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February 20, 2014

FCC Chairman Says Open Internet Rules Coming but Neutrality Remains Open Question


There is never a dull moment when it comes to the fate of net neutrality—aka “Open Internet”—in the U.S.  For example, in a case of what could be described as “thanks, but no thanks!”, this past week saw the Obama administration state that it is in favor of net neutrality as a guiding regulatory principle but then passed the ball back to the Federal Communications Commission (FCC) to make the rules. It did, however, have some nice words expressing full faith and confidence in FCC Chairman Tom Wheeler’s ability to come up with a regime that could pass muster with the courts and congress.

Chairman Wheeler, who has stated in the past few weeks that—in the light of the FCC’s loss in the Verizon v. FCC decision—he and his colleagues would be coming up with proposed rules, without formally presenting them, did issue a statement on the subject of Open Internet rules. It has industry observers abuzz to put it mildly. 

The previous link is to the full text of the Chairman’s statement.  Below are a few choice pullouts that highlight where things stand starting with the following:

I intend to accept that invitation by proposing rules that will meet the court’s test for preventing improper blocking of and discrimination among Internet traffic, ensuring genuine transparency in how Internet Service Providers manage traffic, and enhancing competition. Preserving the Internet as an open platform for innovation and expression while providing certainty and predictability in the marketplace is an important responsibility of this agency.

After saying that he was glad the Court had upheld the FCC’s legal authority to promulgate rules that encourage broadband deployment Wheeler pointed to a few areas where the FCC could act.

These are very relevant since the FCC (see below) is not going to appeal the Court’s decision to the U.S. Supreme Court which is a very wise decision.  Plus, as will be seen from reading the statement, there is also an adroit move not to try and regulate ISPs under the Commission’s Common Carrier rules but leave that option open. The latter while advocated by some would at least to me seem like throwing a car into reverse while going 70 miles an hour, i.e. substantial and possibly irreparable damage would be the result.

So in brief, here is what Wheeler is asking his fellow commissioners to consider:

Enforce and enhance transparency rules.  The idea is to give “edge providers” the information they need when making business decisions about the best path forward for their launching of new services.  

Fulfill the “no blocking” goal. The goal is to assure edge providers are not unfairly (whatever that means) blocked from reaching customers by ISPs.  The Court found this a laudable goal but ruled the FCC needed to work harder on the justification for how it might use it regulatory authority.  Wheeler says that within the confines of the decision he plans to do just that.

Fulfill the goals of the non-discrimination rule.  This is a complex area involving Section 706 of the Communications Act that included such niceties as:

  • Keeping Title II authority on the table in case there is as need to classify ISPs as common carriers
  • Abandoning a challenge to the Verizon decision since the FCC feels it has the authority it needs under other decisions to act
  • Opening of a new plan called “Protecting and Promoting the Open Internet,” so that all public input on the court’s remand of the Open Internet decision will be collected.
  • Hold Internet Service Providers to their commitment: major ISPs said they would honor the safeguards of the 2010 Open Internet Order. Wheeler noted, “That’s the right and responsible thing to do, and we take them up on their commitment – which will continue to provide protection for the Open Internet until new rules are put in place.”
  • Enhancing competition: the Commission will look for opportunities to enhance Internet access
  • competition. One obvious candidate for close examination was raised in Judge Silberman’s separate opinion, namely legal restrictions on the ability of cities and towns to offer broadband services to consumers in their communities.

This last point has jumped to the top of the headline list, and surely is going to be a contentious one as incumbents try to head off a raft of potential new competitors which could jeopardize the value of their franchises.

Wheeler concluded:  “The FCC must stand strongly behind its responsibility to oversee the
public interest standard and ensure that the Internet remains open and fair. The Internet is and must remain the greatest engine of free expression, innovation, economic growth, and opportunity the world has ever known. We must preserve and promote the Internet.

Tom Wheeler. Image via ABC News

On paper, this all sounds reasonable.  As is always the case with such things, the devil will be in the details. Indeed, out of the list above, the one that might be the least contentious is the one on greater transparency.  Regarding the rest of the list, as noted, while I appreciate keeping the option of common carriage regulation of ISPs open this is as big a non-starter as would be fighting the Verizon result in the U.S. Supreme Court.   Non-blocking and non-discrimination are very laudable goals, but history says they are likely to be subject to long legal disputes as incumbents use delay as a very effect substitute for competing under new rules that are designed to be “fairer.”  And, the one about giving state and local governments greater leeway, as mentioned, is not going to sit well either with the industry or with those who are looking to retrain and not encourage government intrusion into commercial spaces.

Finally, did I mention Congress?  He is the mention. Until the Congress provides clarity on what should be considered universal service access in a broadband era, and hence delineates the role of the FCC is assuring that definition, it seems to me this is all wishful thinking. 

Chairman Wheeler has now articulated on several occasions the need for speed, the desirability of regulatory forbearance in favor of competition and industry collaboration, and the voice of the customer in arriving at a measured and fast approach that is designed with not just the present but future in mind. The goals, even within the constraints of the Verizon, could advance the ball forward if a consensus as to their efficacy could established in a bi-partisan manner and some details provided in terms of specific instructions to the FCC as to what it can and should do. 

Unfortunately, it is an election year. This is bad on two fronts. First, it means discussion of the issues is likely to become partisan.  Second, even if there were not, the need to keep this a debating item as a means for politicians to extract campaign contributions rather than one for actual legislative action almost always translate into “wait until we have a new Congress.”  From a purely political perspective it is not the nature of the Washington, D.C. political cauldron to do anything but turn up the heat on contributors.

It is for these reasons you have to have some sympathy for Chairman Wheeler. The White House has told him it is all his.  The Appeals Court has sent him back to the drawing board.  The Congress is a political quagmire. He has to be feeling a bit

What the FCC finally proposes is still going to be of great interest. However, whether it brings sanity to the marketplace where ISPs are likely to demand tiered pricing and where we in the U.S. are likely to have if not fewer choices at least more costly ones, is problematic at best.  It only exacerbates the fact that the clock is still ticking on the death of the PSTN, VoIP services are increasingly being deregulated as the world going all IP, and the U.S. continues to languish when it comes to plans to give universal access to broadband services at not just reasonable rates but at the speeds being offered the citizens of the countries we compete against as a nation. 

My colleague Gary Kim’s take on this is that net neutrality is not dead.  It may not be dead, but it is clearly either on life support or is going to have a long recovery period.

There have been plenty of predictions I have made in the past few years that I am delighted turned out correctly. My view is that speed to clarity on having a net neutrality regime in place—which, at a minimum, is rough justice for all stakeholders, industry and customers together—will be at a snail’s pace, if there is any action at all. But I desperately hope that view is wrong.   




Edited by Alisen Downey


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