Recommendations to the FCC for the path forward

The FCC Chairman, Tom Wheeler, wrote accurately in his blog, “the idea of net neutrality (or the Open Internet) has been discussed for a decade with no lasting results.” The stalemate is the result of an attempt to solve technology problems using legal and political methods.

Designing network systems involve making tradeoffs for efficient resource allocation, functionality and preventing deadlocks. This inherently involves treating different sets of bits differently. Hence trying to mandate “principles of equality” in network design is a meaningless exercise, as has been demonstrated.

The legal root of the current conundrum is the past FCC mistake of classifying the Internet as an “information service,” exempt from FCC regulations. After exempting the Internet from regulations, the appeals court logically rebuffed efforts to regulate the Internet through fuzzy linguistics.

The intrinsic dilemma with Internet access is cost per connection is not a constant, but varies with technology and the “deployment distance” for each termination. Result is higher cost in less populated areas (disregarding the affordability factor.) Hence, some form of network deployment subsidy is necessary in the current market configuration.

RecommendationsTherefore, the long term solution is to declare that the Internet access will be regulated to conform to “common carrier principles” that have evolved over the centuries — starting with ferry operators — taking into account the unique attributes of the Internet. In exchange for accepting network deployment subsidies, network providers must comply with the common carrier principles for Internet access, to be formulated.

Obviously, this requires action by the Congress, which is messy, complicated and long drawn-out. But a declaration to that effect will provide clarity in the marketplace, and may even speed up the Congressional process.

The rise of the Internet, the divestiture of the AT&T [2, 3, 4, 5, 6], and the downsizing of the Bell Labs [2, 3, 4, 5, 6, 7, 8] created a market vacuum. The Bell Labs used to be the final technology authority regarding networks. Parts of the Bell Labs were absorbed into different entities, dispersing the knowledge and expertise accumulated over a century. The current FCC regulatory framework presupposes the existence an external technology authority.

The current network market structure is vastly different from the monopoly market when the FCC was formed. As history has shown, the FCC cannot fulfill its mandate without independent technology expertise. Current legal-centric FCC processes may have been adequate, when quasi-independent technology expertise was available externally. But changes are necessary to effectively manage the changed market structure. The simplest solution will be to develop that expertise internally, within the FCC, and enhance current legal-centric processes — to factor in technology-driven constraints, limitations and possibilities.

The legal-centric FCC processes also have a secondary deleterious impact. Issues related to networks belong primarily in the technology domain. Superimposing a legal framework on technology evolution can create unhelpful distortions. Technology issues and problems need to be addressed as such. The “net neutrality discussions” is an illustrative example of how not to do technology policy.

In addition to the complications created by rapid development of new technologies and wholesale changes of market structures, the idiosyncratic behaviors of financial markets were also in play — as the dot-com bubble. The result is widespread misconceptions about “Internet.” One critical issue is the mis-identification of the success factors of the Internet.

The “magic of the Internet” is the universal adoption of public common standards and practices, which resulted in the astonishing benefits generated. The key to continuing the “magic of the Internet” is making sure that the common standards and practices are followed so that unified network and application interoperability are maintained, helping continued development of a vibrant marketplace.

The focus of regulatory oversight need to be shifted from the current “Internet focus” to “open standards, interfaces and practices.” A critical precursor to that step is for the FCC to become strictly “technology neutral,” allowing the free market to operate creating the best possible network capabilities with public common standards, interfaces and practices.

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