Tag: Verizon

NSA Spying on a Gazillion Americans

Today’s widespread outrage over reports that the National Security Agency is conducting widespread, untargeted, domestic surveillance on millions of Americans reminds me of this post from July 2012, in which Sen. Rand Paul reported on a private briefing he’d received. He couldn’t reveal what he’d learned, but he was able to report that the number of Americans subject to surveillance was closer to “a gazillion” than to zero. Now we have a bit more information. As I wrote then:

Sen. Rand Paul (R-KY) gave a great speech on surveillance last week at FreedomFest. Actually, he gave two good speeches, but the one embedded below is his short 6-minute talk at the Saturday night banquet. He talks about our slide toward state intrusion into our phone calls, our emails, our reading habits and so on. You know how big the surveillance state has gotten? The answer is “a gazillion.” Watch the speech—complete with high-falutin’ references to Fahrenheit 451 and the martyr Hugh Latimer!

Your Congress, Your NSA Spying

The National Security Agency is collecting records of every domestic and cross-border Verizon phone call between now and July 19th. The secret court order requiring Verizon to hand over these records has been leaked to the Guardian.

You may find that outrageous. 1984 has arrived. Big Brother is watching you.

But the author of this story is not George Orwell. It’s Representative Lamar Smith of Texas, Senator Diane Feinstein of California, and you.

Here’s what I mean: In June of last year, Representative Smith (R) introduced H.R. 5949, the FISA Amendments Act Reauthorization Act of 2012. Its purpose was to extend the FISA Amendments Act of 2008 for five years, continuing the government’s authority to collect data like this under secret court orders. The House Judiciary Committee reported the bill to the full House a few days later. The House Intelligence Committee, having joint jurisdiction over the bill, reported it at the beginning of August. And in mid-September, the House passed the bill by a vote of 301 to 118.

Sent to the Senate, the bill languished until very late in the year. But with the government’s secret wiretapping authority set to expire, the Senate took up the bill on December 27th. Whether by plan or coincidence, the Senate debated secret surveillance of Americans’ communications during the lazy, distracted period between Christmas and the new year.

Senator Dianne Feinstein (D) was the bill’s chief defender on the Senate floor. She parried arguments doggedly advanced by Senator Ron Wyden (D-OR) that the surveillance law lacks sufficient oversight. My colleague Julian Sanchez showed ably at the time that modest amendments proposed by Wyden and others would improve oversight and in no way compromise security. But false urgency created by the Senate’s schedule won the day, and on December 28th of last year, the Senate passed the bill, sending it to the president, who signed it on December 30th.

The news that every Verizon call is going to the NSA not only vindicates Senator Wyden’s argument that oversight in this area is lacking. It reveals the upshot of that failed oversight: The secret FISA court has been issuing general warrants for communications surveillance.

That is contrary to the Fourth Amendment to the Constitution, which requires warrants to issue “particularly describing the place to be searched, and the persons or things to be seized.” When a court requires “all call detail records” to be handed over “on an ongoing daily basis,” this is in no sense particular. Data about millions of our phone calls are now housed at the NSA. Data about calls you make and receive today will be housed at the NSA.

The reason given for secret mass surveillance of all our phone calls, according to an unofficial comment from the Obama administration, is that it is a “critical tool” against terrorism. These arguments should be put to public proof. For too long, government officials have waved off the rule of law and privacy using “terrorism” as their shibboleth. This time, show us exactly how gathering data about every domestic call on one of the largest telecommunications networks roots out the tiny number of stray-dog terrorists in the country. If the argument is based on data mining, it has a lot to overcome, including my 2008 paper with IBM data mining expert Jeff Jonas, “Effective Counterterrorism and the Limited Role of Predictive Data Mining.”

The ultimate author of the American surveillance state is you. If you’re like most Americans, you allowed yourself to remain mostly ignorant of the late-December debate over FISA reauthorization. You may not have finished digesting your Christmas ham until May, when it was revealed that IRS agents had targeted groups applying for tax exempt status for closer scrutiny based on their names or political themes.

The veneer of beneficent government is off. The National Security Agency is collecting records of your phone calls. The votes in Congress that allowed this to happen are linked above in this post. What are you going to do about it?

Three Lessons from the Increasingly Irrelevant Annual Wiretap Report

The 2011 Wiretap Report was released this weekend, providing an overview of how federal and state governments used wiretapping powers in criminal investigations. (Surveillance for intelligence purposes is covered in a separate, far less informative report.) There’s plenty of interesting detail, but here’s the bottom line:

After climbing 34 percent in 2010 the number of federal and state wiretaps reported in 2011 deceased 14 percent. A total of 2,732 wiretaps were reported as authorized in 2011, with 792 authorized by federal judges and 1,940 authorized by state judges…. Compared to the numbers approved during 2010 the number of applications reported as approved by federal judges declined 34 percent in 2011, and the number of applications approved by state judges fell 2 percent. The reduction in wiretaps resulted primarily from a drop in applications for narcotics.

So is the government really spying on us less? Is the drug war cooling off? Well, no, that’s lesson number one: Government surveillance is now almost entirely off the books.

The trouble, as Andy Greenberg of Forbes explains, is that we’ve got analog reporting requirements in a digital age. The courts have to keep a tally of how often they approve traditional intercepts that are primarily used to pick up realtime phone conversationse—96 percent of all wiretap orders. But phone conversations represent an ever-dwindling proportion of modern communication, and police almost never use a traditional wiretap order to pick up digital conversations in realtime. Why would they? Realtime wiretap orders require jumping all sorts of legal hurdles that don’t apply to court orders for stored data, which is more convenient anyway, since it enables investigators to get a whole array of data, often spanning weeks or month, all at once. But nobody is required to compile data on those types of information requests, even though they’re often at least as intrusive as traditional wiretaps.

From what information we do have, however, it seems clear that phone taps are small beer compared to other forms of modern surveillance. As Greenberg notes, Verizon reported fielding more than 88,000 requests for data in 2006 alone. These would have ranged from traditional wiretaps, to demands for stored text messages and photos, to “pen registers” revealing a target’s calling patterns, to location tracking orders, to simple requests for a subscriber’s address or billing information. Google, which is virtually unique among major Internet services in voluntarily disclosing this sort of information, fielded 12,271 government requests for data, and complied with 11,412 of them. In other words, just one large company reports far more demands for user information than all the wiretaps issued last year combined. And again, that is without even factoring in the vast amount of intelligence surveillance that occurs each year: the thousands of FISA wiretaps, the tens of thousands of National Security Letters (which Google is forbidden to include in its public count) and the uncountably vast quantities of data vacuumed up by the NSA. At what point does the wiretap report, with its minuscule piece of the larger surveillance picture, just become a ridiculous, irrelevant formality?

Lesson two: The drug war accounts for almost all criminal wiretaps. Wiretaps may be down a bit in 2011, but over the long term they’ve still increased massively. Since 1997, even as communication has migrated from telephone networks to the internet on a mass scale, the annual number of wiretaps has more than doubled. And as this handy chart assembled by security researcher Chris Soghoian shows, our hopeless War on Drugs is driving almost all of it: for fully 85 percent of wiretaps last year, a drug offense was the most serious offense listed on the warrant application—compared with “only” 73 percent of wiretaps in 1997. Little surprise there: when you try to criminalize a transaction between a willing seller and a willing buyer, enforcement tends to require invasions of privacy. Oddly, law enforcement officials tend to gloss over these figures when asking legislators for greater surveillance authority. Perhaps citizens wouldn’t be as enthusiastic about approving these intrusive and expensive spying powers if they realized they were used almost exclusively to catch dope peddlers rather than murderers or kidnappers.

Speaking of dubious claims, lesson three: The encryption apocalypse is not nigh. As those of you who are both extremely nerdy and over 30 may recall, back in the 1990s we had something called the “Crypto Wars.” As far as the U.S. government was concerned, strong encryption technology was essentially a military weapon—not the sort of thing you wanted to allow in private hands, and certainly not something you could allow to be exported around the world. Law enforcement officials (and a few skittish academics) warned of looming anarchy unless the state cracked down hard on so-called “cypherpunks.” The FBI’s Advanced Telephony Unit issued a dire prediction in 1992 that within three years, they’d be unable to decipher 40 percent of the communications they intercepted.

Fortunately, they lost, and strong encryption in private hands has become the indispensable foundation of a thriving digital economy—and a vital shield for dissidents in repressive regimes. Frankly, it would probably have been worth the tradeoff even if the dire predictions had been right. But as computer scientist Matt Blaze observed back when the 2010 wiretap report was released, Ragnarok never quite arrives. The latest numbers show that investigators encountered encryption exactly 12 times in all those thousands of wiretaps. And how many times did that encryption prevent them from accessing the communication in question? Zero. Not once.

Now, to be sure, precisely because police seldom use wiretap orders for e-mail, that’s also a highly incomplete picture of the cases where investigations run up against encryption walls. But as the FBI once again issues panicked warnings that they’re “going dark” and demands that online companies be requried to compromise security by building surveillance backdoors into their services, it’s worth recalling that we’ve heard this particular wolf cry before. It would have been a disastrous mistake to heed it back then, and on the conspicuously scanty evidence being offered during the encore, it would be crazy to approach these renewed demands with anything less than a metric ton of salt.

More Net Neutrality Violations That Aren’t

I see ACLU’s Jay Stanley has penned a reply to my post from a couple weeks back on the civil liberties group’s report arguing for the urgency of net neutrality regulation. The main thrust of my post was that many of the examples advanced to show there’s an imminent threat to the open Internet, requiring regulatory action on the double, don’t really show anything of the sort. Stanley allows that some of their examples are “not violations of Internet network neutrality in the strictest sense” but that they “speak to the motives, intent, and trustworthiness of major telecommunications firms in treating the speech of their customers fairly.” But I’m not sure they really show that either. In fact, if I can be forgiven a little digression, two more egregious corporate offenses against net neutrality that turn out not to be.

First, one I’d missed from the ACLU report: Vague terms of service agreements. Apparently, AT&T’s terms of service had a list of grounds for suspension of service that ended with the rather nebulous provision bolded below:

AT&T may immediately terminate or suspend all or a portion of your Service, any Member ID, electronic mail address, IP address, Universal Resource Locator or domain name used by you, without notice, for conduct that AT&T believes (a) violates the Acceptable Use Policy; (b) constitutes a violation of any law, regulation or tariff (including, without limitation, copyright and intellectual property laws) or a violation of these TOS, or any applicable policies or guidelines, or (c) tends to damage the name or reputation of AT&T, or its parents, affiliates and subsidiaries.

Based on the company’s explanation, it sounds like they intended this as a sort of catch-all for behavior that wasn’t covered by their policy or the law, but was sufficiently clearly abusive to damage the reputation of a provider who allowed it. But you can certainly understand why people read it as reserving the right to disconnect people who criticize the company, and in any event, it does seem way too vague: Who wants to risk losing their service based on such ill-defined criteria? Significantly, though, I don’t see anybody claiming that AT&T or Verizon (which had similar language) ever actually did suspend a user’s account for this reason. It appears to have been one more overbroad bit of legal boilerplate drafted by a lawyer paid to shield the company from liability in as many contingencies as possible, and promptly changed when users complained. More importantly, and at the risk of stating the obvious, this isn’t really a question of network architecture. Such a broad provision could surely be enforced in a way that was contrary to the spirit of the open Internet, but it’s ultimately a provision about how AT&T treats its customers, not about how routers treat packets. Many things might be wrong with it, but violating the end-to-end principle embodied in the TCP/IP protocol isn’t one of them. Indeed, there’s nothing really Internet specific about this at all: An offline business could attempt to refuse service to people who publicly criticize the company in the newspapers. Mercifully, such behavior seems rare, but if you’re worried about the potential for a certain class of abusive contracts aimed at squelching speech isn’t that where the remedy should aim?

Second (via Seton Motley), there’s the ongoing scuffle between Cablevision and Fox. Presumably in hopes that Cablevision would be under more pressure to cut a deal for Fox cable channels if their subscribers couldn’t just get Fox content online, Fox blocked access to their Internet video content for Cablevision subscribers, prompting Art Brodsky of Public Knowledge to fret about the danger to the open Internet. He acknowledges that normally, folks worried about neutrality have focused on the threat of ISPs leveraging access over the pipes to control content, but asserts that “it shouldn’t matter who is keeping consumers away from the lawful content.”

This is just weird. Media companies “keep consumers away from lawful content” all the time! Netflix won’t let me stream their movies unless my subscription is paid up. If I try to access academic articles on JSTOR from home, whoops, I’m blocked! I have to be visiting from an IP address at Cato or some other academic institution that’s made a deal with JSTOR for access. BBC won’t let me watch Sherlock or Doctor Who on their Web site, because they’ve sold the U.S. rights to PBS and SyFy, respectively. “Net Neutrality” and “Open Internet” have a dizzying array of different definitions, but even so, the idea that either obligates content providers to make their content equally available, for free, to every user is… novel.

I harp on this because I think it indicates how muddled a lot of the debate over “neutrality” has gotten. People have a whole welter of heterogeneous concerns about the future of the Internet that increasingly seem to be lumped under the rubric of “non-neutrality” or “network discrimination,” which both obscures the plurality of potential problems and begs the question of whether, assuming a policy remedy is necessary, “neutrality” regulation is actually the ideal silver bullet response to all these diverse concerns. If there were no downside to mandated neutrality—if there were no risk of opening the door to regulatory gamesmanship, and if every imaginable deviation from neutrality were plainly harmful—then this might not be such a big deal. If there are potential downsides, though, it behooves us to get a little more granular and look specifically at what we’re concerned about, and whether there are less sweeping mechanisms that would work to address the problem.

The ACLU puts the threat of content-based restriction of expression at the forefront of their argument, but this also seems like the concern with the weakest empirical basis, even in a relatively oligopolistic broadband market. First, to the extent that content-based filtering would be executed by means of Deep Packet Inspection, it would almost certainly run afoul of the Electronic Communications Privacy Act, which permits carriers to “intercept” the contents of a communication only when this is a “necessary incident” to the provision of their service. As my colleague Tim Lee lays out at greater length in his excellent paper “The Durable Internet,” there is ample evidence that consumers will react with enormous hostility to efforts to literally cut off their access to the sites they want to visit.

If we’re worried about wholesale blocking of domains, then, I think transparency-based regulation should be sufficient. That is, an ISP claiming to offer “Internet access” shouldn’t be able to restrict access to a site while making it look as though it’s the result of some kind of technical problem—perhaps even the blocked site’s fault. On the other hand, if Comcast wants to openly and transparently offer the option of a whitelisted “family plan” to conservative parents who don’t feel up to fussing with client-based blocking software, that strikes me as the sort of limitation on “expression” that is neither a serious threat to the larger Internet architecture—the effect is only to substitute for filtering the parents would do client-side were they more tech savvy—nor a proper civil liberties concern. Again, I expect a transparency requirement would be sufficient to preclude misbehavior on this front precisely because most consumers don’t want their carrier deciding what sites they’re allowed to access, and this, more than the fear of pressure from advocacy groups or even the FCC, will tend to make ISPs hesitant to do so if they can’t do it covertly. At the very least, again, if there are potential downsides to neutrality regulation, I can’t fathom why you wouldn’t try this more modest step first and watch to see if some more radical remedy is necessary.

Of course, consumer pressure is more effective in competitive markets, and as Stanley notes, if you focus on wireline broadband, the picture is not that encouraging in much of the United States. But the fact that wireline may have the characteristics of a natural monopoly doesn’t mean that last-mile broadband necessarily does: What sectors are “natural” monopolies turns out to be highly contingent on the available technology. As 4G wireless networks roll out, and as users consider the appeal of cutting the cord, the stranglehold of the incumbent monopolists and duopolists is attenuated. Wireless broadband, of course, is not a perfect substitute—fiber will probably always have a significant speed advantage—but imperfect substitutes can exercise competitive pressure too. Rail is a natural monopoly, but Amtrak still has to worry that dissatisfied consumers will drive, fly, or take Bolt Bus—even though these alternatives differ from train travel along multiple dimensions.

Moreover, specific deviations from neutrality that respond to consumer demand may themselves help secure the very competition Stanley and I both agree will help discipline carriers and keep deviations from neutrality limited to those that serve genuine consumer interests. So—and consider this a strictly illustrative hypothetical, please—Netflix now accounts for something like 20 percent of downstream bandwidth at peak home use times. Probably there are no small number of people who’d find it appealing to cut the cord if they were assured they could come home to a movie or an episode of Firefly streaming smoothly in HD. Their cable provider, of course, can guarantee this by bundling your Internet with a dedicated video service running over the same pipes—and, of course, no pretense that there’s any parity of treatment between those two types of “traffic.” It’s at least conceivable that permitting similar bundling and cross-subsidy between wireless broadband and Netflix could hasten the demise of the effective wireline duopoly that exists in many markets, eroding the very conditions that undergird the argument for fearing non-neutral routing could be anti-consumer.

Now, to be sure, you can paint a doomsday scenario based on extrapolation from this model that I find every bit as unappealing as Stanley does: A Balkanized Internet on which every ISP has exclusive deals within one player in each online service category to provide high-bandwidth routing, while the rest of the Net limps along at speeds too slow to make innovative services viable unless backed by big corporate money. (Though this would really be a concern about innovation, not free expression: There’s actually very little reason to fear that deliberate viewpoint discrimination by ISPs under transparency rules is either likely or, more to the point, feasible.) If this were to start to happen on a larger scale—despite the demonstrable preference of most consumers for an open Internet over such a curated walled-garden model, it would be worth revisiting the question. But to impose architectural mandates in advance of such experimentation—to assume a priori that any and all deviations from neutrality would impose such great costs to expression and innovation as to trump any possible consumer gains in price or quality of service—seems very much contrary to the spirit of end-to-end.

The Phantom Menaces in the ACLU’s Case for Net Neutrality

I’m accustomed to finding myself on the same page as the American Civil Liberties Union–and in particular with the razor sharp Jay Stanley, who heads their Technology & Liberty program. But their recent report urging the necessity of net neutrality regulation only makes me more skeptical. I’ve always pretty much shared the position of my colleague Tim Lee: The open, end-to-end nature of the Internet is an important driver of both innovation and free expression–important enough that if it were systematically threatened, there would be a decent case for regulatory intervention. But that end-to-end architecture is also pretty resilient, even if some ISPs might wish otherwise. And while it’s easy to think of deviations from neutrality that would be pernicious, it’s also not hard to imagine specific non-neutral practices that might benefit consumers without undermining that broader end-to-end structure. The real policy question ought to be how to get enough competition in broadband markets that consumer choice selects for the latter against the former. Since broadband isn’t all that competitive in many regions, the question is whether we can afford to wait and deal with problems as they arise in a narrowly tailored way, or whether there’s some urgent need for a broad architectural mandate.

The ACLU says there is, and cites ten terrifying “abuses” that supposedly show the need to legislate now. But as I read over the list, I found I couldn’t help but think of those old Saturday Night Life “Coffee Talk” sketches, where a farklempt Mike Meyers would throw out such food for thought as: “Grape Nuts contain neither grapes nor nuts, discuss.” Because ACLU’s list of abuses mostly consists of examples that either aren’t actually net neutrality violations, or for which there are obvious remedies that don’t require neutrality regulation. Let’s discuss:

  • AT&T’s “jamming” of a Pearl Jam concert, in which singer Eddie Vedder’s remarks attacking then-president George Bush were bleeped out of a webcast. Obviously, it would be pretty troubling if your ISP were filtering your datastream to remove political content of which it disapproved. But that’s not what happened here at all. AT&T, via a deal with the Lollapalooza music festival, was streaming the Pearl Jam concert on its own content hub. Now, obviously, whoever was editing the stream and decided to treat criticism of Bush as equivalent to profanity made a highly dubious judgment call, but the point is that AT&T was acting as a content provider here, not a carrier: The filtering happened before the content hit the network, and no proposed neutrality rules I’m aware of would have prohibited this.
  • BellSouth’s “censorship” of Myspace. According to BellSouth’s own account, a glitch in their system temporarily left their outraged users unable to access the popular social networking site. “Some suspected” that the company was actually testing some kind of tiered access system, and decided to do so by blocking a popular site without notice, antagonizing their paying customers. Some also suspect the moon landing was faked, but I wouldn’t make it the basis of legislation.
  • Verizon briefly denied the abortion-rights group NARAL access to a program whereby users who texted a dedicated “short code” could sign up for SMS updates; the company almost immediately reversed its decision. This is, obviously, not a case involving Internet neutrality, and while it’s certainly a case involving the ability of a network owner to discriminate between users of its network services, the issues involved are pretty different. These “short code” services often permit users to either sign up for fee-based updates or donate money to causes via charge added directly to their monthly phone bill. As indicated by their prompt reversal, the rationale for denying NARAL here–desire to avoid partnering with causes on either side of a “controversial” issue–was probably ill considered, but this is clearly a case where the company is partnering with the provider in a way that goes beyond carriage, because they’re also effectively acting as a payment processor. That means they’ll have an interest in vetting partners in a way you wouldn’t expect a mere carrier to vet every content provider on the network. Even if you think this particular type of discrimination ought to be prohibited, this is really a distinct case raising issues separate from those involved in the Internet Neutrality debate, and ought to be considered separately.
  • Proposed filtering for copyright infringement. This is indeed a terrible and, in practice, unimplementable idea–for one because there’s no easy way to distinguish illegal from legal copying (as when I stream music I’ve purchased from my desktop or server to a mobile device). There’s also a pretty good case that this would already be illegal under federal wiretap laws…which may be why the “proposals,” referenced in an article from January 2008, haven’t actually gotten anywhere.

There are a handful of other cases that either may or definitely do count as potentially troubling neutrality violations–the most famous being Comcast’s throttling of BitTorrent traffic. At least two involve ISPs in Canada, which I wouldn’t have thought is the FCC’s problem. In some of these cases, I’d even agree that regulatory action is justified–but by the FTC, not the FCC. If you are advertising access to “the Internet,” then choking off access to whole classes of popular services or degrading throughput well below advertised speeds, well, that’s what we call a deceptive business practice. (In a more libertarian world, this might be handled by another mechanism; in the world we’ve got, it’s the FTC’s lookout.) Maybe there’s a case to be made for more specific transparency rules to establish when and how consumers have to be informed about non-neutral routing policies–certainly no ISP should be allowed to block access to a website and conceal the policy by making it look like a technical glitch–but I have no idea why you’d make the leap to a sweeping architectural mandate before trying something along those lines.

More generally, I’m a little puzzled about why the ACLU is weighing in on this at all. It’s true that ISP routing practices, like the practices of many private firms, could have implications for “free expression” broadly conceived. But not everything that might promote or hinder expression is part of the civil liberties portfolio, which has traditionally been limited to restraints on freedom imposed by government. To the extent federal policies inhibit broadband competition, one might say the government is in some sense complicit in whatever private policies restrict expression, but here again, the obvious remedy is to look for more pro-competitive policies. In any event, this is far enough outside their usual wheelhouse that you’d think it would make more sense for them to remain, well… neutral on this one.

What Was That Ronald Reagan Line Again?

The Washington Post editorializes this morning on the “Google-Verizon” proposal for government regulation of the Internet:

For more than a decade, “net neutrality” — a commitment not to discriminate in the transmission of Internet content — has been a rule tacitly understood by Internet users and providers alike.

But in April, a court ruled that the Federal Communications Commission has no regulatory authority over Internet service providers. For many, this put the status quo in jeopardy. Without the threat of enforcement, might service providers start shaping the flow of traffic in ways that threaten the online meritocracy, in which new and established Web sites are equally accessible and sites rise or fall on the basis of their ability to attract viewers?

What a Washington-centric view of the world, to think that net neutrality has been maintained all this time by the fear of an FCC clubbing. Deviations from net neutrality haven’t happened because neutrality is the best, most durable engineering principle for the Internet, and because neutral is the way consumers want their Internet service.

Should it be cast in stone by regulation, locking in the pro-Google-and-Verizon status quo? No. The way the Internet works should continue to evolve, experiments with non-neutrality failing one after another … until perhaps one comes along that serves consumers better! The FCC would be nothing but a drag on innovation and a bulwark protecting Google and Verizon’s currently happy competitive circumstances.

I’ll give the Post one thing: It represents Washington, D.C. eminently well. The Internet should be regulated because it’s not regulated.

“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

Net Neutrality and Unintended Consequences

Google and Verizon’s proposed framework for net neutrality regulation has provoked cries of protest from advocates of aggressive regulation at places like Free Press and Public Knowledge. Some of the loudest objections have concerned the distinction between the “public Internet,” which (at least for wireline broadband) would be subject to neutrality requirements, and vaguely defined “differentiated” or “managed” services—presumably things like IPTV or digital telephone service—which would not. This, according to the pro-regulation camp, would amount to a massive loophole that defeats the purpose of imposing neutrality rules. As Public Knowledge writes in their press release:

Thus, it is conceivable under the agreement that a network provider could devote 90% of its broadband capacity to these priority services and 10% to the best efforts Internet. If managed services are allowed to cannibalize the best efforts Internet, whatever protections are agreed to for the latter become, for all intents and purposes, meaningless.

This may be right. But if so, it sounds like a reason to be chary of the whole regulatory project. Neutrality or no neutrality, after all, there are a variety of ways to get digital content from producers to subscribers. Traditionally, the cable running to your home comprised separate dedicated channels for cable TV and broadband Internet traffic—though the trend now is toward a more efficient model where the TV content is also delivered as packet-switched data. If you’d rather watch Jersey Shore from the Jersey Shore, you can stream your video to a mobile device like a tablet or smartphone via Internet, but that’s hardly the only way to get your Snooki fix: There’s also, for instance, Digitial Video Broadcasting Satellite to Handheld (DVB-SH) or Qualcomm’s MediaFLO operating on their own dedicated frequencies.  Imposing neutrality rules on wireless broadband (as the Google/Verizon proposal would not – again, to the dismay of regulation fans) shouldn’t affect these services.

My concern, then, is that if neutrality rules foreclose the possibility of cross-subsidy from the providers of subscription-based video streaming or VoIP services, these alternatives become more attractive. Maybe Netflix or Hulu Plus want to be able to offer a deal where your subscription price includes priority delivery of their packets to your smartphone or tablet, making non-WiFi video streaming feasible even if you haven’t sprung for that kind of top-shelf bandwidth for all your wireless data. If neutrality regulation forbids that kind of deal, even with respect to these kinds of “managed services,” one possible effect is to skew investment away from building out next-gen IP networks and toward these kinds of niche services, which strikes me as inefficient. Indeed, it’s precisely the effect Public Knowledge seems to fear, and there’s no obvious reason to suppose that it’s going to be a big problem within IP-based broadband services, but not affect the choice between alternative modes of digital content delivery.

I should close with the caveat that I haven’t looked very closely at the economics here, so while I think the effect I’ve just sketched is theoretically plausible enough, I couldn’t say with any confidence how significant it’s going to be in practice. That said, given that the case for neutrality regulation seems to rest on a smattering of genuine cases of bad behavior by providers and a whole lot of dire speculation about consumer-unfriendly practices that might emerge, I’ll permit myself a little extra latitude to deal in hypotheticals.