Net neutrality: Let the wild rumpus start
As expected, the Federal Communications Commission agreed today to propose a set of Net neutrality rules based on the six principles that Chairman Julius Genachowski laid out in a speech last month. (For more background, see the FCC staff's presentation on the proposal.) Those principles would bar broadband providers from blocking customers from the content, applications or services of their choice; preventing them from connecting with the devices of their choice; discriminating unreasonably against any specific content, application or service; and concealing network management techniques in a way that prevents Web users from operating freely. There are at least four notable caveats, In a win for Hollywood, the protections would apply only to legal content and services, and Internet service providers would still be able to block the exchange of infringing material. ISPs would still be able to conduct "reasonable network management," including weeding out spam. The new rules wouldn't trump ISPs' obligations to cooperate with public safety officials. And the commission would permit ISPs to dedicate a portion of their bandwidth to "managed" services, such as pay TV channels or Internet phone calls. What services would qualify and how much bandwidth could be reserved remain to be determined, in what may be the most fiercely debated part of the new rules.
Some of the biggest broadband providers and their allies in Congress question whether the commission should adopt any rules, period -- and whether the FCC even has the authority to do so. For example, AT&T tried to derail the proposed rules in advance of the meeting, and its opposition isn't likely to diminish as the formal rule-making process goes forward. These opponents have found a sympathetic audience in the commission's two Republicans, Robert McDowell and Meredith Attwell Baker, who gave only partial support to the notice of proposed rule-making. McDowell and Baker said they welcomed the chance for a thorough public discourse on how best to maintain an open Internet but doubted that government regulations were the right course. They also questioned whether there is a problem here for the FCC to fix, noting that the commission has found only a handful of incidents of ISPs behaving in an anti-competitive way.
In McDowell's view, having more competition among broadband ISPs is the solution, and that competition is rapidly emerging. But the wireless providers he's counting on can't match the ever-increasing speeds deployed by cable TV operators and wired telephone companies. Given that there is virtually no competition within each market -- not many people have more than one cable provider or more than one local telco to choose from -- a duopoly will continue to reign over truly high-speed Internet services for years to come.
One other point emphasized by McDowell is that Internet users want ISPs to prioritize some bits (e.g., video streams) over others (e.g., e-mail). That gets to the question of what constitutes "reasonable" network management, and McDowell offers a useful way of thinking about this issue: what the commission should be concerned about is management techniques that are anti-competitive, rather than those that simply treat one type of traffic differently than another.
I think the commission should also be concerned about management techniques designed to make content, application or service providers pay more for the ability to reach their customers online. It's worth remembering that Web-based companies started lobbying for Net neutrality rules after executives at broadband companies complained about the bandwidth consumed by online video services. They warned that they would need to spend heavily to increase the capacity of their networks, and said that companies like YouTube (now a part of Google) should bear some of those costs. But YouTube isn't a "free rider" -- it has invested heavily in the servers and bandwidth needed to deliver its bits to its customers' ISPs. The problem for those ISPs is that their customers happen to demand a lot of bits from YouTube and other online content providers. In other words, the issue isn't what YouTube is supplying; it's what broadband customers are demanding. Is it really YouTube's or Netflix's or Sling's fault that ISPs are having trouble keeping their bandwidth promises to their customers?
The effect of these rules may very well be that ISPs look for solutions on the demand side of the equation, not the supply side. That could mean higher monthly fees or surcharges for those who are the heaviest users. And with so little competition among ISPs, it's reasonable to worry about gouging. On the other hand, having ISPs deploy a "fast lane" for content providers willing to pay extra for higher priority could be powerfully anti-competitive. Google can afford to pay extra, but can the start-up that wants to be the next YouTube? Universal Music Group could pay extra, but could an indie band? That's why focusing on the companies supplying bandwidth-intensive apps is more problematic than on the consumers demanding them. It's also why the commission's exploration of the "managed services" issue will be so contentious. These services are the ones that would be allowed into the fast lane, making them the exceptions that could swallow the rule.
Photo: FCC Chairman Julius Genachowski, announcing his Net neutrality principles in September. Credit: Mark Wilson / Getty Images
-- Jon Healey