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Friday, January 6, 2006

 
Messrs. Rip Van Bellwinkles and FedEx
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This morning's piece on the front page of the WSJ, "Phone Companies Set Off a Battle Over Internet Fees," [subscription required] begins this way: "Large phone comapnies, setting the stage for a big battle ahead, hope to start charging Google, Inc., Vonage Holdings Corp. and other Internet content providers for high-quality delivery of music, movies and the like over their telecommunications networks."

If Rip Van Bellwinkle awoke from a hundred year slumber through the last century, he possibly might think it odd that, without sanction from the regulators who determine such things, the Bells want to charge more for faster service "over their telecommunications networks." After all, in the common carrier environment that prevailed during that monopolistic era of communications, carriers lacked the freedom to decide for themselves what to charge for delivering traffic over their own networks. Regulators decided for them. (It should be pointed out, however, that even in a common carrier environment, it was not unusual at all for higher prices to be charged for faster speed, more bandwidth availability, or greater capacity usage. Indeed, that was the norm as long as the price differential generally was related to the cost of providing service.)

Now consider if Rip Van FedEx awoke from a quarter century slumber and read the lead in today's WSJ story. He likely would think it pretty odd that the phone companies' putative desire to charge more for faster service is setting the stage for a "big battle."

Wiping the sleep from his eyes, he might think to himself: "How in the {!!!!} did we ever get away with charging more for next day delivery!

Well, I understand that the phone companies were regulated as common carriers for almost a century, and that FedEx has never been. But if sound communications policy is going to be based on something other than historical practice, then the important question now is whether the broadband services market is workably competitive and sufficiently contestable that the type of common carrier regulation urged by the Net Neutrality proponents will do more harm than good.

The FCC thinks so because it made findings concerning the existence of just such competition in its cable and telco broadband proceedings removing broadband Internet services from the Communications Act's common carriage requirements.

The telephone companies, after having been subject to common carrier regulation during most of Rip Van Bellwinkle's slumber, with the legacy of such regulation still in their eyes if not their DNA, may harbor doubts about whether they should really be free of common carrier regulation or what such freedom means. After all, they were not entirely uncomfortable with the FCC's adoption of Net Neutrality principles (as long as the principles were not adopted as rules). (We can have a good administrative law seminar later on the difference.)

It looks like there will indeed be a big battle over Net Neutrality during the coming year (and, yes, at least for some, the Net Neutrality mantra includes a prohibition on differential pricing for differential speeds of service). If we're still arguing about whether common carrier-like regulations should apply today, it will be enough to make one wonder what all the fuss was about in the cable and telco broadband proceedings that eliminated common carrier obligations.

Both Rip Van Bellwinkle and Rip Van FedEx can probably agree that an awful lot of trees were felled (thus far) to paper those two broadband proceedings, and that if it turns out that Net Neutrality, in one form or another, means that broadband providers can't implement differential pricing for different levels of service quality, we should demand our trees back.

posted by Randolph May @ 10:19 AM |

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