DCIA, Level 3 Share Netflix Concern About ISPs’ Data Cap Exclusions

Amazon continues to want “vigilance” from lawmakers and the FCC over such arrangements, it said. Netflix had been the only company to criticize AT&T, Comcast and Time Warner Cable for not subjecting to monthly usage limits some of their own content when it’s not delivered to broadband customers on websites but by apps or consumer electronics (CD May 11 p5).

The pool of companies telling the FCC it’s a violation of net neutrality rules when ISPs don’t apply bandwidth caps equally to all content, no matter how distributed, may not broaden much anytime soon beyond Netflix, said industry officials who support the caps and cap foes. They said that’s because the exclusions are relatively new, and Silicon Valley companies appear to still be considering what, if anything, to do. Some nonprofit groups have also criticized Comcast for the caps, while two nonprofits that often oppose regulation weighed in to support the caps: The Free State Foundation (http://xrl.us/bm7t9e) and Technology Policy Institute (http://xrl.us/bm7t9g). Netflix executives visited the commission last week for the first time in two years to oppose caps at AT&T and Comcast, which exclude streaming Internet Protocol video sent to Xbox consoles, and Time Warner Cable for exempting what’s sent to its iPad app. The three ISPs had no comment.

Fans of net neutrality rules said the caps represent the latest version of ISP attempts to get around the spirit of the regulations, which include Comcast slowing down BitTorrent P2P traffic several years ago. The case led the FCC to sanction the cable operator, which it successfully challenged in the U.S. Court of Appeals for the D.C. Circuit, leading to the 2010 net neutrality commission order. The commission, which has said it’s monitoring the situation (CD May 7 p5), declined to comment Monday.

Level 3 backs “Netflix and other Internet content providers in their efforts to assure that individuals continue to have full and open access to all of the Internet content they want to see, hear and use,” said Chief Legal Officer John Ryan. “We hope that Comcast shares that objective, and that it will take all actions to assure that its Internet subscribers have full use of the Internet without unnecessary or discriminatory rationing of Internet bandwidth.” The telecom backbone provider had said Comcast was violating net neutrality rules in 2010 when the cable operator wanted Level 3 to pay to send to the ISPs’ broadband subscribers much more content than they sent to Level 3.

Amazon wants broadband subscribers to “pay for the bandwidth they use,” a spokesman noted Vice President Paul Misener told the Senate Commerce Committee in an April 24 hearing (CD April 25 p). “Immutable or unrealistically priced data caps could hinder or prevent competitive products and services made possible by online video,” Misener said then. “Consumer choice, without impairment, must be preserved."

The data limit exceptions has “gotta be a concern to everybody who is working on over-the-top video solutions, particularly some of the cloud-based IPTV offerings that are coming along now,” said CEO Martin Lafferty of the DCIA. He said that segment of the market is likely to include the CE companies like Intel that are packaging devices like Web-connected TVs with content. The current concern is a “pretty classic one” in that the owner of the distribution infrastructure -- broadband lines in this case -- owns the content and wants to treat it differently from independently owned content, said Lafferty. “Typically it gets resolved with rules of engagement, and the FCC gets very active in ensuring there is fair play and that content that’s owned by the broadband network operators is not treated any more favorably than content that’s owned by third parties.”

It’s “early on” for this particular issue, and the DCIA isn’t taking action “other than keep an eye on it,” Lafferty said. The group’s members include Amazon, Alcatel-Lucent, Cisco and Spotify (http://xrl.us/bm7t3t). The caps haven’t been a subject of much discussion at the Information Technology Industry Council, said Vince Jesaitis, a lobbyist there. “Maybe this is something people were talking about four or give years ago, when net neutrality was really picking up.” ITIF’s members include Apple, Google and Sony (http://xrl.us/bm7t4d). Those companies had no comment.

Broadband caps can be pro- or anti-competitive, said antitrust law professor James Speta of Northwestern University, who backed Comcast in the BitTorrent case. “Such arrangements are potentially anticompetitive, if there is market power that can force exclusion. This is the exact concern that was raised in the NBC/Comcast merger concerning ‘managed’ or ’supervised’ services, although it is happening on the broadband platform, not a separate platform,” he said. “But the arrangements are also potentially pro-competitive, or at least pro-consumer, in that they provide an efficient and desirable form of transaction.” Speta expects more ISPs and wireless carriers to exclude other types of content from caps when content creators pay a data fee.

What Comcast and other ISPs with exclusions are doing is “differential treatment benefiting the ISP’s own traffic -- it is a classic network neutrality violation,” said Marvin Ammori, who runs a small law firm with clients such as Google but was only speaking for himself. “It’s one we would often propose as a potential, hypothetical problem for many years,” said Ammori, who argued as an intervenor in support of the FCC during oral argument in the BitTorrent case at the D.C. Circuit. “I think Comcast probably thinks that the market can’t punish it -- DSL is a pale competitor and Comcast just cut a deal with Verizon neutralizing mobile wireless and FiOS” in that operator and three others selling advanced wireless service spectrum to the carrier, Ammori said. “Nor will D.C. punish Comcast: The current FCC is a press release driven agency that isn’t known for taking actual action [to] benefit consumers, and spent a year of hair-on-fire cowardice trying to avoid making a hard decision on the network neutrality rule. If you were Comcast, you'd have learned a lesson: Nobody will stop you.” Nonprofits will try to stop Comcast, said Ammori, a fellow at the New America Foundation. “And it’s good to see Netflix taking the lead, at the CEO level,” he said, “because a corporate-consumer coalition would be necessary.”