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Summary:

Tomorrow, the FCC will unveil its policy framework around network neutrality (yes, it did this last September but network neutrality is like tech policy’s Groundhog Day) and vote on the proposed rules. But even after the vote, it is an issue that won’t go away.

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Tomorrow, the Federal Communications Commission will unveil and vote on its regulations for preventing ISPs from discriminating on packets traveling across their networks (yes, it did this last September, but the issue of network neutrality is like tech policy’s version of the movie Groundhog Day). We’ve covered the gist of the rules as explained earlier this month in a speech by FCC Chairman Julius Genachowski: rules that saw him cater to the telecommunications providers by allowing paid prioritization, condoning usage-based billing and ignoring the issue of network neutrality on wireless networks. While GigaOM believes that network neutrality is a necessary evil because of a lack of competition, it’s an issue that won’t go away even after the FCC issues its order.

Expect legal challenges and continued attempts to test the FCC’s ability to enforce its rules, with spats such as the one between Level 3 and Comcast becoming more common as the convergence of voice, data and television services continue, and last-mile access providers try to keep competition for their services at bay while also boosting profits as much as possible. For those who aren’t yet sick of reading about the issue, he’s a rundown of what’s being said ahead of tomorrow’s vote. Unfortunately, there’s nothing terribly new.

Both sides came out fighting this morning with Al Franken, a Democratic Senator writing in the Huffington Post:

Here’s what’s most troubling of all. Chairman Genachowski and President Obama — who nominated him — have argued convincingly that they support net neutrality.

But grassroots supporters of net neutrality are beginning to wonder if we’ve been had. Instead of proposing regulations that would truly protect net neutrality, reports indicate that Chairman Genachowski has been calling the CEOs of major Internet corporations seeking their public endorsement of this draft proposal, which would destroy it.

No chairman should be soliciting sign-off from the corporations that his agency is supposed to regulate — and no true advocate of a free and open Internet should be seeking the permission of large media conglomerates before issuing new rules.

Meanwhile, in the Wall Street Journal, Robert McDowell, a Republican FCC Commissioner writes:

Nothing is broken and needs fixing, however. The Internet has been open and freedom-enhancing since it was spun off from a government research project in the early 1990s. Its nature as a diffuse and dynamic global network of networks defies top-down authority. Ample laws to protect consumers already exist. Furthermore, the Obama Justice Department and the European Commission both decided this year that net-neutrality regulation was unnecessary and might deter investment in next-generation Internet technology and infrastructure. …

Still feeling quixotic pressure to fight an imaginary problem, the FCC leadership this fall pushed a small group of hand-picked industry players toward a “choice” between a bad option (broad regulation already struck down in April by the D.C. federal appeals court) or a worse option (phone monopoly-style regulation). Experiencing more coercion than consensus or compromise, a smaller industry group on Dec. 1 gave qualified support for the bad option. The FCC’s action will spark a billable-hours bonanza as lawyers litigate the meaning of “reasonable” network management for years to come. How’s that for regulatory certainty?

In the startup and tech world, it’s mostly quiet, with a few tech executives writing about the issue. John Borthwick CEO of Betaworks writes on TechCrunch:

The arguments that wireless should be treated separately from wireline are in my mind specious at best. Despite the fact that wireless network providers manage the network differently than wireline providers (given a need to share a limited resource among varying densities of users), wireless providers, like wireline providers, should not have the ability to discriminate against specific content, sites or applications.

Furthermore application developers need uniformity of standards at the lower levels of the stack to be able to build products and services in a seamless manner at higher levels of the stack. For example, we are currently building a social reading service that will ship as an iPad application. It includes an interface that distills content streams that should be of interest to you, the reader. The content is then displayed inline, regardless of whether it is text, images or videos. Imagine you use this iPad application at home on your home network. All images, text, and videos are displayed and usable. Now imagine that you take your iPad to the park and fire up the same application through a 3G or 4G wireless connection and all of a sudden the videos won’t work? Not that they are slow—they just wont work given the plan you are on.

After tomorrow’s decision, expect a flurry of commentary and insights as lobbyists, businesses and the media (including me) weigh in on the details. It’s pretty depressing that simple efforts to ensure that lawful content has a chance to make it unimpeded to the user have become a circus of policy efforts designed to entrench the monopoly enjoyed by last-mile providers. The rules so far seem to enable paid prioritization and usage-based billing while also determining that wireless networks shouldn’t have to abide by open Internet principles. If the rules indeed reflect all of that, it may be better not to have them.

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  1. There is simply no reason for ISPs not to at least try levying fees on certain information traveling across their networks and one huge reason to try it (the only reason that matters, to make more money).

  2. The demand on ISPs’ infrastructure continues to grow and companies like Google continue to monetize off that infrastructure. The ISPs want higher compensation for this growth which makes complete business sense.

    If you think it really has anything to do with protecting lawful content then you are very misguided. This is about companies reaping huge gains without having to pay fair compensation to the ISPs.

    I admit it does get messsy because ISPs are few and that makes negotiations difficult. But, this kind of legislation will not be productive. ISPs are the reason those companies are even able to have a business. The ISP should be able to make its own business decisions at its own discretion. If a company does not like it, they can find another ISP or find a new business. Going to the government to regulate the industry is like going to mommy to make it all better.

  3. Richard Bennett Monday, December 20, 2010

    As the TV watching experience moves to the Internet, ISPs will need to add 100 times more bandwidth at their Internet Exchange connections than they have now, and the number of IXs will also need to grow by 10-100 times. This is serious business that’s going to require massive investment at the same time that it will inevitably reduce ISP revenues. It’s a shame that so many people would should know better haven’t thought it through.

  4. Getting developers to use uniform standards is like herding cats. But eventually business will win this issue. There is no such thing as truly free, so the transfer of large amounts of information will eventually come to a tipping point. Pay to play.

  5. Some highly relevant, and consistently pushed away, Econ 101.

    In competitive markets, the cost for an item — say, a MB of data delivered to my home — is sold for the cost of supplying that last increment of it. In a monopoly, the seller raises the price until the amount purchased drops faster than the profit increases.

    In the US, there appear to be NO competitive markets for home internet service, by any standard of competition. So ISPs raise prices to the perceived “value” of a given bit of data. They can sell it way above their cost because no competitor, even one with superior technology, can sell it for the little bit less that’d have us switch.

    In fact, some data costs more to provide than others. Guaranteed- or even prioritized-availability of a connection, as necessary for mobile voice or home Video Over IP, especially during high-traffic hours, requires more capacity headroom than as-available service at 3AM. Strikes me that there IS room for variable pricing under a regulatory environment that would get our society some of the benefits of actual free-market competition that we lack today.

    But that variable pricing should be tied to actual cost factors, not internet users’ perceived value; the marketing departments at ISPs are having a field day in trying to extract higher fees from Netflix and others, in ways that have nothing to do with either costs or what would allocate our resources to the best use.

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