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Before Net Neutrality Eats the World (Part 11): The Inappropriateness of Compulsory Transparency

(Note: On September 9, the U.S. Court of Appeals for the D.C. Circuit will hear oral arguments in Verizon’s challenge of the Federal Communications Commission’s December 2010 Order on “Preserving the Free and Open Internet.” This series explores fundamental issues at stake.)

Back in 2009, the Federal Communications Commission's (FCC) proposed rulemaking on net neutrality included yet another principle on “transparency” with respect to network management practices (Sec 8.15), holding that “sunlight is the best disinfectant” (p. 45, paragraph 118).

This "principle" emerged in addition to the set of commandments specified in the 2005 Policy Statement.

The December 10 "Order on Preserving the Free and Open Internet," which condensed many of the ideas in the 2005 statement of principles but didn't discard them (see earlier installments of "Before Net Neutrality Eats The World"), continued:

Fixed and mobile broadband providers must disclose the network management practices, performance characteristics, and terms and conditions of their broadband services.

and:

We believe that at this time the best approach is to allow flexibility in implementation of the transparency rule, while providing guidance regarding effective disclosure models.

...following which is a series of things FCC says you must do. "Guidance" means future regulation.

A requirement for transparency is certainly appropriate in a political or governance setting; compulsory transparency should apply to unelected regulators like those at the FCC, for example, but not regulated private parties in a highly competitive setting that itself creates pressures for transparency and service guarantees.

Compulsory transparency rules are not appropriate in a private, competitive market setting, beyond what the market itself generates. This provision unnecessarily and harmfully interferes with confidential trade or business practices, and is a make-work provision for the FCC and for troublemakers.

If consumers are getting the speed and services contracted for, there’s no public policy issue at hand, and no legitimate entitlement to endless amounts of information about “traffic management practices of networks” (p. 45, paragraph 118) or whatever the agency comes up with next. Properly, how a firm manages its own private networks is a contractual matter driven by an impatient competitive process intolerant of the withholding of useful traffic and management information.

Forced disclosure is an inferior alternative to revelations driven by rivalry. Markets produce desired products and services, but they also produce relevant information, which is a form of competitive wealth. There exists a disclosure continuum from absolute non-transparency and secrecy, to full-disclosure of network practices. Where we “belong” on that continuum in tomorrow's Internet realm of shifting content and infrastructure shares shifts continually with every new fiber deployment, merger, content deal, undigested meal. The list is endless.

Users should and can pay for varying amounts of disclosure if they find themselves insatiable; but meanwhile competitive pressures between broadband providers, and demands by investors and shareholders, advertisers and Wall Street impel disclosure. By these means the competitive process is a highly energized and capable driver of transparency, and a punisher of shady practices.

The regulatory version of transparency is not a substitute, is a burden, creates obscurity rather than illumination, would undermine the kind of transparency genuinely useful to future interested parties.

A transparency rule creates a make-work regime for an increasingly irrelevant agency, whose "public interest" and "scarcity" management roles are relics. The FCC's questions about, for example, appropriate “standard labeling formats” (NPRM, p. 47, paragraph 126) to supposedly allow consumer comparison of network management practices illustrate this. Apart from the reality that competition can and will increasingly generate that type of information and in useful formats besides, this is a recipe for information overload, banking-privacy-notice style. There is no way to satisfy the political harassment of private firms these schemes will generate.

Transparency regarding particular mundane network management practices becomes increasingly irrelevant in a world of torrential bandwidth and competitive pressures to disclose useful true information. The issue now exists only because bandwidth is, naturally, not unlimited or unconstrained. Bandwidth and speed disclosure will increase because we need many times more capacity for tomorrow's multimedia than we do now, and because somebody somewhere soon is going to want the Web to embrace holograms.

Thus the proper FCC approach is to foster a world in which speeds are so instantaneous and services so supremely tailored (not "neutral") that disclosure probably doesn’t matter, and certainly should require anybody wasting time to report to FCC about. Beyond that, the only need is that the provider adhere to any contract or promise offered the user about speed and transparency. The key to achieving these benefits is, again, agency neutrality.

Next Time: Network Neutrality vs. Cybersecurity