Why an Apple-Comcast Deal Stirs Net Neutrality Concerns

Four years ago, Netflix executives painted a bleak picture for regulators struggling to reach an agreement on new rules for Internet lines.

Unless Federal Communications Commission officials closed a loophole sought by Internet service providers that allowed them to create private lanes of Internet traffic, “network operators will use so-called managed services in a way that harms” independent content providers, Netflix warned.

Internet providers had barely begun to experiment with the use of such “managed services,” an ambiguous term for services that need guaranteed delivery, but they fought — and won — a battle to keep the FCC’s Open Internet, or net neutrality, rules from applying to them.

A Wall Street Journal report Monday that said Apple is talking about getting last-mile priority service on Comcast’s network to consumers’ homes for a video service sparked new outrage from net neutrality activists.

As law professor and former Obama administration tech adviser Susan Crawford tweeted:

https://twitter.com/scrawford/statuses/447900925668380672

The deal highlights concerns that the Internet is starting to balkanize, as deep-pocketed companies pay for elite delivery service while everyone else crowds onto the public Internet. Open Internet, or net neutrality, rules were designed to prohibit Internet providers from discriminating against or blocking legal traffic, but they didn’t prohibit this sort of preferential access.

Comcast and other broadband providers use various network management techniques to ensure that subscribers get reliable phone, TV and Internet services at home. Some Internet providers prioritize certain packets of data, such as phone calls, which have to get there, over other less time-sensitive types of data, like email. Others create what are basically virtual lanes of traffic for different types of services.

Managed services are different from traditional Internet access, which is delivered on a best-efforts basis (i.e., ISP’s will try to deliver your emails or cat videos, but they don’t guarantee when they will arrive). Companies that purchase managed services access get guaranteed, prioritized delivery via a sort of devoted fast lane into a consumer’s home.

“One of the many reasons (we) criticized the Open Internet rules as too weak in the first place was their uncertainty about so-called managed services,” said Matt Wood, policy director for public interest group Free Press.

“We’ve already seen Comcast try to take advantage of this loophole, and of its legacy cable TV provider status, to claim that certain video traffic is not subject to net neutrality requirements,” Wood said.

Two years ago, Microsoft struck a deal with Comcast for a direct video streaming connection for Xbox subscribers. It allowed the Xbox to be used like a set-top box so users could avoid hitting Comcast’s monthly 250 gigabyte usage cap. Comcast has a similar agreement with TiVo. The cable company says those services are basically just cable service to non-Comcast set-top boxes so they aren’t really “managed services.” Internet providers essentially don’t want their lines to be turned into “dumb pipes” and want to be able to operate them in ways that allow them to increase revenue by offering different services to different customers.

According to The Wall Street Journal, Apple is looking for some sort of service that guarantees quick, last-mile delivery of video traffic to a consumer’s home. That’s different from what Netflix did recently when it made a “paid peering” agreement with Comcast to create a more direct route to Comcast’s network, which would make it easier for its video streams to reach consumers.

In other words, Netflix is paying for a more direct route to Comcast’s doorstep. Apple would theoretically be paying for a priority lane to your doorstep within Comcast’s network.

Managed services and the sort of Internet traffic peering agreements that Netflix recently struck offend net neutrality activists who don’t think that big-pocketed companies should be allowed to get preferential treatment on the Internet. The Netflixes of the world can afford to cut such deals, but how about tiny video startups?

Net neutrality activists have expressed worries that Internet services providers like Verizon or Comcast will allocate more space to managed services — which brings in additional revenue — and squeeze the space devoted to general Internet traffic.

The FCC is now drafting new Open Internet rules after its latest attempt got shot down by a federal appeals court. Critics of potential deals like the alleged Apple-Comcast proposal could certainly encourage the FCC to take another look at managed services as it writes new rules.

Comcast is the only Internet provider in the U.S. that is still subject to the FCC’s failed Open Internet rules because the cable giant agreed to abide by them until 2017. It has made noises about agreeing to operate under the Open Internet rules for several more years if it’s allowed to purchase Time Warner Cable.

It’s one of many concessions that are expected to be made by Comcast over the next few months as it tries to convince FCC and Justice Department officials to approve the Time Warner Cable acquisition. Comcast hasn’t even filed its paperwork yet to start the review and already companies and interested parties are considering conditions they could try to get regulators to attach.

Comcast’s NBCUniversal is an investor in Revere Digital, which publishes Re/code.

This article originally appeared on Recode.net.