wants to charge Netflix (et al) more to continue high upload capability because it is Netflix that competes with Comcast while Comcast does not charge more for a non-competing customer (this is what is not “fair”).

    Netflix, of coarse, will pass along the expense to us which is the way things work (no matter how much some whine, this is the way things are and why such ideas as taxing corporations is stupid).

    1. Please do a bit more research. The Comcast – Netflix issue is NOT a purely peering issue with Netflix paying for appropriate peering levels as some have tried to paint it. If that were true then Netflix would be paying LESS per terabit than most other information providers as Netflix would get a bulk discount.

      And, it has been well documented that last fall Comcast in many areas did throttle Netflix data going to Comcast end users. It was NOT Comcast just throttling the data at Netflix’s input to Comcast. It was clearly shown that different areas got different throttling rates or no throttling at all — it was Comcast end user dependent. Comcast tried to explain it all away, but the evidence was there. Plus those throttled (nearly strangled) data stream issues miraculously were cured once Netflix signed a new data transport and peering contract with Comcast. When the new contract is up for renewal, who’s to say it won’t happen all over again so Comcast can raise its rates to Netflix even higher? It could easily bee the old “wash, rinse, repeat” scenario.

      Now, with the new, proposed FCC rules the jacking up of rates to competitors and to the end user — at the same time and for the same data — will not only be allowed, it will be officially sanctioned by the U.S. Government.

      Net Neutrality is a complex issue. It shouldn’t be. Bits should be bits and treated all the same no matter what information they carry. However, that is unlikely to ever be reality. Data caps on one kind of information (third party videos being treated as data) while not on another kind of information (Comcast’s own Video on Demand data) as all are just digital data streams is inherently tied to Net Neutrality.

  6. Let us try an analogy. Let us imagine a company that owns George Washington Bridge (across the Hudson, connecting NJ and NY). This company controls toll booths there, and the toll is the same for all trucks, regardless of who they belong to. Now, let us imagine this company also runs a courier business (lets call it GedEx). Now, these GedEx trucks aren’t paying any toll, as they belong to the same company. However, it seems that even with nominal tolls charged for all others (UPS, DHL, AirBorne Express, FedEx), the competition is still creaming their little GedEx service. So they decide to close off some lanes to the bridge in order to make it harder for those others to cross the bridge (meanwhile keeping a special lane open for unrestricted flow of GedEx trucks). And the next step is, they offer all those competitors a special, preferred access to the toll lanes for a modest recurring fee.

    This would in any other business be called an illegal abuse of a monopoly position (leveraging dominant market position in one market in order to prevent competition in another).

    1. Almost.

      Take it one step further.

      The company that owns the George Washington Bridge in your example says “People getting boxes using *non* GedEx trucks get to receive 20 boxes per month at the standard rate. (ALL boxes traveling across the George Washing Bridge arrive COD. The receiver of the box pays the George Washing Bridge owner a fee to get boxes.) Any individual who gets more than 20 boxes per month must pay us *directly* an additional $10 per box. However, you get an unlimited number of boxes with no additional fees across the bridge if you use our GedEx trucks.”

  7. The simple argument is as follows: consumer is paying for high-speed bandwidth. They are entitled to get this bandwidth, to the best of the ability of the ISP. In other words, whatever the pipes can bear. The ISP should not be allowed to leverage their ISP business in order to stifle competition to their cable TV business by throttling down VoD services (such as Hulu, NetFlix and Amazon). Today, many American ISPs are already doing this (without acknowledging). I have done my own testing by measuring my available bandwidth (25Mbps down, 15Mbsp up) on Verizon’s FiOS service. However, when I start a Hulu session, I get rewarded with only SD feed (not enough bandwidth for HD??) and frequent dropouts. Same with other streaming services. It has been documented that Verizon has been secretly throttling competition to their VoD offerings, and this should be prosecuted, as it is illegal.

    On the other hand, some services take a lot more bandwidth than others. Running something simple, such as an online blog, or event planning, or reservation service, uses fairly little bandwidth (mainly text, a few small images). Running a live webcast service with streaming HD video uses much more. As a business, we pay for what we need on our end, and usually, these rates aren’t significantly higher (HD upstreaming can be done on 50Mbps stream, which is perhaps just twice as expensive as the basic 15Mbps upstream that most ISPs today offer for home / small business users). However, this HD video doesn’t stop at your ISP; it is streamed further down the pipes to your users, and if your business is successful, it clogs a lot of pipes around the world. The bandwidth usage for your HD video is significantly higher than that of a business running an online dating service, or an online shop. Yet, both business pay more-or-less same (or rather similar) rates to their ISPs.

    It is one thing when I, as a consumer, open a HD streaming session on Skype with my cousin overseas. It is an entirely different thing when Netflix runs thousands of concurrent HD streaming sessions to their consumers throughout the USA (and the world). Yes, their ISP is higher than mine, but proportionately not by that much, compared to the amount of data they push through all those pipes.

    ISPs charging content providers for faster access isn’t completely nonsensical. What IS illegal is ISPs offering competing video-on-demand services leveraging the same pipes (and not having to pay extra for the pipes), and throttling competing service across those pipes (unless the competitors pay special extortion fees).

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