The FCC has—finally, mercifully—closed up its net neutrality docket. ISPs, Web companies, and public interest groups hustled to turn in last-minute filings yesterday, most showing a naked self-interest that was bracing to behold: Netflix want guaranteed bandwidth for its over-the-top services, cable operators went after the wireless industry, and the wireless industry just came right out and made the argument that Wall Street wouldn't like net neutrality rules and therefore they shouldn't be imposed on it.

But the most intriguing (and one of the most self-serving) arguments came courtesy of Time Warner Cable: the real threat to "neutrality" and the "open Internet" comes not from ISPs but from broadcasters like FOX. Perhaps the FCC would like to go after broadcasters who try to strong arm the cable industry into better deals?

We agree with these morons



The cable trade group NCTA thinks the net neutrality advocates at Free Press are full of "overheated rhetoric" and that their filings are filled with sloppy thinking—unless Free Press agrees with them.

The two issues on the table in this latest round of comments are "managed services" delivered by ISPs over the last-mile connection to customers, and the question of whether nondiscrimination rules should apply to wireless. Cable likes managed services—which they offer—but don't want any exemptions for wireless, which increasingly competes with them for Internet customers.

While bashing Free Press' rhetoric on managed services, NCTA actually quotes Free Press as evidence that wireless doesn't deserve separate discrimination rules from wireline. Both groups agree with the fairly obvious point that every Internet service has unique technical characteristics. As Free Press puts it, "the shared nature of the cable plant introduces problems distinct from the more limited, but unshared, DSL line, itself distinct from the relatively powerful FTTH connection."

But these differences have little to do with some need for discrimination. Wireless carriers always complain about their capacity restrictions, but nothing in neutrality rules would prohibit throttling and data caps, so long as these were applied to all kinds of traffic. Besides, every network operator could use more capacity. NCTA notes that "cable operators, no less than wireless carriers, operate using a finite amount of capacity, as the Commission has previously recognized. Cable operators have service groups that share the available bandwidth on a node-by-node basis. As in the wireless context, network performance within each node depends entirely on the number of users and the types of applications they are running. Excessive usage by one customer thus can have a dramatic impact on the performance experienced by other users within the same node."

And yet, as Comcast is currently showing us, it's possible to run congestion management in a more-or-less neutral fashion on such a network.

They're much worse that we are



Many ISPs have long felt singled out by "net neutrality," arguing that consumer bottlenecks were present throughout the tech ecosystem. The result: a long-running campaign to mold the term "search neutrality" into a Serious Idea.

The newest attempt at this strategy comes from Time Warner Cable, which has now moved beyond "search neutrality" and into "TV show neutrality." TWC draws on two recent (and frankly obnoxious) decisions made by broadcasters: FOX blocked Cablevision subscribers from watching its shows online during a Cablevision contract dispute, and several networks have blocked Google TV users from streaming their content to a TV set (Hulu has long employed some similar restrictions).

You wanna see some real "Internet openness" issues? Don't look at the ISPs!

"Meanwhile, in the midst of this ongoing theorizing about how and when providers of broadband Internet access services and specialized services might engage in harmful practices, other participants in the Internet ecosystem continue to inflict actual consumer harm with impunity," says TWC, running through a list of misdeeds by broadcasters. "These incidents and practices underscore the irrational nature of any effort to single out broadband providers for scrutiny and oversight, including through the proposals in the Public Notice... Such observations reinforce TWC’s longstanding point that it would be wholly unreasonable—and thus arbitrary and capricious—to regulate broadband Internet access providers based on hypothetical threats while ignoring actual violations of 'openness' principles."

This argument raises all sorts of issues about what "openness" means. Is ESPN360 a non-neutral service because it's only open to users whose ISPs sign up with ESPN? Doesn't being on the edge of the network mean something different than serving as a network choke point? You get the idea.

"Neutrality" is a government subsidy!



Another wireless trade group, WCAI, follows up on the idea that singling out the ISPs is simply not fair. The very idea of net neutrality, it says, is really a way of giving a government subsidy to those at the edge of the network while regulating those at the center.

This one really set off Free Press, which says that the idea is "raising the bar on absurd and harmful arguments."

This argument is ludicrous: Network operators already receive market rates (in fact, likely far more than the rates that would be charged in a competitive market) from consumers paying for Internet access service. Seeking the right to be paid twice for the same connection is tantamount to placing a private tax on innovation. Never before have network operators seriously attempted to charge all innovators additional fees for access to the network connections of the users of applications and content. Former AT&T CEO Ed Whitacre made similar notorious comments regarding Google, but few if any have ever directed such naked rent-seeking assertions on small businesses and entrepreneurs who cannot possibly afford to pay every broadband provider for the right to have their innovations used. Such a development would destroy the start-up economy and innovation that characterizes the Internet.

When has Wall Street ever been wrong?



Finally, there's wireless trade group CTIA, which called one section of its comments, "Wall Street Analysts Are Wary of Uncertainty Caused by Net Neutrality Rules for Wireless."

The basic argument, such as it is, appears to be that, if Wall Street analysts are unhappy, something needs to be done. CTIA is certainly correct to say that drawing this whole proceeding out is causing problems and just needs to be decided one way or the other, but it's not just "uncertainty" that's the issue.

"The investment community has cautioned that the imposition of net neutrality regulation could have a chilling effect on investment in broadband," says CTIA. "Industry concerns with the impact of the type of unwarranted, sweeping changes to the broadband market proposed by the Commission are not only warranted, they are confirmed."

Save room for us



On the other side of the equation, companies like Netflix don't think it's fair that their services could be restricted to the Internet while ISPs offer similar video services of their own over a guaranteed, prioritized section of a user's broadband pipe. So Netflix has a novel idea to prevent the open Internet from becoming a digital ghetto: guaranteed bandwidth.

"Requiring service providers to offer some level of guaranteed capacity for broadband Internet services, at reasonable rates to consumers, will ensure that all comers—from today’s Netflix to the 'next Netflix'—are able to reach consumers without obtaining the permission of network operators," it says. "Under such a 'guaranteed capacity' approach, the network operators would remain incented to create specialized services to drive additional investment in their networks while at the same time helping to preserve the Internet as an open platform for competition, innovation and free expression."

Managed services would still be allowed, but only so long as it never cost consumers more than, say, 30 percent of the total available line capacity.