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Amazom.com Switches Sides on Net Neutrality

Steven Titch
July 23, 2010, 10:19am

In a startling guest column on CNET yesterday, Paul Misener, vice president for global public policy at Amazon.com, for all practical purposes reversed his company’s stand on network neutrality, particularly the controversial non-discrimination rule, which would prohibit ISPs from creating and charging providers of large-scale content, applications and commerce for faster broadband connections and tiered quality of service.

In his column, Misener concedes what many free market bloggers and friends have argued for years: that the net neutrality rules are a solution in search of a problem, and that large providers like Amazon already invest in techniques that ensure quality delivery of content and apps, albeit at the edge, not within the network cloud. Misener writes:

First, there have been almost no Net neutrality violations. Opponents of Net neutrality rules say this record demonstrates that regulation is unnecessary--that Net neutrality is "a solution in search of a problem." But actually, the threats of legislation (since 2007) and FCC regulation (since 2009) have kept the network operators on their best behavior.

Moreover, Net neutrality has become a populist consumer issue in a way that few FCC issues ever have (try Web-searching the terms "Net neutrality" or, more humorously, "series of tubes"). So, it's hard to imagine policymakers adopting laws or rules that would condone popular notions of Net neutrality violations.

Second, the legal/regulatory uncertainties have, understandably, dissuaded network operators from making investments in new technologies and services that might subsequently be found to violate Net neutrality. Unfortunately, some observers seem to think that this uncertainty hurts only the network operators and their suppliers, but consumers and content providers also are suffering, albeit unwittingly, from the lack of new services that might otherwise be available.

Misener goes on to suggest that if freed from the uncertainty regulation, ISPs might develop competitive alternatives to leased lines and web caching that will serve consumer, carrier and content provider interests—the “win-win-win” of the article’s headline.

If paid performance enhancement for some content is equally available and does not degrade the performance of other content, then it should be permissible. And, following this principle, in addition to moving, leasing private lines, and edge caching, Internet content providers (and consumers) should be able to purchase "quality of service" or "managed services" from network operators on the same basis--equal availability and no harm to other content.

Along with Amazon, Microsoft, Expedia, Yahoo and Sony also have backed off from onetime hardline support. Just last October, it’s CEO Jeff Bezos, co-signed an Open Internet Coalition letter supporting regulation. Back in 2006, Misener himself was warning about the potential of ISP abuse of their network to throttle Internet discourse.

Even Google, which has been funding the Open Internet Coalition, has been sending mixed messages on the regulation for more than a year.

What changed? Well, the FCC Chairman Julius Genachowski’s plan to reclassify broadband Internet service as a regulated “telecommunications service,” all for the sake of pushing a network neutrality agenda, is shaking the entire U.S. Internet industry to its senses. For companies like Amazon, when the FCC’s power was circumscribed around carriers, network neutrality was “regulation for thee, but not for me.” It’s significant that Misener raises the issue of investor uncertainty, an ISP talking point that network neutrality proponents have in the past pooh-poohed. Reclassification would give the FCC broad discretionary powers over the entire supply chain for broadband services. And if the FCC can regulate ISP business models, which is essentially what net neutrality is all about—who says it won't, under its new self-styled mandate to regulate all things broadband, it won’t start regulating other Internet business models as well? Given the Obama administration’s immense appetite for regulatory adventurism and its willingness to use (and arguably abuse) discretionary executive branch powers to get around Congress, it could be that many companies that once thought themselves outside Washington's regulatory purview are now rethinking their desire to ride the president’s industrial policy tiger.

Using the same reasoning applied to ISPs and their network technology, regulatory zealots have started talking about “search neutrality” in the context of the Google and its search algorithms. Apple’s exclusive iPhone arrangement with AT&T draws regular fire. Amazon’s Kindle is proprietary to Amazon—you can’t use the e-book reader for books purchased from other on-line retailers (although I understand Kindle will read PDF documents). Who’s to say the FCC won’t demand e-book neutrality?

I don’t like to make predictions, but I think that Genachowski’s push for reclassification is going to blow up in his face. Congress, which sees it as an executive branch overstep, is already unhappy about it. In business circles, regulatory jockeying and rent-seeking might be part of the Washington culture, but it’s notable that companies like Amazon are signaling that, given the choice between paying ISPs for tiered quality of service or the threat of wholesale imposition of a “Mother, may I” regime on their present and future business relationships, they will stand up for their the freedom to conduct business without government intrusiveness.



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