Party today, prepare tomorrow

Net neutrality’s next chapter: How experts saw today’s milestone and next steps

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Pardon me while I catch my breath after all the celebratory dancing I’ve been doing in the wake of the FCC’s historic vote to reclassify broadband under Title II of the Communications Act in order to preserve true network neutrality. We’ve explained what this means for the average consumer here, and why the whole thing was so improbable in this story. But really, today is like the end of a romantic comedy that actually started out all semi-tragic like a Wes Anderson movie and then became something light and fluffy starring Drew Barrymore and restored your faith in humanity.

So yes, I’m thrilled and having written probably a million words on the topic in the last eight years, I could do a victory lap a mile long, but I’d rather share some of the awesome stuff that other people on the web are writing. Because this time, in addition to the 4 million people who commented before the FCC, many thoughtful legal scholars, rarely heard from tech leaders and others have added their voices to the discussion on the FCC’s historic vote today.

So outside of Verizon’s 1930s-era Morse code commenting on the news, or the industry’s whining (which we’ll see parroted in every article), I’ll focus on some very thoughtful points that we should be thinking about as these rules are finally shared and then inevitably head to court.


Let’s start with Stanford legal scholar Barbara van Schewick, who had written an excellent analysis about the upcoming rules. (You should seriously go read it.) She is optimistic about the chances that the FCC will prevail in court once one of the ISPs or affiliated organizations such as the National Telecommunications and Cable Association decides to sue. From her blog:

[blockquote person=”” attribution=””]The good news is that the FCC’s rules will likely be upheld in court. The agency’s decision to reclassify Internet service as a common carrier under Title II of the Communications Act puts the rules on a solid legal foundation. By coupling reclassification with forbearance, the FCC has adopted a light regulatory touch that preserves Internet service providers’ incentives to invest.

Tim Wu
And while Tim Wu, the man who coined the term network neutrality, is hardly an unheard voice in the debate, he hits on an important point that event the Wall Street Journal seems to have missed in its reporting on this issue; that investors seem to feel like this ruling is fine for the broadband providers whose stocks went up or remains pretty much the same. Wu wrote in the New Yorker this afternoon:

[blockquote person=”” attribution=””]Yet the moment that Tom Wheeler announced his plans for strong net-neutrality rules, on February 4th, broadband stocks jumped, and they have stayed buoyant. This has confused experts. Craig Moffett, whom I consider to be the smartest telecom analyst around, was forced to blame the market. “I think it just shows you that the market doesn’t really understand these issues,” he said.

The theory of the wisdom of crowds suggests that the markets have noticed something: the broadband industry hates net neutrality, but its existence has always had a huge and unnoticed upside. Selling broadband is a great business: Moffet has pointed out that the margins are north of ninety-seven per cent. Stated simply, a strong net-neutrality rule locks in the status quo for the most profitable part of the cable industry’s business.[/blockquote]

As for the effects of these rules on new business models, including things like zero-rating of applications and other services that ISPs might want to implement that might generate questions for carriers or consumers about their “neutrality,” Fierce Wireless’ Phil Goldstein explains a little bit more about the process that carriers and consumers can go through to get an FCC opinion under the General Conduct Rule.

[blockquote person=”” attribution=””]FCC officials made clear that carriers will not need approval from the agency to launch new business models and service offerings like sponsored data or zero-rated data. But the officials said carriers may ask for the FCC’s opinion on whether the plans meet the future conduct standard. Wheeler and other FCC officials also described some of the criteria they will use in determining the standard, which will include an offering’s effect on competition, innovation, consumer protections and user control. The full list of criteria will not be known until the FCC publishes the rules.

Sonic CEO Dane Jasper on Feb. 26 in front of the FCC.
Sonic CEO Dane Jasper on Feb. 26 in front of the FCC.

And lest you think that all ISPs oppose this, there are those that welcome the news, even if there are concerns about certain aspects of the regulations, especially as they relate to utility pole access and other minutiae we may not understand fully for quite some time. Still, Dane Jasper, CEO of regional ISP Sonic, wrote on his company’s blog:

[blockquote person=”” attribution=””]It is important to draw the distinction between regulation of the Internet, and regulation of carriers. The FCC’s order will disallow carriers from discriminating against sources of traffic that their customers choose to access via the Internet. This is common carriage at its core, and as a carrier, I am supportive of being regulated as a common carrier by the FCC.

Finally, if you’re wondering how far the FCC could have gone, beyond the dreaded rate regulation that the cable industry so feared, Jon Brodkin over at Ars Technica brings it up. The agency could have demanded that the ISPs unbundle their services (something that would have never happened given our country’s regard for private investment). That would have been far more disruptive than the FCC’s actions on municipal broadband today or its vote to regulate broadband as a transport service under Title II. From his story:

[blockquote person=”” attribution=””]The FCC could have tried to use Title II to require last-mile unbundling, in which Internet providers would have to sell wholesale access to their networks. This would allow new competitors to enter local markets without having to build their own infrastructure. But the FCC decided not to impose unbundling. As such, the vote does little to boost Internet service competition in cities or towns. But it’s an attempt to prevent incumbent ISPs from using their market dominance to harm online providers, including those who offer services that compete against the broadband providers’ voice and video services.

10 Responses to “Net neutrality’s next chapter: How experts saw today’s milestone and next steps”

  1. Given that nobody has actually seen the 317 page order, it’s a bit of a stretch to say anyone is an expert on what it says at this point. I believe Commissioner Pai when he says it’s even worse than most of us thought it would be.

  2. stuart brainerd

    There is something perverse about Gigaom’s lead reporter on Net Neutrality gleefully cheering the passage of regulation, especially when there is a paucity of hard information on what exactly this regulation will mean in practical terms to consumers and carriers. I can understand it when Fox or MSNBC reports the news in a slanted fashion, but I had thought that Gigaom was a reporter of up to the minute technology news, not another fashionista for the Neutrality wave.

  3. “The FCC could have tried to use Title II to require last-mile unbundling, in which Internet providers would have to sell wholesale access to their networks.” And they still can, now. Forbearance? Seriously?? Forbearance? You people believe the government when it says, “Yeah, we know we have the power to do such and such, but we’re not going to use that power.” When has that ever happened? When has government power receded (absent a bloody revolution)? It only ever grows.

    The Internet is now under the control of the same group of people who are spying on their own citizens and using that information to seize their assets, imprison them indefinitely without trial, and even drone their asses. Here’s the best part: It’s ostensibly done in order to fix a problem that doesn’t exist.

    And keep this in mind. The CISPA bill is coming back, which will give your government the power to demand your emails, your telephone’s geo-location history, and any other data you put in the cloud without a search warrant. The politicians are laughing their asses off and wringing their hands now that they have the most powerful spy tool the world has every known under their complete control.

    Yeah, sure. What could possibly go wrong?

  4. George Washington

    Supporting fascism in the false name of consumer protection. What a farse, using the brute force of government to violently coerce businesses into whatever business models the government deem fair and just. A spit in the face of freedom.

    • Indeed it’s as evil as the constitution , guaranteeing freedom and other basic rights is so evil. Full blown anarchy would be so much better ,where everybody can just kill ,steal and rape at will.
      Funny that you have the same name as that fascist that helped draft the constitution.

  5. Next they need to separate carriers from devices and to not allow them to charge on a per device basis.
    Amercan phone makers have been already crippled too hard in favor of carrier price fixing monopolies (that favored big marketing spenders, leading to Apple and Samsung owning 2/3 of the market with absurd pricing and high margins). Even giants like HP , Dell, Amazon or Google have been unable to achieve significant success. New players and small players had zero chance of surviving in a market where there is no competition in practice.
    If carriers are allowed to get anywhere near the devices connected to their networks and to charge on a per device basis the future of computing and IoT in the US is at very high risk
    China’s recent rise in technology exacerbates the need for these measures that would ensure that the market is functional and the entire US technology sector isn’t just killed off in a decade or two.
    It’s not just about the hardware since software and services are often tied to devices so when i say the entire tech sector, i mean it. Carriers are already causing great harm to IoT , look at how much a pet tracker sub is even if it uses next to no data. They are harming the adoption of new devices and services leading to years of delays and will allow for others to reach critical mass before US companies.
    For phones it is almost too late and in 2 more years it will be too late but it’s not too late for the next form factor and IoT,.
    As corrupted as all the American politicians are, they just can’t afford to destroy the entire tech sector.

    • Imagine if we would pay on a per device basis for electricity.
      10$ for each lightbulb per month, 20 to 100$ for each screen enabled device depending on the amount of kW desired, 20$ for the washing machine, 40$ for the refrigerator, 15$ for the set-top box , 50$ for a gaming console and it just keeps going.
      How many appliances and gadgets would you buy? Would you use lightbulbs much or just go to sleep when it gets dark and buy some candles….
      What’s the point in owning a lightbulb if you can;t afford to turn it on, not because it consumes much but because your electricity provider is allowed to charge obscene prices. This is why IoT adoption is already 80-90% slower than it could be, With reasonable regulations the US could have at the very least 100 million more connected devices today.