Network Neutrality in the US

Once upon a time we all accessed the internet in just one way, by dialing up into an ISP modem bank (ok, this isn't entirely true but it's close enough). Eventually, after many years and much consumer demand, there came DSL, cable modems and wireless, and ever-increasing speeds and accessibility. Competition existed, but the choices were often limited and allowed the service providers to exercise their ability to raise prices, lower service quality and interfere in ways they believed to be to their commercial benefit. As dial-up passed into history and the carriers became dominant in the ISP sector, the situation deteriorated. Finally there came the cries for network neutrality.

It is quite natural and expected that carriers would seek to control or otherwise manage internet access services since that is a good way for them to move up the telecom value chain, and avoid becoming a commodity carrier of bits. This tendency is also quite naturally countered with a suitable mix of regulation and competition. However, competition is constrained by the high expense of building facilities to reach the market. Absent prospects for a healthy competitive marketplace, the calls for regulation become more numerous and louder.

In an age when governments of all stripes are trying to reduce regulations as one means to limit government spending, the political reluctance to get involved in the broadband conflict is understandable. Every country responds in its own way. I most recently discussed this in my closing article on CRTC decisions on GAS. Now we have the FCC in the US wading into the morass of network neutrality, which is shaping up to be an epic battle. Although details are sparse, it is worth a look to see what they are attempting to accomplish and why. I plan to skirt some of the blatant politics of the issue so that I can focus on what I believe is more important.

First, I have to say that FCC Chairman Julius Genachowski's public statement is a fine example of clarity in communications. There are many that don't like what he says, but what he says is unambiguously clear. For a politically-motivated agency to do so is to be applauded. I recommend that you should read the full statement if this topic interests you. I will only focus on the following extracts:

...the Internet should remain unregulated and that broadband networks should have only those rules necessary to promote essential goals, such as protecting consumers and fair competition.
...

• Recognize the transmission component of broadband access service—and only this component—as a telecommunications service;
• Apply only a handful of provisions of Title II (Sections 201, 202, 208, 222, 254, and 255) that, prior to the Comcast decision, were widely believed to be within the Commission’s purview for broadband;...

I had to run to my bookshelf for a bound copy of the Communications Act of 1934 (with amendments) to see what the referenced Title II sections were about. I don't need to review these in detail, and consider it sufficient to mention that the choice backs up the policy direction of "protecting consumers and fair competition." There is a clear intent to prevent ISPs from restricting what services and destinations their customers can reach.

This will be unacceptable to many companies with a vested financial interest in controlling or interfering with access so that they can either derive additional revenue from transmission (e.g. ad injection), from usage (e.g. media downloads) or to favour services in which they have an interest. Those companies often have the ear of political leaders, who will exercise their influence on the FCC. It will be quite a fight when the FCC formally issues an NPRM. It will also be interesting to see what lessons the CRTC will learn as they monitor the proceeding down south.

Later this week I will follow up this article with one regarding the distinction between telecommunications and information services. It is largely an artificial one, but one that resulted from the FCC's long efforts to draw a bright line between industry sectors so that they would fall under separate regulatory regimes and policy objectives. As we'll see, the problem is not an easy one.