What did Martin Really Say About a “Tiered” Internet?

Much has been made over statements made by FCC Chairman Kevin Martin at this week’s TelecomNext trade show. As we at MAP have just had an experience with how often the press misunderstands Martin’s rather carefull statements, I am not as ready as many of my comrades to declare that the end is nigh. There is a huge difference between “customer tiering” (where a customer gets to chose the level of service), “provider provisioning” (where a provider pushes packets faster via Akami or bit torrent), and “Whitacre tiering” (where the ISP charges third parties for “premium” access to subscribers without regard to subscriber preferences). As explained below, figuring where Martin is proves harder than people assume.

So most folks I know in the Net Neutrality world read this piece and, convinced Martin is already a Bellhead, conclude that he as given the nod to allowing the bells (and cable cos) to charge third parties for “premium” access to captive subscribers. Following on the heals of last week’s deregulation
of Verizon’s business services, and Martin’s constant drum beat for giving the Bells their requested “franchise relief,” it is easy to conclude that Martin s a Bellhead who will give the Bells whatever they want.

As I’ve said before, I don’t think Martin is an industry tool, although I do think he is wrong about a lot of stuff. But he is also very careful about what he says in public. Which is why I am not so sure that Martin said what many think he said.

One of the problems is defining terms. “Tiering” means a lot things to people, whether it is different service packages offered to a subscriber, but all bits in the pipe are treated the same, or whether it is providers pushing content through technology like Akami, or whether it is the ISP offering “express” service to third parties based on third party payments rather than on subscriber preferences.

So I use the following terms to clear things up: customer tiering, provider provisioning, and Whitacre tiering.

“Customer tiering” is when a provider sells different speeds at different costs, e.g., A 1.5 mbps pipe to the home costs $29/month, a 5 mbps costs $50/month, and a 100 mbps costs $100. The customer chooses a speed and pays for it, even though the pipe could provide higher speed. But all the bits coming down or going up the pipe are treated equally by the ISP.

“Provider provisioning” is where a provider of content or services invests money to make his content or service move faster or more reliably using technology available to everyone. For example, iTunes using Akami or caching to move content closer to subscribers. Here, the provider makes the decisions, but all bits are handled equally by the networks they pass through.

“Whitacre tiering,” named in honor of AT&T CEO Ed Whitacre, the first and most enthusiastic proponent of the practice, is where an ISP decides to prioritize packets based on payments from third parties or from a desire to favor its own packets/content/services over that of others.

I like customer tiering and provider provisioning for economic reasons I will explain in a longer post. I vehemently oppose Whitacre teiring as bad for democracy, bad for business, and, in the end, bad for the broadband providers themselves. Again, I will explain why later. Sufficient unto the day to distinguish Whitacre tiering from customer tiering or provider provisioning.

Martins comments are consistent with either customer tiering or Whitacre tiering. If anything, they are more consistent with customer tiering. Reading the article, he speaks of customers “getting what they pay for,” and that they should not “expect faster service if they don’t pay for it.” But I don’t see anything reported about business models or providing better service for 3rd parties.

Does this mean Martin opposes Whitacre tiering. No. I suspect he would support Whitacre tiering as a reasonable business deal provided it wasn’t used in an anticompetitive fashion (I don’t think it’s as easy to detect anticompetitive activity or that there is as much competition as Martin appears to believe). But the jury is still out, I think. Also, I think Martin is far to cagey politically to commit himself to anything before he has to do so.

If you think my reading is far fetched, consider what happened when the press reported last week that Martin had delayed consideration of the Adelphia transaction at the request of the Applicants. Before jumping to conclusions, allow me to share a recent (as in last week) story. Last week, Martin held his first press conference following the FCC’s open meeting. It was widely reported that, in response to a question about the timing of the Adelphia transaction, Martin replied that Time Warner and Comcast had asked him to wait until the Senate had confirmed Robert McDowell as 5th Commissioner (thus giving Martin a Republican majority to approve the merger with minimal conditions).

If this had been the case, it would have been a violation of the rule requiring all communications with agency staff on a merger go into the public record (called the “Ex Parte” rules). So we wrote a letter to the FCC asking them to investigate whether such a request was made and, if so, whether a violation of the rules occured. This prompted Broadcasting and Cable to print the full exchange, which was a lot more ambiguous. Martin was asked about Adelphia and responded that while he could not comment on specific mergers, the FCC was generally sensitive to the needs of applicants to see things resolved quickly and worked to ensure that applicants were comfortable with the pace of review. This was followed by the Applicants sending this reply saying that they had never made any such request and MAP were idiots to file stuff based on what they read in the trades.

So how did Martin’s statement morph into what was reported? Because rumors have been flying that the Applicants want to wait for a fifth Commissioner. So when Martin made his comments, the press corp projected meaning on it like the proverbial ink blot. Worse, the trade press were nuanced, the general press playing from the trade press were less nuanced, and the blogosphere unuanced. So “we try to make sure parties are comfortable with the pace of the process” becomes “TW and Comcast asked us to hold off so we can ram something through 3-2.”

Given the ambiguities of “tiering” and Martin’s comments about subscribers “getting what they pay for,” I am not so sure what Martin actually said. I wouldn’t be surprised if he supports Whitacre tiering — its consitent with his deregulatory approach — but I wouldn’t say the case is settled either.

Stay tuned . . .

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2 Comments

  1. Stearns says:

    I appreciate the subtlety involved in trying to distinguish fact from projection in such things, particularly as it relates to ex parte communication.

    In our fight against the private powerline monopoly in our state (see http://wiresafewisconsin.org) we’ve discovered that:
    1. The Bad Guys have filed a project application with the state Public Service Commission. We (the people effected by the project) are not allowed to discuss the application with the investigators working for the commission because the application has not yet been formally accepted by the commission. In the mean time, The Bad Guys do get to discuss every aspect of their application with the investigators.
    2. We’re NEVER alllowed to have any contact at all with the three Commissioners who will actually make the decision. This supposedly applies to everyone except the commission investigators who will advise the Commissioners that make the decision (and who are are now getting an earful from the Bad Guys). However…
    3. One of the three Comissioners has a twin brother who is a very senior employee of The Bad Guys.
    4. The fine for violating the ex parte rules here is $300. This is on $3.4B of powerline construction before the commission.

    This is like Kafka! In this kind of environment, it is extremely tempting to look upon any shred of information as proof of duplicity. How on earth are we ever going to get anything other than shreds of shadows of rumour about what is surely going on?

  2. John says:

    Harold:

    I really appreciate your dedication to fairness and reality-based reporting. And I’m glad that MAP is there to keep things honest. Or, at least to provide some impetus to keep things honest.

    As Howard points out, without some impetus to keep things honest, when the Bad Guys have all the power and billions of dollars at stake, one has no particular reason to believe that things will be kept honest.

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