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FCC's 'Middle Ground' Already Under Attack

Carol Wilson
4/24/2014
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The reactions to the Federal Communications Commission (FCC) 's new net neutrality proposals have been swift and predictable even though those proposals haven't even been formally announced yet.

In advance of the expected announcement today, multiple news outlets are reporting that Chairman Tom Wheeler is circulating a proposal that seeks a middle ground. It would allow broadband ISPs to offer premium access to companies that want to carve out guaranteed high-speed bandwidth for their services, as long as such access was commercially available to all on reasonable terms.

Just the fact that anyone would be able to pay for premium services is drawing howls of protest and claims that both President Obama and Wheeler are reneging on their support for a free and open Internet. (See Wheeler Writes Regulatory Rubric and Wheeler Walks Line on Net Neutrality.)

In a Common Cause press release, former FCC Commissioner Michael Copps, now a special adviser to Common Cause's Media and Democracy Reform Initiative, said: "If true, this proposal is a huge step backwards and must be stopped. If the Commission subverts the Open Internet by creating a fast lane for the 1 percent and slow lanes for the 99 percent, it would be an insult to both citizens and to the promise of the Net."

The Wall Street Journal, which broke the story Wednesday , claims the winners in the net neutrality wars would be the broadband ISPs, who would be able to make money selling services to both consumers and content providers, and larger content companies such as Google (Nasdaq: GOOG), Apple Inc. (Nasdaq: AAPL), and Netflix Inc. (Nasdaq: NFLX), who can pay more to make sure their content reaches consumers with higher quality. (See Netflix CEO Wants 'Strong' Net Neutrality .)

But broadband providers, many of whom are announcing financial results this week, are being more measured in their responses.

"We have to see what's ultimately embedded in the proposal," said Time Warner Cable Inc. (NYSE: TWC) Chairman & CEO Rob Marcus. "At this stage, it's difficult to speculate until we know what's contemplated.”

Asked about possible new business models for offering Internet video content, Marcus said it was "premature" to discuss. "We'll have to see what new business models emerge," he said.

The new rules were made necessary by a January court ruling that struck down the FCC's previous rules in a challenge brought by Verizon Communications Inc. (NYSE: VZ). According to the Journal, the FCC would require broadband ISPs to disclose more information about their networks and would retain the right to decide on a case-by-case basis on the fairness and reasonableness of the commercial terms broadband ISPs have set. (See Net Neutrality Fight Not Over.)

UPDATE 11.30 AM EST: FCC Chairman Tom Wheeler is "setting the record straight" in a blog you can read here , in which he says the FCC's proposal to be circulated today would set "a high bar" for what is commercially reasonable. In addition, he says the agency will solicit other approaches to preventing "behavior harmful to consumers or competition by limiting the openness of the Internet."

— Carol Wilson, Editor-at-Large, Light Reading

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Ray@LR
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Ray@LR,
User Rank: Blogger
4/24/2014 | 12:26:07 PM
Lobbyists
I wonder how much in lobby funds has gone into this?
sam masud
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sam masud,
User Rank: Light Sabre
4/24/2014 | 1:09:49 PM
Stick a fork in it
I'm betting the days of the open Internet are numbered. The FCC will triangulate and allow a fast lane, and then tell us the change is to ensure the Net stays open (sort of a variation of the Supreme's logic that money is free speech).
RitchBlasi
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RitchBlasi,
User Rank: Light Sabre
4/24/2014 | 2:54:02 PM
FCC
I guess likening this to paying for a first class ticket for the same flight is out of the question?

 
Carol Wilson
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Carol Wilson,
User Rank: Blogger
4/24/2014 | 3:00:01 PM
Re: Stick a fork in it
I'm as tired of the polarizing talk about Net Neutrality as I am the polarizing talk around Obamacare, immigration reform and deficit spending. 

This can't be an all-or-nothing thing - either the Internet is free and open OR broadband ISPs can develop premium services for OTT content. 

Beating up on the FCC is pointless - these aren't evil beings seeking to undermine the Internet, they are human beings looking for a logical solution to a difficult problem. 

Are they heavily lobbied by those with deep pockets? No doubt. I'm not entirely convinced that means they are incapable of consumer protection. But maybe I'm just being naive. 

 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
4/24/2014 | 3:41:54 PM
Fundamental arguments
The fundamental arguments against preferential treatment are:

- It makes it harder for the next YouTube, Facebook, or Netflix to go into business, as they basically have to ask permission from service providers before reaching a noticeable size. 

- Consumers don't have choice because if you want a new service provider, you have to move. The overwhelming majority of Americans can get broadband from zero, one, or two providers. If they have two providers to choose from, one -- likely the cable company -- is far faster than the other. 

Are these arguments wrong?
Carol Wilson
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Carol Wilson,
User Rank: Blogger
4/24/2014 | 4:09:29 PM
Re: Fundamental arguments
Mitch,

I'm well aware of the fundamental arguments in favor of Net Neutrality.  There are arguments against it as well. For example:

The way networks work today, companies such as Netflix already pay more to have their content distributed close to the consumer on the fat pipes of CDNs - the new rules would only apply to the last mile networks. The argument can be made, and is, that allowing premium content services to traverse that last mile would give consumers access to higher quality content at more reliable speeds than today's best-effort Internet. 

Broadband service providers also make the argument that upgrading their networks to meet demand isn't free, and if the demand is being generated by OTT services that pay nothing for access, where is the financial incentive for them to upgrade? Unless the only answer is asking the consumer to pay more?

I'm sure that will make everyone happy. 

I'm not trying to take sides here, just state the arguments as I've heard them posed, for more than a decade now. The NN crowd didn't even see the FCC proposals before shooting them down. 
Carol Wilson
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Carol Wilson,
User Rank: Blogger
4/24/2014 | 4:22:12 PM
Re: Fundamental arguments
Here is what Wheeler notes in his blog:

 

To be clear, this is what the Notice will propose:
  1. That all ISPs must transparently disclose to their subscribers and users all relevant information as to the policies that govern their network;
  2. That no legal content may be blocked; and
  3. That ISPs may not act in a commercially unreasonable manner to harm the Internet, including favoring the traffic from an affiliated entity.

I think it's at least worth a discussion and not all the moaning, groaning and wailing that has gone on in response to the WSJ account.
sam masud
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sam masud,
User Rank: Light Sabre
4/24/2014 | 4:23:04 PM
Re: FCC
I think that's comparing apples to oranges. Air travel was not created so all could travel by air. By contrast, content on the Net was/is there for anyone who has access to it, either via dial-up or broadband.
futurephil
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futurephil,
User Rank: Light Sabre
4/24/2014 | 4:24:58 PM
Re: Stick a fork in it
I think you might find my most recent podcast refreshing. Martin Geddes and I discuss why both sides of the net neutrality debate need to agree that networks are trading spaces and time and quality are the most important measurements of those trades. 

We also discuss the second act of the musical "Oklahoma!," because there's an analogy that Geddes uses that really works. 

 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
4/24/2014 | 4:26:33 PM
Re: Fundamental arguments
I'm not taking sides either, just trying to get a better understanding of the problem. 

My philosophy here -- as with some of the other hot-button political issues you listed -- is that there is no shortage of people eager to jump in and take sides on these issues, and there is a shortage of people trying to figure things out. 

How do you preserve innovation -- leave openings for the next YouTube or Netflix -- if the incumbents (the current YouTube or Netflix) have been able to raise the price as a barrier to newcomers?
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