Wheeler Letter to Verizon – Permissionless Innovation Nears Its End

by Mike Wendy on August 4, 2014

Houston, we have a problem.

Last week saw a highly unusual letter from FCC Chairman Tom Wheeler to Verizon, taking issue with the company’s plan to ease wireless data traffic congestion.

As Wheeler writes:

“Your website explained that this was an extension of your ‘Network Optimization’ policy, which, according to your website, applies only to customers with unlimited data plans. Specifically, Verizon Wireless ‘manage[s] data connection speeds for a small subset of customers – the top 5% of data users on unlimited data plans’ in places and at times when the network is experiencing high demand. Verizon Wireless describes its ‘Network Optimization’ as ‘network management.'”

Sounds like Verizon’s making sure the network works, which is a good thing.

The FCC’s transparency rules – the only Net Neutrality rules that are still legal, that is – seem to work, too. As the letter shows, Chairman Wheeler learned about the new policy from Verizon’s own website. No ball-hiding there.

Still, the Chairman remains troubled, stating:

“I know of no past Commission statement that would treat as ‘reasonable network management’ a decision to slow traffic to a user who has paid, after all, for ‘unlimited’ service.”

You can almost see the activists salivating, “Oooh, a Net Neutrality violation. Go get ‘em, Tommy Boy!”

Except, of course, nothing’s happened yet – the plan begins in October. Further, it could turn out that there is no noticeable change / harm experienced by any user as a result of the policy. Moreover, even the Commission has defined “reasonable network management” as that which mitigates the effect of traffic congestion on the network.  It appears that Verizon is attempting to do just that here.

But in the Chairman’s world, one which is being pushed more than ever by the radicals who want everything for free, “unlimited service” seemingly means that the service must remain essentially unchecked or unregulated by the company. To heck with the other 95% of customers who are having a hard time getting connected due to heavy users.   Unlimited means untouchable. Period.

Hogwash.

The Chairman (and taxpayers) would be well served if Verizon could figure this out on its own.  If “unlimited plans” are causing congestion, the company shouldn’t be foreclosed from optimizing the system for its customers.  Network engineers, not FCC bureaucrats, are in the best position to make these judgment calls.  If real harm occurs, it can be adequately addressed after all the facts – not conjecture – are known.

Of course, Verizon (and others) might not be so challenged in serving wireless users if more spectrum were available and secondary markets were more flexible. That said, should the company be thwarted from managing its network as here, imagine what this means for the Chairman’s “commercially reasonable” formula that he’s pushing for the new Net Neutrality rules?

This new and “improved” version of permissionless innovation – a pre-clearance of sorts – will kill the Internet if companies have to go to the FCC to ensure that what they want to do is OK with the agency.

This has always been a concern with the shifty idea known as Net Neutrality.  As WSJ’s L. Gordon Crovitz writes today (in Fast Lanes Saved the Internet):

“‘Net neutrality’ has become a meaningless plaint of ‘Unfair!’ Activist groups in Washington with benign names like Free Press and Public Knowledge want the Internet reclassified as a public utility, subject to the sort of regulations that micromanaged railroad monopolies in the late 19th century and the phone monopoly in the 20th.

“That would spell the end of permissionless innovation on the Internet. Bureaucrats would have authority to dictate how networks operate, which technologies can be used, and what prices can be charged. Regulators would approve or disapprove innovation in business terms as well as in technology. If [a company like] Netflix wanted to charge ISPs for the right to carry its video, regulators and not the market would decide…”

How optimum would that be?

Not very.

Houston should abort Tom Wheeler’s mission.

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