New, Old and Forgotten Frames in the Network Neutrality Debate

By Rob Frieden
Rob Frieden

One key reason for confusion about Network Neutrality lies in the many different and inconsistent frames used to shape the debate. The Tea Party has entered the fray by characterizing the matter primarily in terms of freedom. Republicans decry the "job killing" impact of the FCC's rules. Network Neutrality advocates appear ambivalent whether the FCC has capitulated to special interests, or shaped a pragmatic compromise.

Older frames typically use hyperbole to justify government intervention or forbearance. Network Neutrality advocates frame the matter as impacting the Internet's openness and its ability to incubate new ventures such as Google, Netflix, Amazon and EBay. Opponents reject the need for government safeguards based on the view that there is no problem requiring a solution.

Everyone seems to have ignored a more basic question whether or not the Internet access market currently operates competitively. If the market is sufficiently competitive one can vote with their dollars and change carriers if and when the carrier operates in ways subscribers do not like. Of course there are transaction costs in making such a move, and in the wireless market carriers offer subsidized handsets to lock in subscribers for two years. As well the matter of identifying the cause of network congestion, sluggish service or discriminatory practices presents a forensic problem. In light of the interconnected and integrated nature of the Internet, where content and conduit converge, an end user cannot readily determine if degradation in service — however defined — is caused by the content or application provider, a long haul carrier, or the ISP providing first and last mile access to the Internet cloud.

Still if the Internet access marketplace operates competitively, then consumers, if so inclined, can reward or punish ISPs based on the real or perceived openness. Even in competitive markets, carriers can agree explicitly or decide unilaterally not to emphasize or market different degrees of openness. But at least the potential exists for an ISP to identify the openness factor and target consumers who consider it a priority. This is not happening in the Internet access marketplace either because openness, transparency and nondiscrimination are non-issues, because all ISPs are fair and neutral, or because consumers do not have the ability to identify and subscriber to an ISP promising fair and neutral service should the existing carrier explicitly or subversively operate in a non-neutral manner.

So competition in the Internet access marketplace matters greatly and somehow this issue constitutes a "huge omission" in the debate according to the fair minded writers at The Economist. See: A tangled web, America's new internet rules are mostly sensible — but the country's real web problem is far more basic (Dec. 29, 2010) If I had access to a competitive marketplace ISPs would have offer me something better than the one (and only one viable) option I have now: $59.95 plus tax and fees for downloads up to 15Mbps, and uploads up to 3Mbps, or $40.95 plus tax and fees for up to 1.5 Mbps download and uploads up to 384 Kbps.

Just because many consumers have a choice of two broadband distribution platforms (cable and DSL) does not by definition ensure robust competition with affordable rates. The Economist dares to report the issue frame ignored by the FCC and others:

"[T]he failure in America to tackle the underlying lack of competition in the provision of internet access. In other rich countries it would not matter if some operators blocked some sites: consumers could switch to a rival provider. That is because the big telecoms firms with wires into people's homes have to offer access to their networks on a wholesale basis, ensuring vigorous competition between dozens of providers, with lower prices and faster connections than are available in America. Getting America's phone and cable companies to open up their networks to others would be a lot harder for politicians than prattling on about neutrality; but it would do far more to open up the net."

By Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law. Visit the blog maintained by Rob Frieden here.

Related topics: Access Providers, Broadband, Net Neutrality, Policy & Regulation

Comments

Well put, where is the commerce point of view Todd Spraggis  –  Jan 06, 2011 12:08 PM PST

Thank you for this essay. I have argued until blue in the face that there are competitive, thus FTC, and not technical FCC issues at work here. I have to admit that I am slightly jealous of the abundance of choice you have. I only have the choice of IDSL (yes that I is for bonded ISDN as I'm 22K from the CO) or the DOCSIS 2 packages from my cable provider who only gives me punitive pricing plans because I continue to use an antenna for TV. Being from Texas I was extremely concerned that this particular provider who was doing some very creative pricing experiments in another nearby market might have brought them to my doorstep. I would have been forced to pay/play as I can not vote with my feet in such a market (or lack there of).

As for the Tea Party revelers, I completely empathize on the freedom for corporations to conduct business as they see fit, however let us not confuse a libertarian view for one that is anarchist. I ask that those proud of the constitution look even further back to its heritage- that of English Common Law and the Magna Carta where you will find the concept of Common Carriage is one that is well established, rich and undisputed for nearly 800 years: http://www.cybertelecom.org/notes/cc_history.htm

Todd Spraggins
@bellhead

Up to vs. Delivered Rob Frieden  –  Jan 06, 2011 12:38 PM PST

Hello Todd:
Thanks for your comments. Where I live the actual vs. advertised rates differ.  I typically get 3-5 Mbps, so my delivered per Megabit rate exceeds just about every developed country in the world.

So it's all about price? Richard Bennett  –  Jan 08, 2011 12:07 PM PST

I thought the NN debate was about free speech, democracy, virtue, and innovation, not just cheap broadband.

Anyhow, I haven't noticed any lack of discussion around competition at the many NN panels I've attended, there's always the obligatory statement that "if we had true choice we wouldn't be having this debate" so I question the framing premise. We certainly have a competitive market for mobile, and the NN issue rages in that space regardless.

The trouble with NN is that it's not so much a coherent issue as a grab-bag of long standing grievances against the phone company. When these grievances can be defined and isolated, they can be resolved quickly, but the NN movement doesn't want progress, it wants live issues that scare people.

Wireless Competition Rob Frieden  –  Jan 08, 2011 1:21 PM PST

Four national carriers share 92% of the market. AT&T;and Verizon share 58% They offer nearly identical prices and I see them competing only in advertising (4G!) and handsets.  They have nearly identical service terms including the refusal to offer lower rates to subscribers using unsubsidized handsets.

When was the last time a wireless carrier had a sale? 

We certainly do not have a competitive market for mobile.

How many firms make a market competitive? Richard Bennett  –  Jan 08, 2011 2:13 PM PST

Most economists would say that a market with 3 or more major players is competitive, so it's not clear where you're drawing the line, Rob. Tell me if this market is competitive if you please:

A 26%
B 23%
C 15%
D 11%
E 10%
F 6%
------
Top 6 91%

The numbers are very similar to the market for wireless BB in the US, where we have six national networks (counting Virgin) and a number of regional ones. These numnbers are ISPs in the UK, where there's a line-sharing rule in place and also facilities-based competition between cable and DSL. The 2 dominant ISPs both own the facilities that they operate on and wholesale to others.

Wireless Broadband and British ISP Competition Rob Frieden  –  Jan 08, 2011 2:58 PM PST

Hello Richard,

Thanks for taking time to respond.  I'd make several distinctions:

1) The U.S. doesn't have a line-sharing or unbundling requirement for broadband carriers;

2) I can see you're point about reseller competition, but these vitual carriers survive if and only if facilities-based carriers care to offer a wholesale-retail margin, or government imposes a line sharing requirement. In the Linkline Supreme Court case where the incumbent wireline carrier offered a retail rate below the wholesale rate, the Court didn't care about the existence or susrainability of competition--only whether the FCC imposed a duty to deal.

The FCC agrees with you but I respectfully diagree.

How many firms make a market competitive? Richard Bennett  –  Jan 08, 2011 5:04 PM PST

I don't think you're getting my point. People who favor unbundling claim it will create competition among ISPs, which will magically lower prices, increase speeds, and spread virtue and goodness throughout the blogosphere.

But the example of the UK I've cited doesn't prove that assertion. At the beginning of a line-sharing mandate, you sometimes see a plethora of ISPs (depending on how low the wholesale price is set.) But over time, they consolidate due to economies of scale and you get a scenario that's no more competitive than the market for wireless is in the US. So I don't see how you can say that mobile isn't competitive in the US when it's essentially just as competitive as the market for wireline ISPs in the UK under their unbundling regime.

By your own standards of competitiveness, the UK line-sharing rule has failed to create a competitive market for wireline ISPs.