The Payola Internet

2013 could mark the end of the era of Internet openness.

If, as many expect, a federal appeals court rules to allow an Internet payola system, phone and cable companies will start to prioritize access to the few online sites and services that can afford to pay them extra.

The court deciding Verizon vs. FCC could issue its ruling as early as Christmas. The judges hearing the case in September seemed inclined to strike down the Federal Communications Commission’s ability to prevent the practice of “paid prioritization.”

In 2010, the FCC passed the Open Internet order. The order was designed to keep Internet users in the driver’s seat by empowering the FCC to stop Internet service providers from manipulating online content.

But a court ruling against the FCC would usher in an age of online payola, and fundamentally alter the character of the Internet.

Allowing paid prioritization would shift power away from the upstarts and visionaries — those who have sparked one of history’s greatest periods of economic and technological growth — toward established companies like AT&T, Comcast and Verizon, which want to rein in any online innovation that threatens their plans to control the new media economy.

This is bad news for anyone who thinks the Internet marketplace should remain open to all comers. By design, the Internet’s flat network architecture has allowed anyone to innovate without having to first seek permission from the service providers that control much of the “last mile” access to Internet users.

With an open network, Internet users can pick from a wealth of online offerings; they aren’t pushed toward the one company that’s struck a special deal with their carrier. They can choose a privacy-respecting email service like Hushmail and not see their choice degraded in favor of Yahoo! or another blue-chip email service that’s paid for speedy delivery.

ISPs and their supplicants argue that providers should be able to charge big websites and services to “cut to the front of the line” at congested nodes along the network.

“If ISPs could offer premium services,” writes Everett Ehrlich, “then we’d get telemedicine, remote education, livestreaming of sports, entertainment and gaming that much faster.”

Zero-Sum Game

“The more accurate analogy here is like saying, imagine if your state refused to let FedEx drive on its roads without paying extra, and instead [sold] ‘exclusive’ access to UPS,” Mike Masnick writes. “That's not about someone getting something for free: It's about the infrastructure provider blocking competition.” 

To fully understand Internet payola, we must first understand a basic engineering reality: When you prioritize one bit you slow down all others. In contrast to paid prioritization in markets like parcel delivery, the routing of Internet data is a zero-sum game. If a router speeds up one service, all others are automatically slowed down. Consumer choice be damned.

And ISPs won’t just favor the sites that pay up; they’ll also give special preference to their own services. They’re eager to kill the FCC’s Open Internet rules to earn new revenues via payola — and to protect their legacy voice, text and video services from the kind of competition the open Internet makes possible.

The Internet’s Open DNA

Verizon’s attorneys admitted as much before the court during September’s oral arguments. When judges asked whether the company would favor its preferred websites over others if the ruling goes its way, Verizon counsel Helgi Walker replied: “I'm authorized to state from my client today that but for these rules we would be exploring those types of arrangements.”

Walker's admission might have gone unnoticed had she not repeated it on at least five separate occasions during arguments.

The basic principle of open, nondiscriminatory interconnection is baked into the DNA of two-way communications networks. Paid prioritization would turn the Internet into something akin to cable television, where choice is an illusion manipulated by the provider and the companies that control most channels.

The openness principle, often referred to as Net Neutrality, is why the Internet has become a network for the truest expression of the free market.

Regardless of the court’s decision, the FCC has the responsibility to ensure that ISPs don’t use their power over Internet access to seize control of content and destroy this marketplace. Stopping Internet payola now is vital to saving the Internet over the long term.