Net neutrality getting dis-connected

Re/Code recently noticed that Google has gone oddly quiet on net neutrality. With less than a week to go before the deadline for filing comments with the FCC on its proposed rules Google had yet to submit formal comments.
Once a vocal advocate for strong rules, Google has not commented publicly on net neutrality since the agency issued its proposal on May 15th (Google did lend its name, along with 140 other technology companies, to a May 7th letter sent to the FCC raising concerns about an earlier version of the proposal, which was later modified). Other major tech companies that signed onto the May 7th letter, such as Facebook, have also held off submitting formal comments in the FCC proceeding.
Yet while Google has gone quiet on net neutrality it’s making plenty of waves on other aspects of network management. As flagged by the website Quartz, YouTube has recently taken a page from Netflix’s script and has begun naming and shaming ISPs over slow-loading videos and playback problems.
When videos blur or buffer, a new message appears in a blue bar below the video window reading “Experiencing Interruptions?” When users click on the “find out why” button they are taken to a new Google website that displays a chart depicting the video streaming quality for a given user’s ISP and “explaining” why the ISP is likely at fault.
I don’t think the shift in tactics is mere coincidence. Rather, I think Google, Facebook and other large bandwidth users have decided, like Netflix, that their real fight is not over the treatment of their content over the last mile but over how it gets to the last mile. Transit provider Level 3 Communications, for instance, another signatory to the May 7th letter, also has not filed formal comments with the FCC since its net neutrality proposal was released. But it did put up a long blog post this week calling for regulation of interconnection arrangements.
For all the sturm und drang over fast lanes and slow lanes, from the point of view of Netflix, YouTube and other video streaming services, it’s a bit of a red herring, as is much of the rest of the substantive debate over net neutrality as it has been defined by the FCC. Nobody’s going to pay for a fast lane on the last mile if they also have to pay a toll just to get their bits onto the last mile. So long as ISPs are able to erect those toll booths and manipulate the traffic around them, fast lanes and slow lanes are irrelevant in terms of their potential impact on a video provider’s business.
Nor are Netflix and YouTube likely to come out in favor of Title II reclassification, another major element of the net neutrality debate. Common carriage is a blunt instrument, and the more companies like Netflix and YouTube build out their own CDNs and bake themselves into the infrastructure of the internet the greater the risk of coming under its sway.
The FCC, moreover, has begun an investigation of paid interconnection deals, including those Netflix and YouTube have signed (under duress) with ISPs, with an eye toward initiating a separate proceeding that could lead to their regulation. Whether the companies have reached some sort of tacit agreement with Wheeler to stay out of the net neutrality fight on the promise of a peering proceeding down the line is impossible to say. But Netflix, YouTube, Facebook, Level 3 and other big bandwidth users certainly seem to be husbanding their political capital carefully for where they think their real interests lie. At this point, net neutrality is simply not their fight.
There’s another, longer-term consideration, however, that I suspect is also behind the shift in emphasis from net neutrality to peering. I think much of the current debate around both net neutrality and peering, at least with respect to large video providers like Netflix and YouTube, has things the wrong way around.
While Comcast appeared to have the upper hand on Netflix, for instance, in negotiating their recent interconnection arrangement (and Netflix certainly made a meal of spinning it that way) time is ultimately on the side of the content providers, not the network operators. As consumers watch ever-more of their video content via broadband — including live content — the balance of power between content providers and operators is almost certain to tip in favor of the content providers, just as it has in the traditional pay-TV business. It is Netflix and YouTube, in other words, that would most benefit from turning over-the-top video into something like cable TV, not Comcast.
As Stacey Higginbotham noted this week over at GigaOM, charging for peering doesn’t actually make a lot of short-term economic sense for ISPs, since peering reduces costs for everyone. The reason Comcast, Verizon and other large ISPs are so keen on it is precisely because they fear seeing their highly profitable broadband business turn into their much-less profitable pay-TV business.
By establishing the precedent now that major bandwidth hogs, which for the most part just happen to be major video streaming services, should pay for access to their networks they’re hoping to forestall the day when Netflix can demand payment for its content. That’s ultimately worth much more to Comcast than being able to charge for fast lanes on its last mile, and I suspect it would happily trade the latter for the former.
Both Netflix and Comcast are playing a long game, and the current FCC proceeding over net neutrality is only one inning.