Telecom

by publius

I just finished reading the net neutrality bill that Markey and Eshoo introduced last week — the "Internet Freedom Preservation Act of 2009 (H.R. 3458) (pdf).  And it's really good stuff.  The leadership should move on it.

The bill covers all the more well-known problems.  For instance, it prevents Internet providers from blocking sites, and from entering into agreements to deliver certain sites at higher speeds.  That's all to the good.

But the bill has several important provisions that you may not be as familiar with.  Below the fold, I've listed a few that stood out to me:

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by publius

The WSJ has a good policy overview of net neutrality this morning. But the bigger news from the article is that Google (along with other big content providers) appears to be backing away from its support of net neutrality. It’s disappointing and consequential, but not very surprising. [But see the Update on Google’s response to the article below the fold].

Honestly, what’s surprising is that Google, et al., ever supported neutrality requirements. After all, one of the primary justifications for neutrality is that it prevents incumbent entrenchment. In this respect, “pay-to-play” access protects big companies like Amazon and Google from future competition from less well-funded upstarts.

Let’s back up. Remember that what neutrality proponents are trying to prevent is “tiered access.” In this brave new tiered world, Internet access providers (AT&T, Comcast, etc.) want to not only charge you, but to charge companies like Google for “prioritized” access to you. Google would thus pay an additional premium to ensure that your computer gets Google faster than, say, Ask.com who might only be able to afford a lower tier.

In the long run, the fear is that it would fundamentally change the Internet by creating a separate and unequal “lane” for companies who couldn’t afford the higher tiers. Thus, new companies (particularly bandwidth-heavier video sites) would be relegated to an increasingly crowded, congested, and slow lane, while richer companies get the equivalent of a HOV lane free and clear.

Anyway, it makes perfect sense why Google and Amazon would support tiered access. Quite simply, they can afford it and new upstarts (the future thems, if you will) won’t be able to pay. In essence, the established companies would be paying a chunk of their profits to entrench their current success – which of course runs counter to how the Internet should be run (according to the old Google anyway).

But even if it’s predictable, it’s an unfortunate development from a legislative perspective. To win anything in DC, you generally need a well-funded lobbying effort. The only reason net neutrality ever got this far was in part because a lot of these big companies were pushing back, thus providing the Madisonian cross-vector. With that pressure gone, it’s going to be much harder for progressive advocates to get a voice with Congress and the FCC. All in all, bad news.

One last thought – what the hell is wrong with Larry Lessig? More on that below.

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by publius

Assuming no last-minute shenanigans, the FCC will approve an order today reprimanding Comcast for “throttling” BitTorrent traffic (background here and here). This is extremely big news for several reasons — but primarily because it advances the ball on net neutrality in critically important ways.

For the foreseeable future, the real action on net neutrality will take place at the FCC. That’s because both the advocates and opponents of net neutrality have enough congressional support to maintain a filibuster, but not enough to overcome one.

So at the FCC level, there are two primary obstacles to imposing real net neutrality requirements — (1) legal; and (2) political. Tomorrow’s decision will help on both fronts — and will help a lot.

Legal

The most common legal argument against net neutrality rules is that the FCC currently lacks authority to enact them without additional legislation. I disagree with that argument, but it’s a fairly close question that requires some quick and dirty background on telecom law.

The FCC, like any agency, only has the power that Congress gives it. Thus, the scope of the FCC’s authority comes from the Communications Act (which incorporates the 1996 Act).

The Act however has a funny quirk — it sees the world in buckets. Under the framework the Act establishes, all communications services are classified and placed into a specific regulatory “bucket.” The type of regulations the FCC can adopt therefore depends upon what bucket it’s dealing with. (The buckets are actually statutory “titles” such as “Title II”, “Title III,” etc.).

The problem, however, is that the buckets are based on the assumption that a given company will only provide one type of service (remember that the Act was signed in 1934). For instance, there’s a bucket for “cable,” and for “telephone service,” and for “wireless/radio” (i.e., spectrum users). These buckets are outdated and don’t correspond to modern conditions where crazy things happen like cable companies providing “phone” and Internet services instead of just cable. For instance, your landline phone is regulated differently than your wireless phone because they fall within different buckets (cell phones are essentially glorified radios and thus fall within the “radio” regulatory bucket).

Obviously, these outdated categories create problems when new services emerge. The FCC’s answer to all this is a catch all bucket in which services are reclassified as “information services” (a/k/a Title I).

This bucket is generally considered unregulated. Thus, when the FCC wants to deregulate a service, it takes it out of the traditional regulatory buckets, and puts it in the “information services” bucket. Virtually all types of Internet access have been reclassified as “information services,” and are therefore largely unregulated. (This is what the 2005 Brand X Supreme Court case was about).

So what does all this have to do with net neutrality? Well, remember that broadband access is an unregulated information service — that is, it’s been put into the “catch all” bucket. To impose net neutrality requirements, the FCC therefore must slap a regulation onto a service that’s been reclassified and put into the deregulated catch-all bucket.

So that’s the million dollar question — can the FCC impose this type of regulation on an information service? For somewhat complicated reasons, there’s a pretty strong argument that it can (one that’s consistent with most of the case law), but companies like Comcast dispute that. For obvious reasons, they want to argue that the FCC can’t touch them.

With all that in mind, the really important part of tomorrow’s decision is not so much the Comcast case itself, but that the FCC is expected to recognize its legal authority to impose regulations on this type of Internet service. In doing so, it creates a strong legal foundation going forward for future net neutrality requirements (particularly given that courts traditionally defer to the FCC on this stuff).

But the fun doesn’t stop there — the decision also has important political benefits. Take it to the chorus.

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by publius

Some very good news on the net neutrality front — the FCC is all but certain to punish Comcast later this week for blocking BitTorrent traffic. This is a big deal — largely because it strengthens the political and legal foundation for full-blown net neutrality in the future (especially with a Democratic FCC).

Anticipating the loss, Republican FCC Commissioner Robert McDowell took to the Post’s op-ed page to criticize the imminent ruling. He’s not trying to affect this week’s decision (that’s hopeless). Instead, he’s looking ahead to the next battle.

His op-ed makes several arguments — some reasonable, others misleading. But I want to address one argument in particular — namely, the idea that the Internet succeeded because the government left it alone. He’s wrong about that — and it’s important to understand precisely why because it really strikes at the heart of the larger policy and philosophical questions underlying the more narrow net neutrality debate.

McDowell writes:

Our Internet economy is the strongest in the world. It got that way not by government fiat but because interested parties worked together toward a common goal. As a worldwide network of networks, the Internet is the ultimate “wiki” environment — one that we all share, build, pay for and shape. Millions endeavor each day to keep it open and free. Since its early days as a government creation, it has migrated away from government regulation.

Actually, the Internet is successful because the government regulated the bejesus out of it. That doesn’t mean regulation is awesome — it just means that the government got this particular regulatory scheme right.

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