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FCC Agrees to Set Rules on Net Neutrality

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[qi:105] The Federal Communications Commission at an open meeting today approved a draft of proposed rules related to net neutrality. As expected, the rules call for transparency and aim to ensure that the owners of the broadband pipe can’t discriminate against certain traffic on the wired and wireless Internet. But the draft also allows for reasonable network management in response to congestion, asks tough questions regarding managed services, and seeks to apply the principles of network neutrality to players other than the Internet service providers.

The Notice of Proposed Rulemaking is the formal process by which the FCC will seek to codify six principles into formal regulations, and drive comments about its plans for net neutrality. Three of the five commissioners approved the proposal, with the two Republican commissioners concurring and dissenting in part.  For readers already weary of hearing about this debate, the pre-game trash talk and threats can finally end, and we can start arguing about a solid plan. Comments based on this initial proposal are due Jan. 14 with replies to those comments due March 5.

Here’s the summary of the proposed rules:

Under the draft rules, subject to reasonable network management, a provider of broadband Internet access service may not:

  1. prevent any of its users from sending or receiving the lawful content of the user’s choice over the Internet;
  2. prevent any of its users from running the lawful applications or using the lawful services of the user’s choice;
  3. prevent any of its users from connecting to and using on its network the user’s choice of lawful devices that do not harm the network;
  4. deprive any of its users of the user’s entitlement to competition among network providers, application providers, service providers, and content providers.
  5. A provider of broadband Internet access service must treat lawful content, applications and services in a nondiscriminatory manner.
  6. A provider of broadband Internet access service must disclose such information concerning network management and other practices as is reasonably required for users and content, application and service providers to enjoy the protections specified in this rule-making.”

However, the commission is also asking tough questions about managed services and how those may be used to circumvent net neutrality principles, as well as seeking to expand some rules beyond ISPs to application providers and other entities doing business on the web. Presumably, this is in response to Google’s (s goog) defense of its decision to not allow rural callers to use or receive calls from its Google Voice service. From the draft rules:

The Notice affirms that the six principles it proposes to codify would apply to all platforms for broadband Internet access, including mobile wireless broadband, while recognizing that different access platforms involve significantly different technologies, market structures, patterns of consumer usage, and regulatory history.

The two Republican commissioners, Robert McDowell and Meredith Attwell Baker, both expressed their approval of an open Internet, but also questioned whether the FCC has the legal authority to draft a net neutrality policy. McDowell also cautioned that the rest of the world will be watching what the U.S. does in this arena, offering the  threat that less democratic countries may seek to regulate their own countries’ Internet access but out of “less pure motives” and with undemocratic results.

In closing, FCC Chairman Julius Genachowski reiterated the fact that this notice is only the beginning of a necessary process. (He cited the lawsuit filed earlier this year by Comcast as a perfect example of why this rule-making must commence.) He also stressed that this will be a flexible and light-handed process saying:

Fourth, the government’s role in preserving openness is important but also modest. It should be no greater than necessary to achieve the core goal of preserving a free and open Internet. Open Internet rules should be high-level, not heavy-handed. And in fact, the draft rules in the Notice are less than two pages long. The goal is to provide a fair framework in which all participants in the Internet ecosystem can operate, ultimately minimizing the need for government involvement.

Today’s vote marks the true beginning of this net neutrality rule-making process, which is not likely to see an end until spring of 2010 at the earliest — and then the lawsuits will commence. So nestle in, because it’s going to be a long winter of carrier and community discontent.

For those not utterly tired of the process, here is the FCC web site where you can comment, as well as links to our previous coverage:

FCC’s Net Neutrality Push to Boldly Go Where Congress Has Failed Thrice Before

FCC Outlines Its Net Neutrality Proposal

The GigaOM Guide to the Net Neutrality Debate

How Google News Upends the Net Neutrality Fight (sub. required)

He Said What? The GigaOM Net Neutrality Quiz

17 Responses to “FCC Agrees to Set Rules on Net Neutrality”

  1. The US government is proposing broad new regulations for telecommunications and cable internet service providers.

    The new proposals appear to target specific providers for regulation and government oversight. Specifically, Massachusetts Senator Ed Markey has proposed the Internet Freedom Preservation Act of 2009, or the “Net Neutrality” bill, outlining government policies to impose new governance and restrictions targeting telecommunications and cable providers AT&T, Verizon, Time Warner and Comcast.

    The proposed is based on the unfounded fear that service providers will “control who can and cannot offer content, services and applications over the Internet utilizing such networks.”

    The Markey bill indicates the vast majority of consumers receive services from only one or two dominant internet service providers. And, the bill says the national economy could be harmed “if” these providers interfered with access to internet applications.

    The bill proposes regulations imposing equal treatment (eg price/performance) of all internet traffic and content, regardless of content type and delivery costs. Specifically, the legislation proposes internet service providers could not sell prioritized internet applications or services.

    One of the main problems with the proposed legislation is the lack of recognition of costs to provide internet services. Some applications, such as video are bandwidth hogs and require significantly greater network infrastructure and associated costs to deliver when compared to the network infrastructure costs to deliver email access. Under the proposed legislation, services providers would have to charge the low bandwidth users (casual browsers and email readers) more to offset for the higher costs of the video users. One result of the proposed legislation would be less consumer choice and a hidden “bandwidth hog tax”. Today, most service providers offer tiered products and pricing to consumers and businesses to account for the additional costs to deliver bandwidth intensive applications. You pay more if you use more under the tiered pricing model. These are not “discriminatory” practices. Rather, tiered pricing and application prioritization are sound business models delivering reliable, profitable product choices and unburdened internet ecommerce. Consumers and businesses currently have choices. The proposed legislation takes away choice and increases costs to consumers and businesses.

    Another problem with the legislation is, certain applications such as voice and video over the internet require prioritization and special treatment to work properly. The proposed legislation makes existing application prioritization products and networking practices illegal. Internet service providers would have to dismantle these services to make all internet applications “equal” with no prioritization schema. The new legislation would kill off reliable voice and video over the internet as we know it.

    The other problem with the Net Neutrality legislation is anti-trust and federal trade regulations are already in place to protect consumers and business from monopolistic practices and unfair trade. For example, when AT&T disconnected MCI customers in 1974, MCI filed and won a successful anti-trust lawsuit resulting in breakup of the AT&T monopoly. Another example is, the Federal Trade Commission recently investigated possible antitrust violations caused by the Apple and Google sharing two board directors. Arthur Levinson has since stepped down from both Apple and Google boards.

    The US government would better use taxpayer dollars and valuable legislation time by asking two questions:

    Which companies are hiring lobbyists and launching advertising campaigns promoting Net Neutrality legislation?

    What is their agenda?

    Net Neutrality legislation is not needed. Consumers would have less choice and higher costs. Internet service providers would incur additional costs and compliance overhead. Taxpayers would pay higher taxes to create and support additional government oversight organizations.

    What business and consumers need is effective interpretation, oversight and enforcement of existing laws and regulations.

    Disclosure – Joe Tighe has no paid relationships, products or endorsements from any company, political or government organization cited in this article.

  2. This is case of treating a symptom rather then the disease.

    The real issue is lack of competition. Solve competition and net neutrality becomes a non issue. The side benefits of lower prices and higher bandwidths cant be overlooked either.

    Its a more difficult problem to solve, but the payoff is greater too.

  3. The Internet has prospered with no government intervention. FCC regulations will only stifle growth and competition. This is the end of the Internet as we all know it.