Blog Post

The FCC’s “half-pregnant” plan for net neutrality, and why it won’t work

The FCC’s in a tough place as it rewrites rules for the internet: the public wants a ban on “fast lanes” — the idea of letting ISPs charge websites for priority service — but the powerful telecom industry is determined to create those lanes anyways. In response, the agency is reportedly planning a “hybrid approach.” That phrase rings of compromise and good sense but, in reality, will produce the same legal train wreck that placed the FCC in this mess in the first place.

If you’re catching up, the “hybrid” news comes via a detailed leak to the Wall Street Journal in which the agency appears to be setting the table for its impending final rules:

Caught in the middle, Mr. Wheeler is close to settling on a hybrid approach, people close to the chairman say (…)

The plan now under consideration would separate broadband into two distinct services: a retail one, in which consumers would pay broadband providers for Internet access; and a back-end one, in which broadband providers serve as the conduit for websites to distribute content. The FCC would then classify the back-end service as a common carrier, giving the agency the ability to police any deals between content companies and broadband providers.

This approach echoes a scheme floated by the Mozilla Foundation in May that would supposedly let the FCC ban fast lanes without reclassifying consumers’ ISPs as public utilities (or “common carriers” in telco parlance)  — a notion that is radioactive to companies like [company]Verizon[/company].

The Mozilla trick is based on a legal slight-of-hand that redefines just who net neutrality involves in the first place.

Rather than treating consumers as the beneficiaries of net neutrality obligations (as the idea has always be understood), the Mozilla definition would instead treat websites (or, “edge providers”) as the customers. This would have the effect of applying the public utility provision to a different set of actors at a deeper layer of the internet, rather than to the “last mile” at which the ISPs come into people’s living rooms.

If that sounds complicated and hard to follow, that’s because it is. It also won’t work. As Stanford professor Barbara Van Schewick explains, ideas like Mozilla’s “were put forward in good faith and with great creativity” but obvious legal deficiencies “would sink sender-side proposals in court.”

Van Schewick, who made the comments in a filing spotted by National Journal, is a leading authority on this subject and correctly predicted that the FCC’s earlier Rube Goldberg legal fixes for net neutrality would come crashing down. And she’s right that this latest Hail Mary won’t work either; most websites (or “edge providers”) don’t obtain service from ISPs “for a fee” — and that “for a fee” language is a central to identifying the services over which the FCC can flex its public utility power.

Fail, fail again

If the FCC does try to impose net neutrality through any way other than by reclassifying consumers ISPs as public utilities, the agency will get sued, and it will get spanked all over again. In its bombshell decision in January, the DC Appeals Court made it perfectly clear that other legal gimmicks won’t work. The FCC will just embarrass itself if it tries to push its luck once again with another far-fetched plan.

The agency, of course, is likely get sued no matter what it does — the WSJ leak story contains a nasty shot across the agency’s bow to that effect from Verizon:

One industry official admitted the hybrid plans could be more tolerable “at the margins,” but predicted they would prompt the same legal challenge from the broadband providers as full reclassification.

Reclassification “could not withstand judicial review,” Verizon Communications Inc. Deputy General Counsel Michael Glover wrote in a white paper submitted to the FCC on Wednesday.

But at least the agency can win its legal case if it follows the DC court’s clear suggestions.

Having a strong legal case, though, is only half the battle for the FCC. It also needs a strong political case too. And on that front, FCC Chairman Tom Wheeler may not have the clout to fight the telecom industry as well as ascendant Republicans who, sources say, will make the rest of his tenure “hell” if he defies the industry on this.

And that’s why the FCC is preparing to offer a “hybrid approach” that will spare it the wrath of industry, and may also confuse consumers into believing it has not sold them out. But in this case, “hybrid” sounds a lot like “half-pregnant” – it’s a useful concept, but doesn’t exist in reality.

15 Responses to “The FCC’s “half-pregnant” plan for net neutrality, and why it won’t work”

  1. Richard Bennett

    This made me laugh: “If the FCC does try to impose net neutrality through any way other than by reclassifying consumers ISPs as public utilities, the agency will get sued…”

    And then you tried to recover with this: “The agency, of course, is likely get sued no matter what it does…”

    So your implication is that uniform Title II protects the FCC from suit better than the hybrid approach. I don’t know a single practicing telecom attorney who believes that.

  2. Sara Campos

    Money in politics has now reached all of us. I voted for Obama and he still appointed this man to protect us. Cant imagine what would happen when the GOP regains power. America is over, done, and done.

  3. It is all about the # of router hops between you and the content you want.
    Content delivery networks (CDNs) can minimize router hops, lost packets and latency and off-load the general purpose Internet.
    Has nothing to do with Net Neutrality or last mile fast lanes.
    Too many non-technical people spinning conspiracy theories will lead to poor Internet performance for all, be careful what you wish for! The Internet is a shared network. Please look up CDNs.

  4. I apologize for this long post. But I feel it is worth it.

    Tom Wheeler is nothing more than an industry shill. The former chief lobbyist for the National Cable Industry Association and also for the Cellular and Wireless Industry Association, knows there is nothing in any of his “proposals” related to consumer choice in the monopoly cable and telecom industry. Every stupid proposal he comes up with is to satisfy his monopolist overlords, not to represent the public interest. He (and really the rest of the FCC) is the very definition of the “fox in the chicken coop.”

    Net Neutrality is important and critical, but I feel there is a real case to be made that the Net Neutrality issue is nothing more than a red herring. A distraction. A non-issue.

    The real threat to consumers and to our nation’s technology leadership, is the industry’s plan to implement Metered Billing. The monopoly cable industry’s major business objective is to quietly slide into metered internet billing. Their plan is to bill you by usage. Which, BTW, is total price-gouging. A consumer rip-off.

    The industry (with the FCC’s help) will seem to “lose” on the the Net Neutrality issue in order to seem “entitled” to a Metered Billing System.

    Metered Billing will make your old cable TV bill look cheap. Internet service is already the most profitable product the monopoly cable systems sell, by far. Fees for incremental usage above some phoney cap are almost pure profit. Like, 99%+ pure profit. Nobody in any competitive industry expects to make 99% profit.

    Multiple credible studies around the world have repeatedly shown that Metered Billing is not only price-gouging, but is actually a DIS-incentive for the monopolies to improve technology or service. Internet service is not like groceries, or gasoline or electricity. It doesn’t cost them more to deliver more.

    Monopolists throughout history have always created artificial scarcity in order to charge higher and higher prices. Now, in the case of Comcast, failure to invest in their system (which we all know, with advancing technology and low-cost commodity equipment, is actually cheap) makes it seem like they deserve more money to keep up with demand. They failed to invest very much for decades and now they want to charge more for this failure. Again, it has been shown that Metered Billing is actually a DIS-incentive to the monopolists to ever improve service–just bill more!

    The cable “industry” is publicly projecting that the average internet bill will be $200 to $300 -per month- in 3-5 years. JUST FOR INTERNET. That does -not- include a Netflix subscription or MLB TV subscription, or TV fees–just for internet service.

    Comcast SVP David Cohen publicly stated to his investors just last February that they plan to do this. “I would predict that in five years Comcast at least [!] would have a usage-based billing model rolled out across its footprint.” This will be a license to print money for a very few, very rich companies. These monopolists want more and more and more. And they want you to believe they’re entitled to it!

    So, the real (and huge) pot of gold is Metered Billing. They really don’t care so much about Net Neutrality. They’ll give that away, and in doing so will eliminate the opposition that Netflix and the other the big content providers have to their merger activities.

    If we don’t stop them now, we’re screwed. It will be The United States of Comcast/AT&T. They will have more profit money for lobbying, electioneering, and just plain bribery, than any other industry in America. Metered Billing will cause a $2,000 to $3,000 “tax” increase that -you- don’t favor.

  5. spixleatedlifeform

    It’s O.K. Whatever they do, it will serve the interests first, last and only of those service providers who meter their service. Why has this issue not arisen in Europe, Asia, or anywhere else in the world? Because none of them have Legislators, Executives or a Judiciary so thoroughly in the pockets of the mega-giga-corps.
    It’s O.K. because they are only issuing more rope that will hang them all. I give the entire issue to the middle of 2016 when the “boon” will hit the tipping point (assuming the conservatives regain control of the Senate and hold on to the House) and certain things (concerning Wall Street) kept hidden become revealed to the world. It’ll be the last hurrah for their entire Any Randian philosophy.

    SPLF

  6. John Willkie

    Simple. You are responsible for this foolishness. The FCC never should have entered this matter — but GigaOM and Mr. Roberts have been asking for this. Google, Amazon, MS and others (not Cogent) already have Internet fast lanes. At best, what your foolish moves would have done is to freeze these in place.

    “You” means “net neuts” in this context.

    Title II regulation means the Internet regulated as phone companies were before the advent of packet switching: it discouraged investment, innovation and competition. If this is what you want, you haven’t thought through the matters.

    The FCC will only f**k up the situation, and I say this after having watched the FCC closely for more than 3 decades, including a decade in DC “in the building” and having operated FCC-regulated facilities.

  7. ISPs have no obligation or legal relationship to providers (like Netflix before the throttling). ISPs have a legal obligation to their customers, and they are violating that obligation by throttling. Netflix was just collateral damage. FCC is confused as to who is paying, and getting shafted, in the current arrangement. It’s the customer. It’s the public.

    • ISPs didn’t change the speed limit, Netflix tried to get all its traffic in on one lane. Any traffic engineer can understand that Netfix should have been using more roads to get to the millions of destinations it goes every day.
      This is what the fight is over. It’s not a “fast lane” as opponents like to put it. It’s more like multiple roads. Multiple roads are great during peak usage and surging traffic patterns like Netfix. It is an Netflix that doesn’t seem to understand this, I don’t blame them. There not an ISP, nor are you.

      The problem with public opinion is its based on public education.

  8. EinsteinJr

    They are even telling you its for exploitation if you listen. Listen for things like stifles business and innovation and and MONEY . They want your money. They could easily get over all the first noted problems with a simple ethernet fast bandwidth solution for all. Just internet. Its easy the reason it isnt being done more broadly is to exploit you. The very thing you’d expect Wheeler to protect us from. I promise you he and some of his puppet FCC commissioners are rubbing their greedy hands. Why else? they are on the take or will be as promised.

    • Are you for real?

      Same with the power companies! I pay for power from the state utility. Why should Netflix? Those power companies are just being greedy by charging both of us. We should make them a utility! Oh… wait… What are we protesting again?

  9. This feels like the sort of decision point where the flood of money into elections makes a practical difference. Because elected officials like Wheeler’s boss feel dependent on industry money to fight election campaigns, someone in Wheeler’s position will feel pressured to make a decision that’s clearly contrary to the public interest. *sigh*