The debate over network management practices by Internet Service Providers (ISPs) has been waged for the most part without regard to the impact that potential legislation may have on rural wireless consumers.  The fact is that rural ISPs and their customers are, in important ways, very different from their urban counterparts.  Differences in demographics, network architectures, costs and density combine to make rural wireless consumers especially vulnerable and sensitive to unanticipated consequences of well-intended restrictions on wireless ISPs’ ability to manage their limited resources in ways that promote the interests of all their customers.  This ConsumerGram explores some of these concerns.  



The U.S. government has made concerted efforts over the past 75 years to encourage investment in network infrastructure in rural America.  Universal telecommunications service and rural development are joined at the hip in countless policies and rules emanating from Congress, the Federal Communications Commission (FCC), the Department of Agriculture, fifty state utility regulatory bodies, and from dozens of special purpose programs in other agencies.


A frequently ignored feature of rural telecom development is the presence of 8,000 or so small to very small wireless ISPs who offer an alternative to wireline Internet access, and in some cases provide rural consumers with their only access to the Internet.  These companies are typically quite small and frequently serve small, isolated communities.  Their costs of building and operating their networks are relatively high because of low subscriber densities and distance from the Internet backbone.  Most are privately financed and are sole proprietorships or partnerships with limited access to the public capital markets.  Many have credit lines based on personal assets.  They are, for the most part, the kinds of small businesses that are the focus of federal promotional efforts by the Small Business Administration, and at the heart of this country’s entrepreneurial spirit.


As a means of limiting costs, keeping costs to the consumer low and addressing the overall interests of their customer bases, these small wireless ISPs typically use a variety of network management techniques designed to maximize the operation of the network to provide a consistent, reliable quality of service to all users, even if it means modestly constraining the use of a few. 


One such small company, Lariat, serves a handful of customers in Albany County Wyoming, 95% of whom do not have wired access to the Internet.  Lariat was one of the earliest providers of wireless Internet services in rural America and by all indications is highly valued by its customers.  Lariat, like other small, rural wireless ISPs, manages its network in ways designed to do two things – reduce the cost per user of running the network, and ensuring a consistent, reliable quality of service to all users.  First, Lariat attempts to reduce the cost per user of running the network by prohibiting customers in “residential class” service from operating network servers or file sharing repositories that consume scarce bandwidth capacity and thereby impose congestion costs on ordinary users.  Lariat does however provide subscribers with the option of more intensive Peer-to-peer (P2P) uses under a somewhat more expensive “business class” service.  Secondly, Lariat tries to provide all of its consumers a high quality of service (QoS) at relatively low rates.


The specific traffic management techniques Lariat employs constrain all of the users of its services, with specific constraints on particular users whose applications command greater than average bandwidth.  National data indicate that new Internet applications involving file sharing – mainly video content – result in 5% of users consuming roughly fifty percent of total bandwidth on a given network.  Others suggest the 80-20 rule – 20 percent of users command 80% of available bandwidth.  These and related P2P content exchanges swamp the demands of ordinary citizens who typically use the Internet for low bandwidth applications like email, web surfing, and occasional downloads of low volume information content – data, text, still graphics, or the occasional audio or video clip.   


Without a means for networks to manage congestion, network resources can be easily wasted, requiring additional investment in network capacity.  However, building more capacity to accommodate the demands of a few users, the remedy suggested by some, is difficult, given the financial constraints facing small rural providers, including the cost of adding backbone bandwidth in some rural areas. 

The fact is, small rural wireless ISPs like Lariat employ traffic management techniques that are familiar to managers of other kinds of networks – transportation, power, water distribution, sewage disposal, and others – as well as to managers of other limited resources like the environment, scarce park land, waterways and fisheries.  Put simply, they manage traffic and usage in ways to create the greatest good for the greatest number. 


 The ability of rural wireless ISPs like Lariat to serve all of its customers by providing reliable wireless broadband and Internet access services is being challenged at the FCC by a group of advocacy organizations.  They voice arguments invoking terms like free speech, network neutrality, exercise of monopoly power, open networks, and others.  But, their core claim appears to be that every user is entitled to use Internet applications, services and content without regard to the needs of the majority of other users of the same network.  Taken literally, as projected by net neutrality advocates, this claim has no basis in law, custom or common sense.  The notion of an unlimited entitlement to use any limited public resource such as spectrum, without regard to collateral or downstream consequences, is unprecedented.  


The stakes are high for a small company like Lariat.  Were it foreclosed from managing its network as it does, one or both of the following would likely be required: a) reduction in overall QoS offered to all of Lariat’s customers; or b) rate increases for all users.  Neither choice is appealing to a small rural wireless provider trying to grow its business based on the quality and affordability of its services.  This false dilemma facing small rural wireless ISPs like Lariat tends to undermine the economic viability of smaller companies and raises the risk, since many operate on very small margins, forcing them to terminate service and go out of business.   


Even the best intentioned federal policies produce unintended consequences and, on this issue, the unintended consequence is to put small rural wireless ISPs and therefore their customers in peril, thereby reducing the amount of competition in the space and potentially limiting the government’s ability to realize its goal of bringing broadband to all Americans sooner rather than later, at affordable rates.