Archive for 22 December 2010

FCC on Net Neutrality: A Step Forward

22 December 2010

The FCC approved new rules yesterday protecting net neutrality for the first time, bringing to a close a turbulent year of debate over how to best protect the open Internet and ensure the global network remains a vital platform for innovation. While the full text of the action is not yet available, key excerpts are available here, and it’s clear that there will be three new rules governing the ability of internet service providers to regulate the flow of information over their networks. 

First, internet service providers must be transparent in the ways they manage the flow of information over their networks. Second, providers of fixed broadband access are forbidden to block any legal content, applications, services or devices from the network. Third, providers may not “unreasonably discriminate” among content or users. These rules build on the principles laid out in the FCC’s 2005 Internet Policy Statement, codifying the ideal of an open, non-discriminatory internet into enforceable rules for the first time.

Reflecting the longstanding tenor of the net neutrality dispute, reaction to the FCC Report and Order has been dominated by criticism from the right (including FCC Commissioners McDowell and Baker, who voted against the action) that the rules are unnecessary and liable to stifle investment, and criticism from the left (including Commissioners Clyburn and Copps, who joined Chairman Genachowski in approving the measure) that the rules don’t go far enough in protecting the interests of internet users.

In particular, public interest groups and open internet advocates have criticized the FCC for excluding mobile networks from most of the protections afforded wired broadband. While blocking competitors’ apps and services will be outlawed, mobile network operators will retain a broad ability to manage their networks and prioritize content. As Chairman Genachowski explained in his remarks, there are technical issues that affect mobile that don’t exist on wired networks– there’s simply less capacity on mobile networks, and without an ability to actively manage traffic, mobile networks could quickly become overwhelmed and incapacitated by a few hyperactive users. 

Mobile is also different from wired broadband in that, for most consumers, the mobile industry is genuinely competitive. If you’re a Sprint customer, and Sprint blocks you from using third-party applications to pigeonhole you into using their own services, most people in this country are covered by at least three other major mobile networks.  As the mobile ecosystem continues to evolve, we’ll have to hope that the FCC will remain vigilant, and if anti-competitive, anti-consumer behavior by mobile networks operators becomes the norm, they will step in with stronger protections. For now, the FCC’s “measured steps” on mobile broadband are a prudent approach to regulating a dynamic industry.

The Report and Order also raises concerns about two other areas, without specifically regulating either. First, the FCC outlines four reasons why “pay for priority” arrangements– whereby a third party would pay the network operator to favor certain traffic over other– would probably violate the “unreasonable discrimination” rule. Second, the document describes “specialized services,” distinct from the internet but riding the same wires, including voice and video over IP. The FCC again pledges to monitor these services, and ensure that they’re not being used to evade the net neutrality rules. For now, we’ll have to take them at their word. As on mobile platforms, there’s extraordinary opportunity for innovative new services to arrive via broadband, and before there’s evidence of anti-consumer behavior by network providers, there’s no need to discourage innovation with preemptive rules.

In a blog post yesterday, the Chairman of our Globalization Initiative, Dr. Rob Shapiro, celebrated the end of the net neutrality fight. I hope he’s right, but I’m afraid this issue may linger for some time. Most troublingly, the FCC’s Report and Order does not stand on the strongest legal footing.  After the DC Circuit Court ruled earlier this year against the FCC in its suit charging Comcast with illegal content discrimination, the FCC’s authority to regulate the internet has been in some legal doubt. This lack of clarity should be troubling for both sides– network operators, because it continues uncertainty about the legal framework in which they will be working, and consumer advocates, because it puts these new rules protecting net neutrality in jeopardy. Ultimately, congressional action may be required to clarify the FCC’s authority and to establish clear rules of the road for this dynamic, exciting and important part of our economy.

Despite these ongoing issues, I applaud the FCC and Chairman Genachowski for finding a compromise on net neutrality that, for the first time, protects our open internet and the interests of internet users without impeding network providers in their continued investment in building the internet’s infrastructure.