The “Netflix Button” Violates “Net Neutrality”
The newly announced “Netflix Button” that will soon show up on major CE manufacturers’ television and Blu-ray remote controls violates the spirit, and in some cases possibly the letter of the new “net neutrality” rules established by the FCC. At the very least, those who have lobbied so hard for “net neutrality,” like Public Knowledge, Free Press and Susan Crawford should be up in arms about the dominant streaming video service’s plans to preempt a “fast lane” into consumer’s homes by paying for priority. We’ll see.
The announcement that many of the major consumer electronics giants, including Sony, Panasonic and Samsung plan to include a “Netflix Button” on their remote controls gives Netflix a commanding advantage to retain its dominant position as the single largest “streaming video” Internet provider. Smaller competitors offering similar services over the Internet will have a very difficult time overcoming the consumer “fast lane” advantage Netflix has just tied down with some of the largest electronics companies.
This, according to the rhetoric of both the FCC and the prosyletizers of “net neutrality” is precisely what they claim will have serious adverse effects on the development and innovation of the “open Internet.” This is exactly what all the “net neutrality” rules that the FCC just adopted are designed to prevent. It also demonstrates, rather clearly, why those rules are destined to fail, applying, as they do, to just one small subset of the vast Internet ecosystem.
Let’s recall what this whole “net neutrality” fight was all about, or at least what its most vocal adherents claim it was about. They wanted to assure, guarantee, protect, preserve what they called the currently existing “open Internet.” The threat, they said, was that companies providing last-mile delivery of Internet service to consumers, the “ISPs,” because they are gateways, and in some cases also provided video services, like Comcast owning and distributing video programming, have an incentive to act anti-competitively, and “favor” their own programming by slowing or blocking the “open Internet” delivery of other programming or services.
The FCC has adopted this “guilty until proven innocent” model, and as Randy May points out, they have gone even farther and said that they can “protect” the “open Internet” from these potential harms even if the ISP is not dominant, and has not been shown to cause harm! What is that harm? Well, it centers on ideas like the theoretical potential that the ISP would “block” or “slow down” competitors, as noted above, or that they would offer “paid priority” for a “fast lane” on the Internet to the big, wealthy, dominant players and leave all the new, creative, small competitors in the dust, having to rely on the “dirt road” that the “open Internet” would become.
Here’s how Art Brodsky, of Public Knowledge, defined it:
“The issue is whether the company providing the network can favor one company’s content over another’s on the basis of a financial arrangement, i.e., payoff, so that one service works better than another on the Internet.”
Well, I hate to have to break it to you, Art, but Netflix just made a financial arrangement so that its service works better, and is easier and quicker to access by consumers than any other “over the top” video delivery on the Internet while you were looking the other way!
Notice that I am not linking to all the articles and FCC pronouncements that have been written repeating, ad nauseum, these theories over the past two years. I don’t think it’s necessary. We have all read them. So now let’s apply them to what is actually happening.
We are talking here about the largest, most dominant deliverer of video programming on the “open Internet”: Netflix. Well over 20% of broadband capacity is now being used by consumers watching Netflix programming. We are also talking about some of the largest manufacturers of television sets and peripheral equipment such as Blu-ray players. The devices that the “net neutrality” advocates want the “open Internet” consumer to employ. Thus they are already lobbying the FCC to adopt “AllVid” rules for a federally mandated industrial design of equipment supplied by multichannel video programming deliverers into the home.
Significantly and indisputably, we are talking about what is probably the single most important and powerful navigation tool for video; the remote control. There can be little argument that between the consumer impact of faster or slower download speeds for video programming and/or the ability to lock up the extremely limited ocean-front real estate of a special dedicated button on the front of a viewer’s remote control, the remote has far more impact on consumers than any speed differential. This isn’t even close.
So while all its competitors, existing, or new innovators, will have to rely on the consumer employing multiple button pushes, navigation screens and the like, Netflix is about to provide an exclusive “fast lane” to anyone who wants it on the remote controls of the devices that consumers will have to use to access its competitors. And there is little doubt that Netflix is paying for that button to be there. What else is this but “paid priority” for a “fast lane” to the “open Internet?” The Commission’s new rules have no clothes. The advocates of “net neutrality” have been suckered into focusing on regulating the ISP while the major “edge” companies have taken full advantage of services offered by “CDNs” (content delivery networks, like Akamai) to get exactly the priority the advocates have said they fear, and what the FCC has said it wants to prohibit. (See commentaries here, and here, for more on how the Internet was designed, and why CDNs are precisely what “paid priority” is all about, and have been since the inception of the “open Internet.”)
So now what? There are now rules prohibiting ISPs, and only ISPs, from favoring one Internet delivered site over another. This is true, in part, because the FCC is having enough trouble finding a legal justification for jurisdiction to write rules about the Internet in the first place. They believe they can survive legal challenge regarding last mile ISPs, but even they don’t dare consider extending that jurisdictional claim to the rest of the Internet ecosystem. The idea that they could extend this jurisdictional reach to remote controls built by consumer electronics manufacturers is beyond the pale.
But the “Netflix button” creates all the harms the Commission and the “net neutrality” advocates have been bemoaning, and undoubtedly does so in a more direct and demonstrable way than any of the theoretical harms surrounding network management or “paid priority.” Will ISPs be allowed to provide set top boxes, or other equipment that includes a remote control with a “fast lane” dedicated button paid for by a single, dominant Internet streaming video programmer? Will that violate the existing rules while everyone else sells the exact same device in retail stores?
The question alone should lead to some obvious conclusions. Regardless of whether the “Netflix button” can or will be considered by the FCC, the entire effort at “net neutrality” has been misdirected. The FCC will inevitably continue to try to defend its jurisdiction and rules regardless of the fact that those rules do not and never have reflected the reality of the Internet ecosystem. Broadband deployment will be slowed as we spend time in bureaucratic regulation and Court arguing over rules that one little button has already proved are irrelevant.