More on MetroPCS: Discrimination Just Isn't Reasonable

On Monday, Free Press, along with the Center for Media Justice, Media Access Project, New America Foundation Open Technology Institute and, filed a letter with the Federal Communications Commission urging the agency to investigate claims that new service plans being offered by mobile provider MetroPCS block and discriminate against Internet content, applications and websites. With some of its new service plans, MetroPCS — not its customers — will decide which Internet sites and services are important. MetroPCS is advertising unlimited talk, text, “Web browsing” and YouTube at a base price of $40 per month – with all other uses only available on higher tiers at a higher cost. The plans would effectively create a “walled garden” that excludes Skype, Netflix and other popular consumer Internet services, putting those service providers at a competitive disadvantage and restricting consumer choice and innovation.

Since then, there’s been a lot of press on this issue, so I wanted to chime in with a few more thoughts about why MetroPCS's practices are particularly problematic.

The FCC’s December, 2010 Net Neutrality order

First off is a clarification, related to the FCC’s mobile broadband rules and how these rules intersect with what MetroPCS is doing. In summary: MetroPCS is violating the FCC’s December rules as adopted, specifically because their baseline service offering (which constitutes an Internet access service) does not allow the use of Skype (which MetroPCS is forbidden from blocking, as it is a competing voice telephony service) or of “Advanced HTML” (which I would classify as Web browsing, creating conflict with the FCC’s rules which prohibit mobile broadband providers from blocking websites). This restriction comes from a classification of these as “Data Access”, which falls outside permissible content/applications/services in the baseline plan, and which has its own usage limit on the intermediate plan, a usage limit that does not apply to YouTube or basic Web browsing.

MetroPCS’s base line service offering also prohibits the use of other Internet applications and services that people value, such as Netflix, by labeling them as “Data Access.” Those restrictions do not violate the FCC’s December rules. However, they do violate the rules for fixed broadband services, and the FCC has indicated that it didn’t want to signal approval of discriminatory practices by mobile broadband providers, despite knowingly creating loopholes in its rules to permit such discrimination. So, we pointed out these additional issues as well, to make sure the FCC notices them. Ideally, we’d like the FCC to acknowledge that these discriminations are bad; allowing YouTube while blocking Vimeo is nearly an identical match to the Google Video/YouTube hypotheticals cited by the FCC in its order, and it would seem hypocritical not to do anything about it.

The heart of the nondiscrimination principle

But the FCC’s December rules represent just side one of the record, so to speak. Side two is more at the center of Net Neutrality policy, on the issue of whether service providers should be allowed to choose winners and losers on the Internet. Under the principle of nondiscrimination, MetroPCS should not be allowed to offer an Internet access service that includes access to some Internet content/applications/services (in this case, YouTube and some forms of Web browsing) but not others (such as Skype and Netflix). Application-specific discrimination is harmful, with major spillover effects for competition and innovation, and it is unnecessary, because there are less harmful alternatives that do not create those effects. This issue has been dissected in many, many contexts, so I won’t go into it in great detail here, other than to reference one of my treatments of it, in a white paper (written with Robb Topolski, well known Internet engineer and Net Neutrality advocate), the Hidden Harms of Application Bias. Our official filings go into great detail as well – Docket No. 09-191, with separate filings in January, April, October and November of 2010.

Empty consumer options

Does it matter that MetroPCS also offers a $60 unlimited plan? On some level, I guess so – if for no other reason than that it gives ammunition aplenty to my opponents. When MetroPCS comes out with its response in February, expect this to be their central argument. They’ll say they offer an unlimited plan, and that the cheaper plans are all about giving consumers options. These options don’t defeat the fact that MetroPCS stands in violation of both the FCC’s adopted rules, and of the principle of nondiscrimination.

Think about this for one minute: What if that $60 unlimited plan were $100? What about $600? Which of MetroPCS’s arguments would have to be changed? My bet is, none of them. If their “unlimited” plan were $600 instead of $60, they’d still be offering “choice” and “options” to their subscribers. The only difference is that the “choice” would be more obviously meaningless. In either scenario, each subscriber who is tricked into the $40 service option (or who must choose it for economic reasons) is getting a lesser Internet, and is being stranded on the wrong side of the digital divide; and competition and innovation on the open Internet will suffer more for each stranded Internet user.

Here’s another hypothetical for you: What if a post-merger Comcast charged $40 for a broadband connection that included unlimited email and Web browsing and NBC video content, but no other video content? What if subscribers had to pay $60 for a plan that included non-NBC video content? Would anybody agree with that plan? Sure, there’s an anticompetitive motive at play there because of vertical integration, but despite different motives, the impact is the same.

MetroPCS’s plans have a negative impact on the ability of non-YouTube video providers to compete (along with voice providers like Skype, and some website operators). They have a negative impact on the ability of a consumer to choose the Internet content, applications, and services they want to use, because consumers have to pay more for some, but not for others. And they have a negative impact on innovation, because all new video service providers (and all new application developers, and anybody without a basic website) will be in the “data access” bucket and blocked for baseline users.

Hyperbolic Net Neutrality rhetoric

MetroPCS has gotten a little hyperbolic about Net Neutrality in the past. I remember with some wistfulness but much more frustration a passage from earlier comments they filed with the FCC:

    It is sure to make a net neutrality advocate smile to see wealthy consumers Skyping away on their iPhones, oblivious to the rising cost of data; however, this is cold comfort to the underserved customer whose sole connection to the broadband world – her wireless data service – is now too expensive to provide her with meaningful access to the tremendous resources on Internet.

I don’t think of myself as oblivious to the cost of data. I also am pretty sure that on a per-unit basis, data cost is not “rising”. But aside from that, I’ve spent many months now advocating for significant policy reform in the wireless industry, including data roaming rules and special access fixes, that would lower MetroPCS’s costs substantially – I’m a huge believer in increasing wireless competition.

But I’m not a huge believer in misplaced hyperbole. Skype isn’t a data-hungry application, not at all. And, there are ways to deal with network congestion that don’t involve blocking Skype and Netflix – that’s what “reasonable network management” is for. As we argued last year:

    MetroPCS’s desire for discriminatory business models is not only unnecessary and harmful to consumers, it is also unsustainable. The Commission must prevent companies like MetroPCS from promising their consumers unlimited Internet usage, and then controlling consumer choice and forcing the use of MetroPCS services through discriminatory practices, all in the name of mythical wireless competition.

Rejecting reasonable management tools

MetroPCS has lots of tools at its disposal to manage its costs and congestion that arises from heavy use – tools that don’t violate either the FCC’s rules or the principles of nondiscrimination that lie at the heart of real Net Neutrality. But MetroPCS chose not to use these reasonable tools. Instead, MetroPCS chose to offer a plan that blocked swaths of the Internet.

Discrimination isn’t necessary for network management. If MetroPCS wants to offer nondiscriminatory lower service tiers, I think that would be great. There are ways to limit usage that don’t pick and choose winners and losers on the Internet. And, if MetroPCS has too much network congestion, it can always use reasonable network management to deal with it. Cheaper, nondiscriminatory service offerings would be a great way to add some competition to the market for mobile broadband – without undermining competition in the separate market for Internet content, applications and services.

Just don’t charge extra for some parts of the Internet and not others.

People + Policy

= Positive Change for the Public Good

people + policy = Positive Change for the Public Good