At this point the excruciating slog that has been the network neutrality rule-making process just continues to play out like some sort of successful Disney franchise moving from movie theaters to several straight-to-video releases. The news about the shift in timing from the court comes via a research note penned by Stifel Nicolaus, an investment bank, on Monday afternoon. The note said:

The briefing schedule was completed in January and there seemed to be a good chance a three-judge panel would be named any day to hear the case, with oral argument scheduled for no later than May and a ruling possible over the summer. But our understanding is the case will not be scheduled for oral argument before next September (absent unforeseen circumstances), though the panel could be named sooner. The court generally takes a break from oral arguments between May and September.

Analysts Chris King and David Kaut note that the timing for the eventual ruling would subsequently get pushed back to the fourth quarter of this year or early next year. They also note that the timing is likely a disappointment for both Verizon and Metro PCS. Recall that the network neutrality regulations were released in Dec. 2010 and weren’t published in the Federal Register (and thus becoming both real regulation and now open to a lawsuit) until November 2011.

I suppose another nine months or a year before the fate of those rules will be decided is just par for this particular regulatory course.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Netflix may suffer from limited mobility
• CES 2012: a recap and analysis
• 12 tech leaders’ resolutions for 2012

He did however, forge better connections between the tech industry and the FCC and managed to stop a merger that would have certainly hurt consumers. He also tried to make more wireless spectrum available — taking on the powerful broadcast industry to do so. But instead of listing his achievements and capitulations, I dug up a list that my colleague Om Malik and I wrote back in 2009 when he was named to the role.

In the post we told him what he needed to focus on during his tenure. Now, it’s time to look back and see what he has accomplished.

FCC Chairman Julis Genachowski

A focus on one key metric for all FCC decisions — namely returning the U.S. to the global forefront of Internet and mobile technology: On the mobile side, the chairman focused on LTE deployments and getting more airwaves for mobile broadband. And U.S. carriers have already deployed LTE networks ahead of many other countries. On the wireline side, it’s a bit mixed. Broadband caps and a lack of wide scale fiber to the home projects are keeping the U.S. far from the top in international rankings. According to the most recent (June 2012) OECD reports, the U.S. isn’t tops in terms of average or median advertised speeds. We were No. 1 in terms of connections, however. Grade: C+

An emphasis on future technologies (mostly wireless) that boost marketplace competition: Here the FCC has done a lot, despite political and unexpected technical hindrances. Genachowski’s FCC attempted to create a wholesale 4G network using satellite airwaves only to see that idea flail as interference with GPS spectrum was discovered. He also stopped a merger between AT&T and T-Mobile that was not in consumers’ best interests while also pushing for more spectrum and setting in motion an incentive auction that could provide airwaves for the carriers as well as for unlicensed broadband. Grade: B

Special incentives to attract new players (and not older companies) that bring broadband to the masses : Genachowski hasn’t done much here except issue press releases, but others have stepped up including Google and Gigabit Squared to bring gigabit fiber broadband to a few cities. Grade: B-

Tax credits for widespread deployment of broadband speeds of upwards of 20 Mbps down and 10 Mbps up for less than $50 a month without caps: That’s not happening. Grade: F

Better and more connectivity to office buildings, especially from newer players: While companies like Webpass or Sonic.net continue to deploy faster services in more places, business broadband wasn’t an issue the FCC has touched. Grade: F

An IP-centric, rather than voice-centric, approach to reforming the Universal Service Fund: This is a thankless task, but the FCC has started on the road to an all-IP world first with universal service fund reforms as well as a current debate on how to make the transition to an all-IP world, as well as what rules the agency should enforce. Grade: B

FCC Chairman Julius Genachowski.

An understanding that Google, and other web companies, are not the consumer’s friend, so their agenda shouldn’t automatically be trusted: Politics is a sport for big boys and Genachowski’s FCC was pretty transparent in pitting Google and other tech companies against the cable guys and the telcos and assuming that the resulting middle ground was an okay place for consumers. Grade: D

Final summary

All in all, Genachowski spent a lot of time on wireless, believing that to be an area where the FCC had room and regulatory authority to add capacity and improve competition. He was utterly neglectful on the wireline side, not doing much to strengthen competition, or even address issues such as caps and the virtual standstill on investment in rural areas. He also exits an agency that is weaker on the regulatory front than when he started and may end up weakening it further depending on the rulings in the network neutrality case.

He did start the arduous process of reforming the telecommunications regulatory regime to reflect the IP-based future and tackled universal service fund reform. Without a successor named yet, it’s hard to say what the next priorities will be for the FCC, but bringing off a successful auction of airwaves taken from the broadcast industry will be on the agenda as will the issue of how to regulate (and transition to) an all-IP telecommunications network.

Meanwhile, consumer issues such as the high cost of broadband, data caps and the eventual fate of network neutrality are all issues that may or may not change regardless of the new chair. The more things change, the more things still manage to stay the same.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A look back at mobile in Q1
• U.S. Wireless Data Market: Q4 and Year-End 2008
• Netflix may suffer from limited mobility

As part of its investigation, the regulator is also probing three other unnamed companies. The perception is that ISPs in France are either under-investing in infrastructure or violating the spirit of network neutrality, the idea that ISPs should not discriminate on traffic traveling over their pipes. Yet, in France, it seems that at least some in the government are willing to make Google pay for the ability to guarantee that ISP customers can receive its bits, turning the internet into Gulliver in the land of the Lilliputians, with ISPs and governments tying it down. The question is, will what happens in France happen elsewhere?

The ARCEP investigation and user complaints

Early this year, communications regulator ARCEP will rule on an investigation it opened on November 22 following complaints that video streaming services including YouTube are often too slow to watch. Now three French senators are also calling on the country’s digital economy minister to take action.

ARCEP stepped up when a survey of over 16,000 ISP customers by French consumer group UFC Que Choisir found 83 percent of Free customers, 47 percent of Orange customers and 46 percent of SFR customers were unable to use YouTube properly.

Since the investigation began, many users have reportedly noted an improvement in connection quality, but connections remain patchy.

And this issue is not limited to Google. “The quality of connection is inadequate in almost all operators,” said UFC Que Choisir’s survey, which found that France’s native Dailymotion, ironically, is slowest to access through France Telecom’s own Orange ISP, which owns almost half of the YouTube rival. And 25 percent of consumers reported slow-downs while watching broadcaster TF1′s MyTF1 catchup service.

Is it under-investment or a desire to make content companies pay?

UFC Que Choisir says these symptoms may be caused by under-investment in infrastructure as well as commercial tensions between ISPs, which deliver web services to the end user but which don’t pay for the infrastructure. It has called on the government to define quality-of-access rules, in part by allowing the competition regulator ARCEP to build a quality-of-service observatory. Similarly, in the U.S., the Federal Communications Commission is also trying to figure out how to measure the quality of a broadband connection beyond just looking at speeds.

Inter-company tensions do appear to be at play. A case before another public agency — France’s competition regulator, the Autorité De La Concurrence — in September illustrates how ISPs eager for revenue from web content companies can hold the user experience hostage.

Cogent, which handles YouTube’s peering interconnections, had complained to the competition authority that Orange had refused its connections, wanting more money to add ports to connect Cogent traffic to its networks. Much of the interconnections between large ISPs, CDNs and web content companies are negotiated by private deals, so it’s rare to see the government get involved, or even to hear much about them publicly. In the U.S., when Level 3 and Comcast became embroiled in a public peering fight after Level 3 started sending Netflix traffic over its connections with Comcast, the FCC refused to get involved, and both parties settled the disagreement.

But in this case, the competition regulator said one ISP was within its rights to charge more money from services hoping to reach its subscribers. This so-called double-sided business model has been sought by ISPs who argue that companies such as Google are freeloaders making huge profits off the pipes of owned by the ISPs. In contract, Google and other content companies argue that their services are the reason customers upgrade to higher speeds and continue paying ISPs money.

And in France the ISP argument has gained at least one supporter in the Autorité De La Concurrence. The authority says France Telecom is offering interconnection prices significantly below market value, and it has accepted the telco’s undertakings to ensure transparency.

French policymakers generally are generally in the mood to extract more money from Google. They have already set such wheels in motion around taxation and copyright fees. Now infrastructure could be the next arena. But its unclear how far France will go.

It’s one thing to try to ensure that consumers have an acceptable connection to support online video, through implementing some kind of standards. It’s another to get between participants in peering disputes, and to possibly start setting rates.

The U.S. fight is bigger than France’s

But such fights are becoming more common as the stakes over the internet and web video get higher. ISPs are worried about the cost of delivering video traffic over their networks, while also losing out on the ability to charge users for pay TV packages that significantly boost their revenue. Meanwhile, consumers are demanding more video online because they can choose what to watch, when they want to watch it, on any device.

The French competition authority’s earlier investigation referred only to two individual companies at loggerheads in a specific peering fight. But the new inquiry by the communications regulator is much wider, looking at industry-wide practices around infrastructure and interconnection. And it comes following consumer outcry — identified in UFC Que Choisir’s survey — to which politicians may be keen to respond.

The outcome will be important because Google is already facing having to pay to re-use news content in some parts of Europe through both commercial agreements and possible new legislation that suggest excerpting is chargeable. That could set new precedents for the online content economy.

The French broadband outcome will be important because it will set up a precedent for other telecom regulators who are struggling with similar issues. Creating standards to ensure that customers have a quality online video experience is no simple task and may well require investment by ISPs, especially those on older technologies or oversubscribed networks.

As for the peering issues, if the government decides to step into the fray there, it could be setting the internet up for regulations that put governments in the role of determining who can connect to whom and how much they can charge. The OECD recently made a convincing argument that such regulations and government involvement would hurt the web and the economic development of companies dependent on the web. So what France does here might have influence far beyond its borders.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Connected world: the consumer technology revolution
• Connected Consumer 2011: What Not to Expect
• How consumer media will change in 2013

As a general rule, a Romney victory would most benefit the incumbent telcos, according to a report out Friday from Stifel Nicolaus, an investment bank. From the note:

We believe the two Bells would gain the most from a Republican victory and de-regulatory telecom thrust, while some of their rivals would do better under the Democrats, including non-Bell wireless carriers, CLECs, and other upstarts. We suspect that cable will do fairly well under either party, with some risks, and that midsize telcos, DBS, edge/tech giants, and broadcasters face various trade-offs.

The reason for this can be summed up in a pithy quote provided by Richard Bennett, a senior research fellow at the industry-dominated think tank Information Technology and Innovation Foundation. When I asked what was at stake for the FCC and telecom policy in this year’s elections, he said, “It’s either going to get down to Chairman McDowell or Chairman Levin,” referring to current Republican FCC Commissioner Robert McDowell or a Democrat heading up the FCC in the model of Blair Levin. Bennett said that Levin, who helped write the National Broadband Plan and is now spearheading a gigabit fiber project to connect U.S. universities, might not actually take on the Chairman role, but someone who thinks like he does would be a likely candidate.

Both potential commissioners see a role for markets in broadband policy, but the Levins of his comparison would be more likely to view the markets in the U.S. as needing regulatory oversight to function competitively, whereas McDowell would be more content to let the market function, Bennett said. With that in mind, let’s get to some specifics. There are three big areas that will come up after the election: spectrum, network neutrality and the retirement of the copper telephone network.

Congress doesn’t share spectrum!

On spectrum policy, there are a few big issues that fall under the bigger scope of needing more spectrum for wireless broadband. The FCC is currently proposing an incentive auction that would offer TV broadcasters the chance to sell some of their airwaves and no matter who wins on Tuesday, that should continue to go through. But as part of that auction, there’s also the plan to keep some of that spectrum for unlicensed uses as opposed to selling it all to the carriers — or other buyers. Unlicensed spectrum can also be used for broadband. Both Wi-Fi and Bluetooth operate in unlicensed bands.

Harold Feld, a senior vice president with Public Knowledge, explained that in the past few years spectrum has become a partisan issue, which means even something as beneficial as more unlicensed spectrum could become controversial. “There’s a handful of Republicans who hate unlicensed spectrum in the same way that the Grinch hates Christmas. They don’t want to let people have access to it for free.”

But the FCC is also looking at the issue of how much spectrum a carrier can own and still have a competitive market, as well as the idea of spectrum sharing as recommended in a recent President’s Council of Advisors on Policy and Technology report. Under a Republican FCC, spectrum screens probably won’t be a priority. And if Romney takes the White House the idea that certain federal bands of spectrum could be shared in order to provide more airwaves for broadband will likely fall by the wayside. As Levin said a few weeks back onstage at a white spaces event, “Republicans don’t want to share spectrum.”

Network neutrality could hit the news again

The FCC formally passed rules governing how and when ISPs might discriminate against packets flowing over their pipes at the end of 2010. It took roughly a year for those rules to become a law and right now the agency is battling the legality of those regulations in court. If the U.S. Federal Court of Appeals says the FCC didn’t have the authority to impose net neutrality rules then a Republican-led FCC isn’t likely to push back with an appeal or try again with a new justification for why the FCC should ensure ISPs don’t block content on their pipes.

Feld also notes that when the FCC passed the original rules it said it would revisit the issue a few years later to see how network neutrality was affecting the industry. That, plus the actual enforcement of the rules if they are deemed okay by the courts, could be affected by who wins tomorrow. In general, Republicans are more skeptical of the need for network neutrality, although Kevin Martin, a Republican appointee, took action against Comcast when it was found to block P2P traffic on its network,

The death of copper

The final big issue for this next administration is the death of the public-switched telephone network (PSTN) — which you might know better as the copper land line. This issue has been simmering for years, but as AT&T and Verizon begin to publicly back away from their copper networks as they abandon DSL, it’s an issue that will finally come to the fore. AT&T has been meeting recently with commissioners to discuss the issue according to FCC filings.

The issue that the next FCC must face is what to require from companies offering LTE as a replacement for copper in rural areas and from cable companies and other ISPs providing all-IP communication in more urban settings. There are reliability and redundancy issues around how well such a system much handle a disaster (perhaps made more relevant after Sandy) as well as requirements that force current copper providers to service existing lines and circuits even if a competitor is using it to offer service.

There are issues here that will cross party lines and Congress is likely to get involved since rural states and Representatives aren’t going to be thrilled that their constituents will lose their copper networks. As far as what Democrats or Republicans require from this change, my hunch is Democrats will pay greater attention to the how rule changes affecting the PSTN affect competitors who use those networks, while both parties should push for some form of reliability and resiliency regulations, especially if we keep having impressive natural disasters that take out cellular networks and power.

So, head on out to the polls tomorrow, knowing that your vote not only could change the our taxation schemes and government spending, but also the future of our telecommunications networks.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A look back at mobile in Q1
• Netflix may suffer from limited mobility
• 2012: Data, spectrum and the race to LTE

The first is to push more consumers over to the Mobile Shared Data plan, and the second is to establish a precedent that will put its Wi-Fi network on the same legal footing as its cellular one, especially when it comes to network neutrality. Success in the first effort will help AT&T in the near term as it drives people off their grandfathered unlimited plans and tiered plans, while success in the second will give AT&T more wiggle room as it fights the FCC and consumer advocates over network neutrality.

The plans. It’s all about the plans

LTE networks were built for apps just like FaceTime. Every carrier has shown off advertisements with attractive people using video calling of some sort as a way to justify the upgrade to LTE. AT&T even once launched a now-defunct video-sharing service back in 2008 over an even less robust HSPA network, so claims from a post on Wednesday by AT&T’s Bob Quinn that defend AT&T’s stance by saying FaceTime is going to overwhelm the network is kind of like inviting your friends over for a brunch buffet and then only letting them eat the grapefruit.

Another problem is that absent real transparency over how congested its network really is, the FCC and consumers have no way of knowing if AT&T is using network management as a screen to implement network limits designed to push people off its unlimited and tiered plans and into the shared data plans.

And that is likely what AT&T is actually doing. It learned from Verizon’s mistakes of forcing consumers onto a shared data plan, but it shares the same goal as its rival in getting customers to switch. As revenue from voice and texting decrease, these shared plans lock in some of the revenue from those services in the form of fixed fees for devices, keeping the average revenue per user from going down. Jan Dawson, an analyst at Ovum, had this to say in an email regarding these advantages:

“Both carriers are using it as a carrot to get people to pay a fixed amount for unlimited texts and voice, while getting them to pay a variable amount for data. Data usage is increasing, so they can expect people to pay a greater amount over time for data under a variable plan (hence getting them off unlimited data that they may have been grandfathered into on those two carriers). Voice and texting usage on the other hand are decreasing, and so revenue would normally decrease as people cut the size of their bucket for voice and data. But by locking customers into unlimited voice and unlimited data, they prevent that reduction in revenue from happening.”

Preloading is a red herring

The motivation behind pushing customers to shared plans seems obvious. But do AT&T’s FaceTime rules violate network-neutrality rules, as public-interest groups say? Quinn says no in his blog post, first because AT&T is being transparent and second because FaceTime is somehow preloaded on the device. But the discussion about preloading is a red herring. What AT&T is really arguing is that because it allows FaceTime on its Wi-Fi network (and other video-chat apps), it’s not blocking a potentially competing app.

Quinn writes (emphasis mine):

“To date, all of the preloaded video chat applications on the phones we sell, including FaceTime, have been limited to Wi-Fi. With the introduction of iOS6, we will extend the availability of the preloaded FaceTime to our mobile broadband network for our Mobile Share data plans which were designed to make more data available to consumers. To be clear, customers will continue to be able to use FaceTime over Wi-Fi irrespective of the data plan they choose. We are broadening our customers’ ability to use the preloaded version of FaceTime but limiting it in this manner to our newly developed AT&T Mobile Share data plans out of an overriding concern for the impact this expansion may have on our network and the overall customer experience.”

In this one paragraph Quinn hides everything you need to know about this move. The shared plans get a plug, the sleight of hand that equates Wi-Fi with cellular access is accomplished, and AT&T plays the network-management card, which is kind of like a get-out-of-jail-free card for net-neutrality violations anyhow. Defining Wi-Fi as wireless helps AT&T in both wireline and wireless net-neutrality fights, which is why this is such an important move.

Network neutrality and Wi-Fi’s double standard

The idea of network neutrality is simple at its core: ISPs can’t discriminate against packets on its network by blocking or prioritizing lawful traffic. This protects against AT&T blocking VoIP apps it doesn’t like on its wireless network or setting up agreements with certain app developers and asking them to pay more for faster or guaranteed delivery over any of AT&T’s networks.

It’s an idea that looks good on paper (and on wireline networks). But when it comes to wireless — where the last mile to consumers is limited by the amount of spectrum a carrier holds — if too many packets try to reach users, packets drop and calls fail. Thus, when the FCC created its network-neutrality rules, it carved out exemptions for wireless, basically telling carriers to be transparent and not to block competing video and voice services. In both the wireline and wireless rules, it also gave ISPs a lot of leeway on how to deal with congestion.

If AT&T can set a precedent here that Wi-Fi is just as good as cellular when it comes to offering competing apps, then it could limit apps it doesn’t want on its more constrained cellular network to its Wi-Fi network. That allows it to strongly influence the apps that consumers use on the AT&T cellular network and drives consumer behavior in a more subtle way than huge early-termination fees.

AT&T may also use this implication — that Wi-Fi is just as good as cellular — to argue that some of the more stringent rules of wireline network neutrality don’t apply on the AT&T Wi-Fi network. Update: While no one can say what AT&T might do, legal sources point out that even if AT&T tries to argue this, the FCC’s network neutrality rules clearly place Wi-Fi under the protections of wireline networks. However, it can use access to apps over its Wi-Fi network as a way to argue it isn’t blocking a competing app as it’s doing here. So perhaps in the future AT&T could block apps over its Wi-Fi network that it doesn’t like but that don’t compete with voice or video. So consumers shouldn’t just get upset over AT&T blocking FaceTime but about the greater games Ma Bell is playing.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Carrier IQ and the continued erosion of operator trust
• Mobile 2011: Data Consumption Will Explode
• Growing Mobile Data Use Turned Up Heat on Carriers in Q3

Kevin covered the story in late April when rumors of the change in pricing and plans to block VoIP services surfaced. It turns out that TeliaSonera has tested the new pay for VoIP plans in Spain on its Yoigo subsidiary. Subscribers are charged EUR 6 ($7.50) per month for 100MB of VoIP traffic, which supports between five and ten hours of your Google Talk or Skype calling. Existing contract holders won’t have to pay such fees until their contracts run out and TeliaSonera will also offer unlimited plans where the cost of VoIP is included.

Carriers are clearly eager to hold onto their dying voice revenue, which in the U.S. comprises roughly 60 percent of what they make on average from each customer a month, according to data from the first quarter of 2012 gathered by Chetan Sharma. As you can see from the chart below, the revenue is declining along with revenue from texting. This is a global trend. When everything is IP-based, from voice to messaging services, carriers are stuck selling data — and data doesn’t carry the profit margins nor the limits of voice. A person can only talk so many minute per month, offering a ceiling on the potential outlay to support the service. But demand for data just grows and grows as we find new apps that can use it.

Still a charge for Skype provided VoIP — or VoIP provided by any other over-the-top provider — is a problem for fans of network neutrality who worry that TeliaSonera’s charges are an attempt to protect the carriers’ own business and services. Network neutrality is the principle that states ISPs can’t discriminate against the packets traveling over their networks. In this case, charging a user more to use an over-the-top VoIP offering could be construed as discriminating against those services.

However, given the revenue and margin pressure at operators, I doubt this is the last time we’ll see this issue arise in Europe or in other regions. In the U.S. network neutrality rules aren’t extended to wireless networks, but the FCC has said it would look askance at operators who try to discriminate against services that carriers also offer such as voice and messaging.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Survey: the next wave of enterprise mobility
• LTE-Advanced: what it is and isn’t
• Carrier IQ and the continued erosion of operator trust

Earlier this month some of the proposed rules associated with the UN’s plans surfaced on a blog and since then other leaks have given us a sense of what’s on the negotiating table at the UN. The one seeking to gut network neutrality is submitted by ETNO — the European Telecommunications Network Operators Association. Now, this proposal may never make it to the final ITU version of the rules and the ITU itself may never get the authority it wants in terms of being able to dictate how packets travel on the Internet, but its worth understanding what regulators are considering in this fairly secret process.

Glyn Moody at TechDirt has read those documents and clips the relevant segments to argue that these proposals would effectively make network neutrality illegal. As he writes as TechDirt:

That may sound innocuous enough, but “supporting innovation to provide a value-added service” is a coded way of saying that the telcos should be allowed to abandon net neutrality, something confirmed in one of the accompanying proposals…

The key sentence in that proposal is “Nothing shall preclude commercial agreements with differentiated quality of service delivery to develop.”

Ironically, to see what allowing a value-added service can mean to an ISP (or consumers) one only has to look at Comcast’s decision to exempt its Xfinity traffic delivered via the Xbox from its broadband cap. Consumers, competitors and maybe even regulators can perceive those actions to be unfair. The U.S. version of network neutrality regulations allows Comcast to exempt that traffic because it doesn’t travel over the public Internet, and because the FCC didn’t want to deal with the concept of value-added services on an ISP’s network when it made its network neutrality regulations.

So if the ITU is entertaining similar proposals, then it’s time to open up the process more so the parties involved can learn from the actions of our own FCC or ISPs. Maybe then member countries will think twice about the types of rules they want to enshrine. Or maybe they’ll keep listening to the people who run the networks instead of the people who use them and depend on them for their businesses.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• ESPN Leads the Way Over the Top, But Will Others Follow?
• Who and what to watch in the new era of the living room
• Q4 Wrap-up: SOPA and the future of digital content

In fact Kron told me that anything over 5 percent would be a substantial victory because it means that the company would have to pay attention to the issue.

Regardless of change coming from this particular vote, in our talk Kron offered me something far more interesting, an economic justification for broadband companies to embrace network neutrality. So despite Wall Street analysts who argue that such rules would turn the nation’s largest wireline and wireless phone companies into commodity utilities with the profit margins to match, Kron explains why American’s capitalists should be fine with network neutrality.

“Most people are diversified investors and interested in broad-based economic growth. And just because it’s good for a single company doesn’t mean it’s good for the market,” Kron explained when I asked about the potential damage to AT&T’s or Verizon’s profit margins. “The concept of negative externalities comes into play. Just like pollution that isn’t priced in will add costs in the other parts of the market, a free and open Internet is responsible for significant value, and we don’t want to interfere with that. And wireless is where so much activity is moving to — that’s where a lot of money is being made for the market, and that’s why we wanted to make wireless net neutrality a specific issue.”

Now Trillium is in the small class of socially conscious investment firms that take perhaps a more holistic view of their asset management strategy, but compared to returns for the large-cap funds that invest in AT&T and other wireless company, it doesn’t pay a penalty for its social stance. It’s returns in the 1-3-year time frame are slightly lower than the returns from the S&P when you include its management fee, and slightly above the S&P in the 5-to-10 year time frame. Trillium has $1 billion in funds, which means it’s not a small player either.

And given how Comcast appears to be formulating an end-run around wireline network neutrality with its decision to let Xbox streaming of Comcast network traffic sneak onto the network without affecting a user’s data cap, we’re still not done trying to protect the rights of services running on all broadband networks. So on both wireline and wireless networks, network neutrality is still very much a concept we need to pay attention to.

Similar proposals regarding wireless network neutrality are scheduled for votes at the upcoming annual meetings of Verizon Communications on May 3 and Sprint Nextel Corporationon May 15.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Carrier IQ and the continued erosion of operator trust
• Sprint’s tightrope walk: finding a balance for its network modernization plan
• The future of mobile: a segment analysis by GigaOM Pro

The D.C. Circuit Court of Appeals, the same court that had ruled against the FCC’s authority to impose rules that govern the services flowing over the Internet, will hear the case. It also denied the FCC’s request to hold off on a hearing while the agency considered a petition before it, asking for further definition of its rules regarding “specialized services” for business customers. Analysts at Stifel Nicolaus and Co. expect the court to set a schedule this spring with oral arguments in the fall. The group expects a ruling by winter.

And apparently it doesn’t expect the results to favor the FCC, which could be a blow to Silicon Valley companies leery of schemes by telecommunications providers to charge them for accessing their pipes, as well as for consumers who already pay for Internet access and expect their bits to keep on flowing unabated. From the Stifel research note:

A D.C. Circuit three-judge panel in April 2010 undercut the FCC’s broadband regulatory authority under its Title I “ancillary” jurisdiction in shooting down a 2008 order sanctioning Comcast (CMCSA) for its treatment of BitTorrent P2P traffic. The FCC tried to write its December 2010 Open Internet order to respond to the court’s objections by citing other sources of statutory authority, and there could be a different panel this time, but the judges will still be bound by the precedent from the previous ruling, making the FCC’s task difficult, in our opinion.

If the FCC loses, the next stop is the Supreme Court. In the meantime, and if the nation’s top court decides to favor the telcos, the FCC could be stripped of its authority to regulate the nation’s cable, DSL and wireless Internet providers, thanks to regulatory decisions the agency made when the web was young. That means the FCC would turn from a letter-writing gadfly occasionally stepping in on behalf of consumers to a powerless relic of an agency as the web becomes more central to our lives.

Hear that Internet fans? Winter is coming.

Image courtesy of Flickr user Mom Smackely.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Netflix may suffer from limited mobility
• 12 tech leaders’ resolutions for 2012
• Confused about the wireless markets? Here’s a breakdown

According to a story in the Wall Street Journal, which quotes AT&T exec John Donovan, the company is looking at charging app developers for the data consumers use while playing with their apps. Donovan likened it to a 1-800-style service where users could download the app without the data usage being charged on the consumer’s bill. Instead, an app developer would pay for the downloaded bits. From the WSJ story:

What they’re saying is, why don’t we go create new revenue streams that don’t exist today and find a way to split them,” Mr. Donovan said. A customer nearing his data limit for the month could be more likely to download a movie if the content provider covered the price of the data transmission.

Haven’t we been here before?

The stated thinking from AT&T is that the pricing would encourage customers worried about their bandwidth caps to still try new services, but the reality is this is a brilliant way to implement the double-sided pricing model ISPs have coveted for years. And without net-neutrality rules protecting wireless applications that don’t deliver voice or video-conferencing style services, this could affect Facebook, Spotify, maybe Netflix and any startup considering a hot new bandwidth-using mobile application.

I have asked AT&T several questions about the service, and haven’t heard back. But at its heart, the toll-free numbers Donovan likened this plan to in the WSJ story may offer a “free” service to consumers in terms of not counting against their data limits, but it implicitly provides a toll on the participant providing the app. In the telephone world that generally was a company or a call center operated on behalf of a company. But in the data and app world, the proposed toll could hit small and large providers alike, and thus stymie innovation.

This fear of halting innovation by making small providers pay to transmit their bits across carrier networks was one of the bigger arguments for network neutrality — or the idea that service providers couldn’t discriminate against packets moving across their networks. But with this plan AT&T may have found a means to discriminate using pricing, and possibly could halt innovation by companies that can’t pay to offset their users’ data.

What a lovely app you’re building! It would be a shame if data-strapped consumers won’t download it

Full-on net neutrality doesn’t apply in wireless networks, unless an operator is trying to block a competitive voice or video services such as Skype. As I wrote last year, that lack of wide scale protection could still cause problems for chatting within social networks, online games and other services, meaning companies such as Facebook, group texting apps or popular games may be affected. I’ve reached out to the FCC and several startups to see what people think. The FCC had no comment.

It’s also unclear if such pricing would run afoul of net neutrality rules but the big opening here for AT&T is the rollback of its unlimited plans. Give consumers a $10 per GB overage fee and you’ve given them something to fear when downloading a mobile application. So if someone hesitates before playing Pandora or watching a YouTube clip, then half of AT&T’s job is done when it comes to coercing developers to sign up for this toll 1-800 plan. If some applications sign up to pay this fee, then consumers will become acclimated to their app habits getting paid for by their dealer, making the cost of delivering a successful app a lot higher.

And if those apps choose to pay that cost, then AT&T has managed to do what it has tried to do since Ed Whitacre famously put forth the idea in 2005 — force those pesky web companies to pay to use AT&T’s pipes. Way to play the long game, Ma Bell.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How carriers can fight “the death of SMS”
• Survey: How apps can solve photo management
• Analyzing the wearable computing market