In a closely watched vote, the Federal Communications Commission approved compromise net neutrality rules Tuesday that would forbid the nation’s largest cable and DSL internet service providers from blocking or slowing online services, while leaving wireless companies with much more latitude.
After five years of contentious debate that polarized the tech-policy world, FCC chief Julius Genachowski made good on President Barack Obama’s campaign pledge to strengthen rules governing the nation’s ISPs. The measure, which passed 3-2 along party lines, did not go as far as supporters would have liked, but the FCC faced steep resistance from Republicans and the powerful telecom lobbying machine.
The FCC’s order is a milestone in the multiyear battle over so-called “net neutrality,” which is the principle that broadband service providers shouldn’t be able to interfere with or block web traffic, or favor their own services at the expense of smaller rivals. Without net neutrality — which ensures that everyone has open access to the internet — revolutionary web startups like Google, Facebook and Twitter may never have gotten off the ground, proponents argue.
The three new rules, which will go into effect early next year, force ISPs to be transparent about how they handle network congestion, prohibit them from blocking traffic such as Skype on wired networks, and outlaw “unreasonable” discrimination on those networks, meaning they can’t put a competing online video service in the slow lane to benefit their own video services.
The measure pleased few, and provoked howls of outrage from those who say the it will either stifle broadband investment, or not do enough to keep online innovation thriving. Net neutrality advocates on Obama’s left flank were not impressed.
“Despite promising to fulfill President Obama’s campaign promise of enacting network neutrality rules to protect an open Internet, the FCC has instead prioritized the profits of corporations like AT&T over those of the general public, internet entrepreneurs and local businesses across the country,” said Sascha Meinrath, director of the New America Foundation’s Open Technology Initiative.
Meinrath served on Obama’s idealistic technology, media and telecom working group during the 2008 campaign — Genachowski was in charge of the group. Google CEO Eric Schmidt is the Chairman of New America’s board, but that hasn’t stopped Meinrath from ripping the search giant in the past.
Google declined to comment.
During the meeting, Genachowski chided what he called “extremists” on both sides for their “chutzpah.” He said the new rules would advance the administration’s goal of making America’s broadband system the “freest and fastest in the world.”
So what actually has changed here? Although there is much sound and fury being devoted to the new rules, in reality, they differ little from the principles put into place by former Republican FCC chairman Michael Powell in 2005. Those principles set the foundation for the concepts of transparency, nondiscrimination and reasonable network management at the heart of the FCC’s present order.
Comcast, the nation’s largest cable company, offered cautious support for the new rules.
“While we look forward to reviewing the final order, the rules as described generally appear intended to strike a workable balance between the needs of the marketplace for certainty and everyone’s desire that internet openness be preserved,” Comcast executive vice president David L. Cohen said in a statement. “Most importantly, this approach removes the cloud of Title II regulation that would unquestionably have harmed innovation and investment in the Internet and broadband infrastructure.”
The need for the new rules largely stemmed from Comcast’s court challenge to the FCC, after the regulatory agency ordered Comcast to never again block peer-to-peer file sharing. In April, a federal judge ruled that the FCC’s legal basis for the order was inadequate, essentially neutering the agency’s ability to regulate internet access providers.
Comcast, AT&T and Verizon had vigorously opposed an earlier FCC plan — which still technically exists on the FCC docket, which would have reclassified broadband as a communications service. That would have given the commission clear authority to enforce net neutrality, but opponents likened it to returning to the days of government regulation of the phone network.
Today’s order does not formally extend the protections to wireless networks, nor does it prohibit so-called “paid prioritization,” in which the broadband companies could create high-speed, high-priced fast lanes for premium customers. In fact, the order goes so far as to actually create a new category of internet service — so called “specialized services.”
Industry experts predict that the rules face almost certain challenge in federal court. Just minutes after the meeting ended, Verizon Wireless, the largest mobile provider in the country, said it was “deeply concerned” by the FCC’s move.
“Based on today’s announcement, the FCC appears to assert broad authority for sweeping new regulation of broadband wireline and wireless networks and the internet itself,” Tom Tauke, Verizon’s executive vice president of public affairs, policy and communications, said in a statement. “This assertion of authority without solid statutory underpinnings will yield continued uncertainty for industry, innovators and investors. In the long run, that is harmful to consumers and the nation.”
Verizon did not say if it would seek to challenge the new rules in federal court, but most industry observers expect an eventual legal showdown, whether it involves Verizon or one of the other broadband giants.
“Because the rules are very high-level, their meaning and impact will be determined by how the facts on the ground develop over the next few years, and thus we expect the battle will continue in the marketplace and through FCC case-by-case enforcement, as well as in Congress and the courts,” Rebecca Arbogast, managing director at Stifel Nicolaus, wrote in a note to clients.
“We expect the order to come under attack from Republicans in Congress and from stakeholder critics in court,” Arbogast added.
The meeting exposed the bitter philosophical and ideological differences that have pitted supporters of net neutrality with opponents, including the big broadband companies and their allies, who say the rules are an unnecessary burden on a system that works just fine.
“We are skeptical Republicans will gain enough Democratic support to undo the FCC order and could also face a presidential veto if they get a bill through Congress, while litigation prospects will depend on the strength of the FCC’s order, the parties that are challenging it, and the court that hears the case,” Arbogast wrote.
The formal order has not been released yet, because the FCC needs to incorporate the majority’s response to the written dissents of the commissioners who disagree with the order. FCC officials said it could take a few days before the order is made public.
The FCC did, however, release some key snippets from the order, which you can read below.
Snippets of Net Neutrality Order
Additional reporting by Ryan Singel.
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Photo Credit: Flickr/Greg Elin
