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Summary:

On Tuesday, an appeals court in Washington, D.C. struck down the FCC’s rules regarding net neutrality, which are designed to prevent ISPs from giving preferential treatment to certain kinds of data. Here’s what you need to know about the decision and its potential impact

Google's Lame Defense of its Net Neutrality Pact

The principle behind the phrase “net neutrality” is that internet service providers of all kinds should treat data flowing over the open internet equally, without giving preferential treatment to data from one provider or platform. On Tuesday, however, the Federal Communications Commission’s rules governing that kind of behavior were struck down by an appeals court in Washington, D.C. — as reported by Gigaom’s Jeff Roberts — in a case launched by Verizon.

This decision — if it remains unchallenged — raises the possibility that large internet service providers could charge certain companies extra for delivering their content to subscribers, and give preference to the content coming from those who are willing pay them a fee, or have cut some other kind of deal. In effect, the democratized nature of the internet would be replaced by a feudal system in which the ability to reach a consumer would be auctioned off to the highest bidder. As a Bloomberg article described it:

“Proponents, including Web companies, say regulations are needed to keep Internet-service providers from interfering with rival video and other services. Those companies don’t pay today for what’s known as last-mile Web content delivery. The FCC has said that without rules, Internet providers could favor wealthier, established players at the expense of startups, squelching innovation.”

In a Reddit “Ask Me Anything” discussion with Josh Levy of Free Press, law professor and former Obama administration advisor Susan Crawford said the impact of the court decision could be significant and that “high speed internet access is far too important as an essential infrastructure input to our national economy, and to our civic, social, and personal well-being, to leave it solely to a failed market, with no government oversight or fundamental rules of the road.”

A web with tiers for the wealthy

Craig Aaron, who runs an open internet advocacy group called Free Press, said in a statement that as a result of the ruling, “Internet users will be pitted against the biggest phone and cable companies — and in the absence of any oversight, these companies can now block and discriminate against their customers’ communications at will… the biggest broadband providers will race to turn the open and vibrant Web into something that looks like cable TV. They’ll establish fast lanes for the few giant companies that can afford to pay exorbitant tolls and reserve the slow lanes for everyone else.”

In an analysis piece he wrote for Medium, former Wired “Threat Level” editor Ryan Singel detailed the risks in this way:

“If your cable company now wants to slow down Netflix, it can. If it wants to make Skype calls slow, it can. If it wants to make streaming video from its services lightning fast and free from data caps, while slowing down YouTube and counting that data against your monthly allotment, it can do so.”

Tim Wu, who more or less coined the term “network neutrality” in a paper he wrote in 2003 while he was a professor at Columbia Law School, explained why internet users should care about the principle in a piece he wrote for Salon in 2006, comparing it to a future in which those with certain cars would get preferential treatment on the highway:

“You might buy a Pontiac instead of a Toyota to get the rush-hour lane, not because the Pontiac is actually a good car. As a result, the nature of competition among car-makers would change. Rather than try to make the best product, they would battle to make deals with highways.”

In an interview with the Washington Post‘s Switch blog, Wu said that the decision leaves the internet “in completely uncharted territory. There’s never been a situation where providers can block whatever they want.”

In an opinion piece for The Guardian, author and open-internet advocate Dan Gillmor said that the potential future for consumers is bleak if providers like Verizon get to offer deals to specific content providers. As he described it: “You and I are the chief losers, because we will pay more and get less than we would have in a more competitive world where we, not the central authorities, make the key decisions about the services and media we want. We won’t know what innovation doesn’t happen, because it won’t be around.”

As John Herrman at BuzzFeed notes, this isn’t even theoretical any more, since AT&T recently launched something it calls “Sponsored Data,” in which advertisers pick up the charge for getting content to customers. As Herrman puts it: “In the last year, a third, equally insidious but even more subtle scenario has emerged, and today became a much realer possibility. On a less regulated internet, content providers — websites and services — might be able to pay for their users’ data.” Stacey Higginbotham wrote about the potential implications of AT&T’s plan in a recent post.

As a number of observers have explained — including Jeff in his Gigaom piece — the court’s decision wasn’t based on a belief that net neutrality itself is a bad thing, but a view that the FCC implemented its rules in a legally questionable way. If it wanted to prevent ISPs from giving preferential treatment to certain content providers, the communications regulator could have defined internet service providers as “common carriers,” as it did with telecom companies — but the FCC didn’t do that. As The Verge put it:

“The problem isn’t that the court opposed the FCC’s goals, it’s that unlike older telecommunications providers, ISPs aren’t classified as ‘common carriers’ that must pass information through their networks without preference. By enforcing net neutrality, the court found, the agency was imposing rules that didn’t apply to carriers.”

The FCC could increase its power

Techdirt founder Mike Masnick, who writes often about matters of policy relating to the open internet, said one of the problems with the decision isn’t just that it throws the net neutrality rules out the window — it’s that the court has also given the FCC the opportunity to increase its regulation of the internet as it tries to re-implement those rules, and that could be a very bad thing (Paul Sweeting, one of our Gigaom Research analysts, also took a look at the implications of the appeals court decision).

According to Masnick, the telecom companies and ISPs “absolutely want to abuse things to effectively double charge both sides” of the network, and that could cause significant issues for the openness of the global network. But he argues that we “should be equally concerned about the FCC overstepping its bounds and mandate in regulating the internet… because that opens up the opportunity for the FCC to regulate all sorts of aspects of the internet in dangerous ways.”

Stacey looked at the potential downside of this in her post on the impact of Tuesday’s court decision. And if you want a detailed breakdown of what some of the important passages in the appeals court ruling mean, the Wall Street Journal‘s Digits blog has a pretty good overview.

In his interview with the Washington Post, Tim Wu called the FCC’s failure to establish firm legal support for its net neutrality rules a “FEMA-level fail.”

“They blew it on the legal strategy. It’s a big fail. It’s like, FEMA-level fail. Every legal expert told the FCC they’re going to lose this case, and they did… Think of it this way: The FCC is like a battleship, and it has these enormous guns. But it decided to use a water pistol for this particular issue.”

A fundamental change to the open internet

The American Library Association said in a statement that the court’s decision “gives commercial companies the astounding legal authority to block Internet traffic, give preferential treatment to certain Internet services or applications, and steer users to or away from certain web sites based on their own commercial interests.” The association went on to say that:

“This ruling, if it stands, will adversely affect the daily lives of Americans and fundamentally change the open nature of the Internet, where uncensored access to information has been a hallmark of the communication medium since its inception.”

FCC commissioner Jessica Rosenworcel took to Twitter in the wake of the ruling to assert her support for an open internet:

And FCC chairman Tom Wheeler wrote a post for the commission’s blog in which he committed to ensuring that the internet would operate “in the public interest.” Wheeler went on to say that the commission would not disregard “the possibility that exercises of economic power or of ideological preference by dominant network firms will diminish the value of the Internet to some or all segments of our society.”

For its part, Verizon published a statement on its site saying that the court decision means “that the FCC could not impose last century’s common carriage requirements on the Internet,” and that all it wants is the ability to “offer new and innovative services” to its customers. The decision won’t affect consumers’ ability to “access and use the Internet as they do now” the company said. And as Jeff pointed out, the court upheld an FCC rule that requires Verizon and others to disclose what they are doing on their networks, which might help keep them in line somewhat.

Open internet proponents have work to do

As for what happens now, the FCC has suggested that it may appeal the decision, but Mike Masnick of Techdirt doesn’t think that’s going to produce an outcome that’s any better than the current situation, saying: “There’s a decent chance that the Supreme Court will take the case — though I’d be very, very surprised if the Supreme Court came to a different ruling. The original FCC rule, while well intentioned, definitely stretched the FCC’s mandate, and it’s no surprise that it’s now been slapped down.”

Free Press and Save The Internet campaign director Tim Karr wrote about the court’s decision at the Huffington Post, and said that those who are in favor of a free and open internet need to take action to protect it or have it taken over by providers like Verizon (Free Press has an online petition you can sign).

“Verizon has put its cards on the table. Under its preferred scenario, the open Internet no longer exists. Whatever the outcome of this court case, we need to fight to protect the open Internet — and stop Verizon’s vision from becoming reality.”

In her Reddit AMA, Susan Crawford — who was co-leader of the FCC’s transition team before President Obama took office — was asked whether there was anything good that came out of the decision, and she said yes: “The house of cards has fallen. Pretending to deregulate with one hand while regulating (Open Internet Rules) with the other is not going to work.” She also compared the internet and regulation to a sidewalk:

“The sidewalk should be treated as a regulated service – neutral, nondiscriminatory, serving everyone in the country – just like the telephone. That treatment of telephone wires, by the way, gave us the commercial Internet. It was born of that nondiscriminatory policy. No regulation, no Internet.”

In a Twitter discussion about the topic on Tuesday night, venture investor Marc Andreessen said that the net neutrality issue is complicated by the fact that new networking technologies require large-scale investment (we’ve also collected more of Andreessen’s thoughts on the issue in a separate post).

  1. There are so many battles to fight, so much to pick and choose from so maybe we should look at the system that proliferates them. You know, cut down the trees instead of picking all the leaves off separately.

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    1. yeah right..

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    2. Well, then go support “Move to Amend” and get the Constitution to say only people are people, and corporations definitely are not people, and money is not speech. It’s not a ‘silver bullet” but it will at least help a lot. Namely by stopping the funding by big $$ of Tea Party morons.

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  2. I think the right analogy is not democracy replaced by feudalism, but a commons managed equitably for the good of all converted to a marketplace for the benefit of those with the greatest assets, or the largest weapons. And we need the internet to be managed as a sustainable commons, and not exploited by those with the means and interest to do so.

    This is nothing less than wealthy citizens erecting turnpikes in the streets of a city, and demanding that passers-by — private citizens, transports passing through, and delivery vehicles — pay for passage. However, the roadway — the internet protocols and all the rest of the world network — wasn’t constructed by these bandits: they only put the last layer of macadam on their little patch of ground. The value of the network should not be cornered by a cartel of giant corporations, and the rest of us dispossessed, like British villagers were pushed off the land when the landed gentry enclosed the commons of the countryside in the 1800s.

    It’s literally highway robbery.

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  3. Reblogged this on luvsiesous and commented:
    Readers,

    The big internet companies cannot make enough money with tax advantages, so now they want the courts to give them even more power.

    I am not certain net neutrality is the best way to go, but it is the best we have right now.

    I live part time in Ukraine. I pay $15 a month for 10 megabit internet, and $10 a month for unlimited iPhone wireless, they do throttle my texts after about 40 a day. And it is slower wireless.

    But, they can make a profit at $25 a month for what would cost $100 a month in the US …. and mostly provide better speeds and better service.

    Thank Matthew Ingram for bringing us this article. And if you get a chance, go read his blog.

    What do you think about net neutrality and big profits?

    Wayne

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  4. Great piece.

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    1. rememberingbob Tuesday, January 14, 2014

      Thanks!

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  5. Congratulations to the LA Bubble, you just got exactly what you’ve been fighting to get for years. Be careful what you wish for though because you just got it.

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  6. The Internet is Dead, Long Live the Internet!

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  7. markcancellieri Tuesday, January 14, 2014

    While this decision might not be popular, it is definitely a victory for private property rights. Internet providers should be able to use *their* property as they wish. It’s very simple. If you don’t want to pay for their service on their terms, then DON’T.

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    1. The internet has become much like electricity, ubiquitous and almost necessary. The physical infrastructure is technically theirs, but the information flowing isn’t. You can see how giving complete control of how that information flows to a handful of multinational corporations, could end up being dangerous. And not paying isn’t an option for a ton of small businesses, who rely on the internet. Not to mention access to the websites they sell their goods or services on, could be slowed down unless they pay more. It’s much more complicated than you think it is.

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      1. There are some who believe that the wealthy should be allowed to take whatever they choose and if the masses don’t like it too bad. It is not “THEIR” property.

        I suspect they believe they can simply push all the bloggers, small businesses and ecommerce sites offline by gradually raising the fees until none can pay them. If that happens, anyone who wants independent voices instead of party line propaganda will need to learn to use the darknet. Best to get that information out now. Either that, or be prepared to unplug and give up the Internet.

        Wow. The implications of everything that will be impacted by killing the Internet as we know it are mind-boggling.

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        1. Gail your concerns are valid. This comment was previously posted elsewhere, but it’s fitting that I share it here so here it goes.

          ———————————————————-

          It is right that this move against net neutrality generally has the populace up at arms. Unfortunately people who (a) haven’t been subjected to wrongful stifling, (b) haven’t learned the dangers of limitations on free speech by studying history, and/or (c) aren’t critical thinkers might not see the potential dangers in this type of move until it is too late. This should be ended posthaste…and I don’t state that on a whim. History is full of bad acting influential entities that have abused power that they should have never had in the first place. Think about these couple of scenarios:

          1) A startup launches and its success is highly dependent on its ability to deliver various web content to the masses. However, a direct competitor owns and/or operates one or more metaphorical “internet pipelines” (or is an associate of an entity that owns and/or operates one or more metaphorical “internet pipelines”). No problem…just have the delivery of the startup’s web content degraded and/or charge the startup an exorbitant dollar amount. Ours is a fast-paced society full of people who are accustomed to instant gratification. That being the case it is a foregone conclusion that a startup that is subjected to inefficient and/or buggy web content delivery will fail if web content plays a significant role in its business model.

          2) A group is fighting against influential wrongdoers and the group is effectively and rightfully utilizing the internet during the course of their warranted and rightful battle. However, one or more of the wrongdoers owns and/or operates one or more metaphorical “internet pipelines” (or is an associate of an entity that owns and/or operates one or more metaphorical “internet pipelines”). No problem…just have the delivery of the group’s web content degraded and/or charge the group an exorbitant dollar amount. Again, ours is a fast-paced society full of people who are accustomed to instant gratification. That being the case it is a foregone conclusion that a movement against wrongdoers that is subjected to inefficient and/or buggy web content delivery will fail if web content plays a significant role in the movement.

          Those who have a problem visualizing the scenario outlined immediately above need do nothing more than look at corruption-plagued countries that are built upon cultures where censorship is par for the course. Of the many things that this net neutrality move might be, one of the things that it definitely is is a gateway to the implementation of an alternative form of censorship. I’ll repeat that so that it will sink in…a gateway to the IMPLEMENTATION OF AN ALTERNATIVE FORM OF CENSORSHIP.

          There are probably multiple other scenarios that could be listed above but the given scenarios are sufficient to make my point. Again, this is not the right move and IT SHOULD END POSTHASTE. Even if there are conceivably some significant benefits (not that we’re necessarily of the mindset that there are) the very real risks far outweigh any potential rewards. And just in case anyone is saying “if you’re in one of the two groups listed above then sue”, you are naïve. The victims—and make no mistake about it, in the scenarios outlined above they are VICTIMS—indicated in the above two scenarios are already fighting against nearly insurmountable odds and they don’t need any other problems piled on. In other words, in a manner of speaking they are already “down” and don’t need anymore “kicks” such as having their web content interfered with and/or being faced with exorbitant costs. Although some things are right about America, some things are definitely going in the wrong direction. People such as Hitler, those who conducted the Tuskegee Experiment, and those whom were responsible for disseminating smallpox infested blankets to Native American Indians (just to name a few) would have a heyday with this move if they were alive and engaging in their bad acts today. Reason being, it goes without saying that as it stands the internet is the average joe’s most efficient form of a mouthpiece. And let us not forget that in America (as well as in the rest of the world) some of the greatest achievements have been accomplished by determined average joes who spoke out to the masses as efficiently as was possible. Rest assured that this move will make influential bad actors everywhere rejoice…they are likely already planning ways to exploit it (assuming that they haven’t already planned a plethora ways).

          In case anyone somehow thinks that I have no idea what I’m talking about. I will state that I most certainly do. I am personally involved in a long-running, massive, warranted, and rightful fight against epic public corruption. I can tell you that it is an undeniable fact that that warranted and rightful fight has been plagued by civil liberties infringements carried out via wrongful attempts by bad actors to stifle our free speech. For the record the fight is called GATORGAIT and those who are unaware of it can find out more information at the damning, truthful, and lawful website gatorgait-dot-com . Also for the record, the complete website and all of the website’s extensive content works perfectly and efficiently as of the time of this post (i.e. 01/16/2014). Additionally, there has been various other truthful and lawful Gatorgait-related content that has been posted online by us justice seekers and which has remained not interfered with…that content also works perfectly and efficiently as of the time of this post.

          Generally speaking I have lost faith in man’s ability to consistently do what’s right. Over hundreds of years of bad practices and policies promulgated largely by those who have wrongfully and shortsightedly used their gift of intelligence to increase their power and “line their pockets” at the long term expense of mankind and the world we have, as a whole, lost our way. Let’s see where this recent net neutrality move takes us. Just as we opposed the most recent attempt to pass the far too intrusive CISPA we strongly oppose this net neutrality move. Pay attention…close attention. As indicated above I’m jaded; therefore, I have no confidence that if there isn’t an abrupt about face that bad acting men and women won’t ensure that action becomes warranted. It may be soon or it may be later, but rest assured that serious action will become necessary.

          Best wishes to all,
          SB

          “Some people see a problem and do something about it. Others do nothing but sit on their a$$e$ and complain. Be a doer.”

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    2. That’s absurd. Have you ANY idea how the infrastructure for DSL was put into place? Or the governmental grants and funding that funded the creation of ‘the internet’? Lastly, not everything can be viewed as private property by definition.

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    3. Mark, what you are saying is the water company has the right to do whatever and charge whatever they want for a common public resource. The only difference is the internet is a common public resource and water is a natural common public resource. They don’t “own” the product, they just supply it to all, supposedly equally.

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  8. Excellent piece; thanks.

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  9. I would say it’s a fail on par with giving corporations the agency/rights of people. We’re going to end up with a 1% on the internet as well as off.

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  10. False

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