FCC network neutrality rules and efficiency

[Commentary] MetroPCS is the first Internet service provider to be hit with a network neutrality complaint.

The complaint is in response to the ways the company deals with its own limitations:

First, the $40 per month price tag extends a fat discount. Unlimited everything can cost $120 on faster networks.

Second, it has also deployed new 4G technology, offering both a $40 tier similar to the 2G product (no video streaming), but also a pumped up version with video streaming, VoIP and everything else – without data caps – for $60 a month. Of course, this network has far larger capacity and is much zippier (reliable at 700 kbps). PC World rated the full-blown 4G service “dirt cheap”.

Third, to upgrade the cheaper-than-dirt 2G experience, MetroPCS got Google – owner of YouTube – to compress their videos for delivery over the older network. This allowed the mobile carrier to extend unlimited wildly popular YouTube content to its lowest tier subscribers.

Busted! Favouring YouTube is said to violate neutrality. The business plan contains differences that “lack any engineering merit”, and the option for consumers to access more content for a higher price irrelevant. Free Press asks, “What if that $60 unlimited plan were $100? What about $600?” The carrier responds that its customers really like YouTube and that they have no financial interest in the matter by making their subscribers happier. The Federal Communications Commission has already erred. Innovators such as MetroPCS and Google should need no defence in supplying customers’ superior choices. Neither consumers nor the Internet are “protected” by rules hostile to co-operative efforts – even if money were to pass between firms – that expand outputs and lower prices. If the FCC is to take such ill-targeted attacks on competitive rivalry seriously, it will do far more to deter the open Internet than to preserve it.