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FCC Takes First Step to Formally Regulate the Internet Through Proposed Neutrality Rules

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WASHINGTON, October 22, 2009 - The Federal Communications Commission on Thursday approved controversial proposed rules governing internet access during its monthly public meeting. Commissioners on all sides of the debate stressed the importance of having an open internet, and in engaging in constructive dialogue on the issue going forward.

The move marked the beginning of a formal phase of regulating internet access. Although the FCC in August 2005 adopted a policy statement pledging fidelity to four Net neutrality principles, such a policy was never binding upon all broadband providers.

Additionally, the proposed rules go beyond those four generally-accepted neutrality principles.

FCC Chairman Julius Genachowski, a supporter of Net neutrality efforts for some time, noted that the FCC has been addressing open internet questions since 2005.

“[W]e face the dangerous combination of an uncertain legal framework with ongoing as well as emerging challenges to a free and open Internet,” he said.” Given the potentially huge consequences of having the open Internet diminished through inaction, the time is now to move forward with consideration of fair and reasonable rules of the road, rules that would be enforceable and implemented on a case-by-case basis,” he said.

Republican Commissioners Robert McDowell and Meredith Attwell Baker both expressed skepticism about the need for regulation.

During the meeting, Genachowski announced the development of a Technical Advisory Process to be launched by Julie Knapp, chief of the FCC Office of Engineering and Technology, to make sure engineering principles – and not politics – inform answers to technical questions.

Under the proposed draft rules, a broadband service provider would not be allowed to prevent users from “connecting to and using on its network the user’s choice of lawful devices that do not harm the network” or to prevent users from sending or receiving lawful content on the Internet.

The proposed rules also hold that providers cannot prevent users from running lawful applications or services. The agency said it is seeking comment on how it should address internet protocol-based offerings provided over networks used for broadband. Comments on the proposed rules are due on January 14 and reply comments on March 5.

Wireless association CTIA said Thursday that it was pleased the Commission will investigate how the proposed rules should apply to the mobile wireless broadband platform. It also noted that “the imposition of net neutrality rules will degrade the value of unencumbered licenses purchased in the most recent auctions and threaten the integrity of the auction process.”

Barbara Esbin, a senior fellow at The Progress & Freedom Foundation, said she is concerned that “the FCC is poised to take intrusive action into a well-functioning Internet ecosystem without either the demonstrated need or clear legal authority to do so.” Chairman Scott Cleland, a vigorous critic of Net neutrality rules, said in a Thursday statement that “The fundamental unease surrounding this proposed rulemaking is whether new, expanded, and formal FCC regulations could fundamentally transform the long-privatized open internet into a de facto public information commons or morph private broadband companies into de facto public utilities.”

Gigi Sohn, president of Public Knowledge, said, “We are concerned about how the commission addresses the issues surrounding copyright enforcement. In particular, we do not believe copyright holders have the right to demand filtering of everyone’s network traffic, which would violate privacy and free speech rights of everyone online. We are also concerned about the definition and operation of managed services.”

The FCC also received praise from a number of groups, such as the Open Internet Coalition, for its diligent work to preserve Internet freedom.

Meanwhile, two unlikely bedfellows on the open Internet front emerged Wednesday night in a blog entry cross-posted on the public policy websites of Google and Verizon Wireless. The move followed comments delivered by Ivan Seidenberg, CEO of Verizon Communications, that were highly critical of net neutrality proponents.

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  1. Stifel Nicolaus just released a report on the FCC’s decision. They note that “the FCC appeared to stick to the basic direction laid out by Chairman Genachowski, while showing flexibility on a number of issues, including, we believe, regarding managed Internet services, how to structure the nondiscrimination/reasonable network management rules, and a long public comment period.”

  2. The US government is proposing broad new regulations for telecommunications and cable internet service providers.

    The new proposals appear to target specific providers for regulation and government oversight. Specifically, Massachusetts Senator Ed Markey has proposed the Internet Freedom Preservation Act of 2009, or the “Net Neutrality” bill, outlining government policies to impose new governance and restrictions targeting telecommunications and cable providers AT&T, Verizon, Time Warner and Comcast.

    The proposed is based on the unfounded fear that service providers will “control who can and cannot offer content, services and applications over the Internet utilizing such networks.”

    The Markey bill indicates the vast majority of consumers receive services from only one or two dominant internet service providers. And, the bill says the national economy could be harmed “if” these providers interfered with access to internet applications.

    The bill proposes regulations imposing equal treatment (eg price/performance) of all internet traffic and content, regardless of content type and delivery costs. Specifically, the legislation proposes internet service providers could not sell prioritized internet applications or services.

    One of the main problems with the proposed legislation is the lack of recognition of costs to provide internet services. Some applications, such as video are bandwidth hogs and require significantly greater network infrastructure and associated costs to deliver when compared to the network infrastructure costs to deliver email access. Under the proposed legislation, services providers would have to charge the low bandwidth users (casual browsers and email readers) more to offset the higher costs of the video users. One result of the proposed legislation would be less consumer choice and a hidden “bandwidth hog tax”. Today, most service providers offer tiered products and pricing to consumers and businesses to account for the additional costs to deliver bandwidth intensive applications. You pay more if you use more under the tiered pricing model. These are not “discriminatory” practices. Rather, tiered pricing and application prioritization are sound business models delivering reliable, profitable product choices and unburdened internet ecommerce. Consumers and businesses currently have choices. The proposed legislation takes away choice and increases costs to consumers and businesses.

    Another problem with the legislation is, certain applications such as voice and video over the internet require prioritization and special treatment to work properly. The proposed legislation makes existing application prioritization products and networking practices illegal. Internet service providers would have to dismantle these services to make all internet applications “equal” with no prioritization schema. The new legislation would kill off reliable voice and video over the internet as we know it.

    The other problem with the Net Neutrality legislation is anti-trust and federal trade regulations are already in place to protect consumers and business from monopolistic practices and unfair trade. For example, when AT&T disconnected MCI customers in 1974, MCI filed and won a successful anti-trust lawsuit resulting in breakup of the AT&T monopoly. Another example is, the Federal Trade Commission recently investigated possible antitrust violations caused by the Apple and Google sharing two board directors. Arthur Levinson has since stepped down from both Apple and Google boards.

    The US government would better use taxpayer dollars and valuable legislation time by asking two questions:

    Which companies are hiring lobbyists and launching advertising campaigns promoting Net Neutrality legislation?

    What is their agenda?

    Net Neutrality legislation is not needed. Consumers would have less choice and higher costs. Internet service providers would incur additional costs and compliance overhead. Taxpayers would pay higher taxes to create and support additional government oversight organizations.

    What business and consumers need is effective interpretation, oversight and enforcement of existing laws and regulations.

    Disclosure – Joe Tighe has no paid relationships, products or endorsements from any company, political or government organization cited in this article.

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