The FCC Shakes Things Up (Somewhat) On The Net Neutrality Front

from the sorta dept

Well, well. Earlier this week I had agreed to swing by the TechCrunch offices to be on a video panel discussing net neutrality, which was supposed to air at some point in the future. As I was out at lunch on my way to TechCrunch, the Wall Street Journal broke the news that (contrary to reports from the Washington Post earlier in the week), that FCC boss Julius Genachowski had decided to reclassify parts of broadband internet access as a Title II service, which would allow the FCC to regulate it. I found this out as I walked into the studio right before filming, so didn’t have all the details, but if you’d like to see the discussion, here it is:

The panel was moderated by Andrew Keen, and included Gigi Sohn from Public Knowledge, Richard Bennett from ITIF, Larry Downes from Stanford and myself. With so many people, and not much time, I didn’t get a chance to say much other than that this whole thing is a bit of a red herring, and that the real issue, that the FCC should be focused on, is making sure there’s real competition in the broadband arena — because if there were real competition, net neutrality wouldn’t even be a discussion point (because, if any firm broke it, customers would go elsewhere quickly). However, the discussion itself is quite worthwhile, mainly for the viewpoints of the other three panelists.

While Gigi characterizes the panel as three against one, I don’t think that’s quite fair. I’m sympathetic to her argument on the importance of this. I think that maintaining a “neutral” internet, or one where end-to-end principles are maintained, is important. I just think that it can be done without the FCC stepping in, and that having the FCC make this move now could very well open the door to problematic decisions down the road. No matter how good the principles are that Genachowski wants to lay out (and I think they’re pretty good), this opens the door to the FCC making much worse decisions in the future. And, in the meantime, we’ll see all sorts of work by lobbyists and special interests to either neuter the rules or slip in enough exemptions to make the whole thing somewhat meaningless, and just another regulatory nightmare. Gigi’s optimistic that this won’t happen. I’m not convinced.

Meanwhile, if you want a preview of exactly what the legal arguments are that will be filed in response to this decision, well, watch the exchange between Larry and Gigi over whether or not the FCC can even do what it’s proposing to do. I honestly don’t know who is right — and both make compelling cases for their arguments. In the end, a judge (or perhaps nine Supreme Court justices) will make the final call. Larry has laid out why he doesn’t think the FCC can win in more detail — and I’m sure we’ll see more from Gigi as well.

Either way, the one thing that is certain is that this will be tied up in court for many years, and I stand by my assertion that for the next few years this is going to be pretty meaningless for consumers. I disagree with Richard Bennett that this will impact investment in networks — and not because “investment ignores regulation” (a phrase he used which I’ve never heard anyone utter and which makes no sense to me), but because he’s wrong that this creates any more uncertainty than there was before. There’s been a discussion over net neutrality for more than half a decade and threats to move the ball back and forth all of these years. There’s been plenty of uncertainty all along. The only reason that there would be a decline in investment in broadband is if the major providers get fat and happy and realize there’s no competitive pressure for them to continue upgrading.

Also, while I agree with Richard that the internet tends to “regulate itself” to prevent anything really egregious from happening, he’s being a bit disingenuous in suggesting that it’s consumer advocates who came up with the idea that telcos would slow down or block certain websites. That came from former SBC/AT&T (and now GM) CEO Ed Whitacre, who blatantly said that was the plan. However he is right that AT&T’s inability to follow through has mostly been due to loud public outcries against it.

Finally, to Gigi’s point that this is necessary so that there’s someone looking out for consumers and mandating transparency… I still have to go back to the point that those things are not the job of the FCC, but of the FTC, who already has the power to protect consumers and to respond to actions like what Comcast did with BitTorrent, in that Comcast was selling consumers one thing and providing them with something else.

Of course, with all of that out of the way concerning the debate… what about what the FCC is actually going to do. After the WSJ article came out, the FCC put out a statement claiming that its plan — which will be “outlined” today — would not, in fact, be the so-called “nuclear option” of reclassifiyng broadband as a telecommunications service, but a magical “third way”:

“The Chairman will outline a “third way” approach between a weak Title I and a needlessly burdensome Title II approach,” says the statement. “It would 1) apply to broadband transmission service only the small handful of Title II provisions that, prior to the Comcast decision, were widely believed to be within the Commission’s purview, and 2) would have broad up-front forbearance and meaningful boundaries to guard against regulatory overreach.”

As Broadband Reports notes, this is all way too ambiguous. What everyone is saying is that this will apply to internet access, but not to internet providers — whatever that means. Ambiguity in this situation is not good, because (yet again) it introduces all sorts of wiggle room for lobbyists to move things around. But this has become the way things seem to work in the Genachowski FCC, with vague plans announced that try to thread the needle between various sides, without ever taking a very firm stand on anything, but making sure not to piss off anyone either. It’s why the big broadband plan seems to have so few specifics. It’s as if Genachowski is afraid to take a real stand on anything. Even reading the FCC description of this move has him trying to explain why this isn’t really a big deal, saying that it simply seeks to confirm what people felt was true before the Comcast ruling.

We’ll see what the final announcement is — and this is definitely a case where the devil is going to be hiding deep in the details — but either way, you can rest assured that legal briefs are being written as we speak (if they haven’t been written already), and this is all going to be in court for a long, long time before any of it really matters. The video above started out with the question of “what is network neutrality,” and for the next few years, it’s basically going to be gridlock in the court system.

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Comments on “The FCC Shakes Things Up (Somewhat) On The Net Neutrality Front”

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bob says:


Government protects the status quo, I would agree with mike that the bast way to have an open and free internet is lots of competition.
Until the general internet user has informed information about services related to internet providers, I do not expect to see any change towards open and free competition.
Some of the groups that say that they want internet neutrality scare the hell out of me with their socialist/progressive I know better that you positions.

Spanky says:

I understand the fear of having the FCC regulate – there’s no telling how much damage could be done by another Bush administration.

All in all, though, given the choice, I’m more in favor of having the FCC regulate at least parts of the internet than leave it up to corporations. We can already see what the internet is turning into when left to companies alone. It will never be better than that.

And while competition is necessary, assuming it will just spring up out of nowhere is naive. Business will always work to eliminate competition (which is just one of the ways they subvert capitalism). It has to be forced upon them. Without Federal oversight, there will be no competition.

Derek Kerton (profile) says:

What Is The Best Way To Police Net Neutrality?

Larry hits on a great point: somebody or some element will need to police the ISPs to ensure a “neutral network”.

He’s right. Without some kind of pressure, ISPs will just take advantage of the consumer.

But the answer to Larry’s quest is what Mike said. The best tool to police the ISPs is other ISPs. Many ISPs, in fact, all competing. The reason competition would be much better than regulation is that it is very flexible, very responsive to change, and tends to offer better products to consumers at the lowest reasonable prices.

Richard Bennett said the Internet doesn’t need regulation, and that it “sorts itself out” over time. Sure…just as well as our mortgage industry sorted itself out over time – i.e. very poorly! The truth is, the best example we have on communications networks “sorting itself out” would be to examine a century or more of monopoly Telephone network business, and ask “How well did that sort itself out” until the gov’t stepped in to break up AT&T and force competition? And that same, century-long, story played out in much the same way around the world. That’s a lot of failed “sort itself out” experiments!!

Without a driving force, monopoly and oligopoly industries DO NOT sort themselves out. They stagnate and charge too much.

And competition in last mile Broadband infrastructure won’t just magically appear, as we’ve seen for decades. So we need gov’t policy towards competition, and then we actually can let the nagging details like neutrality, capping, tiers, pricing, services, technology sort themselves out — under threat of the invisible hand of competition.

Competition is what we need to ‘police’ ISP behavior.

bobbo33 says:

The third way

On this “magical” third way, here’s my proposal: Regulate monopolies/duopolies as Title II services. However, when a third service becomes available, then the handcuffs come off (no longer Title II), and the free market determines the best business model.

This gives protection to those of us (myself included) locked into a non-competitive situation, while providing incentive for true consumer choice to be created. It might even encourage old dinosaur telco’s to help support start-up ISP’s…

(Of course, with this approach, rules will have to written carefully to prevent incumbents from setting up straw man ISP’s to avoid regulation.)

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