Uncommon Wisdom

Dec 21 2010   7:47PM GMT

FCC issues net neutrality order, but don’t expect much change

Tom Nolle Tom Nolle Profile: Tom Nolle

The FCC’s neutrality vote went as expected, with commentary by various people involved in the process, including the Commissioners. I found a lot that I agreed with, but I disagreed with at least some of what virtually everyone said. It’s not a disappointing order, though I’m sure that most will characterize it that way.

The only thing that’s disappointing is that in my view, it doesn’t address the issue of the FCC’s authority to act. The loss of the previous neutrality doctrine was a result of the Court of Appeals decision having overturned that doctrine for lack of authority to act. I don’t think the current order establishes a strong position, and there will be no lack of players to appeal the order.

The FCC’s position is pretty much as expected, based on prior comments by the Commissioners. The FCC will require that wireline broadband services be subject to handling rules that are transparent, non-discriminatory in terms of sites, devices and traffic types. For mobile services, the transparency rules are in force, but non-discrimination is weakened a bit to reflect the special nature of wireless. For mobile, blocking traffic that’s competitive with the ISP’s own service is prohibited, but other blocking for traffic management may be allowed if the need can be proved. The “specialized services” that flow in parallel with the Internet will be reviewed, but nothing will bar either payment for priority or tiered pricing per se.

The jurisdiction issue here is going to seem trivial, but it’s really central.

The current move is based on Section 706 of the Telecom Act, which the FCC itself has never before said offered it any independent authority to make new broadband rules (the Court of Appeals pointed this out in the Comcast ruling). Further, Section 706 applies explicitly to telecommunications services, and in 2005 the FCC said that broadband Internet was not classified as a telecommunications service. Commissioner Copps took the strong stance that a return to Title II regulation was the right approach, and I agree. The FCC’s “third way” would have given the order an absolute legal foundation and would not have subjected the Internet to being regulated like a telephone network.

But Copps also said that we needed wholesaling for competition, which I’m not sure is true, and that we needed equal regulation in mobile services, which I’m pretty well convinced is not true. The Republican Commissioners laid out objections that boil down to “no neutrality” or “let the kids play”. “Nothing is broken in the Internet access market that needs fixing” is one of the comments. I don’t agree with that either. So what we had was a bunch of political comments about a decision that was likely about as strong as the realities of politics could have allowed it to be. If we saw the rules enforced, they’d likely not hurt anything, would almost certainly prevent egregious behavior, and might even help. I’m not sure they can be enforced, and that’s my problem.

It’s not clear they even need to be enforced. One valid point raised by the opponents of the order was the fact that the FTC and DoJ anti-trust regulations would cover consumers against anti-competitive behavior by ISPs. That’s likely true, and thus you could reasonably say that the FCC’s order could simply be another round in a long-standing battle between the FCC and FTC for control over the telco markets.

So the Democrats, with Commissioner Michael Copps speaking to the impassioned Internet supporters, say that much more regulation is needed to keep the evil ISPs from our door. Baloney. Two of the three Democratic commissioners said they wanted even more neutrality control than the order provides, but went along with the deal because it was the best option available. The Republicans said these rules will kill the Internet, kill investment and kill online society as we know it. Baloney. The FCC that gave us the four principles was led by Republican-appointed Commissioners. Were they in favor of industry-killing then, and have now changed their minds? A pox on all politicians, and sadly the FCC Commissioners are politicians despite the fact that they’re appointed and not elected.

Might the politicians in Congress now jump in? Sure, and they might pass other legislation despite their record of not getting much done. Both parties can block action of the other here, and the division of the Commissioners by party makes it pretty clear that both parties would block any Congressional action they didn’t favor. Some believe that Congress will move to give the FCC specific authority to cover the order, making any appeals moot, but I don’t think that’s likely. We’ll have to wait until a Court of Appeals rules here, if not the Supreme Court, before we’ll see any differences in broadband as a result of the order.

How different is the new broadband under the order, anyway? Despite all the hype on both sides, it’s not very different at all. The biggest changes will likely be the drive toward more settlement among carriers and more payment options for users, moving away both from the unlimited-usage pricing and the bill-and-keep models of the past. But even these changes may be modest until some legal validation of the order is available. The bottom line is, don’t expect to see very much from this in the near term.

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