FTC Wants in on Net Neutrality Fight

Bell and cable companies have long wanted to move on from net neutrality, their 2006 policy debacle. But once Washington has grabbed hold of an issue, it can’t seem to let it go.

I’m not talking about the Federal Communication Commission here. The big Bell companies currently hold sway at the communications agency. No one expects the FCC to take action on neutrality against the Bells, who reject neutrality because, they say, the Internet shouldn’t be regulated.

What I’m referring to is the action happening at another F*C-ing agency: The Federal Trade Commission. The FTC usually gets press for investigating gasoline, drug or tobacco companies. But every decade or so, the FTC also makes a bid for jurisdiction over the Internet.

Since last August, the FTC has decided that net neutrality is its business. Neither rain nor snow nor sleet nor hail can keep these determined civil servants from fulfilling their duty. Two weeks ago, when the rest of the federal workforce closed down over weather, the FTC was busy at a two-day workshop on neutrality.

What is truly bizarre about this turf grab, however, is that the FTC apparently wants power so that it, too, can do nothing about net neutrality.

“I start by admitting my surprise at how quickly so many of our nation’s successful firms have jumped in” – i.e. eBay, Google and Microsoft – “to urge the government to regulate,” FTC Chairman Deborah Platt Majoras said when she announced her Internet Access Task Force in August.

Majoras repeated the caution at February’s event: “Policymakers should be wary of regulation that are clothed in terms of protecting consumers but that in practice would hamper competition, while benefiting only certain vested interests.”

Those phrases must resonate pleasantly in Bell ears. But the Bells have no right to get boastful.

Consider what they’re up against. Last year the Bells spent more than $50 million to change the nation’s telecommunications and video franchising laws. Even with the blessing of congressional Republican leaders, their bill died when Senate Democrats took the measure hostage. They killed it when the Bells refused a net neutrality ransom.

Neutrality proponents, who style themselves as “Internet Freedom” fighters, battling for truth and virtue on the Internet (it is “open” to any application provider) couldn’t be happier that Democrats now clutch the gavels on Capitol Hill. The Democratic turnabout, and AT&T’s need to close the books last year on its merger with BellSouth all led AT&T to accept – as a compromise – neutrality rules for 30 months.

With the executioners now in charge of the legislative facilities, the Bells have decided that they really don’t want Congress to do anything about telecom, after all.

The Bells still have enough juice – and allies at the FCC – to beat back free-standing neutrality legislation. But the real danger is that neutrality will keep spreading. It’s already moving to wireless. Instead of merely neutrality over Bell and cable wires, the freedom fighters want wireless rules, too. Columbia University law professor Tim Wu, the very man who gave net neutrality its name, argued for this in a new paper he presented at the FTC event.

Wu referred to a 1968 FCC rule requiring AT&T to let the Carterphone device onto its telephone network. The Carterphone allowed mobile radios to connect with telephone wires. It has been vital to the creation of faxes and modems. In the wireless world, Wu said, “There is no Carterphone; no right to attach.”

Wu’s first example of the problem is Apple’s new iPhone, currently only available on AT&T’s wireless network.

But at the end of the day, the iPhone may demonstrate the opposite point. If the phone is any bit as successful as the iPod, other carriers will strike deals to get the phone on their networks. The real story of the iPhone is how manufacturers like Apple are reclaiming control over the design of their devices vis-à-vis wireless companies.

At the FTC forum and online, several critics took aim at the aptness of Wu’s Carterphone analogy.

But don’t underestimate the staying power of any federal commission. In the long run, by empowering a new forum for complaints, the FTC’s engagement in this issue may give the Bells the most grief over net neutrality, simply by prolonging its shelf life.

(Longtime technology and telecom policy reporter Drew Clark is a Senior Fellow and Project Manager at the Center for Public Integrity.)