A Growing Chorus Is Trying To Rewrite The History Of Net Neutrality — And Blame Absolutely Everything On Netflix

from the kill-the-messenger dept

With either an ISP lawsuit or a 2016 party shift the only way to kill our new net neutrality rules, neutrality opponents have some time to kill. As such, they’re in desperate need of somewhere to direct their impotent rage at the foul idea of a healthier Internet free from gatekeeper control. Step one of this catharsis has been to publicly shame the FCC for daring to stand up to broadband ISPs in a series of increasingly absurd and often entirely nonsensical public “fact finding” hearings. Step two is to push forth a series of editorials that tries to rewrite the history of the net neutrality debate — with Netflix as the villainous, Machiavellian centerpiece.

A few weeks ago, Netflix CFO David Wells told attendees of an investor conference that Title II was “probably not” what the company wanted at the outset. This resulted in an endless stream of stories about how Netflix had “flip-flopped” on its net neutrality position and simply could not be trusted. Except if you actually bothered to read the transcript of his comments, he goes on to note the company is very pleased where things have wound up, and happy to have a viable regulatory mechanism at the FCC to file complaints over things like interconnection:

“Were we pleased that it pushed to Title II, probably not, right? I mean, we were hoping that, there might be a non-regulated solution to it. But it seems like companies that are pursuing their commercial interests including us have to arrive at something like that. So we’re super pleased that there is now a notion, at least a vehicle, for a complaint…So I would say we are very pleased with what’s been accomplished.”

Wells pretty clearly explains that while it would have been nice if we could have protected net neutrality without regulation, it became pretty clear that Title II was the only way regulators could adequately police anti-competitive behavior in the broadband sector. That’s what Title II supporters have been saying for months: while Title II isn’t perfect, it’s the best option we have given the lack of broadband competition in the sector (which despite a lot of rhetoric isn’t improving anytime soon). There’s nothing hypocritical — or even shocking — about what Wells said.

Still, that Wells had exposed Netflix as a shady trickster has somehow become the talking point du jour in the media and among net neutrality opponents for much of the last six months, with editorials and headlines suggesting Netflix was now “shunning ObamaNet”, or was suffering “lobbyist remorse” over net neutrality. In an editorial for the Wall Street Journal, Holman Jenkins Junior declared the CFO had somehow single-handedly proven that the entire push for net neutrality was somehow a Netflix Con:

“Why, a month after this deluge of demurrers, did Netflix change its tune radically and call for utility regulation of even the upstream ?network of networks,? which previously had not been considered part of the net-neutrality debate? Because Netflix was then rolling out its own network, Open Connect, to bypass the public network in favor of direct tie-ups with last-mile providers like Comcast,Verizon and AT&T. This largely ignored story has been told in detail by a disparate group of analysts and lawyers including Dan Rayburn, Larry Downes, Jonathan Lee and Fred Campbell. Netflix effectively engineered a slowdown of its own service in late 2013 by relying on an intermediary with inadequate capacity, then waved a bloody shirt in pursuit of the direct-connection deals that today allow Netflix to distribute its content more efficiently and cheaply.

At least now we understand the famous but nearly indecipherable remarks of Netflix CFO David Wells at a Morgan Stanley media conference two weeks ago. To wit, Netflix had been happy to flog the net-neutrality meme while negotiating these agreements, Mr. Wells indicated, and then unhappy when the FCC took its rhetoric seriously and imposed sweeping Title II regulation.

One, as we’ve noted repeatedly, the new rules are not “utility-style regulations.” ISPs are being classified as common carriers, but the FCC is forbearing from a massive swath of Title II regulations reserved for utilities, including price controls and local-loop unbundling. It’s more like “Title II lite,” and given the ample remaining loopholes for things like zero rated apps, it’s very, very far from “heavy handed regulation.” Two, Netflix’s Open Connect CDN is a free CDN that benefits ISPs, Netflix and consumers alike, and which ISPs are free to refuse. It’s not, as Jenkins and FCC Commissioner Pai have tried to claim, some kind of secret devil-worshiping cult (though that would certainly add an awesome twist to the story).

Three, to hear Netflix, Cogent and Level3 tell it, it was the ISPs that failed to upgrade their side of peering relationships to degrade performance and extract direct interconnection fees. That Netflix intentionally sabotaged its own business so it could enjoy the privilege of paying Comcast, AT&T, and Verizon what basically are “duopoly customer access fees” doesn’t make the slightest bit of coherent sense. Still, this is the narrative that’s now being pushed by numerous industry-friendly folk in papers and trade rags nationwide.

Broadband industry think tanker extraordinaire Fred Campbell has penned a similarly ridiculous editorial that’s circulating among industry trade magazines. Campbell, too, suggests we’re all victims of the dangerous, shadowy Netflix cabal, using the company’s out-of-context CFO comments as the only notable proof:

“Netflix revealed its Title II advocacy was a ruse on March 4, when Netflix chief financial officer David Wells said the company was disappointed by the ultimate outcome at the FCC…Wells didn?t say what ?non-regulated solution? Netflix had hoped to achieve, but anyone who followed last year?s shenanigans between Netflix and major ISPs knows that its interest was aimed at obtaining free interconnection deals. Wells?s statement makes clear that Netflix hoped its public push for Title II would force ISPs to capitulate to its demands.”

So again, the proof-optional narrative being pushed by ISPs and net neutrality opponents is that the entire ten year net neutrality debate is really all just a clever ploy by Netflix — to save a few bucks. Netflix is the villain, the narrative continues, and companies like AT&T, Verizon and Comcast — with a generation of anti-competitive behavior under their belt — are the real victims here.

Except to seriously believe that you’d have to be so intentionally, willfully oblivious to the point of causing yourself personal, bodily harm. You’d have to ignore that the net neutrality really began with AT&T’s former CEO basically stating AT&T wanted to double dip content companies, billing them for doing absolutely nothing. You then have to ignore ten years of history involving giant ISP experiments aimed at trying to make this dream a reality, whether that’s AT&T blocking Facetime to push unlimited users on to throttled plans, Verizon’s history of trying to block, well, every single technological advancement it hasn’t liked over the last decade, or this latest interconnection kerfuffle.

Of course most of us realize the crime Netflix is actually guilty of here: the company stood up to ISPs on issues like net neutrality, a lack of sector competition, broadband pricing and usage caps. You can’t have a relatively-respected technology company like that talking trash about the nation’s cozy, broken broadband duopoly. As such, the only solution is to discredit Netflix using a literal army of policy wonks, paid to push the “Netflix is the devil” narrative so relentlessly and repetitively that it becomes discourse bedrock. I personally think it would have been much more effective to claim Netflix CEO Reed Hastings is a cyborg-vampire hybrid fueled by virgin and puppy blood, but then again, clumsy character assassination has never been my forte.

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Comments on “A Growing Chorus Is Trying To Rewrite The History Of Net Neutrality — And Blame Absolutely Everything On Netflix”

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59 Comments
Ninja (profile) says:

I personally think it would have been much more effective to claim Netflix CEO Reed Hastings is a cyborg-vampire hybrid fueled by virgin and puppy blood, but then again, clumsy character assassination has never been my forte.

Demon, you forgot demon. With full, pentagram fueled pact with the devil.

Ahem. I think this is going to be an uphill battle for the ISPs shills. I mean, between a guy that’s trying to deliver you what you want when you want and your ISP that most likely has decades long of history of screwing you, delivering crappy services and charging weird stuff all the time it’s hard not to be sympathetic towards the former…

Anonymous Coward says:

It is Netflix fault

Netflix has taken customers from the cable companies creating an imbalance in the industry that is unprecedented.

How can it be legal for a company to take all the cable subscribers leaving them with only Internet subscribers?

Then Netflix has the audacity to use the cable companies Internet networks to deliver their content without compensating the cable companies! Its rape and pillage I tell you, Netflix needs stopped before cable companies cease to exist and all that remains is this Internet thing.

Think of the children who will never have the opportunity to watch commercials that encourage them to eat unhealthy foods while watching even more commercials! Future children will even miss out on channel surfing.

So save our business, er I mean the children, and stop Netflix NOW!

Anonymous Coward says:

Re: It is Netflix fault

I love this because it points out the insanity of the cable companies.

Oh no we’re losing customers to ourselves er wait, Netflix uses up all our tubes – what’s that they pay that bandwidth well umm how about just look the other way while we resort to extortion because…. up yours, you the tax payer didn’t help pay to develop or deploy the technology or anything.

Anonymous Coward says:

Corporate Circlejerk

This is nothing more than corporate circlejerking. These types of pieces aren’t going to convince net neutrality supporters and the type of people who are against it aren’t going to be any more against it as a result.

This does nothing more than give suits a reason to feel good about their anti net neutrality stance.

Anonymous Coward says:

Re: Re:

Picking on just 1 news outlet for spin and bias pretty much advertises that you are, in fact,a blithering idiot and that you are not capable of properly recognizing bias. I don’t even pay much attention to fox but the amount of blithering idiots constantly bringing them up leads me to believe there are a lot of malcontents wetting their bedsheets over something stupid.

They ALL do it! Heck, the mere selection what is newsworthy by the outlets is biased. Learn to use your brain, read between the lines like an adult and the interference their bias has on your simian intellect will fall away.

Anonymous Coward says:

Net Neutrality vs Competition

The concept of net neutrality exists ONLY because Tim Wu postulated a workaround to the then (and still current) monopoly on broadband Internet access by a handful of providers.

The real arguments should be –

Why is COMPETITION to provide broadband Internet being quashed?
Who is doing the quashing?
How do we, as consumers, fight the identified forces that are limiting COMPETITION in the broadband Internet space?

Stop going after the Straw Man fallacy & fight for more access through more choice through more competition.

Anonymous Coward says:

Re: Net Neutrality vs Competition

There is a flip side to that coin. A reason Net Neutrality is important is without it abusive anti-competitive behavior abounds. Any argument for Net Neutrality is automatically an argument for competition as it is the anti-competitive behavior that makes not having it bad. It’s not a one or the other choice.

JP Jones (profile) says:

Re: Net Neutrality vs Competition

The real arguments should be –

Well, those are all questions, not arguments. Were they intended to be rhetorical? That only works if the underlying assumptions of the question is assumed to be true (which in this case is very debatable).

Why is COMPETITION to provide broadband Internet being quashed?

Several reasons. First, internet access is a natural monopoly. Without getting into too much detail (before Austrian school psychos get up in arms) this essentially means anything with extremely high fixed costs and low marginal costs. This creates an severe disadvantage for any new company to enter the market as they first have to deal with the fixed costs. Google Fiber is an obvious counter-argument, but with Google’s massive capital the fixed costs become significantly less of an issue and the horrendous, overpriced service offered by competitors is easy to defeat through marginal costs.

Second, the existing broadband options have used legislation and agreements with one another to essentially remove competition. The economic argument against this is that a “rational and self-interested” free market will naturally gravitate towards favoring the small, consumer-friendly business as they can offer the best product and consumers will chose them over the competition. In practice, however, it’s much easier for the big company to just buy out, make deals with, or use legislation to eliminate this advantage. It’s basically a non-aggression pact; competition hurts both of us, so we’ll agree to stay out of each other’s way, and if everyone is giving crappy but necessary service, consumers will buy it anyway.

Who is doing the quashing?

The ISPs, with the assistance of well paid and/or extremely gullible government “friends.” Make no mistake, the ISPs are not in competition, and have no natural incentive to be. They’ve divided up their territory and are finding more profit in abusing consumers than attempting to compete against each other (after all, they’d have to deal with the pesky fixed costs just like anyone else would to compete).

How do we, as consumers, fight the identified forces that are limiting COMPETITION in the broadband Internet space?

We can’t. Unless you’re in an extremely niche business or lifestyle the internet is a requirement for modern life. You need it for work, you use it for play, you use it to socialize. Around 80% of Americans use the internet and that number gets bigger every year (and virtually all have options for access).

This is important because the two main economic weapons consumers have, choosing where to buy and if to buy, are removed by the current ISP situation. If you only have one real option for internet (or even a couple equally bad options) you can’t choose to take your business elsewhere. “Elsewhere” doesn’t exist where you live. Likewise, unless you’re in the 20% that doesn’t want internet access, choosing not to buy isn’t an option. And that 20% isn’t even a consideration for ISPs because someone uninterested in internet access is unlikely to buy in because the service or price improved.

You say we need to “fight” for more choice and competition, but you don’t say how. You can’t improve competition by going to the competition; if you could, there wouldn’t be a problem! And for the vast majority going without access isn’t an option either (and clearly it isn’t an option for you, considering you are posting this on a website).

So what can consumers do? Start our own ISP? Good luck with that. If you can miraculously find the money and set up the infrastructure, and afford to offer a better, cheaper alternative to the local incumbent, and defeat an entrenched ISP with essentially unlimited money to destroy your business via litigation, legislation, and “temporary special deals” for existing customers, by all means, go for it. I’d be shocked if you got past the “I need a loan for this” stage.

So really, what’s your option? Consumers can’t compete with the ISPs. Consumer’s can’t buy something else or nothing. We can talk bad about them, I guess, but the worst company in America and friends don’t really give a rat’s ass.

Oh, right. There’s an obvious one; we can petition the government to help. We can have a governing body that regulates ISPs to prevent anti-competitive behavior and remove some of those weapons ISPs have to abuse their consumers. The internet is a communications tool, so maybe the FCC should be the one to do it. After all, they already regulate phones, right? Makes sense. They’d need some sort of authority to regulate ISPs though, like, I don’t know, Title II, the same one that authorizes regulation of cell phones companies.

Someone should really suggest that. It may not be a perfect solution, but it’s a step in the right direction.

Sorry, I got distracted. Why is net neutrality a straw man fallacy that doesn’t address competition again? I must have missed that somewhere.

Anonymous Coward says:

Re: Re: Net Neutrality vs Competition

The Socratic method is a form of inquiry and discussion between individuals, based on asking and answering questions to stimulate critical thinking and to illuminate ideas. Asking the question starts the process of the method.

Could you please show me where I stated that net neutrality is a Straw Man fallacy?
A straw man is a common reference argument and is an informal fallacy based on false representation of an opponent’s argument. To be successful, a straw man argument requires that the audience be ignorant or uninformed of the original argument, i.e. which is lack of competition of broadband providers. Nothing to do w/NN.

JP Jones (profile) says:

Re: Re: Re: Net Neutrality vs Competition

Could you please show me where I stated that net neutrality is a Straw Man fallacy?

Sure.

The concept of net neutrality exists ONLY because Tim Wu postulated a workaround to the then (and still current) monopoly on broadband Internet access by a handful of providers.

Stop going after the Straw Man fallacy & fight for more access through more choice through more competition.

You start by discussing the concept of net neutrality, propose a series of questions indicating an alternative to net neutrality, and then you say “stop going after the Straw Man fallacy.” If you weren’t talking about net neutrality, what the heck were you talking about? You don’t mention anything else it could be (unless you don’t know what a fallacy is).

Maybe I should just go back to your original assumption and challenge that:

The concept of net neutrality exists ONLY because Tim Wu postulated a workaround to the then (and still current) monopoly on broadband Internet access by a handful of providers.

Even the most basic research indicates a couple of problems with this. First, the concept of network neutrality existed before Tim Wu; he coined the term in a paper called Network Neutrality, Broadband Discrimination. In it, Tim Wu argues:

Basic economic theory suggests that operators have a long-term interest coincident with the public: both should want a neutral platform that supports the emergence of the very best applications. However the evidence suggests the operators may have paid less attention to their long-term interests than might be ideal. A 2002 survey of operator practices conducted for this paper suggests a tendency to favor short-term results.

His entire argument is in favor of regulation as a way to promote competition. His conclusion is that natural market forces will not remove these issues (and, as the next five years would demonstrate, he was completely right).

I find it interesting that you would argue that the problem is lack of competition, not net neutrality, when the entire purpose of net neutrality is to protect competition. Hence the reason why Title II forbears nearly all rules except those that would interfere with competition, as stated in the FCC’s press release. To say that the issue of competition is not a net neutrality issue is to fundamentally misunderstand the core purpose of net neutrality.

Anonymous Coward says:

Re: Re: Net Neutrality vs Competition

The government breeds anticompetitive practices. Look at what the city of Las Vegas did to Uber banning it from operating on the strip only “licensed” cabbies, or tesla motors not being able to sale cars directly without dealerships in many states, or laws preventing microbreweries from bottling and distributing without having to go through middle men, or the laws that put aereo out of business, or the DCMA that of the many things that it did was press consumers from truly controlling their devices, ad infinitum. Laws and restrictions make the RIAA, MPAA, and BSA possible and make those pseudo government agencies rain a ton of bricks in charges on someone making pushing to make a movie pirate face more of a prison sentence than someone who killed a person or have federal cops hassle a guy watching a movie with his perceptions lens Google glass.

Most of the problems we are seeing in the market today are caused by government intervention whether to fix a perceived problem or to fix the problem causes by the last time it interfered.

If we were to turn the system on its head and stop most government intrusion in our lives there will be a massive shock to the collective systems of the country and it might be frightening for awhile but compare the innovation that occurred in the telecommunications industry twenty years after it started to become deregulated to the stagnation of the previous 20. Long distance is a thing of the past, caller id, answering machines, cell phones, and call blocking are but a few examples. Also the price did jump up after the deregulation in the short term but it did quickly equalize and become cheaper comparirively in the long term.

Pragmatic says:

Re: Re: Re: Net Neutrality vs Competition

That is wrong on so many levels…

First of all, we’ve got CORPORATIONS writing our laws and getting our representatives to enact them.

Secondly, the intrusion you complain about is on behalf of the corporations, who are making out like bandits on the fat contracts being handed to them for the snooping, etc.

Many of our laws and restrictions were created by the MPAA and RIAA, who were created by the movie industry, which has a cozy revolving door agreement with the government, which is why it tends to give it anything it wants.

Most of the problems we are seeing in the market today are caused by government intervention whether to fix a perceived problem or to fix the problem causes by the last time it interfered.

Actually, they are caused by letting the corporations get their own way. The idea that deregulating the telcos has provided anything but a national duopoly (for the most part) is laughable. None of us are buying that “Market forces will save us” nonsense because the market is being strangulated by the incumbents and “take it or leave it” is not an option.

Anonymous Coward says:

Re: Re: Re:2 Net Neutrality vs Competition

Yes that is my point the market is being strangled by the government. Just because the laws are written to favor the corporation does not mean that it suddenly stops being government intrusion. Sheer the government back to the founding of the United states and return to common law over case law. Then hold the government accountable to doing its actual job. Do that and any corporate oligarchy will Collapse under its own bloated corpse.

Then innovation will take over. Maybe old ideas will be re investigated such as tesla’s vision of providing wireless power paid for by transmitting and broadcasting radio waves. Edison used his political influence to smash that vision up. Maybe new ideas will take root instead such as lifi or using light and lightbulbs to transfer data. They are already reaching multi gbps speeds in labs. In ten years this speed and prioritization issue could be moot. But if it’s enshrined in Regulation that the government can tell a company that they can not do what they want with the line they laid then what incentives does said company or individual have in upgrading or expanding their lines or trying new innovative ideas. There would be too much risk of capital for little gain or no gain if the government decides to intrude more. B what would be the incentive for a competitor to join the market.

Anonymous Coward says:

Re: Re: Re:6 Net Neutrality vs Competition

That’s only because we let them be one. Just take out of the box thinking and collaboration with different entities. Maybe a start up could partner with an electrical company to refine a some sort of ethernet over power wan, and or adapting experimental lifi technology to piggy back on light bulbs and the built in infastructure, or set up a mesh of WiFi signal boosters to blanket a metro area and offer that as an intermediary between a backbone and end user, or adapt and build tesla coils to send data along with power wirelessly.

Also a truly free market abhors monopolies and they are not sustainable and tend to break apart without regulations creating barriers of entry.

nasch (profile) says:

Re: Re: Re:7 Net Neutrality vs Competition

That’s only because we let them be one.

That’s not how natural monopolies work. It’s naturally a monopoly, not because of any outside forces. It would not be efficient or likely profitable to have a bunch of competitors laying their own infrastructure for last mile internet service. The infrastructure is not going to be a competitive market. It should be closely regulated, if not publicly owned, with competition at the service level.

Maybe a start up could partner with an electrical company to refine a some sort of ethernet over power wan

Never say never, but more than one have already tried and it didn’t get anywhere.

Also a truly free market abhors monopolies and they are not sustainable and tend to break apart without regulations creating barriers of entry.

If you’re saying that a market free of regulation tends to break up monopolies and result in vigorous competition, you have it exactly backwards. Over time, markets tend toward consolidation and oligopoly if not regulated.

Anonymous Coward says:

Re: Re: Re:8 Net Neutrality vs Competition

No a free market does not naturally lead to consolidation and complete control of one sector of the economy. Compare the tech sector which has less regulations but is no where near free to the auto industry or Healthcare industry. Auto makers have used to government since the new deal to kill smaller competitors via regulations, the Healthcare industry is so regulated and controlled into semi monopolies that now in America government force now actually forces a person to engage with one of these companies to be in legal standing in America. The tech sector on the other hand has less regulations but is still not free and companies that were big 20 years ago are side players now… and sometimes a rise and fall is even quicker. Research in motion dominated the phone market and palm pilot dominated the handheld market and now they are niche at best.

JP Jones (profile) says:

Re: Re: Re:7 Net Neutrality vs Competition

Also a truly free market abhors monopolies and they are not sustainable and tend to break apart without regulations creating barriers of entry.

This is completely false. Even a cursory look at the banking situation in the last 20 years demonstrates the opposite. The U.S. deregulated the banks to “help the economy” and they became “too big to fail.”

Either way, nobody wants a truly free market. A truly free market has no regulation, and no regulation means no tariffs, no public research funding, no immigration restrictions, and no protection from abuse. The U.S. economy would be owned by China, Mexico, and the U.K. in a few years and we’d become a third world country.

I love it when the people who advocate for a “true free market” conveniently leave out the part where all the top economies in the world have never had one.

JP Jones (profile) says:

Re: Re: Re:3 Net Neutrality vs Competition

You have a remarkably myopic view of history. Without government intervention we wouldn’t have an economy.

You conveniently ignore that the United States, widely considered to be one of the top technologically advanced countries in the world, spends more on R&D than any other country and has more total government spending on R&D than any other country (~$126 billion vs. China’s $74 billion).

You ignore that, during most of its history, the U.S. had some of the strongest protectionist policies in the world (as did Britain before it became a world power). Tariffs, strict immigration laws, public funding, and labor laws are all designed to benefit the local economy, yet under your logic this is “negative government interference” and new local industries should be left to fend for themselves in the international market. I’m sure it’ll work out.

You ignore that our entire current economic system is based on principles of risk that drive innovation and could not exist without government protection. The potential cost of starting a business without bankruptcy and limited liability, two mainstays of modern entrepreneurship, would not exist without government protection. If an individual trying to create a new business literally risked their entire livelihood in the process (and had no protection from banks) how many people would try something new? Our economy works because we have safeguards against being destroyed by failure, and in a competitive market, people are going to fail. Making them live in poverty does not help the economy.

Every country in the world has economic regulations for a reason, and it’s not just to make businesses stronger. It’s to protect new and local industries from established foreign competition, allow people to take risks on new ideas, avoid excessive and harmful short-term thinking, and protect consumers and small businesses from massive market forces beyond their influence.

Am I saying all regulation is a good thing? Absolutely not. There is plenty of harmful regulation out there, and much of it can probably be traced to corporations looking out for themselves at the cost of the public.

And that’s why a purely “free market” is a flawed concept. Of course corporations are going to try and tip the game in their favor. They do it right now, when we have a governing body and the possibility to appeal to people that don’t have a personal interest in your abuse. Without that defense, when your only recourse to abuse is to “go somewhere else” (assuming somewhere else exists, is an option, and hasn’t been bought or driven out of business by the ones you’re having issues with), what do you do then?

The government has flaws, but it’s a group of people, just like corporations. I’d be very cautious about advocating to throw away your defenses against abuse because you think that the people in corporations are mystically going to harm you less than those in government.

Aaron Ingebrigtsen (profile) says:

Re: Net Neutrality vs Competition

Wrong. Net Neutrality has been the basis of the internet since it’s inception. One router will not decide to drop a packet on a whim, and send others that it likes for whatever reason the owner of that router might have. Network Neutrality is the reason competition Can exist on the internet. Working against network neutrality is an Anti-competitive thing to do. There is little to no competition between hard wire cable or telephone providers, they are monopolies, and you are an idiotic shill.

Matt V says:

Dissruptive Tech

Everytime we see something new and innovative, the fat and well established will try to kill it as soon as it is born. By attempting to smother net neutrality, information companies are doing their American duty to protect their investment. I don’t blame them for trying to pull the arrow out of their heart, I just don’t think America needs more middlemen.

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