The new rules of net neutrality
What is net neutrality?
On Thursday, the internet world was caught up in llamas and debating the color of dresses but it will be remembered years later as the day the FCC voted, 3-2, to reclassify internet access services as a public utility under Title II of the Communications Act. Net neutrality is the concept that all internet service is treated equally. The term originated with Columbia Law professor Tim Wu. Companies that provide internet access like the telephone and cable companies wanted to be able to create separate tiers of access.
A public utility is like water service, heating and electrical service, and phone service. The government is allowed to set rules on how much they can charge and how they must provide basic service to all customers without discrimination.
What do the opponents want?
Broadband service is one of the most highly profitable businesses with an over 97% margin.
The cable distribution giants like Time Warner Cable and Comcast are already making a 97 percent margin on their “almost comically profitable” Internet services, according to Craig Moffet, an analyst at the Wall Street firm Bernstein Research. As Levin points out, “If you are making that kind of margin, it’s hard to improve it.” And most Americans have no choice but to deal with their local cable company.
Broadband companies and other internet service providers want to be able to sell tiered access to increase their 97% margin. As Professor Wu points out by treating the companies as utilities, their margins will be frozen at their 97% rate. Boo effing hoo.
Broadband companies argue that common carrier rules limits expansion (i.e. infrastructure) and investment in improving service. Basically the internet service providers have said that because they won’t be able to increase their ridiculously high margins, they’ll just sit on their money and not try to get better.
In sum, the argument against net neutrality is grounded in pure capitalism. A free market results in the best product at the most accurate price.
A brief history.
Communications Act of 1934. Created the Federal Communications Commission and allowed the FCC to begin regulating telephone and broadcasting via their rule making abilities.
1996 Telecom Act. Congress differentiates between “telecommunications services” and “information services.” Broadband was identified as an information service and therefore fell outside of the FCC regulatory arm.
2010 FCC Open Internet Order. Established rules that prohibited blocking and discrimination of internet service delivery. There were three primary components: (The following are quotes from this Appellate decision).
- TRANSPARENCY: The Order first imposes a transparency requirement on both fixed and mobile broadband providers. They must “publicly disclose accurate information regarding the network management practices, performance, and commercial terms of [their] broadband Internet access services.”
- ANTI-BLOCKING: The Order imposes anti-blocking requirements on both types of broadband providers. It prohibits fixed broadband providers from “block[ing] lawful content, applications, services, or non-harmful devices, subject to reasonable network management.” Similarly, the Order forbids mobile providers from “block[ing] consumers from accessing lawful websites” and from “block[ing] applications that compete with the provider’s voice or video telephony services, subject to reasonable network management.” …The anti-blocking rules, the Order explains, not only prohibit broadband providers from preventing their end-user subscribers from accessing a particular edge provider altogether, but also prohibit them “from impairing or degrading particular content, applications, services, or non-harmful devices so as to render them effectively unusable.” Verizon blocked Google Wallet back in 2011. Verizon also blocked the PayPal app’s fingerprint authorization this year. (Source: CNN Money)
- ANTI-DISCRIMINATION. The Order imposes an anti-discrimination requirement on fixed [rather than mobile] broadband providers only. Under this rule, such providers “shall not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service. Reasonable network management shall not constitute unreasonable discrimination.” The Commission explained that “[u]se-agnostic discrimination”—that is, discrimination based not on the nature of the particular traffic involved, but rather, for example, on network management needs during periods of congestion—would generally comport with this requirement. In other words, Netflix and Google and Amazon can get the FCC to fight for them when Verizon etc. wants to charge them extra money to deliver the streaming video.
January 14, 2014, the United States Court of Appeals for the District of Columbia Circuit decision. The court struck down the FCC Open Internet Order as it related to the rules regulating broadband service. This is an important decision because it sets the precedent for future lawsuits. In the decision, the court stated:
But after our decision in Comcast undermined that theory, the Commission sought comment on whether and to what extent it should reclassify broadband Internet services as telecommunications services. See In re Framework for Broadband Internet Service, 25 F.C.C.R. 7866, 7867 ¶ 2 (2010). Ultimately, however, rather than reclassifying broadband, the Commission adopted the Open Internet Order that Verizon challenges here. See 25 F.C.C.R. 17905.
Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the Commission from nonetheless regulating them as such.
Essentially the Appellate Court said that until the FCC reclassified broadband, it did not have the power to impose neutrality and non discrimination rules.
February 26, 2015, the FCC votes 3-2 to reclassify broadband from information service to telecommunications allowing them to regulate broadband service like a public utility and it applies to both fixed broadband providers AND mobile providers meaning that it’s going to be more restrictive than the 2010 Open Internet Order that essentially exempted mobile providers.
The rule is based on FCC’s most far reaching power to regulate “communications by wire”.
Verizon, AT&T, Comcast, etc. are gearing up to challenge the FCC’s reclassification.
What does it mean for me?
Data caps are not going away. Chairman Wheeler stated he was not going to interfere or put a cap on rates that companies charge consumers. What we need for better, faster access (in addition to open internet) is more competition. This means allowing local communities to build their own fiber optics networks rather than relying on conglomerate cable companies. New companies will be able to use existing telephone poles to deliver new access services.
It also means that your video streamers like Netflix, Google, Hulu, Amazon, Apple will get the FCC to fight (and fine) companies who are charging them extra money to deliver the streams.
In the short term, though, it means nothing changes for you as the consumer which is a good thing. It means your local bookseller’s website will be delivered at the same speed as Amazon’s even though Amazon could pay for faster speed. In the long term, it may mean increased competition.
Chairman Wheeler’s defense:
The Internet is the most powerful and pervasive platform on the planet. It is simply too important to be left without rules and without a referee on the field. Think about it. The Internet has replaced the functions of the telephone and the post office. The Internet has redefined commerce, and as the outpouring from four million Americans has demonstrated, the Internet is the ultimate vehicle for free expression. The Internet is simply too important to allow broadband providers to be the ones making the rules.
This proposal has been described by one opponent as, quote, a secret plan to regulate the Internet. Nonsense. This is no more a plan to regulate the Internet than the First Amendment is a plan to regulate free speech. They both stand for the same concepts: openness, expression, and an absence of gate keepers telling people what they can do, where they can go, and what they can think.
I’m all for competition. Lord, please make this happen. Amen.
I’m definitely one of those people who has complained about my ISP and the monthly games they play in regards to my bandwidth speed. But the technological advances we’ve enjoyed the past 30 years, particularly regarding internet, was born as a result of government regulation and people wanting to find a way around that regulation. And here comes the government again. They’ll find the way to slow progress down even when they’re doing it for out benefit.
That last line should be **supposedly doing it for our benefit.
I have to agree with Cheryl, government involvement never sped up anything.
Thank you Jane!
I am one of the 4 million Americans that has worked hard this last year writing letters, e-mails and calling everybody and their brother about keeping net-neutrality in the U.S. And it was close…..thank goodness for Tom Wheeler! ATT and Verizon are so very powerful……I wish a good amount of their mobile customers would drop them and go to companies like Credo that actually do good works for their consumers.
I’m not sure what to make of this, but my ISP recently FORCED me to upgrade my service (they specifically told me it wasn’t an option to keep it as it was), supposedly because I live in a high traffic area and there’s too many signals…or whatever, sadly I’m not great at this level of tech talk. Whether or not this is true, I don’t really know, though to be fair my new modem doesn’t cut out entirely in the way that the old one was doing a lot of within the last year. So maybe that wasn’t a lie. But I seriously wondered if it was once they started sending me frantic mail at least weekly saying I’d lose my service if I didn’t call about an upgrade. Meanwhile, my coworkers who live in other towns with the same ISP are all “What? They’re not doing that to us.” But I live downtown and I assume they do not, so…?
When has government regulation ever improved anything? Does anyone look back on Ma Bell as the good old days? I think it takes a special kind of optimism to believe that a 300-page regulation, protected by the strictest secrecy, and passed on partisan lines without any chance of (informed) public comment will result in more Internet freedom. Because of the hands-off approach to the Internet established in the Clinton era, the cable and phone companies built the broadband networks we enjoy today. Now we can say goodbye to innovation and investment and hello to European-style inefficiency. I suspect FCC commissioner Ajit Pai hit the nail on the head: this is a solution that won’t work to a problem that doesn’t exist.
@leslie: Just as smaller companies have proven to be essential when it comes to advancing technology, people need those powerhouse companies to bring that technology to the masses. Admittedly, I’ve never heard of Credo, so I looked them up and I can easily see why no one I know uses them for mobile phone service. When you live in middle America, it’s not unrealistic for people to frequently travel three, four, even five hours in one direction away from metropolitan areas. By choosing their company, my data access would be comparable to the hit or miss cellular service we had ten years ago. Now, could I survive those hours without accessing Facebook and Twitter? Yes, I probably could. By why should I give that up when those powerhouses have made it available? Smaller, local providers help to keep the giants in check, but without the giants, a lot of people wouldn’t have the technology available to them in the first place.
@Tacy Ray: Exactly. For many (my kids in particular) regard wi-fi to be as essential as clean air and fresh water. Imagine what our lives would be like if the FCC hadn’t regarded Wi-Fi as a junk radio frequency and granted unlicensed use?
I’m going to be the oddball in the comment thread and state that I’m grateful someone–even if it’s the government–is checking what corporations are doing. Water and power are regulated the same way, and I don’t see consumers of those two utilities bemoaning government regulation that keeps both affordable and available to them.
Are there going to be issues and growing pains? Yes, there are. Would I rather leave it entirely in the hands of corporations? Not only ‘no’ but ‘hell, no.’
There’s an article in the Tech section of the New York Times from Feb. 26th that looks at The Netherlands two years in with net neutrality. It isn’t a perfect apples to apples comparison with the U. S., but it does show that the fears about regulation haven’t materialized.
And I can’t move to Credo as long as they use Sprint for coverage. Trying to get a sustained Sprint signal at my house is a complete ain’t-happenin’.
I am always surprised to find anyone who doesn’t work for cable companies or DSL providers who opposes net neutrality. What the cable companies and DSL providers want is to block other people’s sites so you have to use theirs, or to charge the other sites to let them through. This is to no one’s benefit but, again, the cable and DSL providers.
As Jane says, they want to charge Netflix to allow them to provide movies to you – after you have already paid for cable AND Netflix. Vague platitudes about how government regulation is bad just don’t stand up (IMO) to the actual circumstances of what is happening here.
@Karenmc: I sympathize, even living in SoCal Sprint can be iffy….I climb to the top of buildings on campus to get a stronger signal. On the other hand I don’t spend much time on my mobile so it’s not really issue. Though a few years ago we broke down in Central Texas…..no signal, because of that my husband left Credo for Verizon. I refuse to budge, last year Credo gave almost 2 million to Planned Parenthood, for me that means something. :)
First of all, Tom Wheeler is Not a dingo!
(This is a John Oliver reference. If you would like to see a hilarious explanation of net neutrality and the importance of government regulation see : https://www.youtube.com/watch?v=fpbOEoRrHyU. For Tom Wheeler’s response: https://www.youtube.com/watch?v=hkjkQ-wCZ5A)
For those who don’t understand who the “government” is, I’ll give you a hint…(we, the people). The department of defense created the internet and the taxpayers payed for the infrastructure (we were also bilked out of 200 billion dollars by many of the same internet providers for fiber optics that never materialized). So why are we paying more than other country for its use? US internet service has been deregulated. The internet is a necessity and should be treated like a utility. Children can’t do their homework without it. For poor families, cable /internet service is currently unaffordable. Small business, the businesses that provide most of the jobs in this country, need net neutrality to be able to compete with large corporations. Having a fast lane and slow lane would seriously impede their ability to do business, and provide jobs. Talk about killing technology innovations! Right on, Tom Wheeler! Great speech!
Oh, by all means instead of imposing reasonable restrictions that prevent what basically amounts to price gouging, lets let the companies that are currently making 97 cents on every dollar that we give them make the rules about the who, whats and wheres of internet supply. In case you couldn’t tell, that’s complete sarcasm there. If the internet were a novelty that people could choose to have or not have without affecting them in any significant way, I’d be okay with the idea of free market driving the situation. But the way the world works today, having access to the internet is about the same as having running water and electricity in your house. How would we all like it if the government took a hands-off approach to all utilities, and the gas, electric and water companies could decide to charge huge fees if you wanted to get water “first”? Net neutrality only helps consumers, so why in the world would anyone but the greedy cable companies be against it?
@Lynn M: I think there are people who truly bought the propaganda that “any government=bad!”
I even saw the argument that where Google is today is ‘proof’ that no-regulation is the way to go, that ‘if the government had regulated the net when Google started, it would not have been able to grow to what it is today.’ To which I say, nonsense.
Wow. Have the cable companies infiltrated these comments, haha? Because government regulation is INFINITELY 100% preferable to letting corporations price gouge and do whatever they want. The communication/internet companies are in it for money $$$$$, not innovation. Letting Comcast, Verizon and AT&T go unregulated is the scary part, sorry not sorry.
So glad that at least someone is looking out for the rights of the consumer.
I may not understand your comment, are you saying that the government interfering and making Ma Bell break up was bad. The government broke up the phone company monopoly, and the prices for calling overseas from the US dropped from $3 a minutes (in the early 90s). The phone companies made all the same claims about how they couldn’t afford to charge less because of infrastructure. But with competition in place the prices “amazingly” went down.
And let’s not forget that in the “good old days” of Ma Bell, nobody actually *owned* their phone; you just leased it from the phone company!
But look at all the amazing tech spurred by the competition between Blackberry vs Apple vs Samsung vs all the others. Does anybody think that we’d have smartphones today if we all had to rent our devices from one single giant monopoly?
Count me in as another person cheering for net neutrality!
Every other month my husband and I have to fight with the cable/phone company regarding cost. Our usage has not gone up but our prices do every month. We can’t change providers as other (lower cost) providers are priced out of the area and cannot compete.
Free market? Please. These companies do all they can to squash the little guy so they can take as much of your money as possible. Does the government get everything right? No, of course not. But this is right and needed to be done.