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FCC Confronts Issues of Net Neutrality, Future of the Internet at Stake

INFORMATION TODAY

On Jan. 14, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the Federal Communications Commission (FCC) does not have the authority over broadband providers in its provision of internet access and traffic “control” as it has with ISPs. Immediately red flags went up for those supporting Net Neutrality, fearing this decision may lead to “opening the door for telecom companies to exert more control over what consumers see online” and allowing broadband companies to favor “big, moneyed companies … over the small.” This is because companies providing internet access control the fees charged to internet providers (such as Google, Netflix, or Amazon) and set the priorities and procedures for internet traffic (which may allow them to manipulate or give preference to certain types of content over others—such as videos or email). The case was first argued in 2013 with the defendant, Verizon, losing. This can be compared to access to televised programming over the free broadcast channels versus the types of plans offered by cable channels—which pick and choose which channels are available, which might be basic, and which would require additional premium fees.

Even advertisers are concerned about an evolving marketplace if the internet is locked into complex, competing patterns of access. In an article in Advertising Age, Tim Peterson notes, “In a world without net neutrality, media companies could be asked to pony up more money to broadband providers to ensure sites load at normal speeds. That could siphon funds that would have gone to producing content, which could compromise quality. Alternatively, consumers could be charged fees for access to some sites. That could discourage them from consuming online content, including the ad-supported variety. … Then there’s the future. The present discussion has centered on the web, but what about the day when everything from a person’s TV to car to refrigerator is connected to the internet?”

Few would question the need for companies to be able to invest in ongoing system upgrades and technological innovation. Marc Andreessen, co-author of the web browser Mosaic and now a high-tech investor and entrepreneur, stresses the need for continuing investment and neutrality in his reaction to the ruling. He tweeted, “In ideal universe I want both net neutrality + fast growing investment in existing&new networks. Not obvious to me how to square circle.” The Center for Democracy & Technology (CDT) reacted with this statement: “CDT advocates striking a balance that grants the FCC narrow adjudicative authority to prevent unreasonable discrimination without granting unfettered jurisdiction over the Internet.”

Reaction—Swift and Concerned

FCC Chairman Tom Wheeler released this statement with the court decision: “We will consider all available options, including those for appeal, to ensure that these networks on which the Internet depends continue to provide a free and open platform for innovation and expression, and operate in the interest of all Americans.” For Verizon’s part, Randal Milch, executive VP of public policy, reiterates that “Verizon has been and remains committed to the open Internet, which provides consumers with competitive choices and unblocked access to lawful websites and content when, where and how they want. This will not change in light of the court’s decision.”

The nonprofit advocacy organization Common Cause rhetorically asks, “Is this a real threat?” and then provides its answer: “There have already been instances of Internet providers blocking access to Internet applications that allow you to access your company’s network, share files with peers—even send large attachments (like digital photos) in your email. … Foreign governments have also sought to block certain web pages and Internet applications. … Meanwhile, the industry likes to say that network neutrality is ‘a solution in search of a problem.’ But cable Internet providers are not prohibited from discriminating against the content available using their services; therefore they could legally restrict access to any website or Internet application they choose whenever it suits their bottom-line economic, or even political, interests.”

“The D.C. Circuit’s decision is alarming for all Internet users,” Harvey Anderson, Mozilla’s SVP of legal affairs, notes in a press release. “Thanks to a legal technicality, essential protections for user choice and online innovation are gone. Giving Internet service providers the legal ability to block any service they choose from reaching end users will undermine a once free and unbiased Internet. In order to promote openness, innovation, and opportunity on the Internet, Mozilla strongly encourages the FCC and Congress to act in all haste to correct this error.”

Many professional organizations also released statements of concern about the announcement, including the American Library Association: “This ruling, if it stands, will adversely affect the daily lives of Americans and fundamentally change the open nature of the Internet, where uncensored access to information has been a hallmark of the communication medium since its inception.”

Cable Makes a Play for an Increased Role in Telecommunications

Cable has become a major channel for entertainment, internet, and communications in the past 20 years. Cable systems in the U.S. operate by receiving franchises for specific communities or metropolitan areas and by subscription using physical cables to connect users to the network. Subscribers purchase access, generally in some type of basic or premium arrangement, and have the option to pay as they go for special programming. Service and pricing have been issues for consumers for years. Also, there appear to be increasing issues of access between providers and cable owners. In 2012 alone there were 91 programming blackouts due to contractual issues between TV networks and cable systems—during which customers continued to pay for nonexisting services. Surveys suggest that, although most people even in the basic plan only watch about 12 channels, they pay for hundreds with no opportunity to choose what they wish to have. This monopoly has been the cause of many complaints and given rise to the ascendancy of dish services and computer-based entertainment programs.

Netflix and other entertainment service options seem to be gaining in market share over traditional cable. Young adults, in particular, seem willing to drop cable for other options. Netflix alone has an estimated 30 million clients in the U.S. today. Although publicly, cable operators tend to ignore these trends, they are certainly focusing on new ways—and interesting tactics—to improve their services, sometimes at the potential cost to their users.

Comcast’s XFINITY is now working to enhance its Wi-Fi services throughout communities by what it calls a “neighborhood hotspot initiative.” XFINITY users with a wireless gateway (combining the router, OIP equipment, and modem in a single device for in-home Wi-Fi) are actually providing their neighborhoods with Wi-Fi service, as they are able to use their access passwords. You are able to override this by disabling “CableWiFI” on your device; however, it is interesting that users would be forced to opt out of this. Also, XFINITY doesn’t appear to make this clear to customers, and its website offers little in terms of clear assurances that there is an unbreakable security wall between subscriber and the surrounding “neighborhood” using you as a node into the network. Although the company claims this won’t impact your access, speed, or cost of service, clearly it has been far less than open and honest with its users. As one writer wonders: “Presumably, if you do want to download a particularly illicit file, you can just switch to the public signal and then, if the police or lawyers ask questions, quite credibly blame it on a random passer-by. And of course, presumably if a random passer-by does use your router’s public signal to do something nefarious, the lawyers will probably try to pin it on you.” Hardly something that most consumers would welcome.

Can There Be Change in the Era of Washington Gridlock?

Concern is being raised across the globe about the potential meaning of this decision. Craig Aaron, president and CEO of the media watchdog group Free Press believes this ruling “means that Internet users will be pitted against the biggest phone and cable companies—and in the absence of any oversight, these companies can now block and discriminate against their customers’ communications at will. … They’ll establish fast lanes for the few giant companies that can afford to pay exorbitant tolls and reserve the slow lanes for everyone else.”

Wheeler notes that the FCC is considering both an appeal as well as looking at further regulatory action. However, as watchdog group Center for Public Integrity states, the deck may be stacked in Washington: “Three Internet service providers were among the top 20 lobbying spenders in the first nine months of 2013. Combined they hired more than 350 lobbyists, 14 of whom were former members of Congress. … Also among the top lobbying spenders is the National Cable and Telecommunications Association, which includes Comcast and Time Warner Cable Inc. as members. NCTA spent $13.3 million in the first nine months of 2013, ranking it ninth among the top spending lobbyists, according to CRP. The association, which opposed the net neutrality rules, hired 73 lobbyists, three of whom were former members of Congress. Add in another $5.8 million from Time Warner Cable, the second-largest cable company in the nation, and the total from these broadband providers and their association surpassed $55 million in the first nine months of 2013. That’s about as much as the top health and pharmaceutical industries spent on lobbying combined.”

Will the future be tiered and bundled access? Controlled as media channels are today? Fragmented by policies and politics of the various countries across the globe?

Implications and Probable Futures

“It means that the major providers of high-speed Internet access in the US, who have systematically divided markets and tacitly agreed mostly not to compete with one another, can treat high-speed Internet access like a cable TV service,” believes telecom expert Susan Crawford with the Telecommunications Equality Project at the Roosevelt Institute. “They can be gatekeepers, charge content providers (any business) for the privilege of reaching us, the subscribers; and, of course, charge us. A lot. For lousy service compared to, say, Stockholm or Seoul.

Calling it an “absolute necessity that there be government oversight of broadband networks,” Wheeler promises that “the FCC also is not going to abandon its responsibility to oversee that broadband networks operate in the public interest. It is not going to ignore the historic reality that when a new network transitions to become an economic force that economic incentives begin to affect the public interest. This means that we will not disregard the possibility that exercises of economic power or of ideological preference by dominant network firms will diminish the value of the Internet to some or all segments of our society.”

Wheeler notes that the Net Neutrality debate has revolved around two major issues: “First, that network operators will take measures, mostly for economic reasons but perhaps also for ideological reasons, that will cut off or diminish the value of the Internet. Second, that the FCC will intrude on the activities of network operators in ways that will damage them economically with injury to them and to their ability to offer more and improved service to the public.” However, Wheeler promises that “my intention is to employ any necessary means among the wide variety of them given to the FCC by the Congress to sustain our jurisdiction. That the jurisdiction exists is not debatable. What path we take to assure it will be a function of circumstance, but whether we secure it should not be a source of doubt.”

Economist Hal Singer sees a middle-ground solution for the issue, by “the FCC making case-by-case decisions or ‘adjudication’ in administrative law. In a nutshell, the FCC would permit special-delivery arrangements between broadband providers and websites, but the agency would police abuses of that newfound discretion through a complaint process. Adjudication would ensure consumer protections on the Internet, and it would bolster the incentives of both websites and broadband providers to invest at the edges and the core of the network, respectively, generating even more benefits to consumers.”

In 2005, law professor Tim Wu published a seminal paper titled “Network Neutrality, Broadband Discrimination” in which he writes that “there remains much work to better define what the concepts of network neutrality and discrimination would fully entail as a regulatory matter, or even as a regulatory threat.” In response to this recent FCC decision, Wu notes that “Tom Wheeler, the new chairman of the FCC, now has the unfortunate task of dealing with strategic errors made by his predecessor. Restoring the agency’s long-standing authority over broadband telecommunications is much simpler than it appears. Wheeler needs only to reaffirm that, for Internet firms that want to send information to customers, broadband is a ‘telecommunications service,’ meaning that the F.C.C. has the authority to regulate it. He has both the time and the votes to do so.”

A Bumpy and Sometimes Strange Road to the Future

Today’s internet is a highly federated system with thousands of carriers, untold content providers, and billions of users across the globe. However, this isn’t the first time that an emerging communication technology has faced peril. As a recent article in Smithsonian magazine points out, “Similar debates have occurred in the past, beginning with the telegraph. Lines from the Pacific Telegraph Act of 1860, for example, could almost be used to describe the internet, at least up until this week’s hearing: ‘Messages received from any individual, company, or corporation, or from any telegraph lines connecting with this line at either of its termini, shall be impartially transmitted in the order of their reception, excepting that the dispatches of the government shall have priority.’” Clearly, Net Neutrality is achievable—but given problems with privacy and political interference, we can expect an uphill battle.

John Simpson, Consumer Watchdog’s privacy project director, explains that “Net Neutrality is essential for the internet as we know it. However, the U.S. Court of Appeals is not as bad as some would believe. Most importantly, it recognizes that the FCC has the right to regulate broadband providers. Where it got into trouble was that at an earlier time it classified broadband providers as ‘information service providers’ rather than as ‘telecommunications providers.’ Telecommunications providers are common carriers and have an obligation to treat all comers equally. That’s what the FCC’s Open Internet regulations would have required of all broadband providers, that they treat all comers equally. The rule in effect requires an ISP, the broadband provider, to act like a common carrier.

“The FCC can’t do that because they have classified [broadband providers] as ‘information service providers,’ and they must not be treated as if they were common carrier telecommunications providers. Therefore, the court vacated the rules,” Simpson continues. “But importantly they ruled that the FCC does have authority to regulate ISPs. The important thing to understand is that how broadband providers are classified is up to the FCC. They have called them information service providers, but they can change the classification to telecommunications providers. If they do that, then they could treat them as common carriers and implement Net Neutrality rules.”

In his 2014 State of the Union address, President Barack Obama discussed the need to bridge the great digital divide and move the country forward, stating: “After 5 years of grit and determined effort, the United States is better-positioned for the 21st century than any other nation on Earth.” The economy is stronger; however, many challenges with the internet continue—including privacy and surveillance. As University of Michigan law professor Shayana Kadidal says: “All of us who work in this field were staggered by the scope of the surveillance operations revealed by Snowden. But at the same time we’ve all been uniformly encouraged by Snowden’s reassurance that ‘encryption works.’ Notwithstanding its $12 billion budget and its unlimited ambitions, the NSA [National Security Agency] hasn’t been able to change the laws of math and physics. The real challenge now is to get ordinary people to adopt the open-source, slightly-less-convenient alternatives to commercial electronic communication packages that can guarantee their privacy against the government.”

Interestingly, just 2 years ago, various internet sites—including Wikipedia and Google—worked to have a 1-day internet blackout to show opposition to SOPA (Stop Online Piracy Act), which was seen as a major attack on internet freedom. Hundreds of other websites participated. The strikers celebrated their success at that time, noting: “Tens of millions of people who make the internet what it is joined together to defend their freedoms. The network defended itself. Whatever you call it, we changed the politics of interfering with the internet forever—there’s no going back.” However, the internet remains a relative newbie in telecommunications and still faces growing pains as it works to move to higher efficiencies and global coverage. Keeping the internet vital, state-of-the-art, open, and—as much as possible—free is an essential requisite for success in the coming years.

 

Nancy K. Herther is librarian for American studies, anthropology, Asian American studies, and sociology at the University of Minnesota–Twin Cities. Email Nancy K. Herther