Reports of Net Neutrality’s Death Have Been Greatly Exaggerated

Posted by Cyberbear on November 15, 2010 in Internet |

Posted by: Ben Kafka

The midterm elections are now the latest supposed death-blow to net neutrality, after each of the 95 candidates who had pledged to support the FCC’s open Internet policies lost in their respective runs for reelection. (http://arstechnica.com/tech-policy/news/2010/11/net-neutrality-any-hope-left.ars).
Last April’s Comcast decision, 600 F.3d 642 (D.C. Cir. 2010), also caused many to believe that the net-neutrality sky was falling. There, the Court of Appeals for the D.C. Circuit struck down the FCC’s attempt to regulate cable Internet service providers under Title II of the Federal Communications Act, thus establishing that cable ISPs are not common carriers. The court’s decision did not, however, foreclose the possibility of cable ISPs being reclassified under Title II and, under Brand X, 545 U.S. 967 (2005), it appears the FCC still has this option. The Comcast case arose from Comcast’s practice of “throttling” data transfers associated with torrent programs such as Bittorrent, but it brought to a head an existing dispute over who “owns” the Internet.

Those supporting net neutrality demanded openness and data nondiscrimination, fearing a “tiered-Internet” wherein ISPs could favor some data and applications over others, while opponents argued that such practices could be adequately deterred by market competition and regulation would only deter future investment in infrastructure. Net neutrality proponents advocated FCC regulation and in 2005 the FCC obliged with its “four freedoms” of Internet use:

Consumers are entitled to access the lawful Internet content of their choice
Consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement
Consumers are entitled to connect their choice of legal devices that do not harm the network
Consumers are entitled to competition among network providers, application and service providers, and content providers.

In 2009, the FCC further proposed to make the above four principles binding on ISPs and proposed two additional principles:

A provider of broadband Internet access service must treat lawful content, applications, and services in a nondiscriminatory manner
A provider of broadband Internet access service must disclose such information concerning network management and other practices as is reasonably required for users and content, application, and service providers to enjoy the protections specified in this rulemaking

http://www.pcworld.com/article/172371/fccs_net_neutrality_plan_draws_fast_fire.html. FreePress and Moveon.org, keen to turn drum up support for net neutrality as a grassroots issue, managed to get 95 candidates in the past election to pledge their support for the FCC’s Open Internet proposal. And then every single one of them lost their race, causing some to ask whether net neutrality is dead.

Though the election was undoubtedly a setback for those hoping to promote open Internet principles through regulation, the FCC is not out of options. Both sides of the dispute agree that openness is best served by market competition between service providers; the disagreement is largely over how to define the “market.” Defined broadly, the market includes all Internet service from a particular speed–the FCC’s current definition of “broadband” is 4 Mbps down/1 Mpbs up–regardless of what technology is used. This is the intermodal definition of the market currently used for regulatory purposes and under it, most broadband markets in the United States are likely to meet both the FCC and FTC criteria for competitiveness. This is especially true as wireless broadband technologies (also included in this market definition) proliferate and reduce the natural monopoly effects of building a wired network

Some criticize the intermodal definition, however, because it fails to consider the market for the fastest broadband connections, which are wired. Under the intermodal approach an ISP can monopolize a local market for, say, fiber optic service and thus monopolize that market for the highest speed connections. The FCC has thus far been reluctant to move from its intermodal market definition to an intramodal one, concerned as it is with discouraging infrastructure investment. Indeed, with Verizon bringing its FiOS fiber-to-the-home rollout to a close, http://gizmodo.com/5503428/verizons-fios-rollout-drawing-to-a-close, those concerns are not unfounded. Should the broadband market become truly uncompetitive, the FCC might look to its own market definition for a solution, specifically the speed at which “broadband” begins. By focusing on speed rather than a particular technology the FCC can largely avoid the investment deterring effect of letting an ISP like Verizon spend billions on a fiber network only to be forced to open up the same to competitors. If, for example, the market for broadband is defined as 20 Mpbs and up, a “SuperWiFi” white-spectrum (500-700 Mhz) network would render the market “competitive.” Regardless of the balance of power in Congress, the FCC will have to balance its openness goals with the need to encourage infrastructure investment. If a market failure occurs even under the intermodal approach, a regulatory backstop in the form of an open access requirement (i.e., unbundling) could ensure some minimum degree of competition at some reasonably—and realistically—high minimum speed. Regulators are hard-pressed to keep up with technological innovation, so using speed as the primary metric in market definition instead of regulating each technology independently (each of which would be little more than a proxy for “connection speed” anyway) leaves room for competition through technological advancement while a regulatory backstop would ensure that consumers have some meaningful choice in broadband access.

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