The FCC is poised to take a significant step today to regulate Internet providers in the name of so-called net neutrality. If it does, its action will say a lot about what’s wrong with an agency that was created in 1934 to regulate telephone and telegraph monopolies.
I had always held out hope that the FCC wouldn’t really move to regulate the Internet, not until hell froze over. I guess the fact that the temperature here in Washington has been not much above freezing for about two weeks now is not a good sign.
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The nub of the problem with what the FCC is poised to do can be neatly summed up this way: The commission is acting on dubious legal authority, in the face of widespread and bipartisan opposition, to adopt a new Internet regulatory regime to “fix” a problem that doesn’t exist.
Indeed, at least up to now, no one, not even the FCC, has suggested that there is any present market failure or consumer harm resulting from the absence of net-neutrality mandates. Rather, from the beginning, it has cast its regulatory initiative as an effort to “preserve” and “maintain” the openness that already exists on the Internet.
The most harmful aspect of these new rules is likely to be the prohibition of (in the words of FCC chairman Julius Genachowski) “unreasonable discrimination in transmitting lawful network traffic.” The common-carrier provisions in Title II of the Communications Act of 1934 — which was designed to regulate telephone and telegraph monopolies — centered on a similar provision prohibiting “unjust or unreasonable discrimination.” Does anyone remember Western Union and the “Bell System”?
But there are a number of ways that these anti-discrimination provisions can be rendered less harmful. For one thing, they can be qualified and limited by the commission’s order — the FCC might, for instance, explicitly affirm that premium pricing for a higher grade of service is not generally to be considered unreasonably discriminatory. This should be done.
By the same token, the new rules should make clear that their anti-discrimination and other neutrality mandates do not apply to providers of wireless Internet. Wireless providers already face substantial spectrum constraints, and they need to be able to manage their networks with flexibility, free from worries about discrimination complaints.
Most important, the FCC’s new rules should require a showing of the Internet provider’s market power and a showing of consumer harm resulting from the provider’s practices as prerequisites to any finding of discrimination. In other words, absent a showing of dominant market power and consumer harm, the actions of Internet providers would be deemed presumptively reasonable. In this way, the commission could acknowledge, at least in some fashion, that it realizes the competitive, dynamic marketplace of today’s digital environment is different from the monopolistic marketplace that prevailed at the time the ’34 law was adopted.
The FCC’s action today — if the agency goes through with it — simply confirm its central failing as it moves into the second decade of the 21st century: Rather than devoting its resources to reducing or eliminating analog-age legacy regulations or jettisoning such outdated regimes as universal-service subsidies and command-and-control spectrum policies, or reforming delay-prone and unseemly “regulation-by-condition” merger-review policies, the FCC is stuck in a mindset of extending regulation into new areas, even where there is no market failure and no evidence of consumer harm.
I don’t want to give up hope, and I’m willing to be surprised. But, frankly, the commission’s prevailing mindset is unlikely to change meaningfully and materially until Congress adopts a new regulatory framework for communications. Without something along the lines of Sen. Jim DeMint’s Freedom for Consumer Choice Act, which he introduced this session and which is based on the Digital Age Communications Act he presciently introduced in 2005, the FCC’s efforts to expand its regulatory power will probably continue.
Wow! Establishment of what amounts to automatic blue-laws that never really had any reason for existing in the first place coupled with regulation for regulation's sake. How cool is that!
"In other words, absent a showing of dominant market power and consumer harm, the actions of Internet providers would be deemed presumptively reasonable."
When regulators proactively regulate as opposed to regulating reactively you cease having a democracy. It would indeed be a sad state of affairs if the FCC is allowed to succeed in this blatant way.
No market failure? What world has the author been living in -- some Adam Smith, Invisible Hand world in which ISPs have real competition? Consumers have very little choice when it comes to 'high' speed ISP selection. The big dogs -- telephone and cable companies dominate. Consumers are lucky if they have two choices for landline access. ISPs should be strictly in the business of providing access to paying customers, but AT&T and Comcast have demonstrated their desire to provide inferior connections to online sites that don't pay them extra money. The money I pay to my ISP should give me equal access to everything online. Net Neutrality can ensure that happens. If we had real market choice, maybe it wouldn't be needed, but the scales of efficiency are such that only a few big dogs are able to dominate the world of ISP providers. Thus they should be treated as public utilities and regulated as such. The author's assertions that there is no problem is ludicrous and sounds like something coming from a shill for some industry group paid for by the big ISP companies.
Most would agree that Comcast, for example, should not block an online service that competes with a Comcast service, or charge them more than it charges other services that generate the same capacity load. However, only in a world of unlimited network capacity would true net neutrality as most folks seem to define it even be possible.
Absent that, either the online services that generate huge amounts of traffic, such as Netflix, will fund necessary capacity upgrades through higher charges, which they will pass along to their customers, or everyone including those who do not use Netflix will pay more.
Someone explain to me why it's good for me to pay to provide a service I do not use.
"Consumers have very little choice when it comes to 'high' speed ISP selection."
Really? I can choose cable, DSL, satellite, and, now with 4G, wireless. You don't have those selections available to you? I think that might a problem of where you live, not with ISP.
Satellite, mobile, and fixed wireless access are all inferior technologies that no one with a wireline alternative would intentionally choose. Point-to-multipoint radio communications is hard, and subject to severe technical limitations.
As far as "regulating the Internet" is concerned, the FCC is doing nothing of the kind. The FCC is attempting to regulate broadband access services, which are clearly a form of "telecommunications", not information services, like individual web sites.
The FCC has the authority to do all this and ten times more under Title II of the Communications Act of 1934, as amended. They have just been trying to avoid claiming Title II authority for purely pragmatic reasons.
If Title II authority is too extensive, too obsolete, too archaic, Congress should consider rewriting or even repealing it. Until then the FCC has an affirmative duty to carry out the responsibilities that Congress has granted it in this area.
Hmm, cable internet is available from a government monopoly, and there is typically no choice in cable providers. Independent ISPs may offer internet service over DSL, but the DSL is actually still coming from the government monopoly. Cellular providers are, I believe, still heavily regulated even though they do not enjoy regional monopolies. I don't like the thought of an enforced net neutrality, but the extent to which pre-existing government monopolies are being impacted by it, it is less onerous than in a truly free market with competition. As I see it, of the four generally available modes of internet access, two are from government monopolies (either on the front-end or the back-end), one is a regulated telco, and the other is expensive, relatively slow, and unreliable. Even "emerging" modes of access such as Uverse or Fios are coming from a government monopoly, or at least a regulated telco. (And don't forget, much of the internet's backbone is run by regulated telco's.)
Make it easy. Get rid of the FCC. Their Constitutionality is dubious at best. Let there be real competition and let the market dictate whether there will be net neutrality.
This is so wrong, it's really just Orwellian. If I want to access the internet, I have one choice where I live -- Comcast. The only reason Comcast hasn't moved to choke off various traffic (like Netflix or other services that compete with its cable TV business) is because of the threat of FCC action. Comcast has already implemented an arbitrary cap on monthly internet usage while still advertising "unlimited" service. If you break the limit accidentally, they will cancel your service forever, with no recourse, and for me no alternative. Forcing monopolists not to abuse their monopoly position is pro freedom.
"Satellite, mobile, and fixed wireless access are all inferior technologies that no one with a wireline alternative would intentionally choose."
Still a personal problem.
"If I want to access the internet, I have one choice where I live -- Comcast."
Still a personal problem.
So what we essentially have are people with personal problems seeking to impose their will on everyone else to correct a perceived problem through which they have no evidence of anything to contrary. Now THAT is Orwellian.
For those claiming there is no current problem here, there has already been at least one instance of internet providers - comcast - have prohibited access to particular services like bittorrent.
I personally don't understand why they do this rather than putting caps on how much users download. Yes bittorrent is often used for illegal downloads and filesharing, but not solely. And if the problem is that these services create too much of a load on the providers, then just cap the users who create the load.
I'm uncomfortable with allowing monopolistic services to discriminate services they don't like for whatever their reasons are.
There already is a problem. Just a few months ago, Fox Television tried (and succeeded for a few days) to get hulu.com to cut off access to Fox Entertainment shows to anybody who was using a Cablevision IP address, even if that address had been sublet to another carrier, because of a dispute that they had with another of Cablevision's companies.
The top Internet information services managed to get big in the first place because the bandwidth service providers gave equal access to the information providers. They saw how they managed to topple the companies that were on top before them through superior, quality and innovative service. Now that they are on top, they want to be able to handicap the competition. For the free market to work, it has to remain free.
@rationalize:
The bitorrent network is notorious for software piracy. It puts Napster to shame. Comcast probably blocked it for legal and liability reasons.
@butlerm:
I don't know where you get your information, but the FCC has no written authority to regulate broadband providers. In April the federal courts made this plain. This bit of regulatory abuse I'm sure will be answered by the 112th Congress and the Federal Appeals Court. They are acting with no legal authority.
@NetLover:
It matters not what your bandwidth is at your end of the network. Unless you buy QoS (Quality of Service) services (very, very expensive), your internet session has no more precedence than any other broadband customer who buys the same packages. There is already tiered services for MPLS customers (these are usually businesses)
What the real issue is is whether content providers (such as Netflix) can consume large amounts of bandwidth and not have to pay the ISPs for that consumption. Netflix customers pay for streaming audio/video through subscriptions. What the ISPs are saying is that Netflix cannot do with this without paying for the bandwidth thier consumers use.
Net Neutrality says the ISPs cannot charge content providers for their bandwith consumption. This over time will mean less bandwith available, and slower networks.
