While many of us spent the week before Christmas with visions of sugarplums dancing in our heads (or, perhaps we were more fascinated by the machinations going on in the U.S. Senate and House with respect to landmark issues like “Don’t Ask, Don’t Tell,” and the passage of the START treaty), the FCC took some landmark action of its own by taking a first stab at rules governing Network Neutrality. Don’t glaze over…this is pretty interesting stuff.
There is no question that the internet is being used by an increasing number of people who rely on it for a great variety of applications (“applications” include, for example, Google searches, Skype, Facebook, Netflix and YouTube videos, among an almost infinite array of other options). Downloading pictures from Aunt Sally’s summer vacation in Duluth, for example, can now be done in a few seconds with a broadband connection, while with a dial up connection (remember dial-up?), such a download would have taken so long as to make the process unmanageable (Perhaps not getting to see those pictures might not be a bad thing, but I digress). The issue is that there is an increasing amount of traffic pumping over and through the internet, and at least some of those entities that provide the internet pipeline and all of the boxes of electronics that make the internet work have wanted to capitalize on the increased traffic by charging higher rates to those who use the most capacity. This is an issue for both wireline and wireless services.
The challenge faced by the regulators (and there remains such a large question about whether, in fact, the FCC has the authority to regulate the internet that part of the materials released in late December read a bit like a pre-emptive defensive strike against what’s likely to be a long lizard-like logjam of litigation) is that of balancing open and unfettered access to the internet by all consumers with the needs and interests of those who make it work. While consumer groups would have preferred rules that enforce and ensure what they see as a free speech issue, the largest providers (read: Verizon, Comcast, and Time Warner, among others) would have preferred no governmental regulation or intervention so that they could develop products and manage the technology, and make business decisions to encourage investment and innovation without the big hand of government imposing limitations and restrictions on how they do business. The end result—or at least the end-result for now—is likely to make neither side totally happy, although it does create an initial framework for regulation with litigation to follow.
It’s interesting to note that in its first stab at creating a regulatory framework, the FCC opted to treat wireless and wireline or fixed services differently. Specifically, because of a greater risk of congestion in wireless networks, wireless providers need greater flexibility to manage their own networks’ service offerings and so are not as tightly bound as are those that provide traditional wireline service. Wireless companies are prohibited from blocking internet voice services (VoIP), but they will be able to block access to other applications by relying on the easy-to-understand—but annoying nonetheless--issue of network congestion. After all, wireless spectrum is a limited commodity, and as increasing numbers of people pump increasing amounts of information over such networks, the issue of congestion will continue to create challenges in communication for both transmitters and receivers.
The FCC’s December action created three rules to ensure open access to the internet: transparency, no blocking and no unreasonable discrimination. For those diehards who have read this far, these “rules” have yet to be completely defined and as such represent a first stab at providing some guidance without the benefit of litigation for clearing up the details. Specifically, transparency will require that an entity providing broadband internet access will be obligated to disclose accurate and current information regarding its network practices, performance and commercial terms of service. This information must be provided in a way that consumers can make “informed” choices between providers.
The “no blocking” rule contains separate provisions for wireless and fixed, or wireline providers. Wireline or fixed providers are prohibited from blocking “lawful content, applications, services or non-harmful devices, subject to reasonable network management.” There are so many key words in that sentence it’s hard to know where to start. Phrases like “non-harmful devices” and “reasonable network management” have future litigation written all over them. On the wireless side, “no blocking” also includes the provision that forbids such providers from blocking “applications that compete with the provider’s voice or video telephony services, subject to reasonable network [management].” This means that wireless providers cannot block calls from VoIP or other non-traditional formats.
Last among these three rules is that requiring “no unreasonable discrimination.” This is a phrase that I suspect will pay for lots of expensive dinners in Washington where the initial litigation is likely to begin. However, the rule, which applies to wireline service providers only requires that fixed broadband providers “cannot unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service.”
Also important, at least in the initial releases from the FCC is the fact that nowhere is the issue of paying for priority discussed. That is, providers believe that they should (--and must) charge their largest customers for extra priority in order to deliver the volume of data/information that some applications, including video and gaming, among others, require. This implies that the cost for Internet is likely to morph away from a flat monthly rate to one that’s based on actual volume of content delivered and transmitted.
The FCC’s first stab at rules to govern network neutrality are designed to prevent future harms, not manage current issues. As such, additional rules will be defined and litigated which we can hope will create a reasonable playing field for all Internet users.