President Obama has thrust Net neutrality back into the news over the past few days. But the truth is that not much has changed since I last considered the issue four months ago in this space, other than the Federal Communications Commission signaling that it might make a decision about whether or not broadband services should be classified as a regulated telecommunications service or a largely unregulated service before year end.
Over the summer, the FCC solicited comments from the public on the issue. It had to extend the deadline because of the volume of comments coming in from all quarters. In total, the FCC received (...wait for it...) slightly more than four million comments. With a volume like this, lobbyists and others with vested and personal interests clearly are working overtime trying to influence the outcome. In broad strokes, the decision pits consumer interests against corporate ones, with a zillion other specific issues falling into one of these two camps.
This past Monday, the President took a strong position on the issue. He said: "The time has come for the FCC to recognize that broadband service is of the same importance and must carry the same obligations as so many of the other vital services do. I believe the FCC should reclassify consumer broadband service under Title II of the Telecommunications Act--while at the same time forbearing from rate regulation and other provisions less relevant to broadband services." (See sidebar: Title I vs. Title II.)
FCC Chairman Tom Wheeler was quick to remind the President that the Commission works for Congress and not the White House, but he no doubt heard the message loud and clear. The White House has come down on the side of consumers who want the Internet to remain largely neutral and not governed by market forces that would permit the largest players to control access to high-volume capacity and, ultimately, content.
Title I of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, created two separate classifications for "telecommunications services" and "information services." These terms were coined back in the day when dinosaurs roamed the earth and when data looked like data (information services- Title I) and voice looked like voice (telecommunications services--Title II). As technology has evolved, these classifications have become increasingly arbitrary, since in many cases, distinguishing traditional voice from traditional data is virtually impossible. In fact, strike the word "traditional." It rarely exists in the current marketplace.
Services classified under Title II are subject to common carrier regulation, while Title I services are not. Common carrier regulations forbid unreasonable discrimination in charges for telephone and cable offerings, while services offered under Title I, although still subject to a few obligations, are regulated with a much lighter hand, thus allowing market forces to dictate offerings, terms and conditions in a more meaningful and potentially lucrative way--particularly for the largest players.
-- Martha Buyer
Title I of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, created two separate classifications for "telecommunications services" and "information services." These terms were coined back in the day when dinosaurs roamed the earth and when data looked like data (information services- Title I) and voice looked like voice (telecommunications services--Title II). As technology has evolved, these classifications have become increasingly arbitrary, since in many cases, distinguishing traditional voice from traditional data is virtually impossible. In fact, strike the word "traditional." It rarely exists in the current marketplace.
Services classified under Title II are subject to common carrier regulation, while Title I services are not. Common carrier regulations forbid unreasonable discrimination in charges for telephone and cable offerings, while services offered under Title I, although still subject to a few obligations, are regulated with a much lighter hand, thus allowing market forces to dictate offerings, terms and conditions in a more meaningful and potentially lucrative way--particularly for the largest players.
-- Martha Buyer
Let me reiterate. The FCC is an independent agency, with five commissioners in total--two Republicans, two Democrats and one chairman, who, in a Democratic administration is not surprisingly a Democrat. What is surprising--or at least of interest--is that prior to becoming FCC chairman, Wheeler served as a lobbyist as president of the National Cable & Telecommunications Association (NCTA) and CEO of the Cellular Telecommunications & Internet Association (CTIA), two agencies that are both clearly on the Republican side of this issue. Hmmm...
A Two-Tier Proposition
Earlier this week, the New York Times reported that, though far from official, the FCC is considering a hybrid solution to the challenges of Internet regulation. As reported, the hybrid plan would recognize the difference between wholesale and retail markets for Internet service. Under the option that has received the most unofficial support, the wholesale portion of Internet service (between the ISP and the content provider) would be subject to Title II regulation that's "utilitylike," while the retail portion (between the ISP and consumer) would be subject to less stringent regulation. The retail piece would be governed by Section 706 of the Telecommunications Act of 1996 which, according to the NYT article, "gives the FCC broad powers to ensure that broadband capabilities are being deployed to all Americans 'in a reasonable and timely fashion.'"
This two-tier regulatory framework could enable the FCC to prevent blocking of legal Internet content and create and enforce rules that limit discrimination of Internet traffic while continuing to encourage creative mechanisms for the delivery of unique services. As is to be expected, pro-corporate groups argue that any regulation discourages investment and stifles creativity, while consumer groups argue that this concept--and yes, it's just an unofficial possibility at this point--doesn't go far enough.
Eduardo Porter, author of the NYT's Economic Scene column made two insightful comments in response to the recent flurry of Net neutrality news. In a piece titled "Net Neutrality Debate: Internet Access and Costs are Top Issues," he wrote, "Free to do as they pleased, the clutch of companies that control access to the Internet would have enormous power to determine what information reaches Americans online."
Porter explained that he had once supported reclassifying broadband as a public utility, just as Obama is doing today, because he deemed the threat to free speech and content innovation serious enough for heavy-handedness. However, he went on to say that the worse-case scenarios envisioned by some simply haven't occurred. "While this does not ensure they never will, it suggests that restraint can be achieved through lighter means that do not put at risk other crucial objectives--like broadening access to the Internet and tackling the nation's very real digital divide," he concluded.
The FCC might issue its determination before year end. If not, it will come shortly thereafter. Compromise is clearly in the air--it's likely that neither of the major combatants will be satisfied, but if middle ground can be identified and secured, addressing the issues may become less political and more practical.
One final point. In some of the commentary that's come out this week, the FCC is making one of its primary goals quite clear, and that is to ensure that whatever it decides (and, after all, it is an independent agency) will withstand the rounds of litigation that are guaranteed to follow.
Stay tuned.
