The FCC thinks Netflix and Cogent have a point in their dispute with the big internet providers

June 20, 2014
June 20, 2014

Though it don’t say it in so many words, the US telecom regulator confirmed some of Netflix’s complaints about the big internet service providers.

Late last week the Federal Communications Commission chair Tom Wheeler announced that its staff would be looking deeper into the world of the internet. In the past, the FCC has focused on regulating the “last mile” of the internet, between your computer and your internet service provider. That seemed fine at first—but recent evolution in the way the companies that control the internet do business behind the scenes has made “the rest of the internet” much more important to your ability to access content than it used to be.

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Netflix and transit companies hired to send data around the country, like Cogent, have complained about being strong-armed into paying extra to internet service providers for taking on data-heavy traffic like video streams before they are transmitted on to consumers. The ISPs have replied that Netflix doesn’t have proof of inappropriate activity—and, regardless, it’s not its business what goes on: “Internet interconnection has nothing to do with net neutrality,” cable TV and internet provider Comcast notes in a recent rebuttal of Netflix criticism.

Comcast is right that the generally accepted standard of net neutrality hasn’t gone beyond the last mile. But in the fourth annual “Measuring Broadband America” report released this week, FCC officials recognized that what’s happening in the “rest of the internet” is affecting consumers:

While internet traffic exchange issues were not the focus of the report, we found notable anomalies as we collected speed data. In particular, we found significant drops in broadband performance during a period when Cogent, an internet backbone provider, reportedly was having disputes with various ISPs….These experiences confirm that the way ISPs exchange traffic with other networks on the Internet is critical to the consumer Internet experience.

The regulators concede that they don’t yet have enough data to understand what’s going on or finger a culprit. But this a key independent analysis saying that companies’ decisions beyond the last mile do affect users and warrant regulatory scrutiny. It’s far from a full embrace of so-called “strong net neutrality”—expanding the definition to include neutral data treatment on the rest of the internet—and it could even backfire for Netflix if the FCC agrees with the ISPs that Netflix is responsible for upgrading its connections.

But, considering the wide-spread secrecy when it comes to interconnection arrangements, it’s hard to see an expanding inquiry as a positive development for companies like Verizon or Comcast—especially as the FCC considers its merger with Time Warner Cable.

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