'Net Neutrality'- another Voice Heard, President Obama

November 10, 2014
By: Peter Bernstein

Even since the U.S. D.C. Circuit Court of Appeals in January of this year threw Net Neutrality rules back to the Federal Communications Commission (FCC (News - Alert)) based on a ruling that in Verizon v. FCC that it had overstepped its authority by prohibiting Internet Service Providers (ISPs) from blocking or discriminating against traffic by lawful websites, this has been a topic of hot debate and intrigue.  

The ruling, which tossed out the old ISP regulatory left FCC Chairman Tom Wheeler (News - Alert) with the hot potato of trying to find a Solomon-like new regulatory framework by which the “Open Internet” would be protected for everyone, but that entities looking for preferred connections could obtain them with ISPs being allowed to charge a premium for giving such services to what others have called “bandwidth hogs.” After all, shouldn’t cost causers be cost bearers? The challenge has been if the hogs get the best connections and the rest of us get “best efforts,” how can this be construed as being good for innovation and competition?

The FCC has a proposed rulemaking in progress, and Chairman Wheeler while giving hints to an outline for a new regulatory regime has yet to present a formal recommendation for consideration and a vote, but he did open up the comment process and over 4 million organizations and individuals have weighed in. Well as of today that count got bigger by one, and it happened to be a big voice, President Obama.  To say that his comments have stirred the Net Neutrality pot to a major boil would be a gross understatement. 

President Obama said what?

This is one of those instances where the medium really is the best way to get the message. In fact, if you go to www.whitehous.gov/net-neutrality, if you are a policy junky like me this is akin to trying to drink from a fire hose.  First there is the link to a video of the president giving his remarks.

And, in case you missed the finer points, there is a posting of his entire statement on the matter.  Here are a few of the most juicy phrases:

“The rules I am asking for are simple, common-sense steps that reflect the Internet you and I use every day, and that some ISPs already observe.” These bright-line rules include:

Except for that last one it seems reasonable enough. Although no paid prioritization is one of two possible third rails on what lies ahead that could cause everything to be electrified and go up in smoke. The other is contained in the language below, which is where things also get volatile:

“…I believe the FCC should reclassify consumer broadband service under Title II of the Telecommunications Act — while at the same time forbearing from rate regulation and other provisions less relevant to broadband services. This is a basic acknowledgment of the services ISPs provide to American homes and businesses, and the straightforward obligations necessary to ensure the network works for everyone — not just one or two companies.”

For those not familiar, Title II of the Communications Act is the one that says in essence that for the common good providers of basic telecommunications need to be regulated as common carriers for the express purpose of effectuating the FCC’s mandate at its creation to provide universal service at affordable rates.

In short, it is precisely the type of thing that the communications industry ever since 1934 has been trying to get undone. The howling already has reached far beyond the Potomac River as ISPs and the wireless industry, whom would fall under such a regulatory regime, are already out saying this will kill their business and stifle innovation.  Not surprisingly, consumer groups and others have hailed the president’s position as upholding what they believe needs to be recognized as a right in a connected world, i.e., access to ubiquitous state-of-the-art broadband connectivity at reasonable rates.

Other affected interests have been more circumspect in their comments taking a “wait and see” approach and vowing to work with the FCC as the process moves along. 

It is important to remember in watching all of this that President Obama is just one voice, albeit one with some clout, on the matter. The FCC, as he himself points out, is a totally independent agency that is going to use its expertise and independence to craft a new regime.

The problem is that Congress is also going to have a say on this, and it will be consequential. There are millions of dollars and potentially votes at stake. Do you side with consumers who don’t wish to pay more for Internet services if there is the perception that the rich are being privileged? Or, do you side with those who perish the thought of being regulated and are willing to spend what it may take to derail anything that imposes additional burdens on them. Where does partisanship, and the context of the entire Washington, D.C. dysfunctional landscape fit into this passion play?

As noted, the first four bullets of the president’s list are kind of like mom and apple pie. For the most part, the industry already follows these suggestions, although AT&T Wireless recently had the Federal Trace Commission (FTC (News - Alert)) file a complaint about its throttling practices. Where finding a solution becomes a nightmare is on whether the likes of NetFlix and other should be given better connections than the rest of us, even if they are willing to pay some type of premium whose price they are likely to find objectionable not matter what it is.

Throw on top of that one the issue of Title II, where President Obama has chosen to make his stand and you can see why being the FCC Chairman at this critical juncture in time is not a fun job. 

Plus, I almost forgot. No matter what the FCC ultimately decides in terms of rules, it will end up ultimately being decided in court. This will be true even if there is a legislative effort to instruct the FCC with some Congressional intent. There is too much at stake for all of the stakeholders and the Federal Communications Bar Association (News - Alert) would not want to have it any other way. 

For the time being all eyes are on M Street, the home of the FCC.  That is going to be a voice whose words are going to be closely listened to and parsed.  Will be back at you soon. J  

Edited by Maurice Nagle