The Other Threat to Net Neutrality

The issue of net neutrality flared up again earlier this week when, after FCC Chairman Tom Wheeler introduced a new “hybrid” franken-proposal that ignored all the reasons why so many millions of comments supported Title II reclassification by only putting half the market (a half that had never been seen as a separate market before) under that bracket of telecommunications law, leaving everyone unhappy in the process, and the same day net neutrality supporters rallied in front of Wheeler’s house, President Obama came out swinging, not only staunchly defending Title II reclassification but laying out several specific principles he’d like to see in any net neutrality plan. Combined with the public smearing Sen. Ted Cruz received after comparing net neutrality to Obamacare, it’s become apparent that this will end with the Internet being reclassified under Title II, or strong, litigation-proof net neutrality protections being installed in some other way, no matter how long it takes. The masses of the Internet will not let it end any other way.

But if you think the broadband companies are going to stop fighting to tear down net neutrality, or that simply codifying it in law will prevent them from undermining it in other ways such as Comcast’s interconnection blackmail of Netflix, you’re mistaken. There’s something else the FCC is doing, far more under the radar, that is just as much a threat to the ideal of net neutrality than their explicit Open Internet rules – maybe a bigger one, because it could completely undermine the ability to maintain net neutrality in the long term. That would be the broadcast incentive auctions recently postponed to early 2016.

The incentive auctions are intended to free up spectrum currently used by over-the-air television broadcasters for use by wireless providers. Using a unique double-sided auction process, broadcast stations can agree to voluntarily go off the air, share channel space with another station, or move to a worse block of spectrum, if wireless companies are willing to bid the right price for their spectrum. Once the auction is completed, the FCC will “repack” the remaining stations so that wireless companies can have a contiguous block of spectrum to use.

“Why is that so bad for net neutrality?” you’re asking. “If anything, it should be great for net neutrality. If wireless providers get more spectrum, they’ll have less congestion and less demand for paid prioritization or other schemes to prioritize some sites over others. What on earth could be so wrong about that?”

The answer has to do with what the company is at the center of the net neutrality dispute these days: Netflix. According to Cisco Systems, video makes up 78 percent of all Internet traffic in the United States, and could go up to 84 percent by 2018. This isn’t strictly because video is an insanely popular use of the Internet; according to Alexa, YouTube is the third-most popular site in the United States behind Google and Facebook, while Netflix is all the way down at 17th – but accounts for over a third of peak Internet traffic, while YouTube only uses 13%. Video, especially high-quality video, is a massive consumer of bandwidth, and right now a lot of video is consumed using pathways other than the Internet – cable, satellite, and over-the-air television, as well as physical media like Blu-Ray. If cord-cutting increases, if Internet-delivered television services become more popular, if consumers watch more TV on devices other than a fixed television set – all of these would increase video’s share of Internet traffic substantially. Think of all the millions of people who still watch television every day, and then imagine if all of them watched the same amount of television but did it over the Internet instead. Regardless of what the net neutrality rules may say, the Internet would effectively be a video delivery service, and it would make too much sense to dismantle net neutrality in favor of a regime that recognized the massive amount of traffic taken up by video and allowed Internet providers the leeway to manage that traffic as they see fit or prioritize uses seen to be in the public interest. Even many of the people that are speaking up so vociferously in favor of net neutrality today might favor some sort of prioritization scheme in such a scenario.

Of course, that’s a rather extreme scenario, and it’s possible that more efficient use of our existing connections, through better video compression or simply improving the connection itself in ways such as switching to modern fiber-optics, could allow there to be enough capacity for the Internet to absorb all this additional traffic without needing to prioritize anything. But a lot of those gains could be erased if people’s desire for higher-quality video increase in kind; even with modern H.265 compression, 4K video imposes significantly higher demands as current standards. And while mobile devices like smartphones or tablets might not be big enough for 4K to make an appreciable difference compared to HD, allowing compression to actually go towards reducing video’s share of traffic, wireless companies face a physical constraint that they cannot overcome completely: they are limited to finite blocks of spectrum, which they must compete with other wireless companies and numerous other uses for their share of.

Much of the shift away from linear television and towards the Internet is or will be driven by the desire to view content whenever you want and free from the constraints of a cable provider, but it’s also driven by the desire to view content on devices other than a traditional fixed television set, and sometimes “whenever you want” is still as early as possible and at the same time as everyone else – especially for a live event like the Super Bowl or breaking news (but even a scripted, taped show can fit the bill). When those sorts of things happen, an internet provider has to deliver the exact same content, mostly at the exact same point, to multiple people at the same time. Wireless providers such as AT&T and Verizon have been working on ways to improve this situation using “LTE Multicast” or “LTE Broadcast” technology, which uses a dedicated network to deliver content to many devices at the same time, more efficiently than if it had to deliver that content to each device individually. If this sounds familiar, it’s pretty much exactly the same as how over-the-air linear television works. It’s a recognition that rather than abandon linear television for the Internet in order to view content on more devices, we should instead change linear television to deliver to more devices.

In short, the FCC wants broadcasters to go off the air to free up their spectrum for wireless companies, who in all likelihood need the spectrum in the first place to deliver video, the ultimate solution to which includes essentially doing the exact same thing the broadcasters are already doing, except because AT&T and Verizon have their own separate LTE Broadcast networks the same content is likely to be repeated across several blocks of spectrum thus diluting the efficiency gains, and/or your access to content is likely to be dependent on which carrier you subscribe to, the exact situation net neutrality is supposed to prevent, all at the expense of over-the-air broadcast stations that have been doing the exact same thing, to anyone with an antenna capable of delivering the signal, for decades, right at the moment when interest in over-the-air broadcasting is (theoretically) already on the rise thanks to cord-cutting.

As if this wasn’t absurd enough, broadcasters already recognize that the solution to the problem is to deliver linear television to more devices, but their current solution is an optional add-on kludge that requires an external antenna and that no one has heard of despite being around for several years now. Work is well underway on a new broadcast television standard with native support for mobile devices and other advantages substantial enough to warrant another transition on the scale of the digital transition, but the hope is to have a final standard ready in 2016… in all likelihood, after the incentive auction. In other words, broadcast stations would have to go through the substantial upheaval of the incentive auctions – which, remember, even those stations not giving up spectrum or prime real estate could still be subject to repacking – and then go through another expensive upheaval to upgrade to the new standard. It seems especially wasteful since the FCC is billing this as the transition of spectrum from broadcast television to wireless data uses.

All this would be fine enough – sure, the timing is unfortunate, but nothing says you can’t free up spectrum for wireless companies and still have broadcast stations delivering content in the remaining spectrum, possibly even alongside LTE-Broadcast services. After all, linear television is still primarily useful in a circumscribed set of circumstances; there are plenty of other reasons for video consumption to move to the Internet, meaning there’s less demand for linear channels and more demand for wireless spectrum, and most broadcast stations outside of Big Four affiliates have microscopic audiences anyway. But as presently constituted, the incentive auctions could leave broadcast television crippled and unable to fill that role.

Right now broadcast stations are allocated uniform 6 MHz blocks of spectrum at specific channels numbered 2-51 in three blocks, the “low VHF” band from 2-6, the “high VHF” band from 7-13, and the UHF band from 14-51. After the incentive auction, some stations will continue to occupy 6 MHz blocks of spectrum on their own, while others will enter channel sharing arrangements where two licenced “stations” will occupy the same block of spectrum. They won’t be allocated specific 3 MHz sub-blocks – they’ll effectively be a single station with two owners offering different programming, and to make matters worse, they’d be effectively blocked from alternative uses of spectrum the next-generation standard could make possible.

But as if that weren’t enough, because the amount of spectrum freed up is dependent on the number of stations that participate in the auction and whether or not their price is met, the FCC is opening the door for different amounts of spectrum to be sold in different parts of the country, meaning the same block of spectrum could be used for wireless service in some areas and broadcast television in others. Making that work is an immensely complex problem, one that still has lots of questions surrounding it, yet the only reason the incentive auction was postponed from the middle of next year was to allow litigation to play out. Broadcast stations already found their coverage areas severely impacted by the digital transition (which may be a cause of the slow pace of cord-cutting), and while the FCC is taking steps to preserve their existing coverage areas after the transition and repack it’s not guaranteed they’ll succeed – especially if interference from wireless networks in adjoining markets turns out to be an issue, to say nothing of interference from other repacked stations – and it doesn’t seem to be a particularly high priority, and experts have questioned whether or not their plan for doing so would achieve its goals either. And all the complexities of repacking, moving channels, and commencing channel sharing has to be finished within three years after the end of the auction. And that’s just for the full-power stations; the FCC also licences stations to operate at substantially lower power than the big stations do, but if they don’t have a specific type of licence protection they could be forced off the air entirely – as could translators set up by the bigger stations to make up for the loss of coverage from the digital transition.

To top it all off, the auction may not even be necessary. Wireless companies sold the FCC on the need for an auction with doom-and-gloom scenarios before the advent of technologies that could use spectrum more efficiently, the strains on their network may not be as devastating as they claim anyway (and neither, for that matter, are what they themselves tell shareholders), and some have suggested there are wide swaths of underused spectrum outside the broadcast band out there for the taking (or in many cases, that they’re already squatting on). Wireless companies would rather gobble up other businesses and ask the government to help them out than actually upgrade their networks.

But there’s a lot of money at stake here for some well-heeled groups, and not a lot of parties interested in standing up for the broadcast industry’s existence, let alone the impact the incentive auctions could have on it. Besides the wireless industry, the cable industry would love to eliminate the implicit competition of over-the-air television once and for all; internet companies are primarily interested in their own traffic, not the health of the Internet as a whole, so they loudly support net neutrality but have barely a peep to say in this matter; and broadcasters themselves, while they may speak up in their own defense, have become so dependent on “retransmission consent” payments from cable operators (especially the biggest players) that they seem to actively dread anything that might make it easier for people to view their content without a cable subscription, to the point that when an outfit named Aereo came along and claimed to be nothing more than a way to increase the reach of broadcasters’ signals by delivering content from numerous individual micro-antennas to various Internet-connected devices, broadcasters not only effectively sued it out of existence but threatened to remove their most valuable programming from broadcast and put it exclusively on cable if that didn’t work. Even supporters of cord-cutting may be ambivalent at best towards broadcasting even as they benefit from it, to the point of preferring to see spectrum currently used by broadcast television delivering the Internet instead (and in the process, missing the bigger picture). Thanks in part to all of this (and the botched messaging of the digital transition), the general public may not know that broadcast television still exists (if it ever did), let alone the advantages of digital television or the threat posed by the incentive auction.

To be sure, the decreased demand for linear television as a result of the Internet and the increased spectrum efficiency of digital television that makes channel sharing even conceivable suggest broadcasters are currently using substantially more spectrum than they need even in the long term (much of it still allocated in patterns befitting the analog era), spectrum that can be put to better use by wireless providers, but there are far better ways to repack broadcast spectrum in a way that enhances, not cripples, the role broadcast television can play in the video marketplace of the future that the FCC and broadcasters alike don’t even seem to be considering. An incentive auction and repack may be a good idea in theory, but the very fact that the FCC is selling this as the transition of spectrum from broadcast television to wireless data makes it all the more imperative that they get it right. If they do not, I fear that all the protesting and wailing and gnashing of teeth over net neutrality may prove to be for naught.

4 thoughts on “The Other Threat to Net Neutrality

  1. First, It all depends on how the term “Telco” is difened plain and simple. If Google are within the letter of the law then they should be fine. What might cause less friction is simply charging a fee for terminating calls in in rural higher cost areas. If anything, GV is no different in practice than using a calling card. You add minutes to your card and then make calls on top of their supplied 800 number. Whatever laws govern that *might* also apply to GV *maybe*.Second, as for AT&T’s take on this, they’re just trying to deflect some heat from this whole “GV kicked from the appstore mess” but, again depending on the wording of the law on what constitutes a telco, I don’t see GV as a telco. Again, no dial tone, only a voicemail service. (Is this part of the telco definition? Whether or not the spirit rather than the letter of the law is violated is smoke and mirrors – companies including AT&T do it and have done it for years, Google just happens to be more visible about it than most. Here’s a similar illustration: a *new* service provider goes into an established market and low ball’s their price under what the other *established* service providers have unofficially agreed upon. In so doing, they are not breaking a law, however they are pissing off their competitors, showing them up. In turn, ANY fault, or sidestep of the law by the *new* service provider becomes the subject of a complaint made by *established* service providers to whoever regulates the business as a matter of protecting their own market share.Third, by using GV the consumer also avoids certain lock-in problems the true telcos almost rely on as an unofficial part of the business model. To the consumer, it means it no longer matters what number you use. If anyone trying to reach you has your GV number then you can use whatever company is cheapest (possibly not AT&T) and still keep your number, and key features like voicemail and sms independent of them. (In that specifically I say ‘cry me a river AT&T’)The problem is the playing field is changed completely because in times past, any network that anything happened on was owned by some company who could charge. No one *Owns* the internet and so how you make money is, *complicated*. It’s the digital wild wild west with no physical boundaries or borders and everyone, including the FCC is trying to figure it out and revamp laws made when the only computers were owned by the government, or universities – not to mention the size of tractor trailers :-)Google is basically doing for the consumer, what many companies should have done, and either can’t or won’t do. I just hope as the company grows up, that they don’t become guilty the same as the companies they are trying to positively 🙂 influence. Lastly, I think Bastions comments are mostly right on. Each of these companies are ‘for profit’ businesses out to make money in the end and none of us should become zealots developing emotions that are shaped by bloggers or the media. If we do, then we’re sheep that deserve to be herded along.

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