Why Genachowski's Net neutrality proposal is best

FCC chairman's plan enables continued industry growth while helping ensure consumer protections, argues attorney Jorge Bauermeister, a former communications regulator.

Editors' note: This is a guest column. See Jorge Bauermeister's bio below.

For those heavily engaged in the Internet regulation battle that has been raging over the past year, the next two weeks will be a nail-biting period. Federal Communications Commission Chairman Julius Genachowski recently announced what seems to be a sensible compromise on the issue of Net neutrality, which will work to govern how the Internet pipes are managed.

Genachowski's proposal appears to meet all interested parties in the middle by ensuring the continuation of an open Internet and also providing an environment that enables the growth of the Internet and communications sector to continue at a rapid pace. Continued growth, naturally, is essential to enabling new technologies and services to meet consumer demand and needs.

But instead of plaudits, the chairman is stuck in a tug-of-war between the long-standing proponents of Net neutrality and those skeptical of new regulations and any unintended consequences they may cause. Splits in the commission, which will vote yea or nay this month, mirror the outside fight.

I have been a supporter of light-touch approaches to any sort of Internet regulation, often citing the negative fallout that could result from heavier rules--particularly the approach of reclassifying Internet services under the Title II framework that has governed telephone services since the 1934 Telecommunications Act. Luckily, the Title II approach appears to have been taken off the table, given the recent announcement of the chairman's framework, which maintains rules under the current Title I approach.

Why compromise is good--and where extreme policy goes wrong
As for those who want tough neutrality rules on wireless broadband, I'd advise one to be careful what you wish for. The smartphone revolution has created dramatic new demand for wireless capacity, which is already bumping up against the limits of current technology.

Wireless networks simply can't handle as much data as wired networks and, therefore, the wireless infrastructure and management of mobile networks require a different approach than wired and fixed broadband. We are just at the beginning of a high-growth wireless revolution. Overregulation will stunt its growth, and Genachowski's plan takes into account that reality, leaving room for continued growth while also doing enough to ensure consumer protections on mobile networks.

Advocates of heavy-handed regulation are pressing FCC commissioners Michael Copps and Mignon Clyburn to work for rules that would prevent network operators from offering premium, or "prioritized," services. They say operators might use prioritization to favor their own content service over another company. But Genachowski's proposal addressed that fear with a nondiscrimination rule.

What opponents of differentiated services are asking for is, simply put, to allow certain content companies to skip paying more for the cost of using more bandwidth within the Internet backbone, as they congest a network operated by another company.

Barring such services would prevent valuable innovation. Imagine that you are part of a company whose sole business offering is videoconferencing, and one of your clients has an important videoconference with a potential client overseas. What would happen if the videoconference stalls midway through the meeting? Your client would look unprofessional, and so would your company. Bottom line: you lose your business.

Likewise, what if a doctor were guiding a surgery via videoconference, and it stalled midway through the operation to accommodate someone five blocks away downloading a TV program? Can anyone justify that occurring? Companies that rely on quality of service must be able to deliver on that, and they are willing to pay for this, as they should be, just as any business would pay for an essential service to its bottom line.

What about on a personal, consumer level, which may apply to "usage-based pricing?" Should a neighbor of mine who streams data-heavy programs all day long pay more for the pipe space he uses? I am only getting online for two hours each night to send e-mails and watch a TV show or two. Should I pay the same amount to subsidize my neighbor's much more robust use? The same principle can be applied to mobile data. AT&T says it now has 7 million customers on one of the usage-based mobile plans it launched a few months ago.

To my astonishment, people often overlook the fact that service providers are businesses as well--and that businesses are responsible for building out the bulk of our Internet today. Everyone agrees that private investment is crucial to the Internet infrastructure, in terms of building new networks and upgrading platforms. After all, it was this private investment that has enabled all of us to have broadband service in our homes, offices, and on phones. This has not come cheaply.

Over the past two years, Internet service providers collectively invested $120 billion. Their investments are essential to driving our slow economy, creating jobs, and improving our Internet experience, from access to networking opportunities to platform availability.

What opponents of differentiated services are asking for is, simply put, to allow certain content companies to skip paying more for the cost of using more bandwidth within the Internet backbone, as they congest a network operated by another company. They have the guts to argue that they spend the same billions of dollars as providers such as Verizon Communications without returns.

Possible outcomes and current state of play
Republican Commissioners Robert McDowell and Meredith Baker have stated publicly that they plan to vote against the chairman's proposal. We can assume that the chairman will vote in favor of his own proposal, leaving the majority votes required to pass the order up to Democratic commissioners Clyburn and Copps, both long-standing supporters of Net neutrality.

While Commissioner Clyburn has been relatively silent on the proposed order, the compromise sounds as if it doesn't go far enough for Commissioner Copps, who says he is committed to a more invasive proposal to reclassify Internet services as telecommunications services under the 1934 Title II framework.

Copps recently remarked during a speech at Columbia University that he is looking for stronger rules over wireless networks, as well as banning prioritization of services--ideas long pursued by groups such as Free Press, Public Knowledge, and the Open Internet Coalition, which favor more extreme government regulation over the flourishing telecommunications sector. Their calls for regulation mirror those of content delivery services, such as providers of streaming video, that depend on more bandwidth from ISP pipes to meet their users' heavy data demands.

So what if the vote passes 3-2? Consumer groups and the companies that continue to invest billions of dollars annually to build out the Internet networks from which we currently benefit should be pleased. In the end, consumers win with this plan in part because the proposal protects an open Internet while ensuring the continued investment Americans need to meet their technological demands. At least in the short term, passing a new rule would enable the commission to move its focus from Net neutrality to the National Broadband Plan, which was created to achieve universal broadband in this country. Even if the rule is challenged in court or on Capitol Hill, it would take the issue off the FCC agenda until those other bodies act.

What if the vote doesn't pass, and Commissioner Copps holds out for the wish of total overhaul of our Internet policy framework? This is a no-win situation, one in which even "public-interest groups" lose. Recent court rulings suggest that the commission lacks the legal authority for Copps' desire to reclassify Internet services under Title II, which would apply to the Internet the same micromanagement rules drafted more than 70 years ago for the old-fashioned monopoly phone system.

If the FCC even attempts this path, it will be met with lawsuits to kingdom come. Additionally, with the House shifting to Republican hands, Congress would likely move to strip the FCC of any authority to move on Net neutrality rules. Thus, the best bet for the continued protection of a free and open Internet is through Chairman Genachowski's Net neutrality order. With this, everyone wins something in the end. Isn't that the way most progress results in the American political system?

In conclusion
The bottom line is that the Net neutrality order up for vote would be a consumer win, as it:

  • Protects an open Internet and prevents against discrimination of content.
  • Enables reasonable network management to protect consumers against privacy and cybersecurity concerns, as well as support the business of providing and consuming if more robust online experiences, in terms of performance and capacity demands.
  • Supports continued innovation and investment in communications technologies, facilitating broadband access improvements and network upgrades, as well as adding related American jobs.

We must look past the smoke and mirrors of the doomsday hypothetical's being thrown around by extreme proponents of reclassification of the Internet. The "what if" and "imagine this" scenarios are doing nothing but harming a best resolution of this complex issue, which lies in compromise.