Net neutrality fight far from over

Despite the FCC's recent vote to approve new broadband regulations, this is a battle that will continue, argues consultant Larry Downes.

Larry Downes
Larry Downes is an author and project director at the Georgetown Center for Business and Public Policy. His new book, with Paul Nunes, is “Big Bang Disruption: Strategy in the Age of Devastating Innovation.” Previous books include the best-selling “Unleashing the Killer App: Digital Strategies for Market Dominance.”
Larry Downes
6 min read
Editor's note: This is a guest column. See Larry Downes' bio below.

LAS VEGAS--Attendees at a standing-room-only debate over Net neutrality were treated to a rare occurrence at the Consumer Electronics Show: consensus.

Unfortunately, the only thing that Federal Communications Commission and congressional officials, along with representatives from industry and public interest groups, could agree on was that the fight over the FCC's controversial new "open Internet" regulations is far from over.

The discussion took place yesterday as part of CES's Tech Policy Summit, running through Saturday in Las Vegas.

The FCC voted 3-2 at its December 21 meeting to approve new broadband regulations covering Web site blocking, traffic discrimination, and network management transparency. A few days later, it issued its nearly 200-page report (PDF). Many analysts and neutrality activists assumed this would put an end to a rancorous debate that has raged off and on for over five years.

But even FCC Chief of Staff Ed Lazarus acknowledged that the December vote, which came on the heels of a new Congress decidedly less friendly to Net neutrality than the last one, was only the first step in a long process. "We addressed the problems we saw," he said. "We'll stop there for now. If other things come up that pose anticompetitive or consumer problems, then we'll revisit."

Rick Whitt, Google's Washington telecom and media counsel, agreed that Net neutrality is "an iterative process," and that the rulemaking last month was just "the initial foray" for the Commission. He was responding to concerns raised by moderator Cecilia Kang of The Washington Post that the rules as adopted gave different treatment to wireline and mobile broadband, and whether doing so created a "two-tier" Internet. "The rules adopted don't bind [the FCC] in the future," he said.

Google, once an advocate for strong neutrality rules for both wired and wireless access, is satisfied with this first effort.

Indeed, the open Internet rules approved by the FCC closely matched a proposal made jointly last summer by Google and Verizon, which was the first to propose separate treatment for mobile broadband. Google now agrees with its one-time adversary that constraints on broadband spectrum and robust competition called for a lighter regulatory touch, or what Lazarus referred to as "regulatory humility."

The next step
But other panelists had a different view of the next stage in the battle over Net neutrality. Verizon Executive Vice President Tom Tauke acknowledged that the company is unhappy with the new rules and pointedly refused to dispel rumors that the company is preparing to challenge them in court.

Verizon objects to the rules on substantive and procedural grounds. On the substance, Tauke noted that the Internet ecosystem has evolved to give others besides broadband access providers the potential to interfere with customer preferences in using sites, services, applications and devices of their choice. Device manufacturers, operating system developers, and application providers all have increased leverage, he said, to dictate user behaviors if they choose to do so. It makes little sense, Tauke said, only to regulate the carriers.

On the process, Tauke argued that the FCC "operated at a huge disadvantage" in passing the rules, as Congress has never given the agency the authority to regulate broadband. Indeed, the FCC lost a court challenge in May, when the D.C. Circuit Court of Appeals overturned sanctions levied against Comcast for throttling some customers' BitTorrent traffic. The court held that the 1996 Communications Act did not authorize FCC oversight of broadband.

Tauke believes that it should be for Congress, and not the FCC, to determine how broadband access should be regulated, a view shared by many of the panelists.

Indeed, just days into the new Congress, there are already indications that reversing the FCC's new rules is a priority for Republicans. Rep. Marsha Blackburn (R-Tenn.), introduced legislation on Wednesday to make clear the FCC has no authority over broadband. At least one Democrat, Rep. Dan Boren (Okla), was among 60 congressmen who supported the bill. In the Senate, Sen. Kay Bailey Hutchison (R-Texas), ranking member of the Commerce Committee, has also called for legislation to overturn the rules.

Such legislation, of course, would require a majority of both the House and Senate to pass, and could face a veto from President Obama, who praised the FCC's new rules soon after the FCC vote in December.

But Neil Fried, chief legal counsel on telecommunications for the powerful House Committee on Energy and Commerce, believes anti-neutrality legislation has a good chance. He noted that 95 Democratic candidates for Congress who signed a pro-Net neutrality pledge all lost their races, and he sees the strong Republican showing in the mid-term elections as a strong indication that Americans want less, not more, government intervention, especially in industries that are weathering the economic downturn.

Critic: FCC 'untethered'
Fried, an outspoken critic of the rules, compared the FCC to the Ministry of Truth, the agency in George Orwell's "1984" that is responsible for rewriting the news to suit the repressive goals of Big Brother.

In the interest of ensuring that Internet entrepreneurs need never "ask for permission to innovate" from broadband providers, he sees the new rules as ensuring "everyone has to ask permission" from the FCC. "Freedom is slavery," Fried said, quoting the favorite slogan of the fictional government.

Fried and other panelists worry that the broad authority the FCC claimed for itself, argued in the teeth of the court's contrary Comcast decision, suggests the agency has become "untethered." He promised that the now-Republican led Commerce Committee will take up the FCC's rules as its first telecommunications issue, including a series of hearings.

"Overreaching of authority is not something we can skip over," Fried said, noting that the Commission's thin legal justification for neutrality authority could apply to any subject with "even the remotest connection to broadband." For example, the FCC could use the same justification to pass strict new privacy regulations, an area the FCC indicated interest in as part of last year's National Broadband Plan.

For his part, Roger Sherman, now minority counsel on the House Energy and Commerce Committee, is confident the president would veto any congressional effort to overturn the rules. But he also expects a court challenge, and notes that former Committee Chairman Henry Waxman (D-Calif.), tried to address Net Neutrality in legislation circulated just prior to the mid-term elections. "If Republicans want to talk about real ways [to regulate the internet]," he said, "we're open to that."

What's the problem?
As the new rules make their way through likely legislative and legal challenges, it's not even clear how if at all they will affect consumer Internet access. The FCC, Lazarus concluded, is now positioned to be "the cop on the beat" for broadband access providers. But while Lazarus defended the vote as having "addressed the problems we had seen" and no more, the FCC's own report described its new regulations as "prophylactic rules," a phrase that appears 11 times in the document.

Indeed, the agency cited only four incidents in the last 10 years it considers to be true violations of the principle of an open Internet (including the Comcast case). As I explained elsewhere in a detailed analysis of the new rules, the rules the agency finally adopted would cover few if any of even this handful of incidents.

And Lazarus refused to rule out the possibility that the agency will go ahead with a controversial proposal made in the wake of the Comcast decision to "reclassify" broadband Internet access and subject it to common carrier rules last used for the former telephone monopoly.

A "Notice of Inquiry" on reclassification is still open, and the FCC has no plans to close it, Lazarus said. A bipartisan majority of the previous Congress signed letters urging the FCC not to proceed with that inquiry, which stands on even shakier legal ground than the net neutrality rules actually adopted last month.

So for now seems that the prediction of Verizon's Tauke is the most likely scenario for Net neutrality and those who follow it. Absent substantive congressional review of communications law, Tauke expects "we'll be in the same place in a few years as we are now." There will be "a lot of stirring" by Internet activists, "the FCC will act, and the courts will overturn them."

Seems like an awful lot of wasted effort for a problem that, by most accounts, hasn't even appeared yet. But as Google's Whitt reminded the audience, "Nothing happens in Washington by large steps."