FCC to Collect Interconnection, Peering Data

Interconnection and peering are getting more FCC attention. Chairman Tom Wheeler told agency staff to start gathering information from ISPs and content providers on the extent of such agreements, he said at the agency’s open meeting Friday. “Consumers need to understand what is occurring when the Internet service they've paid for does not adequately deliver the content they desire.” Industry observers told us they aren’t at all surprised the agency is collecting information on the agreements, but some worry the move may portend future regulation.

Wheeler cited the continuing connection problems facing Netflix, and quoted an email he received from “George,” which asked: “Is Verizon abusing net neutrality and causing Netflix picture quality to be degraded by throttling transmission speeds? Who is at fault here? The consumer is the one suffering.” Wheeler is “not suggesting that any company is at fault,” he said. “But George has gone to the heart of the matter: What is going on and what can the FCC do on behalf of consumers?"

Consumers pay content providers like Amazon, Hulu or Netflix and then don’t know who’s at fault when they don’t get good service, Wheeler said. In its investigations, the commission has already received agreements between Comcast and Netflix, and Verizon and Netflix, he said, and the agency is asking for others. “What we are doing right now is collecting information, not regulating,” he said. “We are looking under the hood.” Netflix shouldn’t try to make peering part of the net neutrality debate, NCTA President Michael Powell said last week. (See separate report below in this issue.)

"I would have been surprised had Wheeler not done this,” said Berin Szoka, president of TechFreedom. What Wheeler’s doing sounds like what the FTC does under Section 6(b) of the FTC Act, Szoka said: Collect data confidentially and then issue reports. Szoka wondered what authority Wheeler was using to gather the data: Is it Communications Act Section 706? “Is the FCC now claiming a roaming mandate to collect any information it wants from communications companies,” he asked. “If so, Silicon Valley should beware: The roving eye of the FCC might fall on them next.” The question now is what the agency will do with its information, he said. An “objective, considered report written by economists” could be helpful, but “given the FCC’s manipulation of past reports under various chairmen,” people should be “skeptical that the FCC will refrain from using this report as simply a way of bullying industry -- essentially, an informal tool of regulation,” said Szoka.

"We are making inquiries across the board,” Wheeler told reporters after the meeting. For example, he said that “if we're talking about video as being a driving force of this, it would be kind of silly not to include YouTube, wouldn’t it?” The FCC is “asking across the board multiple content players,” he said. The commission has “broad authority” to act, Wheeler said. The net neutrality NPRM has also asked about information on interconnection agreements, he said; the current action is “separate but related."

'Regulation by Threat'?

Free State Foundation President Randolph May said he worries about where Wheeler’s action will lead. Although there’s a difference between collecting information and regulating, “Wheeler’s already shown a predisposition to what I might call ‘regulation by threat’ and I think that may be what’s going on here,” he said. Like former Chairman Julius Genachowski, “Wheeler sees all so-called edge providers as upstart Davids against the ISP Goliaths,” May said. “Netflix, Google, Amazon and so forth are no longer anybody’s upstarts, so regulation should be disfavored absent a market failure. Having to pay more than you would like in a competitive market is not a market failure."

"There are lots of assertions that have been made” by ISPs and content providers, Wheeler said. “There’s lots of this going on,” he said, crossing his arms and pointing his fingers in opposite directions. “What we're addressing in this examination is: When that ISP connects to the Internet, what’s going on there?” Wheeler cited a need to “parse the process.” There is “the delivery from peering to the consumer’s computer, then there is what happens at the traffic exchange point,” he said. “Those are driven by different technology realities, perhaps different economic realities, and [what] we're trying to do is get to the bottom of that. But I think that they're two different things.” The information the agency finds will determine what action it takes, Wheeler said. Transit provider Cogent produced traffic graphs last week showing its peering points with AT&T were completely congested (CD June 13 p4).

Collection of data relating to interconnection was “inevitable,” said Geoffrey Manne, executive director of the International Center for Law and Economics. Manne told us he’s “dubious” about Wheeler’s separating this issue from the net neutrality proceeding. “Although it may start out as a separate proceeding for political/rhetorical purposes, I suspect it is intended to produce a record that can and will be used in the [net neutrality] proceeding assuming it proves amenable to that,” Manne told us by email. “It’s possible that it’s a precursor to a distinct regulatory effort, but I would guess that really does depend on what the FCC finds, and that in that regard this really is an information-gathering exercise, not the first step in a planned out regulatory endeavor.”

"We look forward to working constructively with the FCC,” an AT&T spokesman said. “We are confident that when you cut through the noise on this issue, the facts regarding Internet interconnection will show tremendous investments taking place and the consumer benefits that flow from that.” A Verizon spokesman said: “Internet traffic exchange has always been handled through commercial agreements. This has worked well for the Internet ecosystem and consumers. We are hopeful that policy makers will recognize this fact and that the Internet will continue to be the engine of growth of the global economy."

Some congressional Democrats praised the FCC announcement. “Shining more light on how content is delivered across the backbone of the Internet is an important step in ensuring that consumers receive the service they are paying for,” said Senate Judiciary Committee Chairman Patrick Leahy, D-Vt. Leahy said “net neutrality rules alone may not be enough” to protect the open Internet when ISPs “can charge tolls or block access to their networks at the interconnection point.” Interconnection agreements provide “a key aspect of connectivity that allows the Internet to serve as the platform for innovation and investment,” said House Communications Subcommittee ranking member Anna Eshoo, D-Calif. “It is reassuring that the Commission recognizes that net neutrality is only one aspect of the Internet ecosystem, and that in order to ensure openness and competition, the connection between broadband and content providers is equally important.” -- Matthew Schwartz (mschwartz@warren-news.com),