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The Oatmeal, in its recent post on net neutrality, disseminates a common misconception, saying “The Internet … was founded on one principle: all information must be treated equally.” But this is simply not the case, and that’s a good thing! The engineers charged with developing software protocols to manage Internet traffic long ago recognized that not all bits are created equal. For example, some bits are very time-sensitive — like 9-1-1 calls, live video-streaming, or online gaming — while others are not — like email, music downloads, and non-critical software updates. These latter services work just as well in the face of minor delays due to congestion or packet-loss, whereas the former suffer from significant dropoffs in quality of experience with even minor interruptions in their bit streams.[[MORE]]

This really gets to the core of the debate. The Oatmeal and other net neutrality hardliners fear that ISPs may use their unique position to discriminate among different sources of Internet traffic, favoring well-heeled and/or affiliated edge providers and ultimately resulting in significant (and externalized) harm to small businesses and free speech. The solution, as they see it, is to mandate bright-line rules that will prohibit ISPs from engaging in such discrimination. But, while simple, bright-line rules have a certain appeal, in this case — considering the inherent complexity and diversity of the issues at hand — such a broad-sweeping rule against discrimination would do great harm, because it fails to account for a key facet of the Internet: some bit traffic is qualitatively different than others, because some is bursty (like web-browsing) and some requires sustained bit streams (like VoIP calls). Thus, while “neutrality” of treatment would perhaps be warranted when comparing like services (i.e., apples to apples), when comparing unlike services (i.e., apples to oranges), mandating neutral or equal treatment could do significant harm to both. In recognition of the fundamental differences between different forms of bit traffic, Internet engineers developed, among other tools, the Differentiated Services (DiffServ) set of protocols, which were designed to enable differential treatment of bit traffic in real-time. And by allowing ISPs and transit providers the capability to treat some bits differently than others, the Internet itself can work smarter, faster, and better for all parties in the online ecosystem.

Also contrary to popular belief, these are not recent developments. The 8-bit DiffServ field has been built into all packet-headers since IPv4 was implemented (back in the 1980s), and it was retained in the updated IPv6 standards, so any claim that “equality” is embedded into the Internet’s foundation is just patently false. And these are not just hypothetical applications — ISPs already utilize the DiffServ protocols to prioritize voice-over-IP (VoIP) packets, such as Skype, on their networks. They do this because they know that two-way voice services are very latency-sensitive, so ensuring a seamless delivery of VoIP packets makes those services work better and their customers more happy.

Most everyone can agree that certain forms of Internet traffic ought to be prioritized over others (e.g., 9-1-1 calls undeniably should be prioritized over non-emergency traffic). But, more often than not, outside of the realm of emergency services, people struggle to think of prioritization uses that would be beneficial to consumers, competition, and society writ large. The nefarious examples of anticompetitive prioritization (e.g., An ISP prioritizing its affiliated traffic over its unaffiliated traffic, resulting in skewing of the competitive Internet landscape) are typically all that come to mind. However, putting potential harms aside for the moment, it is easy to envision a number of beneficial uses of prioritization via the DiffServ protocols:

• Microsoft, Sony, Nintendo, Steam, and Blizzard, to name a few online gaming companies, would willingly offer to pay extra — on top of the hosting and transit fees they already pay — to get their users’ bits prioritized, because they know even minor latency (or “lag” as it’s typically referred to by gamers) can ruin the online gaming experiences that they’re trying to cultivate.

• ESPN, Fox, NBC and others that own broadcast rights to live sporting events, and offer online streaming capabilities (e.g., WatchESPN, FoxSportsGO, NBCSportsLiveExtra), would willingly offer to pay extra to get their bits prioritized, because doing so would make their consumers happier — through higher-quality bit streams — and would allow them to finally outperform the illicit websites that host sports streams in violation of copyright law, convincing more consumers to subscribe to their legitimate online streaming services (which likely will soon be offered a la carte).

• And on the flip-side, although many net neutrality supporters rail against the idea of getting “stuck in the slow lane,” there are innumerable web-based services that would likely jump at the chance to get their traffic de-prioritized, because they know their services are time-insensitive (a.k.a. latency-robust), so slower delivery of bits wouldn’t matter much to their users, and — this is key — the cost of delivering those bits would be lower than if they were in a faster lane of Internet traffic. For email hosts, software developers, or any startup company (not trying to live-stream video) looking to cut their transit costs, such an option would surely have at least some appeal (depending, of course, on the particular price points).

These are just a few examples of how Internet traffic prioritization could be hugely beneficial for consumers, but there are surely plenty more. To be fair, there are also numerous examples of how this sort of prioritization could be harmful — by allowing powerful companies to crowd out smaller firms, or by allowing ISPs to surreptitiously favor their affiliated services — which is why some reasonable rules ought to be put into place to guard against such harms. Whether those rules ought to be based on the legal authority of Section 706, Title II, or a new piece of legislation from Congress, is a debate for another time. The point here, simply, is that any hardline “net neutrality” rule that bans outright any and all forms of commercial “prioritization” would stifle innumerable pro-consumer and pro-competitive business models in their cradle, perhaps forever stulting the growth of the World Wide Web.

As part of its At Issue written debate series, CQ Researcher asked TF’s Berin Szoka and Free Press’ Derek Turner, “Is the price for watching TV unfairly high?” Read both essays as printed, or check out Berin’s “no” argument below:

We live in a “golden age” of television, as The New York Times’ David Carr puts it: “The vast wasteland of television has been replaced by an excess of excellence.” We love TV, and it’s getting better all the time — but we hate paying for it, even when we’re getting a better deal.

Since 1996, the cable industry has invested $210 billion in infrastructure. That’s meant faster broadband, higher video quality and new TV features like DVRs and smarter interfaces. Adjusting for inflation, basic cable video prices rose 2.7% annually from 2005 to 2012. 

But adjusting for quality is hard, so consider how much cable companies paid programmers during that period: 5.61% more annually. Indeed, programming costs, which have more than doubled since 1992, represented 56% of cable bills in 2012 — and are rising, largely due to the cost of sports programming.

Cable’s become just another distribution channel, watched by fewer than half of American households. Viewers have switched to satellite (a third), telco services like Verizon FiOS (15%), or entirely to online services like Netflix and iTunes (5%).

Studios are also investing in quality because they face unprecedented competition. The number of channels has exploded, from 565 in 2006 to over 800 today. Some of today’s most popular programming comes from once-stale channels like AMC (e.g., Breaking Bad and Mad Men). And new entrants like Netflix now offer enormously popular, original content like House of Cards.

Understandably, people hate paying for channels they don’t want. Yet economists have found that mandating a la carte pricing would raise prices per channel, perhaps costing consumers more overall while hurting new and smaller channels. Meanwhile, the availability online of individual episodes is pressuring video programmers to change how they do business. There’s no reason to think the market won’t find the right balance — without more government meddling.

In fact, government has increasingly helped to drive costs up, not down. Most egregiously, Americans shouldn’t have to pay for broadcast stations when they buy basic cable. Repealing other privileges for broadcasters might also help ensure that the prices distributors like cable pay for content reflect its value.

More broadband competition could help make Internet television viable. That means lowering local barriers that make it hard for companies such as Verizon and Google Fiber to compete with cable. But at the end of the day, no matter how it’s delivered, quality television costs money.

As the debate over FCC Chairman Wheeler’s Net neutrality proposal rages on, the Wall Street Journal asked two tech policy experts whether broadband should be regulated like a public utility. Arguing the “no” side was TechFreedom’s Berin Szoka, arguing “yes” was Columbia Law School’s Tim Wu. Read the article and both essays on WSJ.com , or see Berin’s essay below:

Public-utility regulation is a self-fulfilling prophecy: It assumes competition is impossible—and keeps it that way.

Utilities accept heavy regulation, which insulates them from competition. This quid pro quo makes sense only when technology is static and alternative infrastructure just isn’t cost-effective.

Broadband, however, isn’t a “natural monopoly” and it doesn’t require the kind of oversight originally developed for railroads. The industry is rapidly evolving and competition is thriving as never before, thanks to a regulatory light touch and despite lingering federal and local obstacles.

Competition Is Alive and Well

Telephone and cable companies have been trying to out-innovate each other since the mid-1990s. Despite talk of a cable monopoly in broadband, phone carriers are gaining ground.

AT&T’s upgraded DSL service, delivered via fiber to neighborhoods, should reach 75% of its footprint by 2016 with download speeds 10 to 15 times faster than Netflix high-definition streaming. Some 70% of Verizon households will soon have access to FiOS, the carrier’s fiber-to-the-home network, and cable firms have raised top download speeds to match Verizon’s. Google Fiber may expand its full-gigabit service to 34 more cities from the original three, giving more Americans access to a “third pipe” to the Internet.

One in 10 Americans, meanwhile, relies entirely on wireless broadband and the number is growing as those networks get faster. Opening more radio spectrum would help, but the FCC and Congress have moved slowly. Likewise, the FCC has been reluctant to let phone companies transition to Internet protocol-based networks, even though doing so would save billions of dollars that could be used to make the “second pipe” faster.

Where government has gotten out of the way, broadband competition, investment and innovation have flourished. Indeed, the regulatory light touch for broadband wisely begun by President Clinton’s FCC unleashed $1.3 trillion in private broadband investment. Yet some insist the FCC made a mistake in not subjecting broadband to public-utility rules in 2002.

Congress, including 74 Democrats, overwhelmingly opposed “reclassification” to public-utility status in 2010 and with good reason: Even if the FCC promises not to apply the most burdensome public-utility rules, the process would be slow and messy, paralyzing investment for years and discouraging new entrants.

And for what? The FCC has already claimed sweeping powers to regulate broadband just shy of a full-blown utility. The more judiciously it uses that power the better, but merely having the option makes reclassification largely unnecessary.

A Better Way

Reclassification would distract the FCC from doing what it can to facilitate broadband competition and deployment.

Some think the answer is having cities operate broadband networks. Provo, Utah, tried that, and the city wound up selling its $39 million network to Google Fiber for $1 after realizing the city just wasn’t good at running it.

Instead, municipalities should reduce the local bureaucracy that discourages new entrants like Google Fiber and even incumbents like Verizon from expanding. If cities want to spend tax dollars to improve Internet access, they should install “Dig Once” conduits under streets that any broadband provider could lease. That could make deployment 90% cheaper while adding just 1% to the cost of a road project.

Increased competition can bring down prices, making Internet access more affordable for those who still don’t have it. Subsidies also could help—but added regulatory barriers certainly won’t.

Broadband should be regulated like most other industries: through antitrust and consumer-protection laws. That’s a better model for regulation—one that doesn’t give up on competition.

TechFreedom launched just over a year ago with the publication of The Next Digital Decade , a free ebook that brought together 26 scholars of Internet law, philosophy, policy and economics to consider what the next digital decade might bring from a wide variety of philosophical perspectives. Even with all of the changes in the past year, this book is still essential reading for those who are looking toward the future.[[MORE]]

The book’s 31 essays address questions such as: Has the Internet been good for our culture? Is the Internet at risk from the drive to build more secure, but less “open” systems and devices? Is the Internet really so “exceptional?” Has it fundamentally changed economics? Who—and what ideas—will govern the Net in 2020? Should online intermediaries like access providers, hosting providers, search engines and social networks do more to “police” their networks, increase transparency, or operate “neutrally?” What future is there for privacy online? Can online free speech be regulated? Can it really unseat tyrants?

Read the book’s Foreword and Introduction for more details. You can read or download the free ebook here —or buy a print copy . The book can also be found in the Kindle ebook store for $.99, or for free in the Apple and Google ebook stores.

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