FCC Net Neutrality Proposal Stirs Up Controversy- Reclassify or Not?

An image of Tom Wheeler, Chairman of the FCC,.
FCC Chairman, Tom Wheeler (image courtesy of FCC.gov)

On May 15th the FCC Commissioners narrowly voted to approve a framework for rules that would create an Internet fast lane, while trying to patch up the loopholes that would make that fast lane possible.

The proposal from FCC Chairman Tom Wheeler would ban broadband providers from blocking or slowing down websites, but leaves the door open for them to strike deals with content companies for preferential treatment, or fast lanes to customers. The Democrat-majority FCC voted 3-2 along party lines to open the proposal to public comment for 120 days, with an eye toward voting on final rules later this year.  However, the timing of actual rules will depend on what the agency decides to do after the four-month comment period expires.

Frankly, we don’t understand why there are objections for content providers and consumers paying more for higher speed delivery of broadband Internet content.  Doesn’t every ISP charge more for higher speed Internet access?  Don’t pay TV providers charge more for premium content with tiered service offerings? And an extra charge for HBO, Showtime, STARZ, Cinemax, etc?

The FCC is proposing that it should use the authority that it has under Section 706 of the 1996 Telecommunications Act to regulate net neutrality, which leaves the rules open to the possibility of “paid prioritization” of Internet traffic. While FCC Chairman Tom Wheeler said that those rules don’t allow paid prioritization and is vehemently against allowing any bifurcation of the Internet, it’s also something that the agency can’t enforce if the ISPs offer a creative legal challenge to its no-blocking rules or the wording of the eventual net neutrality rules.

“The potential that there would be some kind of a fast lane has many concerned,” Wheeler said. “I don’t like the idea and I will work to see that does not happen. We specifically ask whether we can and how to prevent an internet fast lane.”

While broadband providers like  Comcast, Verizon and  AT&T are firmly against stronger regulatory oversight of the industry—a possibility that the commission opened up for comment—they have indicated that Mr. Wheeler’s proposal as it stands is something they could live with.

The content providers disagree vehemently.  Google, Facebook, Amazon.com, and many web content startups are vehemently opposed to any arrangements that allows broadband providers to charge content companies extra for preferential treatment.

Netflix, whose streaming service is responsible for a substantial share of overall Internet traffic, said it is “concerned that the proposed approach could legalize discrimination” in how broadband providers treat Web traffic, “harming innovation and punishing U.S. consumers.” The statement added, “Netflix is not interested in a fast lane” on the Internet.


Another key issue is whether the FCC should reclassify broadband as a public utility service that’s regulated.  Currently, Internet Service Providers (ISPs) are classified as information services, which means the FCC cannot regulate them as it would landline phones which are considered telecommunication utilities and under the FCC’s purview. Reclassifying ISPs as utilities (like common carrier telephone services) would potentially give the FCC far greater control over ISPs and, potentially, help the FCC ensure an open Internet.

The problem with defining broadband (not including mobile Internet access) differently than land-based common carriers, which are governed by Title II in the original 1934 U.S. Telecommunications Act, is that the FCC doesn’t have the right to regulate broadband or truly protect net neutrality.

When the FCC sought to censure Verizon’s efforts to manage its own Internet traffic, the D.C. Court of Appeals found it had overstepped its bounds and struck down the net neutrality rules the FCC essentially built as a bulwark against Internet access abuse. The rules it was applying to Verizon’s Internet services were not covered under Section 706 of the 1996 Telecommunications Act, which governed the FCC’s oversight of broadband.

Section 706 of the 1996 Telecommunications Act didn’t give the FCC that kind of power. Redefining broadband Internet services a utility would allow the FCC to bring to bear all the rules and power found in Title II of the 1934 Telecommunications act.

“The fact is that reclassification doesn’t mean any additional regulation at all,” said Free Press Research Director S. Derek Turner who added that industries like wireless and carrier Ethernet currently classified under Title II “are thriving.”  So what’s the problem?

Net neutrality proponents believe officially designating broadband as a utility to be regulated is the only way to ensure an open Internet. “It is exactly what the bulk of activists are supporting, as the recent court decision made it clear that it is the only way in which true net neutrality regulations can be applied,” said David Segal, executive director of Demand Progress.

Some would like the whole Internet designated a public utility. “The Internet is a public utility and the FCC must regulate Internet providers as common carriers. Anything short of undoing the George W. Bush-era deregulation of broadband industry is fake net neutrality, and we’re not falling for it this time,” said Becky Bond, Political Director at CREDO Mobile.

“Tom Wheeler spoke passionately about the open Internet, but his rousing rhetoric doesn’t match the reality of his proposal. The only way to accomplish the chairman’s goals is to reclassify Internet service providers as common carriers,” Craig Aaron, CEO of the open-media advocacy group Free Press said.

Broadband (wire-line) providers, though, say reclassification would be devastating for their industry.  Former FCC Chairman Michael Powell (now the CEO of National Cable and Telecommunications Association) said: “Treating broadband as a utility-like Title II service would reverse years of settled precedent, dry up investment in broadband deployment and network upgrades, and result in protracted litigation and marketplace uncertainty. We (the NCTA) will continue to reiterate our unwavering opposition to any proposals that attempt to reclassify broadband services under the heavy-handed regulatory yoke of Title II.”


The FCC’s proposal is open to months of debate before a final document is voted on at the end of this year. Whether the Title II reclassification concept survives that long is open to conjecture and debate.  Mr. Wheeler emphasized that his proposal is only a draft, and that he is open to changing it before a final vote later this year.

Mr. Wheeler has repeatedly vowed to use all tools at his disposal to prevent Internet providers from striking deals that would shut out startups and smaller companies that can’t afford to pay for preferential treatment.  He said consumers pay for a specific amount of bandwidth when they subscribe to broadband Internet access, and that the commission won’t allow broadband providers to throttle that connection or limit how consumers use it.

“The potential for there to be some kind of ‘fast lane’ available to only a few has many people concerned. Personally, I don’t like the idea that the Internet could become divided into have’s and have-nots,'” Mr. Wheeler said. “I will work to see that doesn’t happen.”

“There is one Internet. It must be fast, it must be robust, and it must be open,” Mr. Wheeler added. “The prospect of a gatekeeper choosing winners and losers on the Internet is unacceptable.”

That remains to be seen.  This is going to be one heck of a balancing act for the FCC.  For sure, they won’t be able to satisfy all the stakeholders in the broadband Internet (content providers, ISPs, consumers, public interest/ consumer advocate groups, etc).

We’ll update you with our perspective, comment and analysis as this controversial proposal and ultimate ruling progresses.  We think it will be a “battle royal.”


Here’s how to submit a comment to the FCC:

The FCC is taking comments on its proposal at OpenInternet@FCC.gov This email address is being protected from spambots. You need JavaScript enabled to view it. . The initial deadline for comments in July 15th and the deadline for reply comments is September 15th, but the agency is expected to keep the inbox open until it votes to finalize the proposal.


References:

Everything You Ever Wanted to Know About the FCC’s Net Neutrality Proposal

Section 706 of the 1996 Telecommunications Act

(TELE) COMMUNICATIONS ACT OF 1934

 

0 thoughts on “FCC Net Neutrality Proposal Stirs Up Controversy- Reclassify or Not?

  1. Thanks Alan, for your comprehensive round-up on this controversial topic.

    One thing not mentioned in the network neutrality discussions are the content owners who discriminate against consumers that use certain broadband operators. This is exactly what Viacom is doing to CableOne broadband subscribers. Viacom and CableOne didn’t agree on terms for CableOne to renew Viacom channels on its network. Now, Viacom is blocking their online properties from appearing as part of CableOne’s broadband offering (but if CableOne was only a broadband ISP, then the customers would receive those channels).

    http://www.dslreports.com/shownews/Viacom-Blocks-CableOne-Broadband-Customers-From-Online-Content-128970

    As Wheeler mentioned in a speech several weeks back, the best and most efficient way to ensure Net neutrality is through last-mile competition. Removing barriers at the local level is important to ensuring multiple providers.

    Getting more spectrum in individuals’ hands (e.g. the P2P SocialMesh concept http://www.viodi.tv/?s=socialmesh), instead of auctioning it to the highest bidder, seems like it would go a long ways to promoting competition as well.

    1. Ken, Thanks for pointing out what amounts to “reverse discrimination.” An important net neutrality objective is to prevent broadband access (last mile) providers from slowing down or blocking traffic from specific content providers. Having a content provider (like Viacom) discriminate against a broadband provider (like Cable One) and its customers is discrimination in the other direction.
      For sure, that should be part of the debate over bi-directional net neutrality.

      1. Here’s an on target comment from a DSL Reports reader:
        “This certainly is a net neutrality issue. Viacom’s websites are part of the network. The problem is the original rules (and even the proposed rules) only include part of the network. The rules only require an ISP to be “neutral.” Thus, they leave a huge portion of the network (all the network edge=content providers) free to do whatever they choose. That’s why Viacom can get away with these shenanigans.

        In order for the network to be neutral, the whole network needs to be included, not just one element. Otherwise, you set an uneven playing field where one party (Viacom) can use the rules as leverage against the others.

        Think for a moment, though, what would happen if it was Facebook demanding payment from an ISP, or Google or Hulu or Netflix? Would they be able to wrench a dime or dollar from these competing ISPs? Almost certainly, or customers would migrate to another provider willing to pay to acquire market share. In the process, the Internet starts to look more like TV, heavily laden with content most people don’t want or use.

        Net Neutrality should enable any consumer to access any legal content from any device from the ISP of their choice. Then, it truly would be neutral.”

        1. Anand, Thanks for the copy/paste of the comment. It appears discrimination by Viacom & other content providers is NOT covered under “network neutrality,” which is focused on broadband service provider/ISP interference on Internet-based content & applications. It says nothing about the content providers (referred to as “network edge providers” in the comment you pasted which I just edited). Also, “network neutrality” doesn’t apply to broadband wireless (Internet) access.

      2. Thanks for all the great comments. In the some of the rural areas, where there is effectively only one broadband provider, Viacom’s content might not be available under those circumstances.

        Another variation of how the content owners are distorting the Internet is that some of the cable networks have effectively tied their cable TV offering with their broadband offering, such that the cable (or telco) operator has to pay on a fee for everyone of its broadband subscribers, even if only a portion are video subscribers and even if all the broadband subscribers don’t want the broadband video offering.

        This has the effect of raising the cost of broadband for the operator and those who aren’t interested in this multi-screen programming effectively subsidize those who enjoy the programming. There has been a fear that if enough of the content owners force this sort of business model, the cost of broadband will rise and retail prices will increase.

        Interestingly, you don’t have to be just a big media conglmorate to play favorites with your content, as EvoKnow developed a WordPress Plug-in that automatically slows down a web site when it detects an IP address associated with the FCC.

        1. THE BEAT GOES ON: Viacom blocks online videos in retrans fight, wakes up regulators
          Cable One isn’t the only provider affected by these types of online blackouts. Customers of Liberty Cablevision of Puerto Rico also can’t access Viacom programming online, and the American Cable Association, which represents smaller cable providers, estimates that dozens of its other smaller member companies could soon be affected as well. The group has been lobbying to get the FCC’s attention, arguing in a filing with the FCC that Viacom’s move goes against the idea of net neutrality. Read more at: http://gigaom.com/2014/05/23/comedy-central-mtv-blocked-cable-one-voacom-retrans-fight/

  2. I don’t understand what “regulating the entire Internet” means. In spite of there being large content providers, the internet is a peer-to-peer service. Does “regulating the entire Internet” mean that the users on each end (“core service” and “end user”) would also be regulated? Ifso, what would be the bounds for such regulation. As a user, I don’t want to be a regulated utility. Neither do I want my blog hosting entity or Hustler.com to be a government regulated utility. That sounds oh so North Korean. (In addition to which it would not pass a 2nd Amendment test)

    1. Geoff, You can reply to the person who left the comment about “regulating the whole Internet” at: http://www.dslreports.com/shownews/Viacom-Blocks-CableOne-Broadband-Customers-From-Online-Content-128970
      That commented was copy & pasted in a comment here.
      My take-away is that “net neutrality” (as defined) does nothing to stop “reverse discrimination” by a content provider to a broadband access provider/ISP. Hadn’t realized that before!

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