Reclassifying Internet Service Providers: A cursory review of the FCC’s role in regulating the internet

By: Brian Henchy, Albany Government Law Review

            It is axiomatic that the internet has become ingrained as an everyday part of society. It has become an invaluable and heavily relied upon tool in social interactions, the dissemination of information, and the development of ideas.[1] Over the last decade, with the numerous and frequent advances in technologies[2] that make use of internet connectivity, the proliferation of social networking,[3] exponential growth in demand for online video and gaming,[4] and infusion of technology into education and business[5] have “creat[ed] a lucrative market for delivering such services to consumers.”[6] This market caters to a group of impatient customers that have come to expect fast download speeds, even for bandwidth intensive tasks.[7]

Until January of 2014, the idea that various sources of content would be prioritized by service providers seemed absurd to a great many. Net Neutrality and Internet Openness both refer to the principle that service providers provide equal access to all data on the Internet.[8] For the purposes of this article, I will use the more common term net neutrality,[9] purely out of convenience and for the sake of clarity. Ultimately, net neutrality detractors rely on speculative concerns and offer promises of hypothetical product development to assuage fears.[10] A new scheme that effectively revives the underlying policies of the Open Internet Order should hardly be burdening future for internet service providers (hereinafter “ISP”). The assurances of ISPs, that such regulation is unnecessary should not prevent the establishment of basic prophylactic measures. After all, ISPs have existed in a reality void of regulation for barely over a year, before that consumers and content creators had mandated equal access.

The Open Internet Order

In December 2010, the Federal Communications Commission’s (FCC) Open Internet Order put into practice a form of Internet openness also known as “net neutrality.”[11] Prior to these codified regulations, the FCC had implemented general “Internet Policy Principles,” which established broad guidelines protecting the consumers’ unfettered access to the internet, principles that form the foundation of net neutrality.[12] Among the principles were customers’ entitlements: to “access the lawful [i]nternet content of their choice”; to “run applications and use services of their choice”; to “connect their choice of [lawful] devices that do not harm the network”; and to “competition among network providers, application and service providers, and content providers.”[13] Ultimately the internet policy principles were adapted to form the regulations in the Open Internet Statement.[14]

The FCC released the Open Internet order on December 23, 2010[15] after years of debate centered on whether the FCC should promulgate regulations of its kind.[16] The order was the result of a rushed and partisan political process; issued seven months after the D.C. Circuit Court of Appeals stifled an earlier attempt to codify the Internet Policy Principles.[17] This April 2010 decision, lead to the three democratic members of the FCC committee supporting the Open Internet Order in varying degrees, and the two republican members vigorously dissenting.[18] The collection of rules governed how a broadband ISP may treat “customer data traveling over their networks.”[19]

The order effected rules supporting transparency, and restricting blocking content and unreasonable discrimination of network traffic.[20] The transparency rule mandated that ISPs publicize information regarding “network management practices, performance characteristics, and terms and conditions of their broadband services.”[21] The restriction on blocking prohibited certain broadband providers from blocking “lawful content, applications, services, or non-harmful devices” from using their networks.[22] The restriction on discrimination of traffic prevented any unreasonable limitation on “lawful network traffic.”[23] Essentially the collection of restrictions maintained the internet as a tool equally available to all.

Proponents of net neutrality want to maintain the former status quo of the internet.[24] They advocate for “minimal ISP involvement in making decisions about how to route data traffic.”[25] There is great fear surrounding the power that ISPs would wield if they had an unregulated control over the content travelling over their networks.[26] Especially in a world where web traffic, which correlates with success for business with an online presence, suffers impairment as a result of delays as long as the blink of an eye.[27] A prominent fear revolves around what the Internet may look like without regulation. Exorbitant fees may prevent small competitors from competing with the likes of large companies, such as Facebook and Google.[28] Excess costs may turn the Internet into a system like cable television where consumers must select between tiers of service, each with more options than the previous.[29]

On the other hand argument, broadband ISPs, among other opponents of net neutrality, suggest these concerns have spawned regulations which “are based largely on unfounded theories.”[30] From their perspective these regulations “artificially increase the cost of maintaining the network and ultimately burden the consumer.”[31] Passing that potential allotment onto consumers may well be worth the cost to the public, given the security it offers. More importantly the “unfounded theories” have indeed been cognizable for a decade. A study conducted in 2002 found that service providers do in fact favor their short term interests through data discrimination.[32] This lends credence to the belief that ISPs care more about making a profit rather than taking part in creating a mutually beneficial long term arrangement.

Regulating the Internet

In Verizon v. FCC, the Circuit Court of the District of Columbia determined that the FCC does have the authority to regulate broadband, but vacated the anti-discrimination and anti-blocking rules, leaving the disclosure requirements as the only surviving regulations.[33] The Court ultimately decided in favor of Verizon because of the manner in which the FCC elected to classify different broadband providers.[34] The decision “affirm[ed] the FCC’s authority in principle to regulate broadband Internet service,” which suggests a reclassification of ISPs could survive future challenges.[35] In fact, it appears that the Court provided the FCC with “a roadmap to reconstitute and even improve on its original decision.”[36]

The regulatory system put in place by the Open Internet Order was far from perfect; aside from ultimately being outside the authority of the FCC.[37] The flaws in the regulations are likely a result of the rushed fashion in which the regulations were formed. The FCC balked at the chance to establish a more secure long term solution in favor of an ill-advised and partisan measure.[38] After four years of implementing the Open Internet Order, and now with the clarified scope of the FCC’s authority to regulate ISPs and the internet, the FCC may now craft a truly viable system of regulations. Despite the initial appearance that the FCC would give ISPs the option “to enter into individual negotiations with content providers[,]”[39] it now seems that the FCC is on the verge of creating a thorough policy to forward an open internet.[40]

It is difficult to predict the manner which ISPs may throttle internet traffic, but imprudent to entrust ISPs with the unencumbered ability to reshape internet access as we know and expect it. With broadband internet connections, when a fast lane is created it necessarily degrades other traffic.[41] Many theories of what the internet would look like, without regulations enforcing net neutrality, revolve around a world where large corporation backed entities can throw money at ISPs to dominate access speeds. In this scenario, websites and other content creators unaffiliated with corporations with deep pockets will be relegated to the bottom of the proverbial queue.[42]

ISPs, such as Verizon have suggested that customers’ access and use of the Internet will not be impacted negatively without FCC mandated net neutrality.[43] To the contrary, in the absence of controls, they suggest that “the internet will be a richer experience.”[44] As cable television has experienced a “boom in content” using similar business models, so would the internet.[45] Additionally, those opposed to an open internet suggest this is an opportunity to encourage improvement on the ability to provide internet to customers.[46] In broad terms these arguments suggest the aim of policy should be to create an abundance, not to manage a scarcity.[47] In other words:

Telecommunications is a means, not an end. The aim of telecom[unications] policy should not be figuring out regulatory contortions to artificially create a competitive market for Internet access where one does not exist. Rather, it should be to assure everyone a cheap and ubiquitous Internet access in order to create a robust and competitive Internet economy.

However, it seems difficult to trust ISPs when, on average, they charge sixty dollars for a product that costs them five dollars to provide.[48]

Advocates of net neutrality proposed various solutions to fill the void created by the D.C. Circuit court decision in Verizon v. FCC.[49] Those in favor of maintaining net neutrality generally support a reclassification of the internet under Title II of the Telecommunications Act.[50] Putting aside the policy reasons[51] that add weight to the classification, ultimately a reclassification, which is within the authority of the FCC, is a sure and simple method to maintain net neutrality. Few, other than those who stand to benefit financially from legal data discrimination based on source, oppose a reclassification of broadband as a “communications service” as opposed to a purely “information service.”[52] Such a switch should enable the FCC to implement a considered system of regulations, which that would maintain the status quo the public and content creators have come to expect, and to improve upon the rules previously in place.

 

[1] See Fed. Commc’ns Comm’n, Connecting America: The Nat’l Broadband Plan 16 (2010), available at http://www.broadband.gov/download-plan.

[2] See Top 10 Internet Advancements of the Decade from 2000–2009, The Juice from Blue Tangerine Solutions (Dec. 19, 2009), http://thejuice.bluetangerinesolutions.com/2009/12/top-10-internet-advancements-of-the-decade-from-2000-2009/ (hereinafter Internet Advancements); Rahul Chowdhury, Evolution of Mobile Phones: 1995–2012, HongKiat.com, http://www.hongkiat.com/blog/evolution-of-mobile-phones/ (last visited Nov. 15, 2014).

[3] Internet Advancements, supra note 2; Arnaud de Borchgrave, The Global Proliferation of Social Media, News Max (May 16, 2011, 2:32 PM), http://www.newsmax.com/deBorchgrave/socialnetworks-Twitter-Facebook-MySpace/2011/05/16/id/396543.

[4] Internet Advancements, supra note 2; Samuel L. Feder & Luke C. Platzer, FCC Open Internet Order: Is Net Neutrality Itself Problematic for Free Speech?, 28 A.B.A. Comm. Law. 20, 20 (2011).

[5] See Emmarie Huetteman, Obama Announces Pledges of $750 Million for Student Technology, N.Y. Times, Feb. 4, 2014, http://www.nytimes.com/2014/02/05/us/politics/obama-announces-pledges-of-750-million-for-student-technology.html?_r=0; Chris Riedel, 10 Major Technology Trends in Education, The Journal (Feb. 3, 2014), http://thejournal.com/articles/2014/02/03/10-major-technology-trends-in-education.aspx.

[6] Feder & Platzer, supra note 4; Tim Wu, Network Neutrality Broadband Discrimination, 2 J. on Telecomm. & High Tech. L. 141 (2003) (predicting that “the private interests of broadband providers and the public’s interest in a competitive innovation environment” will come into conflict in the decade following the 2003 publication of the article).

[7] Steve Lohr, For Impatient Web Users, an Eye Blink is Just Too Long to Wait, N.Y. Times (Feb. 29, 2012), http://www.nytimes.com/2012/03/01/technology/impatient-web-users-flee-slow-loading-sites.html?pagewanted=all; see also Feder & Platzer, supra note 4 (discussing the reasons why internet speed is important based on services).

[8] James O’Toole, Court Strikes Down Net Neutrality Rules, CNN (Jan. 14, 2014), http://money.cnn.com/2014/01/14/technology/fcc-net-neutrality/index.html; Jennifer A. Manner & Alejandro Hernandez, An Overlooked Basis of Jurisdiction for Net Neutrality: The World Trade Organization Agreement on Basic Telecommunications Services, 22 CommLaw Conspectus 57, 57 (2014).

[9] The term was coined by Tim Wu, a professor at Columbia Law School who has been very vocal in defending net neutrality. Nancy Scola, Q&A: What Exactly is Obama Signaling He Wants to Do with His Net Neutrality Support?, Wash. Post, Nov. 15, 2014, http://news.nationalpost.com/2014/11/15/qa-what-exactly-is-obama-signally-he-wants-to-do-with-his-net-neutrality-support. See generally Wu, supra note 6, at 144 (the article where Wu first used the phrase “network neutrality”).

[10] FCC Commissioner Ajit Pai, Press Statement: On President Obama’s Plan to Regulate the Internet, Feb. 10, 2015, (an unofficial statement from one of the commissioners who would be determining future policy, which highlights the positions of those who oppose net neutrality. Among the assertions is that net neutrality will discourage development of technology which would increase internet speeds, that ISPs will start to charge more as a response to additional burdens created by a net neutral system.) available at http://www.fcc.gov/document/fact-sheet-president-obamas-plan-regulate-internet.

[11] Reynolds, Comment, Enforcing Transparency: A Data-Driven Alternative For Open Internet Regulation, 19 CommLaw Conspectus 517, 517 (2011).

[12] Feder & Platzer, supra note 4, at 21. See generally In the Matters of Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, 20 FCC Rcd. 14,986 (2005) [hereinafter Internet Policy Principles].

[13] Internet Policy Principles, supra note 12, at 14,988.

[14] In re Preserving the Open Internet, Report and Order, 25 FCC Rcd. 17,905, 17,908 (2010) [hereinafter Open Internet Order]; Feder & Platzer, supra note 4.

[15] Reynolds, supra note 11.

[16] Larry Downes, Unscrambling the FCC’s Net Neutrality Order: Preserving the Open Internet–But Which One?, 20 CommLaw Conspectus 83, 84–86 (2011); Declan McCullah, Ten Things That Finally Killed Net Neutrality, CNET News(Sept. 6, 2007), http://www.cnet.com/news/ten-things-that-finally-killed-net-neutrality/.

[17] Comcast Corp. v. FCC, 600 F.3d 642, 644 (D.C. Cir. 2010); Larry Downes, supra note 16.

[18] Open Internet Order, supra note 14, at 17,907–08; Larry Downes, supra note 16, at 84–87. See generally Darrell Etherington, Circuit Court of Appeals Strikes Down FCC’s Open Internet Order, Net Neutrality Threatened, Tech Crunch (Jan. 14, 2014), http://techcrunch.com/2014/01/14/fcc-open-internet-order-struck-down/ (net neutrality advocate, Free Press, acknowledged that, despite being a step in the right direction, the regulations enacted under the Open Internet Order left much to be desired and were based on faulty grounds from the start); Brian Fung, A FEMA-Level Fail: The Law Professor Who Coined Net Neutrality Lashes Out at the FCC’s Legal Strategy, article in The Switch, The Wash. Post (Jan. 14, 2014), http://www.washingtonpost.com/blogs/the-switch/wp/2014/01/14/a-fema-level-fail-the-law-professor-who-coined-net-neutrality-lashes-out-at-the-fccs-legal-strategy/ (characterizing both the arguments employed by the FCC in Verizon v FCC and aspects of the regulations in the Open Internet Order as ill-advised, in the format of an interview with Tim Wu).

[19] Alexander Reynolds, supra note 11.

[20] Open Internet Order, supra note 14, at 17,908; Feder & Platzer, supra note 4.

[21] Feder & Platzer, supra note 4 (quoting Open Internet Order, supra note 14, at 17,906).

[22] Id.

[23] Id.

[24] James O’Toole, supra note 8 (Advocates of net neutrality want regulations in place so “providers . . . can’t auction off priority traffic rights to one site over another, or impose tolls for high-bandwidth sites such as video streamers Netflix and Hulu.”)

[25] Alexander Reynolds, supra note 11, at 518.

[26] Feder & Platzer, supra note 4; James O’Toole, supra note 8; Darrell Etherington, supra note 18.

[27] Steve Lohr, supra note 7. See generally James O’Toole, supra note 8; Darrell Etherington, supra note 18 (additional fears include ISPs setting targeted fees for those who make content which doesn’t conform with their own goals or beliefs, stifling creative innovation with fees that only large companies can afford); see also Brad Reed, This is What the Internet Will be Like Without Net Neutrality, BGR, Jan. 20, 2014, http://bgr.com/2014/01/20/net-neutrality-verdict-analysis/ (hereinafter “Reed, Jan 2014”).

[28] Reed, Jan 2014, supra note 27; Brad Reed, Is Google About to Stab Net Neutrality Right in the Back?, BGR, Feb 13, 2015, http://bgr.com/2015/02/13/google-android-one-net-neutrality/. /; Neil Irwin, A Super-Simple Way to Understand the Net Neutrality Debate, The New York Times (November 10, 2014) available at http://www.nytimes.com/2014/11/11/upshot/a-super-simple-way-to-understand-the-net-neutrality-debate.html?abt=0002&abg=0.

[29] James O’Toole, supra note 8.

[30] Alexander Reynolds, supra note 11 at 519.

[31] Id.

[32] Tim Wu, supra note 6, at 152-53.

[33] Verizon v. FCC, 740 F. 3d 623, 628 (D.C. Cir. 2014); Kevin Webach, The Court’s net-Neutrality Ruling Isn’t Actually That Bad, The Atlantic, Jan 15, 2014, http://www.theatlantic.com/technology/archive/2014/01/the-courts-net-neutrality-ruling-isnt-actually-that-bad/283094/.

[34] Verizon v. FCC, 740 F. 3d 623, 628, (D.C. Cir. 2014).

[35] James O’Toole, supra note 8.

[36] Kevin Webach, supra note 33.

[37] Verizon, 740 F. 3d at 628.

[38] Larry Downes, supra note 16; see Brian Fung, supra note 17; Darrell Etherington, supra note 18.

[39] Tim Wu, Goodbye Net Neutraliy Hello Net Discrimination, The New Yorker (Apr. 24, 2014), http://www.newyorker.com/tech/elements/goodbye-net-neutrality-hello-net-discrimination.

[40] FCC, Fact Sheet: Chairman Wheeler Proposes New Rules for Protecting the Open Internet, Feb. 4, 2015 available at http://www.fcc.gov/document/chairman-wheeler-proposes-new-rules-protecting-open-internet.

[41] Id.; Tim Wu, Goodbye Net Neutrality, supra note 39.

[42] See generally Alexander Owens, Protecting Free Speech in the Digital Age: Does the FCC’s Net Neutrality Order violate the First Amendment?, 23 Temp. Pol. & Civ. Rts. L. Rev. 209, 248 (2013).

[43] James O’Toole, supra note 8, Zach Epstein, ISPs Try To Convince Us Net Neutrality’s Death Won’t Sting, BRG (Jan. 15, 2014), http://bgr.com/2014/01/15/net-neutrality-isp-responses/.

[44] Neil Irwin, supra note 28.

[45] Id.

[46] Steven Pearlstein, Shades of Complexity Dominate the Debate Over ‘Net Neutrality’, Washington Post (November 28, 2014), available at http://www.washingtonpost.com/business/shades-of-complexity-dominate-the-debate-over-net-neutrality/2014/11/27/bde4f2de-74ef-11e4-9d9b-86d397daad27_story.html.

[47] Id.

[48] Tim Wu, Goodbye Net Neutrality, supra note 39.

[49] See Steven Pearlstein, supra note 46. See generally, Verizon v. FCC, 740 F. 3d 623 (D.C. Cir. 2014).

[50] Alexander Owens, supra note 42.

[51] See Neil Irwin, supra note 28. The policy considerations surrounding how to view the internet’s place in the context of both society and the FCC’s regulatory powers have seemingly been secondary to a results based discussion.

[52] See generally Alexander Owens, supra note 42.

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2 Comments

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2 responses to “Reclassifying Internet Service Providers: A cursory review of the FCC’s role in regulating the internet

  1. Anthony J. DeCarlo

    Now that the Internet is a part of everyday life the question is when e-mailing a Fire Violation to an owner does it hold as much weight as a hand delivery or registered mail???

  2. Is president Obama aware exactly who, will do what ,with his Net Neutrality Support?

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