Does Net Neutrality Decision Illustrate New Balance of Political Power Within Ecosystem?

Some might take a cynical view of the Federal Communications Commission’s network neutrality rules, since politics matters in Washington, D.C., and matters greatly for the setting of communications policy.

To a great extent, politics also reflects perceived political power. So one might argue the perceived power of the ISPs has dropped, while the power of the app providers has grown.

In a way, this is the political analogy to the “content versus distribution” debate within the video ecosystem: who has more power within the ecosystem?

“What the net neutrality rules really demonstrate--and a little sooner that we are all comfortable with--is that a new status quo is emerging. And that status quo is Google, Netflix, Facebook et al,” writes Kieren McCarthy, of The Register.   

Others might note that executives from Google visited the White House once a week, on average, during the tenure of President Barack Obama.

Some might call that an exaggeration of the situation, but others might say there is great merit. Power within the Internet ecosystem has, for some time, shifted away from ISPs and access providers, and towards the app providers, in the same way one might argue power has shifted to content owners versus content distributors in the video ecosystem.

It perhaps is no coincidence that the video and content distributors (pipes and access) are one and the same. What seems most unique and valuable in video content or Internet ecosystems are apps and content, not access methods. In fact, people only want Internet access because they want to use the apps.

If you subscribe to the view that power matters, and gets expressed in politics and then FCC decisions, the net neutrality ruling will come as no surprise.

“The FCC hasn't suddenly discovered it must fight for the people's rights: it's simply realized that it's time to serve new masters,” said McCarthy. “The new rules are simply paving the way for the next generation of companies who will bend the market and government to their profit-making will – and be given the freedom to do so in the policies of today.”

McCarthy is blunt: “The people that will be most served by the rules are not consumers but large Internet companies.”

Google and Netflix didn't want interconnections between networks regulated, and so they were not regulated.  While the FCC sees future possible negative motives in the cable companies, it seems to think the opposite is true when it comes to the internet companies, McCarthy noted.

As McCarthy sees matters, one huge problem is that the FCC acted without knowledge. The agency’s "open internet" plan wanted Internet service providers to supply all information about network packet congestion including the source of it, its location, its size and so on. The actual order does not require such information. Why?

As the document notes, “we decline at this time to require disclosure of the source, location, timing, or duration of network congestion, noting that congestion may originate beyond the broadband provider’s network and the limitations of a broadband provider’s knowledge.”

In other words, congestion can happen for all sorts of reasons beyond an ISP’s control.

One might cynically say the FCC continues to “blame” ISPs for bottleneck or oligopoly practices, while it continues to see app firms as aggrieved parties.

The FCC is going to force cable companies to provide many more details over their internet offerings: everything from speeds, rates, restrictions and packet loss stats.
But the agency doesn't know how to. So it is asking its Consumer Advisory Committee to come up with a plan within six months.

The FCC is also going to be the place for disputes over how cable companies are ripping off consumers and internet companies on a "case-by-case basis." But it doesn't have such a facility, and has never really run one before so it will have to create and hire a new ombudsman, McCarthy says.

One might argue the Commission acted to prevent clear abuses of market power by cable companies. The issue is whether the Commission adopted remedies that are unnecessary, and ignored the growing power of app providers (edge providers) in the ecosystem.

The view seems to be that the ISPs are inherently monopolists, while app providers inherently are innovators posing no threat to Internet openness.
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