When William Norton posted his article raising the red flag that the new FCC NPRM regulations on the Internet could ban Paid Peering services, a number of people suggested that Norton was over interpreting the proposed regulations and some like Daniel Golding went as far as calling it “malpractice” on Net Neutrality.  I’ve shared Norton’s concerns in my article as did Richard Bennett, and we think this is a very legitimate question that must be clarified by the FCC.  This is especially relevant when the FCC’s Chief Technologist Dr. Jon Peha stated that the NPRM was intentionally vague to solicit comment and that the FCC “has an awful lot of questions” about the NPRM and that the FCC “actually want to know the answers to them”.

The FCC is clearly saying that they do not know the answer and that they are looking for answers.  But when we have law professors including Larry Lessig, Tim Wu, and Jack Balkin writing a letter saying that the new NPRM rules are too narrow and aren’t restrictive enough, and we have Free Press’ Tim Karr arguing that the NPRM has way too much leeway for the ISPs, the fear that some Net Neutrality proponents want the NPRM to ban “enhanced” services such as Paid Peering is real.  These open ended rules could expose businesses to future legal battles and the uncertainty of it has a chilling effect on future innovation.

The current draft of the FCC NPRM prohibits any kind of “prioritized or enhanced” service that a broadband provider would offer a Content, Application, or Service (CAS) Provider and it doesn’t define what prioritized or enhanced means, and the FCC is saying they don’t know what it should mean.  To help answer these questions, I’ve drawn up figure 1 and 2 below showing current and potential “enhanced” business models on the Internet.

We have gone past the state of arguing over the interpretation of the NPRM because we know that there cannot be a right interpretation when the FCC  admits they don’t know the answer and they want our input.  I will take a stance on each Internet model and explain why they are all valid and I welcome supporting or opposing responses from anyone that wants to participate in the FCC NPRM debate.

Figure 1: Which “enhanced” Internet models will the FCC NPRM prohibit?

Option 1 is the traditional “transit” model of Internet connectivity that was common as recent as a few years ago.  With the advent and necessity of peering, option 1 is no longer a viable solution for the kind of large scale unicast video streaming revolution on the Internet that started a few years ago.  Some content providers pay Content Delivery Networks (CDN) such as Akamai or Limelight for enhanced cached delivery of content at equal or lower prices than the traditional model.  But what if ISPs decided to offer their own CDN caching services as shown in option 2?  Since this increases competition in the CDN space, that makes enhanced content delivery much more affordable which is beneficial to the smaller startups.  Should the FCC NPRM prohibit ISPs from offering these enhanced CDN services?  We at Digital Society say no because we want to see more competition in the CDN space, but we would like to hear your arguments in support or in opposition to these business models.

There’s an even cheaper option than CDNs which is the “Paid Peering” model shown in option 3 where the CAS pays $1 to $3 per Megabit per second (Mbps) per month depending on the commitment level compared to paying $2 to $9 per Mbps per month for traditional transit Internet access.  Note that there are two versions of option 3 where a CAS provider either buys a direct connection to a broadband provider or they put their own caching servers near the broadband provider at a peering exchange.  The caching option is probably more feasible because it’s cheaper to use traditional Internet transit service to distribute content to the edges rather than expensive lease lines.  The initial delivery is relatively inexpensive because it is only a one-time delivery while the caching server delivers content over and over again to many nearby users on the broadband network.  Should the FCC NPRM prohibit this type of enhanced service offering from the broadband provider?  We at Digital Society oppose a regulatory ban because this would harm the smaller content providers by forcing them to use slower, less reliable, and more expensive transit service.  We would like to hear your arguments in support or in opposition to these business models.

Figure 2: Which future Internet models will the FCC NPRM prohibit?

What if we extended option 2 and 3 to include boosting the performance of the end-user’s broadband connection beyond what the user is paying for as depicted in option 4 and 5?  That means a broadband user might have only purchased 3 Mbps broadband access, but a certain website wants to offer content at 6 to 18 Mbps and the ISP is offering them an attractive enhanced delivery option to boost the end user to 6 to 18 Mbps.  This would certainly not be a form of “double dipping” or “double charging” since the ISP is merely offering a content provider the option of paying on behalf of the end user.  Even though the end-user eventually pays for the extra bandwidth through an increase in the product price, this “seller” pay model is often beneficial to the consumer because the seller can negotiate less expensive high-volume data “shipping” rates.

This is not an entirely new business model since Amazon and Barns & Noble are already paying mobile ISPs like Sprint and AT&T to connect the Kindle and Nook eBook readers to the mobile Internet.  That means Amazon and Barns & Noble are paying an ISP to boost their user’s performance from 0 Mbps to something that’s fast enough to deliver eBooks.  In Amazon’s case, users also have access to Amazon-approved websites but are blocked going to non-approved websites but this is a free service.

Would this business model be any different on the wired network?  Would it be harmful to give CAS providers the choice and freedom to utilize or reject these offerings?  Or should the choice to utilize these new connectivity models be eliminated through new regulations in the FCC NPRM?  We at Digital Society don’t think so because this is the very type of innovation that makes the United States the global leader in technology innovation.  We don’t believe it is a good idea to force innovators like Amazon and Barnes & Noble to ask an ISP or the government for “permission to innovate”.  Some would argue that it is only the ISPs that are being regulated, but how can this not spill over to the Application, Content, and Service providers especially when they might need to work with Internet Access Providers to innovate?  Would anyone argue in support or in opposition to these business models?  We’d like to hear, and so would the FCC.