On Thursday, the Federal Communications Commission (FCC) announced its new policy about Open Internet Rules, frequently referred to as "Net Neutrality." FCC Chairman Tom Wheeler wrote on April 24, 2014 about the agency's new policy:
"The Notice proposes the reinstatement of the Open Internet concepts adopted by the Commission in 2010 and subsequently remanded by the D.C. Circuit. The Notice does not change the underlying goals of transparency, no blocking of lawful content, and no unreasonable discrimination among users established by the 2010 Rule. The Notice does follow the roadmap established by the Court as to how to enforce rules of the road that protect an Open Internet and asks for further comments on the approach."
Earlier this year, the D.C. Court of Appeals gutted the existing Open Internet Rules. In February, I cited in this blog the MediaPost explanation of the situation, which I repeat:
"In January, the D.C. Circuit Court of Appeals gutted the FCC's net neutrality rules, which prohibited broadband providers from blocking lawful content or apps. The court ruled that the FCC couldn't impose common carrier regulations on broadband providers, given that the agency classified broadband as an “information” service in 2002. Neutrality advocates now say the FCC must first reclassify broadband as a telecommunication service if the agency wants to impose neutrality rules that will stand up in court. That way, broadband providers will be subject to the same common carrier rules that require telephone companies to put through all calls."
This isn't real Net Neutrality. It is some weird, twisted corporation-friendly form of Net Neutrality. This is very troubling, and Chairman Wheeler's comments are perhaps misleading since he didn't mention reclassification. He should have mentioned it. The FCC classified broadband as an "information service" in 2002. The New York Times described the FCC policy shift:
"The Federal Communications Commission said on Wednesday that it would propose new rules that allow companies like Disney, Google or Netflix to pay Internet service providers like Comcast and Verizon for special, faster lanes to send video and other content to their customers."
The Wall Street Journal described the new FCC policy:
"Proposal Would Allow Broadband Providers to Give Preferential Treatment to Some Traffic... Regulators are proposing new rules on Internet traffic that would allow broadband providers to charge companies a premium for access to their fastest lanes... The proposal marks the FCC's third attempt at enforcing "net neutrality"—the concept that all Internet traffic should be treated equally."
The Electronic Frontier Foundation (EFF) described the new policy:
"... Chairman Wheeler’s new proposal embraces a “commercially reasonable” standard for network management. That standard could allow ISPs to charge companies for preferential treatment, such as charging web-based companies like Netflix or Amazon to reach consumers at faster speeds. This kind of “pay to play” model would be profoundly dangerous for competition. New innovators often cannot afford to pay to reach consumers at the same speeds as well-established web companies. That means ISPs could effectively become gatekeepers to their subscribers... The devil will be in the details."
Preferential treatment is a pretty good description. A better description might be, "net discrimination." Juan Cole wrote in his Informed Comment blog:
"FCC Plots Murder of Blogs on Behalf of Billionaire Media Lords... What does this mean? It means that the companies with more money and more bankrolling (and a better way to bribe services like Comcast) will have more broadband, while other, smaller companies that haven’t curried favor with their corporate overlords are going to be left with the table scraps. ISPs cannot legally slow traffic on purpose, but when you have a two tier system and the corporate approach to ethics (that is, “catch me doing something wrong, I dare you”), how do you tell the difference between slow and “slow?” "
Preferential treatment and greater fee revenue are exactly what Verizon, AT&T, and the large telecom corporations wanted. And Chairman Wheeler seems happy to give it to them. Presidential Candidate Obama acknowledged the importance of Net Neutrality, but President Obama isn't pushing the FCC to reclassify broadband. That's not the change I wanted nor voted for. President Obama appointed Wheeler as FCC Chairman and Wheeler began work as FCC Chairman on November 4, 2013.
Chairman Wheeler also wrote on Thursday:
"The Court of Appeals made it clear that the FCC could stop harmful conduct if it were found to not be “commercially reasonable.” Acting within the constraints of the Court’s decision, the Notice will propose rules that establish a high bar for what is “commercially reasonable.” In addition, the Notice will seek ideas on other approaches to achieve this important goal consistent with the Court’s decision. The Notice will also observe that the Commission believes it has the authority under Supreme Court precedent to identify behavior that is flatly illegal."
The terms "unreasonable discrimination" and "commercially reasonable" allow plenty of room -- too much room -- for telecommunications companies and Internet Service Providers (ISPs) to create price increases embedded within fast and slow lanes. Think of it this way: what do your think an ISP will do for a publisher's website that refuses to pay such fees? That site won't receive the same delivery speed and/or level of service (to users) as other sites that paid the fees. Otherwise, there's no incentive to pay the fees. And boom... you have fast and slow lanes. That's the ISP's leverage to force publishers to pay fees.
The result: ISP services with fast and slow lanes that are dictated by the ISP. This is not consumer choice. This is not the marketplace at work. Think of it this way: can you pick and choose specific channels today with your cable television service? No. Your cable provider arranged the packages of stations. Consumers view that as unreasonable although the cable industry views it as reasonable. Now, the FCC seems content to let ISPs do the same with broadband... and call that "commercially reasonable."
So, your ISP gets to decide the packages of Internet sites it will offer. Not you. You will lose that freedom. Here comes broadband Internet with even higher prices, no faster speeds, and no better service.
Plenty of Net Neutrality advocates have make these price-increase arguments previously. Chairman Wheeler addressed the price-increase topic in his Thursday post:
"The allegation that it will result in anti-competitive price increases for consumers is also unfounded. That is exactly what the “commercially unreasonable” test will protect against: harm to competition and consumers stemming from abusive market activity."
I found Chairman Wheeler's comments to be mistaken on this point. The cable industry has proven it will raise prices continually. The same companies also offer broadband Internet, and want to consolidate via merger. The FCC's policy shift does not restore Net Neutrality. It kills it. The indicator: no longer is all content treated equally. No longer do consumers decided where to go with the broadband bandwidth they've paid for. ISPs can charge some publishers fees for content they believe and can "reasonably" justify. Think of your favorite video sites, since video consumes more bandwidth than plain text. If a publisher can't pay the fees, then they will have a tougher time getting their content and websites distributed.
Think about your favorite cloud services and all of your files -- text, music, and video -- that you have stored there... assuming unlimited Internet access. Guess what? The ISPs could lump those cloud services sites (e.g., Dropbox, Apple iCloud, etc.) along with other video sites in the fast lane; or in the slow lane if the publishers refuse to pay the fees.
Think about cash-strapped start-ups. The new FCC policy doesn't increase innovation. It stifles innovation.
I found Chairman Wheeler's comments and the new FCC policy troublesome also because he didn't address the fact that the USA lags many other countries in broadband speeds while leading with the highest prices. Consumers in the USA simply aren't getting the value citizens in other countries get. I don't seen any of Wheeler's comments addressing this.
FCC Chairman Wheeler promised innovation. Where's the innovation? Where's the beef? It seems like a big, fat zero to me. A price increase and windfall for telecommunications and ISP companies; with no downward pressure on prices for consumers. Add to this the fact that many telecommunications companies have already inserted binding arbitration clauses into their agreements with consumers, and you have a playing field that is even more heavily tilted towards telecommunications companies and against consumers.
Add to the fact that the playing field is tilted even further by restrictive laws in some states that prevent towns and municipalities from operating their own fiber Internet services. If is fair to ask: how many more jobs and new businesses would have been created in your state (or city) if it had fiber Internet access everywhere? Some local towns tried and got squashed:
"In North Carolina a couple of years ago lobbyists for Time Warner persuaded the state legislature to make it almost impossible, virtually impossible for municipalities to get their own utility... And so now North Carolina, after being beaten up by the incumbents is at the near the bottom of broadband rankings for the United States... All those students in North Carolina, all those businesses that otherwise would be forming, they don't have adequate connections in their towns to allow this to happen..."
It is fair to ask Chairman Wheeler: how many more jobs would be created in the USA with broadband reclassified as a telecommunications service (e.g., utility)?
What should consumers do now?
It is time to take action. That means, contact your elected officials today and demand genuine net neutrality; not the faux net neutrality FCC Chairman Wheeler pitched. Demand that your elected officials force the FCC to reclassify broadband Internet as a utility. John Nichols said it well at BillMoyers.com:
"Recognize that this is the time to send a clear signal of support for genuine net neutrality. The FCC has listened in the past when a public outcry has been raised, on media ownership issues, diversity issues and Internet access issues. Wheeler is a new chairman. It’s vital to communicate to him and to the other members of the commission that President Obama was right when he said that establishing “fast lanes” on the Internet “destroys one of the best things about the Internet — which is that there is this incredible equality there.” "
It is important for consumers to speak up twice: now and later when the FCC releases its Notice of Proposed Rulemaking (NPRM). Voice your concerns and outrage. As the EFF warned:
"While all we have now is a statement that a proposal for what the proposed rules might look like is being circulated in private within the FCC, the public should be poised to act. In an FCC rulemaking process, the commission issues what’s called a Notice of Proposed Rulemaking (NPRM). After the NPRM is issued, the public is invited to comment to the FCC about how their proposal will affect the interest of the public. The FCC is required by law to respond to public comments, so it’s extremely important that we let the FCC know that rules that let ISPs pick and choose how certain companies reach consumers will not be tolerated."
Have you contacted your elected officials? Are you ready to comment when the FCC releases its NPRM?