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Summary:

Some feared the worst when an appeals court struck down long-standing “net neutrality” rules in January. New developments show why the fear is not unfounded.

All websites are equal, but some websites are more equal than others.

That, in a nutshell, is the Federal Communications Commission’s latest response to a bombshell court decision in January that blew apart its rules on “net neutrality” — the principle that internet service providers can’t favor one type of web traffic over another when they connect consumers to the internet.

According to the Wall Street Journal (sub req’d), the proposed rules the FCC will announce on Thursday will bar ISPs from discriminating against certain websites, but “allow content companies to pay Internet service providers for special access to consumers.” In plain English, this means that an ISP like Comcast can’t slow down traffic from Netflix — but that it could cut a deal with one of Netflix’s competitors to make that competitor’s traffic go faster.

If that sounds like a strange definition of net neutrality, you’re right: an ISP that gives faster treatment to some sites is no more neutral than one that slows down other sites. The measure comes after FCC Chairman Tom Wheeler said in February that the agency would not allow “blocking” or “discrimination.”

The FCC is now reportedly trying to maintain a semblance of neutrality by requiring that ISPs who offer a sweetheart traffic deal to one company must offer the same deal to others on “commercially reasonable” terms. This may sound reassuring, but it’s not.

The reality is that any competitor that wants to enforce the “commercially reasonable” rule will first have to wade through a slow and expensive legal swamp and, in any case, only the biggest of the big will have the means to sue in the first place. A small site that wants those “commercially reasonable terms?” Forget about it.

The horse has left the barn

In case you’re unfamiliar with this debacle, the reason that we’re even discussing “special access” in the first place is because the FCC bungled its own rule-making process in the first place. Specifically, the agency failed in 2002 to classify internet providers as “common carriers,”  which in turn led a Washington appeals court to rule in January that the FCC’s Open Internet Order of 2010 did not apply to ISPs.

The upshot is that the January court decision resulted in an uncomfortable choice for the FCC: if the agency wished to re-impose net neutrality, it could either start regulatory process from scratch and do it right by stating that the ISPs are common carriers — or else it can just sort of muddle through. And that is what it appears to be doing with the proposed “special rates” and “commercially available” language.

This is not entirely the fault of FCC Chair Tom Wheeler. The reality is that the FCC rule-making process is a slow one, and that re-classifying the ISPs as common carriers would be a slow, laborious and possibly unsuccessful process. As such, without the power of the “common carrier” stick, the FCC will have to rely on lesser measures like the ones that will be proposed this week.

The proposed rules also reportedly do not attempt to address the issue of “peering” arrangements, which concern network interconnections (and choke points) that occur before website traffics arrives at its ultimate destination via the ISP. The FCC has not tried to regulate peering in the past, but recent peering disputes over Netflix has brought new attention to the issue.

The bottom line is that the chances of the FCC reimposing meaningful net neutrality requirements are fading by the day. And in the absence of such rules, we are watching the emergence of a new internet order where ISPs and big content firms will be able to engage in all manner of pay-to-play or outright favoritism — at the likely expense of rivals and consumers.

  1. The FCC’s new thinking is not about “connect[ing] consumers to the Internet.” It’s about letting a content provider pay more for speedier delivery of its bits to a consumer of those bits.

    The U.S. Postal Service, FedEx and UPS all offer faster and slower envelope and package delivery options, with the faster delivery options being more expensive than the slower delivery options. The tiered pricing makes sense to me.

    Likewise, the business logic behind the FCC’s new thinking on tiered bit delivery options makes sense to me.

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    1. are you comcasts ceo trying to justify the end of the free internet?

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    2. I don’t have a problem with ISPs providing and charging more for faster lanes.

      The problem is that consumers like me pay more for higher speed to Comcast and the like.

      If I pay Comcast for a 15 megabit connection, I expect that speed.

      When Comcast slows Netflix data to 2-3 megabits on my 15 megabit connection, then Comcast isn’t giving me the product that I am paying for.

      Then Comcast gets Netflix to pay them. Then Netflix will have to raise fees to cover the new additional costs. Then I’m paying Comcast higher monthly rates indirectly via Netflix.

      To use your analogy. What if I live in an apartment complex, and all the mail is delivered to the managers office.
      Then the manager decides that he is going to hold all USPS, FedEx, and UPS mail for three days unless I pay him more money each money to get my mail when is actually delivered.

      That’s not a great analogy, but I don’t think you really understand the problem. Or you work for an ISP.

      If I pay for 15 megabits, I should get that speed from everywhere on the internet or Comcast should disclose that I only get 15 megabits from certain websites.

      It opens a lot of legal grey areas on consumer fraud by the ISPs.

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      1. “If I pay for 15 megabits, I should get that speed from everywhere on the internet”

        This is nonsense. Suppose you want to receiving streaming video from a friend. You think your ISP is obligated to upgrade their dial-up modem connection to 15 Mbps? Suppose your friend already has a 15 Mbps connection, but they are in Australia. You think your ISP obligated to pay for enough capacity on a trans-Pacific fiber to make sure you can get your 15 Mbps? Obviously, the answer is no. “The Internet” is not actually a magical cloud like you have seen it in pictures. It is a collection of private networks whose business is to carry packets from one place to another. Just as in the postal system, the sender pays. Your Internet connection does not pay for your friend in Australia or for Netflix’s. It never has.

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  2. USA is no longer a pioneer if it goes about this like this.

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  3. Really cool articile always good to see how the rules are used to, as always “protect private enterprise”… clearly the corperate network engineers and network economic gate keepers have now fiqured out that they have no “economic span of control” over traffic on the network (surprised?) … what do you do? ..
    I know get the governing body …you know the ones that only represent us (the people) when they are running for office..
    get them to create new rules (something they are good at) that allow for “traffic segragation” yeah thats the ticket …metering didnt work… equipment is getting cheaper..then there those google guys making us compete and build faster networks not to mention Netflix and of course Aereo maybe we outsmarted ourselves? …oh whats a boy to do?..
    I know get the Head governing guy (one of us) …to create new rules and along the way tell everyone … “they wouldnt understand” the movie Blankman comes to mind ….

    When all along, you are doing what you always do for “private enterprise” continuing our “unfair advantage” and making people think you are doing it for their own good..how smart our we? (you know us the guys that contribute ) the only interst/people who matter REALLY?

    it says here the author got it right ..They think we all are stupid thats why they are so blatant they dont have to care the rule makers do the heavy lifting when it comes to that (for those keeping score) However and maybe more alarming is they think/believe they are not
    “STUPID”….the term (quisleing) comes to mind

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  4. People like you keep saying this is going to allow the big content providers to stomp all over the little guys. Did it escape your attention that the single biggest content provider, accounting for about 1/3rd of US Internet traffic, is the most vocal opponent of this? And we are supposed to be worried that a competitor of Netflix could cut a deal to deliver better quality streaming? Why is that a worry if we don’t own Netflix stock? And, why exactly should Netflix be earning $2 million in profits per employee, simply by buying rights to content other people produce to ship it over networks other people operate?

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    1. Robyn Belameyer Thursday, April 24, 2014

      Tim explain how Comcast provides shitty overpriced cable and internet. People aren’t even given enough options like a-la-carte pricing. Brian Roberts and David Cohen of Comcast make millions of dollars with their salaries. Your $2 million per employee argument is bogus.

      You obviously work for comcast. Get out of here you liar!

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      1. I don’t doubt that Comcast service is crap, but blocking them from charging Netflix and other users of their network will only make it worse. Why on earth would they spend money to upgrade their network capacity if they are not allowed to charge for it?

        Maybe the problem is that content companies like Netflix, Google, Facebook, etc., are walking away with too much of pie? Comcast has 50 times as many employees as Netflix, while they are worth only 7 time as much. Comcast and ATT combined are worth less than Google. Who would want to be in that business? No wonder our networks suck. Meanwhile, Netflix and the Silicon Valley crowd have got everyone bamboozled with their Net Neutrality nonsense.

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  5. Hollywood and the entertainment industry lobbied hard and this is what we have. Blame them for taking away a free internet. A free internet disappeared under the Democrats at the hands of a Hollywood lobbyist who runs the FCC. Sorry…Obama runs the FCC as we saw that when the FCC tried to put monitors (agents) in every newsroom.

    The end of a free internet will be their shameful legacy with these moves by the same FCC that failed to put monitors in every newsroom is a diagrace. Leave the internet alone.

    And don’t forget the leftist Silicon Valley activists who are right there with the Democrats to take away a free internet at the bidding of Hollywood and the entertainment industry. We saw Silicon Valley Values on display when they sold out shares before the big drop recently. A bit of insider trading while at the same time they kick out the disadvantaged in San Francisco CBD to make way for housing the rich techies.

    We used to talk about the importance of the separation of church and state. How about the separation of Hollywood and State? The Seperation of Silicon Valley and the State. Remember those famous words of Obama. Hollywood best projects American values.

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  6. Why not just admit the error, go back and rewrite without changing the playing field? Oh, I forgot, its politics, there are no go backs because it wasn’t a mistake, it was an oversight. Who advised them to do it this way? Big Media? Hmmmm. Mea maxima, maxima culpa.

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