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Net Neutrality Part 2: Rules Praised, Questions Remain

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Advocates are pleased that Federal Communications Commission voted 3-2 in February 2015 to reclassify the Internet as a telecommunications service to impose rules that ensure net neutrality. Net neutrality is the principle that Internet service providers (ISPs) must treat all Internet content equally.

The new rules ban ISPs from charging content providers for providing faster Internet speeds to reach consumers and prohibit ISPs from blocking or slowing Internet traffic. The rules also apply to mobile Internet service, which was excluded from rulemaking when FCC tried to pass weaker net-neutrality rules (and failed) in 2010. The rules will go into effect 60 days after the full 317-page order is published in the Federal Register, which experts expect to happen by late April.

“This vote is among the greatest public-interest victories in U.S. history,” says Barbara van Schewick, who is faculty director of Stanford University’s Center for Internet and Society, which is a public-interest policy program.

However, net-neutrality advocates and critics alike wonder about FCC’s so-called general-conduct rule, which makes the agency a “referee” that can prevent any future ISP activity that “hurts consumers, competition or innovation.” In other words, FCC reserves the right to decide what’s harmful and innovative. Advocates and critics say that the general-conduct rule is too vague and that it gives the agency too much discretion. Among the reasons why this is important: No one knows what practices ISPs will adopt. For instance, no one knows how ISPs will introduce ultrafast 5G mobile data connectivity, which experts believe will arrive by 2020.

“Innovation is hard to measure and define,” says Mitch Stoltz of Electronic Frontier Foundation, which promotes digital civil liberties. “Given enough time, money and lawyers, you can get the FCC to declare that something harms innovation. We think there should be concrete rules, so an ISP knows what they’re allowed to do and Internet users know whether or not their ISP is legally permitted to do something.”

In other words, we won’t know the full effect of the net-neutrality rules until they play out on a case-by-case basis.

CHANGING THE GAME. Under FCC’s new rules, wired and wireless Internet service will be treated as a telecommunications service under Title II of the Communications Act of 1934. FCC believes that it has to use the broad powers of that law to adopt open Internet rules that will pass legal scrutiny.

“The Internet is the most powerful and pervasive platform on the planet,” FCC Chairman Tom Wheeler said at the February 2015 meeting where FCC held its vote. “It’s simply too important to be left without rules and without a referee on the field.”

FCC was careful to say not all of the provisions that are in Title II, which was written to regulate phone companies back in the days of Ma Bell, are applicable to its decision regarding Internet service. For example, FCC says it won’t get involved in pricing or network management. FCC says it can ignore inapplicable provisions through forbearance, which is a legal term for choosing which parts of a law are appropriate and which parts are counterproductive.

Net-neutrality advocates say forbearance isn’t a complicated process, but ISPs disagree. Michael E. Glover of Verizon, which successfully challenged FCC’s 2010 net-neutrality proposal in court, says Title II will bog down ISPs in “broad and open-ended regulatory arcana.”

The rules “will have unintended negative consequences for consumers and various parts of the Internet ecosystem for years to come,” Glover says. However, Glover didn’t provide any specific problems that might await consumers.

House Judiciary Committee says it will urge Congress to nullify FCC’s rules. In a letter that was sent to FCC and signed by House Judiciary Committee Chairman Bob Goodlatte, R-Va., and other members of the committee, the panel claimed that the rules “threaten the viability of the Internet and America’s ability to compete in the global technology marketplace” but didn’t provide specifics.

The White House says President Barack Obama will veto any such resolution.

Experts tell us that the final word on FCC’s rules will be decided in the courts. However, unlike previous FCC rulings in 2008 and 2010, FCC’s new rules likely will survive, experts say, because now the rules are based on Title II, which gives FCC the authority to create such rules.

FCC’s 2010 net-neutrality regulations were bogged down in court for 4 years. “I don’t think it’ll take as long this time, but it definitely will take us into next year,” says Erik Stallman of Center for Democracy & Technology, which is a consumer-advocacy organization. “Title II reclassification is the most straightforward basis of authority for net-neutrality rules.”

OTHER COSTS? Critics of FCC’s actions argue that Internet service now will be subject to new taxes, because it will be treated as a telecommunications service. One of the fees that Title II allows FCC to impose on telecommunications services is the federal Universal Service Fund (USF) surcharge, which is used to finance telecommunication service for underserved areas, such as libraries, rural areas and schools.

When everyone used wired phones, the USF remained fat. Now, with fewer people using wired phones, the fund’s revenue stream gets thinner every year. FCC Commissioner Michael O’Rielly, who voted against the net-neutrality rules, argues that pressure to widen that revenue stream will force the commission to impose the fee on Internet service. However, FCC insists that its new rules won’t set rates and won’t boost consumers’ Internet service bills.

“This means no unbundling, tariffs or other forms of rate regulation, and the order does not require broadband providers to contribute to the universal service fund, nor does it impose, suggest or authorize any new taxes or fees,” Melissa Kiekel of FCC said at the February 2015 vote.

Proponents of the new rules have been dismissive of the claims that consumers will be hurt by the FCC’s action.

“It’s fear-mongering,” says Christopher Lewis, who is vice president for government affairs at Public Knowledge, which is a public-interest group that specializes in open-Internet policy. “Congress has passed a law preventing states from putting new taxes on broadband services.”

Another criticism of FCC’s new rules is that government regulation will create bureaucratic obstacles for ISPs and less incentive to invest in broadband services. The result, critics say, is that consumers will be saddled with slower connection speeds and won’t be able to take advantage of innovations, such as ultrahigh-resolution 4K video streaming.

(Editor’s Note: As of press time, we found the enhancements of 4K video over HD video difficult to see on a screen that’s less than 70 inches.)

 “Companies are going to make claims to try and influence the FCC, but these companies are making a lot of money, and I don’t know what in this order will change that,” says Jon M. Peha, who is a professor in the department of engineering and public policy at Carnegie Mellon University.

Major ISPs are split over what effect the rules will have on their investment. AT&T, Comcast and Verizon say they’ll reduce investment in their networks if FCC’s rules remain in effect. Cablevision says the new rules won’t have any real effect on its business. Google, which is building a national high-speed network, is part of a coalition of companies along with Amazon, Netflix and Yahoo that supports the rules.

Advocates of net neutrality doubt that ISPs will reduce investment in their networks.

Doug Brake of Information Technology & Innovation Foundation, which is a think tank, says he doesn't expect investment to dry up. “The worry is out there among Wall Street analysts, but a lot of the stocks of these [ISP] companies went up on this news, so I don’t think investment is going to disappear.”

Stoltz agrees that the threats about reducing investment likely are hollow. He says local and state governments gave ISPs a lot of privileges for installing broadband Internet infrastructure through public land.

“If they’re not going to invest in the networks, I think that the proper response from FCC and state and local regulators is to say, ‘If you’re not making full use of the public land and public spectrum that you’re using, we’re going to take them away and give them to someone who will,” Stoltz says.

Stay tuned.

John P. Mello Jr. has covered technology issues for 25 years. He’s written for The Boston Globe, Byte magazine, Computerworld and PCWorld.

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