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The Net Neutrality Slap Down: Time to Move On

The decision from the Court of Appeals for the District of Columbia was hardly unexpected, but it was sharp and unequivocal. Writing for a unanimous three-judge panel, Judge David Tatel told the Federal Communications Commission that its Open Internet Order, designed to preserve network enutrality, exceeded its authority: “[E]ven though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates.”

You would think that by now, the FCC would have figured out that the courts mean it. Every time the Commission tries to stretch beyond the letter of the law, it gets shot down. In the case preceding this one, the FCC fined Comcast for violating its network neutrality rules.  The Supreme court struck down the rules. The FCC morphed them into the Open Internet Order, and now the appeals court has said no again. The White House and the FCC may appeal the decision to the Supreme Court, but their chances are not good. Judge Tatel, a Clinton appointee is a highly respected jurist who carries a lot of weight with Supreme Court liberals. (Judge Judith Rogers, also a Clinton appointee, concurred; Senior Judge Laurence Silberman, a Reagan appointee, dissented in part but in a way that would have further restricted FCC powers.)

Frankly, FCC Chairman Tom Wheeler ought to move on. The theory behind network neutrality is sound. The argument is that unless neutrality is enforced, carriers such as Verizon and AT&T will adopt discriminatory practices or pricing policies that will favor the largest and most powerful content providers. Startups and little guys with be hurt and innovation will suffer.

The problem is that network neutrality violations are unicorns. Everyone knows what they are supposed to look like, but no one (well, hardly anyone) has ever seen one. Free Press, a pro-neutrality advocacy group, reacted predictably to the decision: “Right now there is no one protecting Internet users from ISPs that block or discriminate against websites, applications or services. Companies like Verizon will now be able to block or slow down any website, application or service they like. And they’ll be able to create tiered pricing structures with fast lanes for those who can afford the tolls and slow lanes for everyone else.”

But why would they? What actually would be in if for them? One reason it is hard to make a compelling case for net neutrality regulation is that in the two decades since the internet was turned over to private carriers, this simply has not happened. If carriers really started messing with

att-sponsored-dataAT&T recently announced that it would arrange deals with content providers who would subsidize traffic on the AT&T 4G wireless network and those bits would not count against customers data caps. Opponents, as expected, promptly denounced the idea as a violation of net neutrality and the FCC said it would at least take a close look. The real question is whether this will help or hurt consumers, and I think the best we can say at this point is that it depends on just how it is implemented. I could certainly see a benefit to me from being able to watch Netflix without worrying about data consumption–provided nothing else I depend on is lost in the process. I think it is time for a bit of regulatory humility; let the FCC stand back and see how things work out. If they go badly for consumers, there will be plenty of time for government intervention.

The appeals court left the door open to a more draconian alternative. The FCC has classified broadband service providers as Title II carriers, putting them in the same lightly regulated class as cable TV operators. It could, as the court noted, reclassify them under Title I, which would regulate them as common carriers, the same as voice providers. Such a course has been advocated by Free Press and others.

I think it would be a terrible mistake. For one thing, it would embroil the FCC in a huge fight with Congress and would likely freeze progress on frankly more important issues, such as freeing more wireless data spectrum and furthering the transition of telephone services to IP networks. Second, it would create a regulatory regime in which the only companies likely to thrive are the spiritual and literal heirs of the Bell System, AT&T and Verizon (and to a lesser extent, Century Link.) Survival under that sort of regulation requires a special skill set which these carriers have spent over a century refining. Title II reclassification would end up being a far more profoundly anticompetitive move than any retreat of network neutrality.

 

Published by

Steve Wildstrom

Steve Wildstrom is veteran technology reporter, writer, and analyst based in the Washington, D.C. area. He created and wrote BusinessWeek’s Technology & You column for 15 years. Since leaving BusinessWeek in the fall of 2009, he has written his own blog, Wildstrom on Tech and has contributed to corporate blogs, including those of Cisco and AMD and also consults for major technology companies.

5 thoughts on “The Net Neutrality Slap Down: Time to Move On”

  1. While I agree that nothing has occurred yet to cause concern and the whole policy itself has issues such that the spirit (articulated by many well meaning and intended groups, such as many in the arts) did not necessarily match up with the policy, the one thing that I _fear_, and hopefully it is not too crazy, irrational, delusional a fear, is that the bulk of the internet is now served through cable TV providers. All one has to do is see their primary business model and it isn’t too far a leap to believe they will find a way to build internet access into a similar model.

    You asked, why would they? I say it is easy enough to understand why—money and control. Those are the things driving the entertainment business as it is. It is the one thing that is driving cable and network broadcasting nuts at the moment. If cable TV ISPs can figure out a way to apply that old model to this new medium, I don’t think they will hesitate for a second. It’s the American way. The cable industry once again has the opportunity to exercise the role of gate keeper.

    Joe

    1. The best outcome would have been for Congress to embrace the reasonable Open Internet statement. But that wasn’t going to happen and we can’t live in a world of might have beens.

      Title II reclassification, favored by people like Susan Crawford and Tim Wu, strikes me as a terrible application off he precautionary principal that will do real harm to prevent a still-hypothetical evil.

      1. I don’t like being a cynic, but lo, here we are…

        “strikes me as a terrible application off he precautionary principal that will do real harm to prevent a still-hypothetical evil.”
        It’s to the level of natural law, “that which isn’t forbidden is compulsory”. The defeat of net neutrality will serve to accelerate the compulsory. Though I do share your cynicism towards our political leaders, and it’s the way it should have been handled to begin with.

        “It strikes me as very odd that many people who are horrified by the NSA are prepared to give the government sweeping regulatory powers over the internet.”
        Well, under the Constitution, especially the 1st and 4th amendments…Yes! The government (the people) funded and invented the internet. They own it! Besides, which is more consistent? Elected officials taking responsibility, or corporate boards? One answers to the electorate, the other to shareholders. Where is it that we guarantee them such control and profit? Go invent your own internet then. We’ll use “PBS”, or pay you. Choice is good,

  2. First of all, net neutrality or not, I don’t believe a single ISP dares to block the access. However I believe they would love to prioritize certainly types of traffic versus other types of traffic, charging more money for higher priority traffic. It is actually a well accepted practice in many other industries. For example parcel delivery, FedEx charges different rates for different priority parcel delivery: $48.50 for next day by 8am, $20.50 for next day by 10:30am, $18.45 for next by 3pm, $15.07 for 2nd day by 10:30am, and so on. You can also ship parcel by USPS express mail, priority mail, first class mail, media mail, etc. However, USPS media mail is very cheap, but very slow, and sometime you lost your parcel. ISP certainly want to have the same type of business model of charging digital parcel (IP packet) by priority. If you or Netflix pay cheap, your video packet may arrive slow or lost, just like USPS media mail. But if you cannot tolerate the froze screen or pixelization picture, then ISP wants you or Netflix pay a premium to deliver your video packet faster. Should the consumer always get the long end of stick of having best service and cheap price, and business always get the short end of stick of building expensive network and low return? Or vice versa? Or some middle ground?

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