FCC Approves Net Neutrality, Lawsuits Will Ensue

FCC Approves Net Neutrality, Lawsuits Will Ensue

Yesterday, a sharply divided FCC voted to 3 to 2 to approve new Net Neutrality rules. The vote went down as expected with Democrats voting in favor of rules intended to prevent broadband service providers from blocking content, and Republicans opposed, claiming that such rules are an unjustifiable (and potentially illegal) power grab by the FCC.

The rules were not the hard-and-fast protection of content and Internet access that Net Neutrality advocates wanted to see, but a compromise. They include vaguely-worded wiggle room for broadband pipe owners and sidestepped rules for mobile broadband (3G and 4G). The word "reasonable" is the problem, i.e. the FCC rule regarding blocking content states, "A person engaged in the provision of fixed broadband Internet access service, insofar as such person is so engaged, shall not block lawful content, applications, services, or non-harmful devices, subject to reasonable network management."

Legal experts expect the rules to lead to a whole bunch of lawsuits. No sooner was the vote announced and Republican commissioner, Robert McDowell, released a statement [PDF] that spelled it out: "'Reasonable' is  a subjective term.  Not only is it perhaps the most litigated word in American history, its definition varies radically from country to country."

Because of that wiggle room, pipe owners including Comcast support the rules, saying they "strike a workable balance." This even though the cable operator is arguably one of the most egregious abusers of net neutrality principles. The latest battle, and perhaps one of the reasons the FCC pushed Net Neutrality onto its 11th hour 2010 agenda, is its fight with Level 3. Hours before the FCC voted, Level 3 issued a public statement to the commission that basically called Comcast a liar. Comcast claims that it is being unfairly used now that Level 3 will be sending a lot more traffic onto the wire thanks to its giant contract from Netflix. It contends it should be able to send Level 3 a big-fat bill for using its pipes, or to be able to throttle back on Level 3's access. Comcast, responded by saying Level 3 was the liar.

Will the new rules solve the battle and make Comcast leave Netflix traffic alone? First off, there is the likely scenario of a court battle to see if the FCC really has the authority to impose them. Remember, in April, an appellate court struck down the FCC's ruling in Comcast Corp. v. FCC, saying the "FCC lacked the authority to regulate the network-management policies of Internet service providers," notes Legal Times. Ergo, legal precedent exists to back McDowell's words of warning.

At stake is $246 billion of revenue from residential video, voice, and Internet services in 2010, reports Infonetics Research. Subscribers are not growing for the broadband providers while Netflix and Hulu Plus are growing like gangbusters. "Video services are proving to be a hard fought battle," notes Diane Myers, an analyst for Infonetics. "While cable operators have a legacy in North America, they have been unbending in their pricing policies, and as a result are losing record number of subscribers to less expensive alternatives."

Here are the three basic rules that the FCC adopted per its press release yesterday [link: Word document].

Rule 1: Transparency
A person engaged in the provision of broadband Internet access service shall publicly disclose accurate information regarding the network management practices, performance, and commercial terms of its broadband Internet access services sufficient for consumers to make informed choices regarding use of such services and for content, application, service, and device providers to develop, market, and maintain Internet offerings.

Rule 2: No Blocking
A person engaged in the provision of fixed broadband Internet access service, insofar as such person is so engaged, shall not block lawful content, applications, services, or non-harmful devices, subject to reasonable network management. A person engaged in the provision of mobile broadband Internet access service, insofar as such person is so engaged, shall not block consumers from accessing lawful websites, subject to reasonable network management; nor shall such person block applications that compete with the provider’s voice or video telephony services, subject to reasonable network.

Rule 3: No Unreasonable Discrimination
A person engaged in the provision of fixed broadband Internet access service, insofar as such person is so engaged, shall not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service. Reasonable network management shall not constitute unreasonable discrimination.

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I'm torn on this topic: in a free market, the business has every right do change their policies and business model. They created, maintain, and support the system - it's privately owned, so they can do what they want with it. That free market precedent needs to stand strong.

Granted it could suck for the consumer initially, BUT this opens the market for a competitor offering a net neutral solution. Which would force the ISPs who would go against net neutrality into a corner- either change back or lose customers.

Those who say that the companies would just all do the same thing and legally price gauge (for lack of a better word) could be right, but then again a smart person would see the huge opportunity in creating a net neutral option and makes some serious $$$. Cricket wireless anyone?

I find the first point transparency halirous, we expect privately owned companies to be transparent yet our own government to be closed off (wikileaks...dont worry not going into it).

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If it wasnt broke then why fix it!

Oh yeah more gvmt regulations! This remiinds me about the last time that this has happened, when the govmt took control of everything and said it was for the good of all! Even then the German people went in willingly thinking that they were doing the right thing for Germany!

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This whole thing is of great interest to me as it should be to everyone I believe. The true capitalist model I think specifically but singularly in Cable television, and Wireless communication is flawed in that 2 players own the market. One At&t because of a device, the other because of there network size. On the other side Cable TV is largely a joke in many places or seems to be so. When there is only one provider there is no market, and that provider can starve the rest out. I have watched this happen when I worked for Comcast to a couple of smaller providers who were either bought, or shut out of coaxial lines. The net neutrality affects all of this, and will even more so in the future as it all comes to center around the internet which it most surely will eventually. I subscribed very recently to Uverse which is Fiber to home, and all comes through my modem. the is taken to my TV over a CAT 5E/6 cable.

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rapid1:
is flawed in that 2 players own the market.

It's hard to entice venture capitalists with an identical business model, that's why there are so few companies. Thats alot of money just to be an impostor with less reputation, either good or bad.
If the net neutrality went away, you bet your a$$ that a venture capitalist would give his money and his rep on a net neutral ISP. You have to actually offer something better or unique in order to succeed in business. You cant ride on other's success, being "were just like comcast but not as douche-y... " or "were just like comcast but are more reliable" that wont get investors attention.

rapid1:
shut out of coaxial lines.

In order to compete on that level, you need high level investors and budget to "make your own lines." 

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