More About Net Neutrality via Title II Reclassification; FCC Chairman Blogs

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In an op-ed that just went live, Federal Communications Commission Chairman Tom Wheeler talks about how this week he will circulate to other FCC members, his proposal for preserving net neutrality. As expected, he hopes to do that via what’s become known as Title II reclassification. The FCC is expected to vote on Wheeler’s proposal Feb. 26.

“…I am proposing that the FCC use its Title II authority to implement and enforce open Internet protections,” FCC Chairman Wheeler wrote. “Using this authority, I am submitting to my colleagues the strongest open Internet protections ever proposed by the FCC. These enforceable, bright-line rules will ban paid prioritization, and the blocking and throttling of lawful content and services. I propose to fully apply—for the first time ever—those bright-line rules to mobile broadband. My proposal assures the rights of Internet users to go where they want, when they want, and the rights of innovators to introduce new products without asking anyone’s permission.”

“All of this can be accomplished while encouraging investment in broadband networks,” he continued. “To preserve incentives for broadband operators to invest in their networks, my proposal will modernize Title II, tailoring it for the 21st century, in order to provide returns necessary to construct competitive networks. For example, there will be no rate regulation, no tariffs, no last-mile unbundling. Over the last 21 years, the wireless industry has invested almost $300 billion under similar rules, proving that modernized Title II regulation can encourage investment and competition.”

Title II, part of the Communications Act of 1934, gives the FCC authority to regulate telecommunications providers as utilities or common carriers. Activities related to this now involve a push by President Obama and Chairman Wheeler to get the FCC to reclassify broadband as a telecommunications service.

Naturally, the net neutrality discussion continues to drive heated debate about how potential approaches like Title II reclassification could impact the future of broadband network investment and address continued viability of over-the-top business models from companies like Netflix.

Not surprisingly, Verizon and some of the other big ISPs, as well as many of their equipment suppliers, have come out strongly against the Title II approach to net neutrality. Facilities-based service providers say such reclassification of broadband could prevent future investment in broadband (although Verizon earlier said net neutrality wouldn’t impact its broadband investments, but it recently backpedaled on that), lead to extra costs for them, prompt regulation of their interconnection deals, and lay down a slippery slope that could mean more broadband and Internet regulation in general.

Interestingly, however, not all the big carriers came out strong against Title II reclassification. Recent comments from an executive at Sprint indicating the carrier was pretty ok with this potential outcome aroused great interest.

“…Sprint does not believe that a light touch application of Title II, including appropriate forbearance, would harm the continued investment in, and deployment of, mobile broadband services,” Sprint CTO Stephen Bye wrote in a Jan. 15 letter to Wheeler.

“The light touch regulatory regime that Congress put in place in 1993 through a revision to the Telecommunications Act that allows new carriers, including Sprint, to enter the mobile market helped enable an explosion of growth,” Bye added, and that emanated from Title II common carriage regulation.

The drive to put rules in place to ensure net neutrality got a shot in the arm last March when Netflix CEO Reed Hastings posted his blog “Internet Tolls and the Case for Strong Net Neutrality.”

“The essence of net neutrality is that ISPs such as AT&T and Comcast don't restrict, influence or otherwise meddle with the choices consumers make. The traditional form of net neutrality which was recently overturned by a Verizon lawsuit is important, but insufficient,” Hastings of Netflix wrote in his 2014 blog. “This weak net neutrality isn't enough to protect an open, competitive Internet; a stronger form of net neutrality is required. Strong net neutrality additionally prevents ISPs from charging a toll for interconnection to services like Netflix, YouTube, or Skype, or intermediaries such as Cogent, Akamai or Level 3, to deliver the services and data requested by ISP residential subscribers. Instead, they must provide sufficient access to their network without charge.”

While Hastings in his blog cast ISPs as the villains in the net neutrality story, Frost & Sullivan analyst Dan Rayburn later revealed that it was in fact not the major ISPs that were throttling in this case; instead, it was Netflix’s Internet transit provider Cogent. Shortly after Rayburn came out with this revelation, Forbes reported, Cogent admitted that was indeed the case, and Cogent explained it was standard practice for it to intentionally slow the traffic of all its wholesale customers.

But by then, the refueled net neutrality movement was already on the fast track. President Obama late last year laid out his plan for what he called a free and open Internet, and redirected the FCC’s efforts on this front, inspiring Wheeler to address net neutrality under Title II.

While that makes Netflix happy, it doesn’t seem to be translating into broad acceptance by the greater over-the-top community.

For example, serial entrepreneur and VoIP pioneer Jeff Pulver (of Free World Dialup, VON trade show, and Vonage fame), speaking at ITEXPO Miami last month, said Title II reclassification is bad for entrepreneurship.

This is an example of a situation in which, “the medicine is worse than the disease,” said Pulver. The best thing the FCC ever did was to get out of the way and let VoIP flourish, he said, suggesting the commission should do the same in this case. A better way, he suggested, is to enable business leaders to work directly with one another to find solutions.




Edited by Stefania Viscusi

Executive Editor, TMC

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