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Wheeler: Between a Rock and a Hard Place

FCC Chairman Tom Wheeler is not having an easy week.

First, net neutrality activists barricaded his driveway (well, four protesters anyway). Then President Obama, while on a trip to Asia, comes out with a surprise announcement calling for strict Title II regulation of broadband service providers, putting even more pressure on Wheeler to act. (See Obama Backs Net Neutrality, Stuns Industry.)

A report by The Washington Post says Wheeler was "visibly frustrated" at a meeting with Silicon Valley business executives after the statement from the White House was released.

"What you want is what everyone wants: an open Internet that doesn't affect your business," Wheeler said, according to people who attended the meeting. "What I've got to figure out is how to split the baby."

Wheeler has previously said that he would consider reclassifying broadband services under Title II of the Communications Act, but he's also given indications that he'd prefer to stick with regulating the industry under the looser Section 706 rules with some additional requirements put in place. Officially, the Federal Communications Commission (FCC) chief responded to the White House statement Monday by saying he was "grateful for the input of the President." But, according to The Washington Post, he said privately that he "preferred a more nuanced solution" than the one that Obama proposed. (See FCC's Wheeler: 'Internet Will Remain an Open Pathway' and FCC Split on Net Neutrality Plans .)

Obama's statement comes amid growing concerns about broadband companies charging content providers for "fast lanes" on the Internet -- a fear that's been magnified since news broke that Netflix Inc. (Nasdaq: NFLX) is now paying five major US Internet service providers for direct network connections. However, there is still significant confusion over what a fast lane actually is, and when and where it might be beneficial to allow service providers to prioritize certain types of traffic. Wheeler tried to address that issue with a hybrid proposal that would split the Internet and require so-called net neutrality on back-end connections, but not on the connections taking place between carriers and consumers. But, so far, that proposal hasn't made anyone happy. (See Net Neutrality: Latest Proposal Will Make Everybody Unhappy and Comcast's Cohen: Define Internet Fast Lanes.)

Meanwhile, opponents of Title II treatment have argued that the regulatory framework currently used for utilities would wreak havoc on an industry where rapid change is a constant. Analyst Larry Downes in The Harvard Business Review articulated this position by saying "The effect of such rules would be to offset the speed and flexibility of entrepreneurial innovation with the plodding rigidity of federal and state bureaucrats, more focused on process than on outcomes."


Find out more about key developments related to broadband on Light Reading's dedicated broadband channel.


Long-time industry analyst Dan Rayburn takes the argument further by asking what Title II classification would even do to mitigate public concerns about paid agreements between content owners and ISPs, including those between Netflix and broadband providers like Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Verizon Communications Inc. (NYSE: VZ). Title II doesn't cover interconnection deals, which is where Netflix is bumping up against ISPs. Rayburn has stated that instead of turning to Title II, "we need new language or better yet, a new law, not reclassification of an old law, applied to today's economy."

Regardless of what the right solution is for maintaining an open Internet, there's no doubt that President Obama's latest statement on the matter has made Chairman Wheeler's efforts to find a middle ground even tougher. With politics on both sides and complex technology in the middle, Wheeler is truly facing a difficult road ahead.

— Mari Silbey, special to Light Reading

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brooks7 11/12/2014 | 1:19:05 PM
I would add  

Neither Section 706 nor Title II would create a Universal Service Obligation.  I think that this is the other bit that we all want.  I think as a consumer what I want is:

1 - Universal Service

2 - Minimum speed increases over time

3 - Congestion management clarity

4 - Services that work all the time.

 

seven

 
msilbey 11/12/2014 | 3:48:07 PM
Re: I would add It sounds so simple when you put it like that!

Behind the scenes I'd also like to see something worked out that creates an equitable way of sharing data transport costs. Level 3 has proposed a concept called bit-mile peering that values traffic based on volume and distance traveled. If we could assign some kind of standardized value based on a model like that, then maybe we could have a reasonable discussion about who (content owners, ISPs, consumers) should pay for what. 

But quite frankly, I have no idea if the bit-mile peering proposal is reasonable or realistic. 

 
cnwedit 11/12/2014 | 5:00:37 PM
Re: I would add Seven,

Who pays for universal service? Is the cost of reaching high-cost areas shared or are the service providers supposed to figure that out?

Who decides how to define "clarity" in congestion management and how do you get beyond the finger-pointing that exists today?

I agree with everything you say, at least in principle. I just think we've gone too far down the path of letting investor-owned companies provide our networks to make it easy to now impose regulations. 

Netflix apparently agrees - it proved to be more important to their business model to pay for the interconnection they needed rather than continue fighting to get it for free. 
brooks7 11/12/2014 | 5:50:45 PM
Re: I would add Mari,

I like it conceptually...will work in localized scenarios (like Netflix in the US).  Might be really tough globally (Like Netfrix from Japan into the US - yes really bad cultural reference...attempt at humor using stereotypes!).

seven

 
brooks7 11/12/2014 | 5:53:10 PM
Re: I would add Carol,

Great questions...I think we want it to be a social obligation so I think USF should be repurposed to broadband instead of eliminated.

Clarity means we set points of measurement and standards.  I like the notion of subscribing to a VoIP capable service or a Video Streaming Capable service.

And I think we need to get a set of principles that we agree to first.  Then we can sweat and bang around the details of how we get there from here!

seven

 
DHagar 11/12/2014 | 10:10:20 PM
Re: I would add Carol, I fully agree with you.  It would be ideal to begin to define ideal concepts and draw the map but the reality is that there have been real investments made.  I believe that the way forward needs to take into account those investments and ownership.

The answer will not be simple, but just a "new" problem, as a result of a policy that does not reflect reality, will not make things better.  They need to thoughtfully review the investments made, the current markets, the new evolving markets, and the best way to protect public rights AND private investments.
Duh! 11/13/2014 | 10:31:54 AM
Meta The most unfairly maligned man in Washington just threw the second most unfairly maligned man in Washington under the bus.  The President is apparently an intelligent guy, but can't imagine he understands the issues.  Gotta wonder who he's listening to, and, in particular, whether Tom Wheeler is one of those people.

"Splitting the baby" is the only way to resolve this.  There are lots of moving parts, subtle issues and complexities.  Plus a vacuum left by the Verizondecision.  Wheeler is one of the few folks who truly get it.  He appears to be looking for a principled solution.  

Amping up the political pressure in support of entrenched positions (on both sides) is not helping. 
WhoCares 11/14/2014 | 1:05:26 PM
What is Wheeler going to do now? What will Wheeler do now.....?

He has been in bed with Comcast and took the hand outs.

Now O Idiot has said......

And Wheel baby goes O shi% How what... DUH?

We all know the FCC is a total Joke. And is not for the people...

We all know that Wheel Baby will Ok the Comcast/Time Warner deal.. 

So Comcast can shaft everyone. With the net caps, fast land crap and all. 

And O Idiot will go... DUH?  Well the Illegals need more... 

Faast it.... It's all a total B.S Government joke.... And we all know how that goes....

Don't count on the FCC are the Government for shi%   

Just the honest truth... 

 

 
mhhf1ve 11/14/2014 | 6:28:28 PM
Re: Meta The "more nuanced" approach may be difficult to actually ratify in reality. Any newly imposed regulations will of course be disputed in the courts and take a long time to resolve, so it seems reasonable to start with Title II and add forbearance terms. Alternatives sound less consumer-friendly and give the public a tougher negotiating position -- which is probably why Obama picked Title II. Sure, it's not a going to be enjoyable for ISPs, but they'll survive -- they already operate under Title II for other services and seem to do okay. 
mhhf1ve 11/14/2014 | 6:31:43 PM
Re: I would add I would keep in mind that telcos have been promising fiber upgrades and collecting public subsidies for years without fully delivering on their promises. So... protecting the investments of telcos doesn't seem like it should be necessarily that high on the priority list. Protecting consumer rights and the public interest has long been neglected... and it may very well continue to be if govt officials submit to regulatory capture and are convinced that they need to listen to the FUD coming from telcos that Title II will ruin them.
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