On Thursday, the Federal Communications Commission voted 3-2 to publish a proposed new set of rules on “net neutrality” and to allow public comments. The proposal, drafted by FCC Chairman Tom Wheeler, is a response to a January federal appeals court ruling that the FCC did not have a valid basis for discriminating against Internet service providers that want to create preferential treatment deals with application providers — as the Internet is not an utility.
This vote is expected to set off vigorous debate both inside and outside Washington about the nature of the “free” Internet and net neutrality during the build-up to the expected FCC vote on the proposal later this summer.
While the full text of Wheeler’s proposal was not available at the time of writing, the proposed rules change is expected to present two possible options the commission can pursue. (The proposed rules change was revised from the chairman’s original proposal due to outcry from net neutrality advocates and Democrats — including Wheeler’s fellow Democratic FCC commissioners.)
First, the FCC can classify broadband as a telecommunications utility, or a Title II service. In doing this, the FCC would be free to enforce “common carriage” rules, ensuring that all Americans and all services have open and equal access to the utility. Currently, broadband is an “information service,” according to the FCC, which leaves most decisions about bandwidth and access to the ISPs.
The second option would see the FCC leave broadband’s classification alone and, instead, provoke its prerogative under Section 706 of the Telecommunications Act of 1996, which encourages access to broadband service to all Americans and empowers the commission to create policy toward improving service deployment. In this function, the FCC would ensure that bandwidth access to consumers and smaller application providers is not being impeded by “fast-lane” access deals, such as Comcast’s proposed access deal with Netflix. While the proposal does not outright ban preferential access or “fast-lane” deals, it does give the FCC the right to reserve such privileges to applications that serve the common good, such as medical records delivery.
ISPs push back
On Tuesday, the heads of the nation’s major ISPs — AT&T, Bright House Networks, CableVision, CenturyLink, Charter, Comcast, Cox, Frontier, Suddenlink and Time Warner Cable — along with signatories from 15 other companies and several of the ISPs’ trade organizations, sent the FCC commissioners a thinly-veiled threat that the industry will stop developing broadband infrastructure and abandon innovation should the commission consider making broadband an utility.
“Today’s regulatory framework helps support nearly 11 million jobs annually in the U.S. and has unleashed over $1.2 trillion of investment in advanced wired and wireless broadband networks, as well as an entirely new apps economy,” read the letter.
“[Even] the potential threat of Title II had an investment-chilling effect by erasing approximately ten percent of some ISPs’ market cap in the days immediately surrounding the Title II announcement in 2009/10,” it continued.
“Today, Title II backers fail to explain where the next hundreds of billions of dollars of risk capital will come from to improve and expand today’s networks under a Title II regime. They too soon forget that a decade ago we saw billions newly invested in the latest broadband networks and advancements once the Commission affirmed that Title II does not apply to broadband networks.”
The ISPs argue that the inability to control their networks as they see fit denies them the capability of addressing potential service issues — such as the fact that Netflix currently utilizes more than a third of all downstream bandwidth in North America. With many Internet users using video-on-demand services as their primary alternative to television or cable, the ISPs argue that to be fair to other customers, such demands on their networks should carry a higher price.
Understanding the threat
Netflix and Google — the owner of YouTube — argue, however, that this “pay for prioritization” is unfair and may even be a backdoor attempt to recover lost revenues from “cord-cutters” that dropped the ISPs’ cable television options. Additionally, many experts feel that the ISPs’ threat to cut deployment does not stand up to scrutiny and may be an attempt to find a convenient excuse for the current decline in broadband development.
As reported by Ars Technica, Verizon, for example, in recent years has cut back on its FioS service deployment and has launched an astroturf campaign to flood New Jersey’s Board of Public Utility with hundreds of emails from customers to support Verizon’s claim that it should be excused from completing the statewide broadband network — which was due by 2010 — despite the company having received financial incentives over the previous 20 years to do so.
An April report from Stop the Cap found that many of these customers were unaware that emails were submitted by the campaign in their names.
Additionally, the commission received pressure from the House Republicans via a letter signed Wednesday by House Speaker John Boehner of Ohio, Majority Leader Eric Cantor of Virginia, Majority Whip Kevin McCarthy of California, and Conference Chair Cathy Morris Rodgers of Washington state, urging the commission to back off from considering any new Open Internet rules.
“At a time when technology businesses need certainty to innovate, this is not the time for the FCC to engage in a counterproductive effort to even further regulate the Internet,” the lawmakers wrote to Wheeler.
Senate Democrats had previously written to Wheeler, urging the protection of net neutrality.
“Sanctioning paid prioritization would allow discrimination and irrevocably change the Internet as we know it,” the senators wrote. “Small businesses, content creators and Internet users must not be held hostage by an increasingly consolidated broadband industry.”
Read the letter to the FCC below