Tech fights Internet ‘fast lanes’

Tech companies are pushing federal regulators to get involved in the multiplying disputes over how they connect to Internet providers.           

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The industry and allied groups are looking for opportunities to push for equal treatment of Internet traffic in the wake of a court ruling last month that opened the door to the use of “fast lanes” for Web traffic.

Federal Communications Commission (FCC) Chairman Tom Wheeler has said his agency wouldn’t look at the deals that websites strike with Internet providers — called “interconnection” or “peering” arrangements — in the agency's push to rewrite net neutrality rules. Those rules had kept Internet providers from slowing or blocking access to certain websites.

Wheeler is keeping an eye on the issue, according to an agency spokesman.

“Peering and interconnection are not under consideration in the Open Internet proceeding, but we are monitoring the issues involved to see if any action is needed in any other context,” he said.

Tech and advocacy groups say the FCC needs more information about the often-hidden deals, which were left untouched by the agency's first round of net neutrality rules.

“We just don’t even know what’s going on in this market,” Public Knowledge Vice President Michael Weinberg said.

“What we’ve been telling the FCC to do is figure out what’s happening” in the peering market, he said.

The issue came under the spotlight last month, when online video streaming service Netflix publicly disparaged the deals, which have traditionally taken place through a third-party interconnection company.

Earlier this year, Netflix and Comcast announced that they would connect directly, rather than through a third party, to improve video streaming service for Netflix subscribers.

Comcast said the agreement was good for both companies, but in a blog post — and later in an FCC filing — Netflix called the agreement an “arbitrary tax” and slammed Comcast for supporting “weak net neutrality.”

Netflix CEO Reed Hastings called for “strong net neutrality” that would prevent Internet providers from downgrading access for high-traffic and high-bandwidth websites and then charging those companies for a fast lane to users.

Some Internet providers “are extracting a toll because they can — they effectively control access to millions of consumers and are willing to sacrifice the interests of their own customers to press Netflix and others to pay,” Hastings wrote.

Internet providers — many of which have pledged to abide by the principles in the now-defunct net neutrality rules — have said the peering deals benefit are beneficial to their business and the websites whose users get better service.

Companies across the tech industry should be watching the peering issues closely, said Cathy Sloan, vice president of communications for the Computer and Communications Industry Association. That trade group includes Google, Microsoft and Facebook.

“It’s not like entertainment content is the only thing that’s at risk here,” she said of Netflix’s stance on the matter.

“The only reason that Netflix is the example that you hear the most about is because it’s the most popular.”

But any company whose high-bandwidth services rely on Internet providers to connect with users — from services like Vonage or Microsoft’s Skype to other video services — will have an interest in ensuring they don’t have to pay for Internet fast lanes, Sloan said.

“It’s any online ecommerce or information service that has competitors who may have a better deal than they do.”

Despite Wheeler’s comments, Netflix said it would continue pushing the FCC to require “strong net neutrality.”

“It makes sense to us that peering be included” in the revamped net neutrality rules, a company spokesman said.

“You could have the strongest Net Neutrality rules on the planet, but if [Internet providers] can use their power to selectively degrade websites at the interconnection point, they will be in role of picking winners and losers instead of consumers,” he said.

The spokesman said that Netflix will continue to “make that argument with the FCC” but is also open to pursuing other avenues.

Tech groups are already imagining what those other avenues might be.

“If you are worried about interconnection becoming a problem, you are thinking about all the different ways of reducing that problem,” Weinberg said.

“You’ll see it manifest different ways in different places.”

One obvious place for the FCC to examine peering is through the proposed merger between Comcast and Time Warner Cable.

As the two largest cable companies in the country try to convince antitrust regulators that they should be able to join forces, public interest groups are eyeing the net neutrality commitments as a condition of Comcast’s 2011 purchase of NBC Universal.

When the FCC gets its turn to evaluate the proposed deal between Comcast and Time Warner Cable, the agency should evaluate the company’s peering practices, Weinberg said.

Peering is an “incredibly relevant to [Comcast’s] business model,” he said. 

As the agency considers the potential effects of the merger on the future of online video, “they need to understand how [peering] works in the Comcast context,” which will also involve looking at practices across the industry, Weinberg said.

That will leave the agency “much better educated about peering than they are now,” he said.

During last month’s open meeting, Wheeler declined to comment on whether the agency would consider peering deals as it evaluates a merger between Comcast and Time Warner Cable, which has yet to be filed at the FCC.

“We have nothing on the record right now, to make a decision like that,” he said.

Another opening for the agency to look at peering issues would be the current proceeding on the Internet Protocol (IP) transition, a movement by phone companies to switch out traditional phone technology with Internet-based technology.

“The matter of interconnection and peering is one that is very appropriate for the IP transition proceeding,” as the IP transition proceedings deals with interconnection between phone companies, Sloan said. 

But others think the tech companies are barking up the wrong tree.

One lobbyist for a broad-ranging tech trade group said serious action from the FCC on peering is unlikely.

While the agency might “send some warning shots” by saying it’s watching the peering market carefully, “the chairman is wisely staying out of” the peering market “because the market is competitive and it works,” the lobbyist said.