FCC Approves Net Neutrality Order, But Will It Stick?

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In a split vote, the Federal Communications Commission approved Tuesday the nation's first legislation aimed at addressing the way that phone, cable and Internet companies interact when it comes to Internet traffic. But despite the commission's historic 3 to 2 vote to pass the network neutrality order, Congress or the courts may end up unraveling the work.

And for proponents of net neutrality, a less than optimal situation could get worse. Supporters are already less than thrilled by the order's provisions, noting the rules don't go far enough in granting equal protection to folks who rely on mobile broadband access compared to those who use fixed, or wired, broadband pipes.

Calling out that disparity is important, they argue, given the growing reliance Americans have on accessing mobile data and other Internet services like banking through their smartphones and mobile devices like tablet computers and notebooks. Over the next four years, shipments of mobile devices are expected to rise 19%, for example.

The FCC order outlines three rules, two of which treat fixed broadband Internet access differently than mobile broadband access.

"No Unreasonable Discrimination"

Rule No. 1 applies to both wired and wireless broadband Internet access services. They're required to provide accurate information regarding performance, network management practices and terms of service so consumers can make informed decisions about the services, applications and other offerings.

In rule No. 2, fixed broadband operators are prohibited from preventing network-safe devices from accessing applications, services and content considered lawful. Mobile broadband operators, however, have fewer restrictions. They're only prohibited from standing in the way of allowing businesses and individuals access lawful websites and applications that compete with the mobile operator's own voice or video telephone services.

Fixed and mobile broadband operators, under Rule No. 2, are both given flexibility to determine if this access is reasonable in the management of their networks.

Rule No. 3 applies only to fixed broadband operators and calls for the prohibition of "unreasonable discrimination." Basically, it says these operators can't put the kibosh on consumer Internet access service providers that want to piggyback on that operators' network.

Similar Arguments from Supporters and Critics

Net neutrality has caused tempers to flare and folks to hit the streets. And, ironically, supporters and critics use similar arguments in stating their case: It will hurt innovation among companies that need to use these fixed and mobile broadband operators to develop their services and software, and it will lead to reduced investment and increased costs for these companies and users.

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In August, a coalition of several organizations launched a protest at Google's headquarters, when the Internet titan (GOOG) and Verizon (VZ) proposed their own net neutrality policy for the FCC's consideration. That fared no better than a tin-cans-on-a-string phone line. Protesters were concerned about the proposal's suggestion that broadband carriers be allowed to offer paid services if they deemed them separate from the Internet. Critics of the Google-Verizon plan feared it would create a two-tier system where only some players would get access to faster speeds to deliver their services and create an uneven playing field.

According to the FCC, under its order, the pay-for-priority would likely fail in its ability to satisfy Rule No. 3 -- "no unreasonable discrimination."

Verizon was quick to express its displeasure with the FCC rules, noting that its passage fell along political party lines. In a statement, Verizon said:
Although we share with the FCC the overarching goals of an open Internet, we are deeply concerned by today's 3-2 decision. The FCC's majority breaks with years of bipartisan communications policies that recognized that Internet innovation and investment -- and the jobs they create -- thrive without government intervention. There is no doubt that the policies put in place by the Clinton Administration and the Bush Administration to jumpstart innovation and the spread of broadband worked. As a result, America's broadband and Internet marketplace is intensely competitive and an engine of economic growth, job creation and multibillion-dollar investment. Today's decision, however, unnecessarily departs from these successful policies.

While it will take some time for us to analyze the FCC's rules and the order once they are released, the FCC's decision apparently reaches far beyond the net neutrality rules it announced today. Based on today's announcement, the FCC appears to assert broad authority for sweeping new regulation of broadband wireline and wireless networks and the Internet itself. This assertion of authority without solid statutory underpinnings will yield continued uncertainty for industry, innovators, and investors. In the long run, that is harmful to consumers and the nation.

Verizon remains committed to preserving an open Internet and meeting the needs of our customers. We will continue to work constructively with the FCC and the Congress on these issues.
The order is expected to take effect early next year, but that's providing Congress or the courts don't intervene. The courts earlier this year ruled that the FCC did not have the authority to enforce its own previous net neutrality policy, following a challenge by cable operator Comcast (CMCSA).

And while the FCC says broadband Internet access services are "clearly within the Commission's jurisdiction," it may be wise to postpone wagering bets until Congress returns in the New Year.
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