FCC Wrestles With Depth, Breadth of Net Neutrality Comments

WASHINGTON, February 8, 2010 – The Federal Communications Commission has received thousands of comments both lauding and criticizing its proposed plan to address the controversial issue of network neutrality.

The media and communications communities spent hundreds if not thousands of hours carefully crafting their arguments as their members view net neutrality as a linchpin to the future of Internet innovation and economic growth.

Content distributors, consumers and parties concerned about limitations on free speech largely favor net neutrality in their filed comments.

Some content makers also support the concept, but the largest content makers appear to oppose it.

Net neutrality supporters argued that a free and open Internet is necessary for innovation and that a lack of competition among service providers removes market protection from infringement.

“The success of the open Internet as a tool for economic growth and expression belies the premise that service differentiation is necessary or desirable,” submitted the City of Philadelphia’s government.

Sony also believes an open, unfettered Internet is best for the nation’s future: “This investment has been predicated on consumers having unfettered access to the legal content, applications and services of their choice” the electronics giant wrote. “Future investment requires the preservation of this underlying principle to protect the common interests of consumers, network operators, content developers and application providers in the Internet ecosystem. Moreover, SEL believes that ultimately the commission’s proposed network neutrality rules, if implemented, would lead to more expansive broadband deployment and greater consumer uptake of broadband connectivity and services.”

Phone firm Vonage wants the FCC to go further: “It recommends that the commission modify each of the first three principles to clarify that a provider of broadband Internet access service ‘may not prevent or hinder’ users from obtaining lawful content or applications or attaching lawful devices to the network. This change will better capture the harm to consumers that the commission designed these principles to prevent: degradation of service as well as a complete loss of service.”

Skype chimed in with concerns about unfair Internet transmission blockage by carriers: “Evidence suggests that carriers have the incentive and ability to harm innovation in the communications application market either by outright blocking or more subtle forms of discrimination. Because these applications offer consumers additional choice and savings, they should not be delayed, obstructed or throttled by broadband access providers. The commission’s openness policies should apply in a competitively neutral way across all broadband platforms.”

Google also cautioned that lack of an open Internet could harm innovation: “The Internet has created unprecedented benefits and opportunity for every facet of our society.  For this reason, the FCC must take the broadest view when assessing how the assurance of open broadband networks affects risks, investment and innovations associated with broadband infrastructure, and the overlay services, content and applications that ride upon it. In brief, the open Internet drives overall investment and innovation in technology and in other sectors, maximizes free speech and civic participation, and engenders more sources to create the fastest and greatest innovations.”

The Internet search giant also touched on issues surrounding the use of deep packet inspection.

The Electronic Frontier Foundation and other commenters brought up the Madison River case: “Already, we have seen some troubling examples of protocol-based discrimination by ISPs. In 2005, Madison River Communications selectively blocked voice-over-IP (VoIP) services that could compete with its wireline telephone services.”

Many of these groups also expressed concern about possible content discrimination. For example, “EFF is also concerned that content-based discrimination may be looming on the horizon. The entertainment industry, for example, has been pressing ISPs to implement network-based measures to address the problem of online copyright infringement.”

DISH Network was one of the few content distributors to support network neutrality. It wrote that: “Nondiscrimination rules are necessary, because vertically-integrated broadband providers have the incentive and ability to discriminate against competitors like DISH. By favoring their own video services or degrading services of competitors, telco and cable providers can drive customers away from competitive direct broadcast satellite services.  Permitting such anticompetitive behavior does not serve the public interest.”

The opposition to network neutrality comes not only from internet service providers but also from those who seek firmer copyright enforcement. The following is a summary of the most common and unusual claims they make.

The Motion Picture Association of America claims to support the principles but pushes further with concerns about content piracy. It says that “to make clear that ISPs are not only permitted, but encouraged, to work with content owners to employ the best available tools and technologies to combat online content theft. Service providers also should be encouraged to work with content owners to implement consumer education programs that can help law-abiding Internet users find legitimate sources for online creative works, while simultaneously warning repeat infringers that they risk consequences if they continue to violate the law.”

AT&T uses some of the strongest language slamming a net neutrality plan, asserting that robust competition already exists: “Unfortunately, the commission’s [notice of proposed rule making] charts an unwise, unwarranted and unprecedented reversal in course.” The telecommunications firms says that “far from being a ‘cozy duopoly’ as some pundits claim, wired broadband Internet access services are robustly competitive, as evidenced by increased speeds, rapidly growing usage, significantly declining prices on a per-bits-consumed basis, and very substantial customer ‘churn’ rates for both cable and telco broadband providers.”

Most of the commenters also say the FCC is trying to solve a problem that does not exist. For example, AT&T adds that “new regulation, moreover, without any credible data-driven evidence of any market failure amid this robust competition.  Instead, it bases its hyper-regulatory proposals solely on the basis of speculation that a market failure might arise someday in the future.”

Verizon Communications and other firms claimed that the inability to manage their network properly would result in overcrowding and potentially a limit on innovation.

Verizon also claimed that net neutrality violates the First and Fifth amendments. “Contrary to claims of net neutrality proponents who assert that government regulations would promote First Amendment interests, the First Amendment protects against governmental restrictions on speech. Here, by restricting providers’ ability to offer their own differentiated services, whether by using their own content or innovative content and services offered in collaboration with others, the proposed rules would impose direct restraints on speech in violation of the First Amendment.”

It said net neutrality would impinge upon the Fifth Amendment by “requiring the compulsory dedication of private property to the use of others with no express statutory authorization and without compensation.”

Comcast, which some in the broadband community believe is the impetus for the FCC’s net neutrality rulemaking, said: “In light of these real risks, rules should only be adopted if a record is built that includes concrete facts and data demonstrating (1) actual – not conjectural – harms that would be remedied by the proposed rules; (2) actual – not hypothetical – benefits that would be gained by adoption of the proposed rules; and (3) that the harms and benefits outweigh the real risks to continued innovation and investment.  To date there is no such record.”

Comcast also finds the rules to do more harm than good: “(1) The proposed rules apply only to a narrow class of Internet service providers, ignoring whether the Internet is “open” at all of its layers; (2) The proposed “nondiscrimination” rule would prohibit network operators from adopting a number of reasonable practices that potentially could have significant benefits for consumers and the public interest; and  (3) The proposed “transparency” rule would create a new and burdensome legal duty for network operators while failing to impose corresponding duties on other key participants in the Internet ecosystem.”

Wireless providers also oppose network neutrality under network management grounds. Their main belief is that wireless networks operate differently from wired networks and so should receive the same regulation. They feel that they must deal with a lower amount of spectrum and must manage their networks more heavily. Additionally, the section on the connectivity of devices is truly something they feel their networks cannot handle. They also believe that their market — unlike the wireline market — is truly competitive with constant price drops and a wide variety of choices along with competition from WiFi hot spots and WiMax.

Pros and Cons Have Merit, But Is FCC Authority at Stake?

While the comments in support and opposition have merit, one of the biggest issues covered by the comments was whether or not the FCC has the authority to take these actions.

The FCC is using authority given it under Title I and II, which say, respectively, that the agency has ancillary authority and can regulate broadcast services. However, Time Warner disagrees: “Having appropriately classified broadband Internet access service as a Title I service, the commission cannot now seek to apply core aspects of Title II by regulatory fiat.”

Verizon said: “In 2005, when the commission confirmed that wireline broadband Internet access service is an information service outside the scope of Title II regulation, it found that such services were “offered by two established platform providers, which continue to expand rapidly, and by several existing and emerging platforms and providers.”

Google and Public Knowledge oppose this view and claim that the FCC does have the authority to provide this regulation. Google says the commission actually has authority under more than just Title I and II – it also can claim authority under Title’s II and VI. Google states: “Communications using last-mile broadband facilities – whether copper, fiber, or wireless – constitute “interstate… communication by wire or radio.” In the Wireline Broadband Order and Cable Modem Declaratory Ruling,  the commission held that it had ancillary jurisdiction over wireline and cable  broadband Internet access service providers, explaining that their “services are unquestionably ‘wire communications’ as defined in [the Act].”

The FCC also has determined in the Wireless Broadband Classification Order that wireless broadband Internet access service, offered using mobile, portable or fixed technologies, is “interstate . . . communications by radio.” Internet-based video programming is now significantly impacting both television broadcasting and cable, altering the economics  of these marketplaces and affecting local programming, diversity of viewpoints, service delivery, and the FCC’s overall regulation in these areas. Broadband Internet access services also enable consumers to place Internet-based VoIP calls to “traditional land-line telephone[s] connected to the public switched telephone network.” The widespread use of VoIP and related services as cheaper and more feature-rich alternatives to Title II services has significant effects on traditional telephone providers’ practices and pricing, as well on network interconnection between Title II and IP networks that consumers use to reach each other, going to the heart of  the Commission’s Title II responsibilities.  In light of the impact of these Internet-based services on services regulated under Titles II, III and VI, as well as the effect upon the FCC’s regulatory framework under those Titles, precedent confirms the FCC may exercise its ancillary jurisdiction to fulfill its explicit mandates. “

The issues surround net neutrality have been discussed for years in both official and unofficial capacities, but with the FCC’s recent proposal of a rulemaking, the concerns have a forum for further discussion and may actually be addressed.