The so-called net-neutrality rules adopted by the Federal Communications Commission last December have finally been published in the Federal Register, meaning that they will become law on Nov. 20 (see United States: 23 December 2010: FCC Passes Net-Neutrality Vote in US, Excludes Mobile Broadband Use).
The Federal Register filing gives a summary of the new rules:
- Transparency: Fixed and mobile broadband providers must disclose the network management practices, performance characteristics and commercial terms of their broadband services.
- No blocking: Fixed-broadband providers may not block lawful content, applications, services or non-harmful devices. Mobile broadband providers may not block lawful websites or applications that compete with their voice or video telephony services.
- No unreasonable discrimination: Fixed-broadband providers may not unreasonably discriminate in transmitting lawful network traffic.
These rules, applied with the complementary principle of reasonable network management, ensure that the freedom and openness that have enabled the Internet to flourish as an engine for creativity and commerce will continue.
Net neutrality becomes law, but lawsuits to come
Net neutrality is quickly becoming law in several countries across the globe, with the U.S. the third major country to make the move. Many believe that the Dutch were the first to do so, in June this year, but Chile passed the first rules mandating nondiscrimination as part of an overall regulatory package back in July 2010. Other countries have organised consultations, most notably in Europe and around Latin America, while a similar law is going through Israel’s Knesset
Even though there is broad agreement on the need for freedom and quality of access for consumers, and best effort and transparency in terms of traffic management, there remains some key differences, for instance about the need to differentiate between fixed and mobile networks, with the FCC focusing on fixed networks following the Comcast/BitTorrent case while the Dutch looked at mobile networks, and the blocking of certain VoIP and messaging applications from mobile carriers.
In the U.S. case, the introduction of these rules into law will likely lead to lawsuits from carriers, with earlier attempts from Verizon and MetroPCS failing because the rules weren’t official legislation, an obstacle that has now been removed. Carriers believe the FCC has overreached its authority in this case as they believe that minimum regulatory oversight should apply on this issue to continue to encourage both innovation and investment in the Internet, as per the Google/Verizon joint statement.
Legislators are also looking warily at these new rules, especially on the Republican side, unhappy at the way the vote was held just before Christmas, with the House of Representatives in Republican hands, and the way in which the vote was split along party lines in the FCC. It might also make the regulator’s life difficult in terms of other issues, such as the approval of incentive auctions to release more spectrum. This is an area where both carriers and legislators could have the same strategic interest, which they may use to ensure that new, weaker rules are being drafted while further spectrum becomes available. The Senate is already looking at a proposal, known as Senate Joint Resolution 6, that would significantly weakened the FCC’s rules, and while everyone is waiting for a carrier to launch litigation in order to stop the legislation, the first lawsuit has come from a consumer group, Free Press, which think the new net neutrality rules aren’t strong enough, pointing out the lower level of protection for wireless users.
While there exists some technical and network issues as to what that is, as network may need to prioritize certain bandwidth-hungry content on mobile networks to ensure a reasonable quality of service across the board, it mostly proves that net neutrality means different things to different people.
Different things to different people
The FCC’s rules point out three major areas of ensuring principles — transparency, no blocking and no unreasonable discrimination — but the issue is sometimes complicated by the use of different terms to define these principles, whether it is open, fair or neutral. The FCC officially calls the legislation “Preserving the Open Internet,” and with the Internet having so many stakeholders, it raises the question as to which the Internet should follow. Legislation thus far has differed between countries, while carriers that fight against these rules have recently introduced programs that follow these rules — for example, Verizon, whose latest “network optimization” program clearly follows the transparency principle — but it also blocks tethering applications on its LTE network despite the license requirements calling for open access, showing that different interests can occur even within the same organization.
The Internet is somehow seen as different to other industries in that it is a public good rather than a business, where prioritization of services is seen as the start of a two-tier Internet and against net-neutrality rules, but the broader point is about transparency, understanding and choice for the consumers. We have had tiered data packages in mobile technologies as it makes sense for consumers to pay for what they use and not subsidize heavy users if everyone is on an unlimited plan, and it shouldn’t be an issue if some consumers wish to pay extra for better and further services, as long as these services aren’t exclusive to a specific provider.
This is especially true in the case of over-the-top (OTT) providers, where no one complains about Apple’s proprietary walled garden and with regulators just starting to investigate the rationale behind Google’s search results, while the latest agreement between Facebook and Spotify means it is now not possible to join the music streaming service without being a member of the social networking site; this may make sense as a business proposition for Spotify, as Facebook’s 800 million users is a big incentive, but why is it an issue for carriers to block certain services and not content providers, considering they both operate in a competitive marketplace where customers can choose and decide which services they want?
The bottom line is that, as Kranzberg once said, technology is neither good nor bad, nor is it neutral. There still exists some role for regulators to ensure all services have fair and transparent access, but regulation will never satisfy all the different parties, as their diverging interests are too far apart, but as the Dutch case has proven, consumers might suffer from too draconian regulation as the introduction of the new ruled, where no content could be blocked by mobile operators, led to a sharp increase in data prices in the market.
About Dexter Thillen
Thillen is a senior analyst at IHS Global Insight focusing on the North American market and focusing on fixed and mobile telecoms. Before joining IHS, Dexter was a research analyst within Informa Telecoms & Media’s Data & Forecasting Division, providing expert analysis for WCIS+ (World Cellular Information System) and the Mobile Europe IC (Intelligence Centre) with a primary focus on Western Europe specifically the Scandinavian, French-speaking markets, Turkey as well as any EU-level issues.
Thillen has a specific focus on operator strategies as well as ongoing regulatory issues and was also responsible for the Mobile Trends Analysis PowerPoint for Europe. He also co-managed the World Cellular Handset Tracker product and has been quoted many times by Reuters and Bloomberg.
