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."

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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.



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