Net Neutrality – In the Public Interest
By Luc Delany
Net Neutrality – In the Public Interest
6 Mar 2015 - Delany & Co

Last week, three of the five judges on the Federal Communications Commission voted in favour of Chairman Tom Wheeler’s reclassification of the internet as a telecommunications service, thereby allowing the government to regulate it as a utility under the Communications Act to protect the principles of net neutrality – that all traffic on the Internet must be treated equally regardless of content or source. Wheeler  argued that the commission needed to take a dramatic step to preserve a “fast, fair and open Internet.”

The Communications Act, which was amended in 1996, replaced the Federal Radio Commission with the Federal Communication Commission to regulate telecommunication, internet and broadcasting law. Under the act a ‘telecommunications carrier’ refers to a paid service while an ‘information service’ refers to capability.

It is important to note however that:

  • A carrier providing ‘information services’ is not a ‘telecommunications carrier’ under the act when, for example, it is selling broadband Internet access.
  • The act however enforces specific regulations against ‘telecommunications carriers’ but not against ‘telecommunications carriers’ providing ‘information services.’

The need for the FCC to produce new rules came as a result of legal action taken in January 2014 by broadband provider Verizon as the agency didn’t have authority under Section 706 to regulate for net neutrality. The District Court of Columbia found, in favour of Verizon, that the FCC had improperly regulated Internet providers as if they were similar to a public utility when they were officially classified as information services under the Open Internet Order of 2010. Calls followed for the FCC to reclassify broadband as a utility duly followed with President Obama giving his full support last year urging the FCC to adopt the “strongest possible” rules.

Net neutrality is crucial to the future of the web according to World Wide Web inventor Sir Tim Berners-Lee. He argued in a European Commission blog post that abandoning the concept of net neutrality, where internet packet data is treated equally by a network regardless of its origin, would damage the openness of the web and the innovation it facilitates. Without net neutrality network operators would be able to block or inhibit web traffic and favour particular services, eroding competition and innovation. Governments would also be able to effectively censor the internet by restricting access to legal content.

With last week’s FCC ruling, the US becomes the fourth country behind the Netherlands, Slovenia and Chile to adopt new legislation on net neutrality. The Dutch rules differ somewhat as some rules allow for some premium deals between operators and services like Netflix, the online video-streaming company. Such agreements are to be tightly restricted under the new regulations by the FCC.

US internet providers fear plans to regulate broadband as a public utility will now give the US Government the power to mimic current European policies, such as forcing companies to share their infrastructure (Single Digital Market) and undermine market dominance. Regulatory burdens could affect their ability to manage traffic as well as future broadband investment according to broadband operators and providers. If telecommunications companies are unable to invest in technology and infrastructure the networks could grind to a standstill. To put this in context of the FCC ruling, US broadband providers are estimated to spend around $73bn (£47bn) a year on upgrading infrastructure with net usage expected to double over the next 10 years and data transmissions to increase eight-fold.

The main changes for broadband providers are as follows:

  • Broadband access is being reclassified as a telecommunications service, meaning it will be subject to much heavier regulation
  • Broadband providers cannot block or speed up connections for a fee
  • Internet providers cannot strike deals with content firms, known as paid prioritisation, for smoother delivery of traffic to consumers
  • Interconnection deals, where content companies pay broadband providers to connect to their networks, will also be regulated
  • Firms which feel that unjust fees have been levied can complain to the FCC. Each one will be dealt with on a case by case basis
  • All of the rules will also apply to mobile providers as well as fixed line providers
  • The FCC won’t apply some sections of the new rules, including price control

The European Parliament, which passed net neutrality rules last April (2014) voted to restrict internet service providers’ (ISPs) ability to charge data-hungry services for faster network access. Introducing net neutrality regulation is one of its main targets of the new presidency of the European Council.

The rules also prohibit mobile networks and broadband providers from blocking services – such as WhatsApp messages or Google Drive storage – that compete with their own offerings. The proposal could mean that bandwidth heavy subscription services – such as Netflix, Amazon Instant Video, Blinkbox and Sky Go – do not have to raise their own prices to take account of new data speed fees from the ISPs. However, mobile and cable firms have warned that the law would also prevent them from being able to offer enhanced services. For example, charging a movie site a fee to ensure that ultra-high definition films run smoothly on consumers’ devices when they might otherwise stutter.

Europe’s Council of Ministers still need to be approve the rules, which are being negotiated with member states. The original strong stance adopted by the European Parliament is likely to be watered down in the final version of the law, experts say, due to industry concerns.  Two of Europe’s biggest telecom operators have called on regulators to be flexible in finalising rules to protect the openness of the Internet, to allow them to give priority to certain kinds of data traffic on their networks. The chief executives of Vodafone and Deutsche Telekom said on Monday (02/03/15) at the Mobile World Congress in Barcelona that network operators needed to give special treatment to data for new services like connected cars and smart electricity meters to ensure that they functioned properly.

The precise language of the FCC’s rules were not revealed last week, and it could take weeks for the regulations to be published in the Federal Register, when they will be made public. At that point, Internet providers will have several weeks to take legal action against the regulation. With two of five judges disagreeing, it leaves the door open for years of legal action to follow suit.

Photo Credit: Billboard