The Mixed Reality of the FCC's Move on Net Neutrality

Carl Weinschenk

Federal Communications Commission Chairman Ajit Pai in mid-November set a December 14 vote on a proposal that would drastically change the way internet service providers (ISPs) are regulated. That news was met by proponents of the current rules as an expected and certain fatal blow to what they see as the tenets of a fair internet, which features an even playing field, from Facebook and CNN to a personal blog.

Many of those favoring a transition from the current regulatory structure say that the starting point is acknowledgement that the FCC doesn't have the constitutional power to regulate broadband unless a law is passed saying it has such rights. "The issue for the USA is how to make rules that are legal," Roslyn Layton, Ph.D., a Visiting Scholar at The American Enterprise Institute and a Visiting Researcher at Aalborg University in Copenhagen told IT Business Edge in an email. "The Telecom Act of 1996 says that the Internet should be free and 'unfettered from Federal and state regulation.'  So it is not possible for the FCC to make net neutrality rules unless and until Congress gives it the authority to do so."

Layton also suggests that the current laws may violate the First Amendment and points to a case on the Supreme Court's 2018 docket that will decide the issue.

Some Oversight Will Remain


The demise of net neutrality as it was enacted in two years ago does not mean that there will be no internet oversight at all. Larry Downes, the project director of the Georgetown Center for Business and Public Policy, told IT Business Edge that enforcement will shift between federal agencies. The FCC, he wrote, "proposes to replace the 2015 rules with a new, enhanced transparency rule and turn over enforcement of other anti-competitive and anti-consumer behavior to the Federal Trade Commission, which was explicitly cut off from its active enforcement by the FCC in the 2015 Order."

The level of enforcement, whether emanating from the FCC or the FTC, will come down to the philosophy of the administration in power. There is a partisan divide. The left, as evidenced by Tom Wheeler's FCC, favors tighter regulation and oversight. The right tends to let markets self-regulate. The FCC's controversial position to cede its control follows the GOP's long-held position on broadband and overall regulatory philosophy in advocating that lighter, hands-off approach.

Layton has studied net neutrality around the world and suggests that this works. "In general, I found that countries with soft rules for net neutrality (e.g., code of conduct, multi-stakeholder model, etc.) had the best results," she wrote. "These were the countries in the [Nordic countries], Japan, South Korea, UK and Switzerland. The countries with the hardest regimes (e.g., legislation or regulation, [such as the] Netherlands, Slovenia, countries in Latin America) did the worst. It is interesting to note that China has no rules at all but has been very successful at innovating and creating apps that people use around the world."

Zero-Rating Likely to Grow

The government's attitude toward zero-rating will be a harbinger of how much overall attitudes have changed. Zero-rating scenarios enable carriers and service providers to offer programming or services without counting them against subscriber data, which gives the zero-rated entity a competitive advantage. These beneficiaries may be fully or partly owned by the network operator or pay a fee to be zero-rated. Net neutrality proponents generally feel  zero-rating violates the open internet spirit.

Zero-rating no doubt would expand under a lighter regulatory approach. The market place would be left to decide winners and losers. That is not a bad thing, according to Rob Frieden, holder of the Pioneers Chair and a professor of telecommunications and law at Penn State. "I oppose a uniform prohibition on zero-rating, because broadband consumers can benefit from carrier marketing offers that combine services (broadband and video), or turn the meter off for specific services," he wrote. "The court of public opinion agrees. There may be instances where  zero-rating distorts the competitive playing field for content and apps, but I believe the FCC could address disputes using its complaint resolution process."

The Obama administration's take on net neutrality still has its defenders, of course. "The FCC’s 2015 Open Internet Order is indeed a regulatory solution well-grounded in internet architecture, network economics, and telecommunications law, and it should be maintained, not repealed," said Scott Jordan, a professor of computer science at the University of California Irvine. Jordan was the FCC’s Chief Technologist from the autumn of 2014 through 2016.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.


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