Broadband & Neutrality Regulation

Two Scathing Dissents on the FCC’s Illegal, Unnecessary & Harmful Net Neutrality Order

by on December 22, 2010 · 3 comments

The FCC’s order still isn’t out (just a news release in .DOC form), but the Commissioner’s accompanying statements are. Anyone interested in net neutrality regulation or the coming political, legal and constitutional fights over it must read the scathing dissents by Commissioners Rob McDowell and Meredith Baker.

Commissioner McDowell’s jeremiad about “one of the darkest days in recent FCC history” makes clear the utter impossibility of reaching a “compromise,” as Chairman Genachowski insists he wanted. Commissioner McDowell summarizes his dissent beautifully:

  1. Nothing is broken in the Internet access market that needs fixing;
  2. The FCC does not have the legal authority to issue these rules;
  3. The proposed rules are likely to cause irreparable harm; and
  4. Existing law and Internet governance structures provide  ample consumer protection in the event a systemic market failure occurs.

The dissent runs just over 9 pages, but he includes a long appendix of his legal analysis. Here are Commissioner Baker’s key points:

  1. The importance of regulatory certainty
  2. There is no factual basis to support government intervention
  3. Consumers will not benefit from net neutrality
  4. The order may inhibit the development of tomorrow’s internet
  5. The Commission is miscast as the internet’s referee
  6. The Commission lacks authority to adopt net neutrality rules
  7. The Commission acts improperly as a quasi-legislative body
  8. The Commission has strayed from a pro-jobs consensus agenda.

Also check out statements from Chairman Genachowski, Commissioner Copps and Commissioner Clyburn. In the end, as Adam Thierer and I have warned, the FCC is heading down path towards “mutually assured destruction,” opening the door to endless regulatory battles among the Internet’s many players.

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Preserving the Open Internet by Changing Everything

by on December 21, 2010 · 8 comments

Citing nefarious, and completely imaginative, examples of “Big Mobile” and “Big Cable” shutting down access to the Internet, the FCC voted today to move towards greater regulatory oversight of Broadband Internet through Net Neutrality principles. (indeed, even the HuffPo is saying in the most hyperbolic way that this is “The Most Important Free Speech Issue of Our Time“)

For a primer of Net Neutrality, visit here or here.

The public is still waiting for the specific language of the regulatory order (FCC Commissioners only recevied it themselves just before midnight last night), so I cannot comment on the language that lawyers are sure to argue over for years to come. However, based on the comments of the FCC Commissioners, both pro and con, on the order I have come to some preliminary conclusions:

1) Those who think this regulatory framework “preserves” the openness of the Internet are wrong. This fundamentally changes many aspects of the infrastructure of the Internet, even if it is below the radar. My foremost concern is that paid prioritized access will be barred. So, count Level3 among the winners here today. How is paid prioritized access a bad thing? If I want a quality experience with Netflix or Amazon or Hulu, I need access to a network that prioritizes video over someone’s email, who won’t be harmed if their message is delayed by less than a second. If my video is delayed less than a second, guess what, jitter occurs. And if too much jitter occurs then I’m turning off my video. How is that good?

Continue reading →

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The Era of Internet Regulation Begins

by on December 21, 2010 · 10 comments

FCC Chairman Julius Genachowski can now strike “Get Net Neutrality Done” from his 2010 to-do list.

The rules enacted today represent something of a compromise with the industry and are better than the sweeping regulation the FCC proposed last year—if you consider a club to the knee better than a sharp stick in the eye.

The FCC gave the most ground on the so-called “fifth principle,” which, in original form, would have placed strict rules on the way service providers could manage their networks, even if the aim was to make certain applications, particularly video, work for users the way they were intended. The new rules appear to allow wireline ISPs to takes steps that are not “unreasonable.” Wireless networks are pretty much exempt from this rule – good thing, too – as the engineering wireless carriers did to support smartphones such as the iPhone and those using the Droid operating system would likely be immediate neutrality violations under such rules.

And, as the owner of any of these devices can tell you, it’s pretty easy to see that wireless is where broadband access is going. This will present a quandary for the commission a few years down the line as they try to do backflips to rationalize separate sets of rules for data that travels by wires and data that travels by radio. For myself, I was following Cecilia Kang’s tweets from the FCC all morning, and have her Washington Post story open on my phone as I write this. So much for the paucity of access that the FCC seems to think requires neutrality regulations.

Continue reading →

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Now back to the National Broadband Plan…

by on December 21, 2010 · 0 comments

I recorded a commentary today  for KQED–NPR in the Bay Area–on the importance of the National Broadband Plan.  In the wake of tumult over net neutrality, Title II, and other regulatory gibberish, the important goals of the NBP, published in March of 2010, have been lost.  That’s unfortunate, because the authors did a great job of setting out ambitious goals essential to maintain U.S. competitiveness.  The plan also relies for funding on private investment and incentives, giving it a realistic chance of success.

While recent polls indicate that few Americans want the government involved in encouraging adoption of broadband, I believe this is one example where intervention–if only of the cheerleading and goal-setting variety–is appropriate.  As I’ve written extensively elsewhere, the Internet’s success is a function of network effects, as succinctly described by Metcalfe’s Law.  The more people who have broadband access, the more valuable the network is for everyone.  And the better the chances for serendipitous new uses and applications to flourish.

Those of us who already have broadband access, in other words, would benefit just as much from getting non-users online as those users themselves.

Perhaps even more.

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Net Neutrality: A Christmas Gift for Washington Lawyers & Lobbyists

by on December 21, 2010 · 4 comments

Well, there really isn’t anything left to be said about Net Neutrality regulation that hasn’t already been said a million times before.  Yes, it is the most important technology policy battle of our time, but man, I am sick of it!  Anyway, I’ve summarized the “The 5-Part Case against Net Neutrality Regulation” here before, so consult that for details, as well as this paper by Berin Szoka and me, “Net Neutrality, Slippery Slopes & High-Tech Mutually Assured Destruction.”

But on this day when the Federal Communications Commission (FCC) is enshrining an audacious new regulatory regime for the Internet, I’m going to ignore the shoddy economics behind the effort, the unjustifiable legal basis for it, and the whole stinking undemocratic process leading up to it.  Instead, I just want to focus on the one element of the fight that continues to interest me most, and which, ironically, the one thing that almost all intellectual combatants agree upon: Regulation is prone to excessive special interest influence.  I cannot possibly articulate this concern more succinctly than professors David Farber and Gerald Faulhaber have in this Atlantic op-ed today, “Net Neutrality: No One Will Be Satisfied, Everyone Will Complain.” They note that:

“When the FCC asserts regulatory jurisdiction over an area of telecommunications, the dynamic of the industry changes. No longer are customer needs and desires at the forefront of firms’ competitive strategies; rather firms take their competitive battles to the FCC, hoping for a favorable ruling that will translate into a marketplace advantage. Customer needs take second place; regulatory ‘rent-seeking’ becomes the rule of the day, and a previously innovative and vibrant industry becomes a creature of government rule-making.”

Continue reading →

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McDowell: “Long Winter’s Night for Internet Freedom”

by on December 20, 2010 · 2 comments

FCC Commissioner Robert McDowell penned an outstanding piece in today’s Wall Street Journal (subscription) on the commission’s vote tomorrow on neutrality regulation.   The final paragraph is worth a Pulitzer:

On this winter solstice, we will witness jaw-dropping interventionist chutzpah as the FCC bypasses branches of our government in the dogged pursuit of needless and harmful regulation. The darkest day of the year may end up marking the beginning of a long winter’s night for Internet freedom.

Strangely, McDowell’s dire warning is similar to that of Senate Majority Comedian Al Franken, who warned today in the Huffington Post that if the proposed rules are adopted, “the Internet as we know it would cease to exist.”    Of course, his reasoning is a bit different, as he calls for more, rather than less regulation. 

Despite complaints from Franken and others on the Left that the FCC proposal doesn’t interfere enough with the Internet, the betting at the moment is that the FCC will adopt neutrality rules of some type or another tomorrow.   The the real battle begins, on two fronts.  In Congress, GOP members are anxious to use their new House majority (as well as their increased Senate heft)  to take a whack at regulation generally, and neutrality regulation specifically.   Secondly, in the courts, which decimated the FCC’s prior attempt to impose neutrality rules, and will no doubt will look skeptically at these new ones.

Should be an interesting 2011.  (BTW, my own piece on the issue, released on Friday, can be found here.)

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Buzz Out Loud’s Epic Misunderstanding of Peering

by on December 2, 2010 · 20 comments

I love listening to podcasts, yet I’m increasingly disappointed with popular tech news podcasts like CNET’s Buzz Out Loud, which despite being staffed by tech journalists, consistently fail to grasp the basic economics of the Net.  The latest case of this arose on Episode 1360 of “BOL,” which took on the recent dispute between Comcast and Level3 over their peering agreement.

To provide some background, Comcast and Level3 have had a standard peering agreement for years, meaning the balance of incoming and outgoing traffic on either side is so similar that the two have simply agreed to exchange data without exchanging any dollars.

In the past, Comcast and Level3 had a different arrangement. Comcast paid Level3 for access to their network in a “transit” agreement.  This sort of agreement made sense at the time because Comcast was sending a lot more traffic over Level3’s network than it was taking in from Level3, hence it was a net consumer of bandwidth and was therefore treated by Level3 as a customer, rather than a peer.

Now, the tables have turned thanks to Level3 taking on the huge tasks of delivering Netflix streaming video, which takes an impressive amount of bandwidth—up to 20% of US peak traffic, according to CNET.  So, logic and economics compel Comcast to start charging Level3, as Level3 is now the net consumer.

None of this background was understand by the folks at Buzz Out Loud, which probably explains why the hosts acted as though this peering dispute was a sign of the coming Internet apocalypse, decrying the action on the podcast and summarizing their feelings on the action in the episode’s show notes by stating:

We break down the Level 3 and Comcast battle–no matter how you slice it, it’s still very, very, VERY bad for the Web.

No, it’s really, really, REALLY not. Continue reading →

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Brief Thoughts on today’s Net Neutrality developments at the FCC

by on December 1, 2010 · 0 comments

Late last night, FCC Chairman Julius Genachowski made explicit what he’d been hinting for weeks–that he was going to call for a vote in December on the agency’s long-running net neutrality proceedings.

Today, the Chairman gave a speech outlining a new version of the rules he has circulated to fellow Commissioners, which will be voted on on Dec. 21, 2010..

The new order itself has not yet been made public, however, and the Chairman’s comments didn’t give much in the way of details.  The latest version appears to reflect the proposed legislation circulated before the mid-term recess by then-Commerce chair Henry Waxman.  That version, for those following the ball here, was itself based on the legislative framework proposed by Google and Verizon, which itself emerged from informal negotiations convened over the summer at the FCC. Continue reading →

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FCC Pulls a Fast One on Net Neutrality, Presenting New Regulations as Fait Accompli to GOP Congress

by on December 1, 2010 · 2 comments

Last June, when the FCC was careening towards issuing net neutrality rules on its own authority, even on the heels of a tongue-lashing from the DC Circuit in the Comcast decision (holding that the agency lacked authority to impose net neutrality principles on broadband as a deregulated Title I service), Charlie Kennedy (a giant of telecom law who’s a partner at Wilkinson Barker and was an adjunct at the now-defunct Progress & Freedom Foundation) made a bold prediction in a PFF paper. That prediction was today, sadly, proven true with the FCC’s net neutrality proposal. Charlie wrote:

With no clear consensus to be “restored” and no compelling need to overturn the Commission’s de-regulatory classification of Internet access under Title I, there is simply no need for the FCC to undertake—let alone rush—this proceeding. The timing of the NOI’s release and the rapid comment schedule suggest that the agency is simply trying to ram reclassification through as quickly as possible so that the 112th Congress—which seems likely to be even more hostile than the current Congress to the imposition of net neutrality regulation by the FCC—will be presented in January with a regulatory fait accompli. If that regulatory endrun around Congress succeeds, it will be remembered for decades as a pivotal moment in the decline of the rule of law and the rise of a regulatory bureaucracy “freed … from its congressional tether,” as the D.C. Circuit rightly denounced the FCC’s jurisdictional over-reach in Comcast.

In essence, Genachowski is asserting that, despite what the pesky DC Circuit thinks, he already has the authority to impose net neutrality regulation—so reclassification of broadband from deregulated Title I to common-carriage Title II is unnecessary. Talk about an agency freed from its congressional tether! See you in court, Mr. Chairman!  And while we duke this out in court, infrastructure investment will stagnate—and consumers will suffer. As Charlie predicted:

Reclassification under the “Third Way” will also be the beginning of the Internet’s “Lost Decade” (or more) of stymied investment, innovation, and job creation as all sides do battle over the legality of reclassification and its implementation. To paraphrase President John Adams: “Great is the guilt of an unnecessary regulatory war.”

And as Adam Thierer points out, so much for the democratic accountability of administrative agencies and the rule of law!

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Net neutrality announcement: No reclassification, good; no details, bad

by on December 1, 2010 · 0 comments

_Written with Jerry Ellig._

Chairman Genachowski’s [net neutrality announcement](http://www.openinternet.gov/speech-remarks-on-preserving-internet-freedom-and-openness.html) today was very short on details. What we learned is that the Chairman plans to buck Congress and the courts in a drive to regulate broadband. He is proceeding against the wishes of hundreds of members of Congress from both parties that [have written the FCC](http://news.cnet.com/8301-13578_3-20005834-38.html) demanding that it not adopt net neutrality rules until Congress has an opportunity to review the matter. Also, since he has announced that he will not seek to reclassify broadband as a regulated telecommunications service, he seems to be resisting the D.C. Circuit Court of Appeals, which told the FCC earlier this year that it [lacked the authority](http://techliberation.com/2010/04/06/fcc-loses-comcast-case-end-of-line-for-fccs-creative-claims-of-authority/) to regulate broadband.

Genachowski’s remarks gave us only a thumbnail sketch of how the rules he’s advocating the FCC adopt. We don’t know what authority would undergird new rules, and we don’t know what the chairman means when he says that the new rules would prohibit “unreasonable” discrimination of content by service providers. The devil is in those details, and they seemingly won’t be available until the FCC adopts the rules at its December 21st meeting — days before a new Congress is sworn in.

While taking reclassification off the table is a welcome compromise from the chairman, we don’t understand the rush to action. Why the midnight announcement last night? Why the limited announcement today? Why not allow the new Congress to take up the matter?

Having chosen to act, however, it’s “put up or shut up” time. Chairman Genachowski said the broadband providers have incentives to act as gatekeepers to the Internet and have prevented consumers from using the applications of their choice in the past. But it takes more than these assertions to justify a new regulation. Any net neutrality order [needs to offer a coherent, logical theory](http://docs.google.com/viewer?url=http%3A%2F%2Fcommlaw.cua.edu%2F%2Farticles%2Fv16%2F16.1%2FBrito.pdf) that explains why broadband providers face systematic incentives to act in non-neutral ways that have no offsetting consumer benefits. And it needs to back up that theory with rigorous empirical evidence that proves a widespread problem exists — not just a repetition of the same handful of anecdotes about bad actors.

It’s heartening to see that Chairman Genachoswki believes wireless broadband is at a different stage in its development and should be treated differently from landline broadband. But insisting that wireless is too different invites a sleight of hand trick that would allow the FCC to claim that broadband faces insufficient competition because wireless doesn’t count. The commission has [already done this](http://techliberation.com/2010/05/19/more-on-the-fccs-broadband-funding-gap-and-universal-service/) in its National Broadband Plan, which dismisses third generation wireless as a competitor because it allegedly isn’t fast enough. This stacks the deck in favor of regulation by making it easier to claim that wireline broadband doesn’t face enough competition.

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