Quick Impressions on FCC Open Internet Order

Last week, the FCC issued their new Open Internet rules. This process has been underway for over a year, and many people hoped it would lead to a strong framework for network neutrality.

We have a name for those kinds of people: optimistic fools.

Okay, that's harsh. And the optimism wasn't completely unfounded. The current President and Chair of the FCC both came into office saying they wanted to do network neutrality. Once there, however, that aspiration met the harsh reality of a regulatory apparatus captured by the communication providers.

The result isn't what anybody advocating network neutrality hoped for. But that doesn't mean that it's all bad.

The Good Bits

The biggest benefit is that it provides some clarity and grounding for federal regulation of Internet access. Note that is not regulation of the Internet, but just access (i.e. how you connect to the Internet). That's good, because there was nothing preventing a provider, for instance, from limiting your access or performance for various services. When the FCC tried to make rules for this, the courts overturned them -- not because the rules were bad but because they didn't have the regulatory founding to support them. That, hopefully, is now fixed.

The order calls for transparency. Network providers are supposed to tell you about anything they do that affects your access, such as filtering or managing your network connections. That is very important in a competitive marketplace, because it allows you to pick the best vendor for your needs. In a dysfunctional marketplace such as broadband, it at least provides some accountability for what providers are doing.

The order prohibits blocking or discrimination. For instance, AT&T cannot try to prevent you from using Skype, in preference to their voice phone service.

The order indicates that paid priority would probably be discriminatory, and thus disallowed. This is a huge win. The large providers have signaled they want to create fast lanes and charge content providers such as Google and Netflix to use them, thus relegating independent content providers to the pokiest connections of the net. This point is a bona fide Christmas present from the FCC to open network advocates.

The FCC has created a framework which might allow Internet users to bring grievance against the providers. Not everybody has the wherewithal to file a complaint, but if the FCC puts a good process in place there are watchdog groups and activists that will work to ensure an open Internet. One of the failures of Federal anti-spam legislation is that individual spam victims do not have strong recourse, which limits the pressure on transgressors.

The Bad Bits

The FCC issued different rules for wireless networks, which omit most of the protections discussed above. If disallowing paid prioritization for wireline broadband is a grand Chrismas present, the rule creating a non-neutral wireless network is one giant hocking lump of coal. A lump of coal rolled in dog poop and shoved up the butt of a skunk. It's a sham of a travesty of a mockery of a sham. The potential damage this may do for an open and innovative wireless Internet cannot be overstated.

The FCC issued little guidance for tiered pricing. In April 2009, Time Warner Cable proposed a tiered pricing model for broadband in Austin that would have made watching video by Internet economically infeasible. The FCC order specifically allows tiered pricing, but without giving any guidance for what would be considered discriminatory, and thus in violation of the rules. At the very least, this uncertainty is a disincentive for investment in innovative broadband services.

The order allows access providers to go after illegal content. Access providers should not be monitoring user content, and the Digital Millineum Copyright Act is built on the policy of insulating providers from this. This rule opens up the door to snooping, as well as ham-handed actions such as blocking protocols just because they may be used to distribute copyrighted content. This crummy, but we can take some consolation that the FCC did not mandate access providers police all content, which is what Hollywood was asking for.

Carrier services are afforded special (non-neutral) treatment. Your cable provider, for instance, is free to allocate immense amounts of bandwidth for their cable video product, but a minuscule straw of bandwidth for broadband services. They are prevented from discriminating between broadband services, but they are free to make the broadband experience far inferior to their special products.

The FCC did not reclassify broadband services. The FCC has classified broadband as a lightly regulated "information service," which affords little protection to users. Prior to 2005, DSL broadband was classified as a telecommunications service, which offered strong "common carrier" protections. There were a number of strategies proposed to put broadband under a more appropriate service classification, but the FCC opted not to do so.

There is one final negative, which is the source for a lot of the opposition from network neutrality supporters. There were a lot of promises made and expectations raised around network neutrality. It's created a lot of pressure for regulators to act. Now with the rules released they can declare "done deal" and the pressure is relieved. We're stuck with less than what we wanted, and some really bad things codified in regulations -- and little hope for improvement in the near term. So, a lot of people want to reject these rules to keep the pressure on. I don't see it this way, but it is perceived as one of the greatest negatives of this plan.

The Unknown Bits

The biggest unknown bit is what loopholes will be punched through these rules. The advocacy groups are presenting a much more negative picture than I am, because they are assuming the carriers will find some crafty way to breech the transparency and non-discrimination requirements. Make no mistake about it -- the communication companies will find a way to twist the rules to their advantage. But I don't know that the worst case scenarios being advanced by the advocacy groups are warranted. On the other hand, they could be.

Another unknown is what the new Congress will do. The communication companies are apt to spread some of their lobbying muscle and dollars, to get the regulations changed to their liking. So there is significant risk that the partial protections offered by these rules may get undone, and there is little hope that Congress will make them better.

The Bottom Line

The bottom line is that I don't think we're any worse off under the new rules than we were before. The rules do formally permit a bunch of crappy things, such as allowing discrimination of wireless content, but there was nothing (other than public pressure) stopping providers from doing these things before.

There are some very good bits, and, yes, a lot of uncertainty that threatens to undo the good bits.

I think on the whole, these rules move the ball down the field and in the right direction. It's not a touchdown, but there are benefits just moving the team closer to the goal line.