FCC Probes Internet Traffic Slowdowns -- 2nd Update

By Dow Jones Business News, 

By Gautham Nagesh

Federal regulators plan to get to the bottom of why consumers aren't always able to watch Netflix and other streaming video services over their home broadband connections.

Federal Communications Commission Chairman Tom Wheeler announced Friday that the agency has begun an inquiry into the issue of peering, which concerns how residential broadband providers such as Comcast Corp. and Verizon Communications Inc. interconnect with the networks of content providers such as Netflix Inc. and Google Inc. on the back end.

"To be clear, what we are doing right now is collecting information, not regulating. We are looking under the hood. Consumers want transparency. They want answers. And so do I," Mr. Wheeler told reporters. "The bottom line is that consumers need to understand what is occurring when the Internet service they've paid for does not adequately deliver the content they desire, especially content they've also paid for."

Netflix has feuded publicly with Verizon in recent weeks over consumers' ability to stream high-definition movies and TV shows such as "Orange Is the New Black." The dispute over who is to blame for delays and choppy video delivery has continued even though Netflix had struck paid peering deals with both Verizon and Comcast earlier this year to deliver its traffic more efficiently.

The nation's largest broadband provider, Comcast, welcomed the FCC's new peering probe. Comcast has previously argued that its deal with Netflix proves the commercial market is capable of settling peering disputes without regulatory intervention.

"We welcome this review, which will allow the commission full transparency into the entire Internet backbone ecosystem and enable full education as to how this market works," Comcast spokeswoman Sena Fitzmaurice said. "We also agree that the broadband consumer should be the focus of this inquiry and not any particularly business model."

Said a Netflix spokesman: "We welcome the FCC's efforts to bring more transparency in this area. Americans deserve to get the speed and quality of Internet access they pay for."

Mr. Wheeler said many of the more than 19,000 comments the FCC has received in response to its net-neutrality rules have concerned the disputes between Netflix and Verizon/Comcast, and have asked what the FCC can do to resolve the problem. Mr. Wheeler reiterated that he considers net neutrality a separate issue from peering.

"I have experienced these problems myself. I know how exasperating it can be. Consumers must get what they pay for," Mr. Wheeler said.

A spokesman for the leading cable industry trade group expressed support for the commission for looking into peering as a separate issue from its net-neutrality rulemaking.

"We agree with Chairman Wheeler that Internet interconnection and peering issues are not net-neutrality issues. We look forward to assisting the Commission in better understanding this vibrant, competitive marketplace," National Cable and Telecommunications Association spokesman Brian Dietz said.

Meanwhile, Internet backbone operator Level 3 Communications Inc. praised the commission's move to investigate what it called "arbitrary tolls" on some networks' connections.

"We agree with the Chairman: Consumers pay their ISP for access to the Internet at a specified speed, and they should get what they pay for," said Mark Taylor, a Level 3 vice president. "That means that those ISPs shouldn't intentionally degrade Internet traffic on the last mile. Critically, it also means that ISPs must provide their users with adequate interconnection capacity to the rest of the Internet."

The FCC staff is currently obtaining information needed to determine precisely what is causing the congestion between broadband providers and content networks. Mr. Wheeler said the FCC has already received the agreements between Netflix and Comcast/Verizon, but he also plans to request them from other broadband providers and content companies, such as YouTube.

Senate Judiciary Chairman Patrick Leahy (D., Vt.) also welcomed the announcement, arguing that the recent interconnection disputes show that "net-neutrality rules alone may no longer be enough to promote an open Internet."

"Shining more light on how content is delivered across the backbone of the Internet is an important step in ensuring that consumers receive the service they are paying for," Mr. Leahy said.

Shalini Ramachandran

and Drew FitzGerald contributed to this article.

Write to Gautham Nagesh at gautham.nagesh@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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