A team of online game developers and boosters told the Federal Communications Commission on Thursday about worries that the big ISPs could fragment the Internet with "pay-for-priority" arrangements, causing economic troubles for the gaming industry similar to those created by mobile access providers.

"Software platform developers like Microsoft and Facebook pose less of a threat to innovation than infrastructure owners," one developer told the agency, according to notes of the meeting. He added that "if the Internet were balkanized, and developers had to negotiate separately with each ISP, that would be a substantial drag on innovation because it would divert resources from development."

The game makers included Asheron's Call producer Dan Scherlis, Jon Radoff of GamerDNA, Christopher Dyl of online world-maker Tubine, Matthew Bellows of voice chat developer Vivox, and Darius Kazemi of the International Game Developers Association. Kent Quirk also attended, speaking for himself and not his employer, Linden Lab.

Meeting with four FCC staffers on the agency's net neutrality docket, the participants weren't of one voice on this question. In some instances they could see scenarios in which priority access deals or paying more for higher Quality of Service (QoS) might be fair. But overall they seemed pretty nervous about the prospect. "If developers had to spend time and resources negotiating with ISPs for quality service, that would be a drag on innovation and make the platform less attractive to innovators," warned Jon Radoff, who took the meeting's notes.

The conference came on the last day of the FCC's call for comments on its proposed Internet non-discrimination rules. As we've reported, priority access is a big issue in this debate. AT&T complains that the FCC's proposals "would completely ban voluntary commercial agreements for the paid provision of certain value-added broadband services, which would needlessly deprive market participants, including content providers, from willingly obtaining services that could improve consumers' Internet experiences."

But, judging from the summary of the meeting, the market participants who met with the Commission on Thursday aren't so enthusiastic about these kind of voluntary deals.

Latency, not bandwidth

The big issue for the industry, these gamers told the FCC, isn't so much data capacity as latency—the time it takes data packets to travel to servers and then return. Latency is a special problem for online games; if the latency varies, jitter occurs. So far, most developers have managed to tackle latency difficulties in the United States, one participant noted, many of which stemmed from WiFi router equipment.

But interconnection problems between ISPs can pose huge challenges, noted Christopher Dyl. Turbine can serve up its games to Australia from servers in the United States without much trouble, while European subscribers have to get their data from game servers based in Europe. "The problem is not the distance (the speed of light) but the different interconnections between the US and Europe, compared to between the US and Australia," Dyl explained.

As more game graphic rendering gets handled up in the cloud, compensating for the limits of mobile devices, bandwidth will become more important, especially in the case of slow updates. ISPs can help with this by providing prioritized services for an extra fee. But "there will be a moral hazard," Dan Scherlis suggested. "ISPs will invest less in open access and more in services that they can provide at a premium."

And that could harm the certainty of the online gaming environment, he continued:

Predictability is extremely important for gaming developers, who must design their games based on the characteristics of the network. However, once products appear that take advantage of higher-priority QoS offerings by ISPs, new entrants will have to choose between paying for that QoS or foregoing the opportunity to compete in that space. Thus, higher-priority QoS offerings will become essential to the industry sectors that grow to rely on them, giving the ISPs another form of monopoly power that, as responsible fiduciaries, they would be obligated to exploit, in an unregulated environment.

What these developers told the FCC they definitely don't want is an environment similar to the mobile game landscape prior to the iPhone and its app stores. In Europe, subscribers could purchase third party software for most phones, they explained. But in the US, the big carriers created "walled gardens" where only applications that they sold would work.

As a consequence, carriers could demand huge percentages of developer revenue, in some instances as much as half. They could also pick a small number of content providers to work with, who, in turn, could charge developers as much as half their revenue, just for opening up a chance to sell to the telco.

They would also like to avoid the choices offered in China, where several ISPs offer customers a "superior QoS" in reaching their subscribers from their servers. "This is an easy promise to make," Chris Dyl explained. "All the ISP need do is ensure that non-ISP-hosted services suffer appreciable degradation as part of interconnection."

Slotting fees

As a final analogy, the sextet of developers offered the Commission staff an interesting historical parallel: the "slotting fees" that supermarkets and bookstores began charging food makers and publishers in the 1980s for access to market shelves. Researchers found that slotting fees put these markets beyond the reach of smaller vendors.

Sure, the group conceded—most consumers enjoy competition among grocers, but there's less so among Internet providers. "Subscriber choice in wireline Internet access (and thus in affordable broadband Internet) is sharply constrained by the choices municipalities have made in granting access to utility poles or to street trenches. Having been granted this public resource, the ISP should assume some responsibility to the public," the meeting notes conclude, "even beyond the promises they made while obtaining that access, back before the World Wide Web was invented."