Wednesday, April 07, 2010

Net Neutrality Loses, But Is Not Dead (Yet)...

Monster news yesterday. A federal appeals court ruled that the FCC did not have the legal authority to regulate the network management practices of internet service providers (ISPs). In plain English, the court effectively killed Net Neutrality.

Or did they?

You see, Net Neutrality is the long-standing principle - also called the First Amendment of the Internet - that has always guaranteed that all web content was treated equally. No matter whether a site delivered streaming video or just plain text, data was data, and when you paid your ISP for web access every month, you were assured that you would have equal access to all websites regardless of their type of content.

The FCC was responsible for ensuring that Net Neutrality remained in place and that large telecom and cable operators like Comcast, Verizon, AT&T, etc., did not divide the internet into two parts - one "fast lane" where giant corporations paid extra to deliver their websites at faster speeds, and one "slow lane" for small businesses, schools, non-profits, and individuals who could not pay the extra fee and thus their sites were delivered at slower speeds. Net Neutrality was designed to prevent this type of splintering into the digital haves and have-nots.

With this appellate court ruling, the sky seems to have fallen! Bloggers are proclaiming the end of cyberspace as we know it. It is nothing less than a transformational shift, they say, and a corporate power grab. This is akin to right-wing pundits like Glen Beck decrying Net Neutrality as a "Marxist plot to take over the internet".

Everyone ought to relax. I've always framed the Net Neutrality issue, not as the Average Joe vs. the evil global corporation (the David-vs.-Goliath analogy), but rather as being between one group of giant corporations vs. another group of giant corporations. In a practical sense, the Average Joe website owner doesn't compete for speed with the giant websites anyway. They just don't have the hardware or other resources. So really, what we're talking about here is a battle between the ISPs of the world like Comcast and Verizon vs. the major internet players like Google, Microsoft, and Yahoo.

Now, you can certainly have an opinion about which side you favor, but it's misleading to frame the issue as being something other than one gargantuan industry versus another. Personally, in full disclosure, I favor the websites in this battle only because their industry remains less monopolistic and because I believe that there is far more potential for technological innovation and economic growth in the hands of website operators than there is in those of the dozen or so major telecom players who've been gathering cobwebs for decades.

Stepping back from the brink, a few things become clear as a result of the court's ruling. As Tech Trader Daily points out, there are three possibilities for what will happen next:
  1. The FCC will ask Congress to pass legislation granting them the needed authority (that they previously thought they had).

  2. The FCC will ask Congress to outright pass Net Neutrality legislation.

  3. The FCC will reclassify broadband services as a "utility" in order to bring such services under their jurisdiction.

The latter is being described as the "nuclear option". Turning broadband into a Title II service with the "common carrier" label would mean far more regulatory obligations extending way beyond Net Neutrality. It would grant the government the ability to regulate broadband the way it did telecommunications when it was still an AT&T monopoly, including price controls. If this was the course pursued - and, let's be clear, most observers do NOT believe it will - then the result would be a virtual halt to all telecom infrastructure investment for years. And that's something that nobody wants.

Thus, if you want to boil all of this down into a few bullet points to impress your co-workers, let us say simply that the court has ruled against Net Neutrality, and despite some people claiming apocalypse, Congress is likely to take up the issue next. If they succeed, Net Neutrality will return, perhaps stronger than it was (with an actual legislative mandate); if they fail, then it will mean in practical terms that large website companies like Google and Microsoft will have to pay an extra fee, although it will affect the rest of us only slightly. In either case, the Net Neutrality debate shall live on.


At 3:57 AM, Anonymous Anonymous said...

>The FCC was responsible for ensuring that Net Neutrality remained in place and that large telecom and cable operators like Comcast, Verizon, AT&T, etc., did not divide the internet into two parts

No, this has never been the case, as the recent case (where the FCC attempted to exercise that authority) was the first time it tried, and failed.

At 1:57 PM, Blogger Robert J. Domanski said...

Yes, I should have clarified. The FCC had taken the responsibility upon itself to ensure Net Neutrality continued, and that authority was not formally granted to it by some other governmental institution. Sorry if that was not clear.


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