New FCC net neutrality proposal: Not as rigid as ISPs think

Even with switch to Title II, Wheeler's new neutrality proposal leaves some flexibility for ISPs

Federal Communications Commission Chairman Tom Wheeler revealed the major elements of his latest net neutrality proposal Wednesday in an op-ed in Wired, prompting much wailing and gnashing of teeth by Internet service providers and their allies.

The pain point: Wheeler wants to reclassify ISPs as telecommunications services subject to Title II of the Communications Act. Much of Title II dates to 1934, when the target was the local Bells and similar regional monopolies. It gives the government the power to regulate prices and service territories, among many, many other things. There are also a number of provisions from 1996 that were designed to force the Bells to lease all or part of their networks with fledgling phone and Internet services, such as NorthPoint and Covad.

Wheeler argued that in order to get unequivocal protections for net neutrality, including prohibitions on paid prioritization and bandwidth throttling, the commission had to bring ISPs under Title II. But he also proposed to waive ("forbear" from enforcing, in FCC parlance) the sections not applicable to net neutrality, including the ones on rate regulation and network sharing.

Here's a typical reaction to Wheeler's proposal, from Ryan Radia of the conservative Competitive Enterprise Institute:

“[T]he FCC’s proposal will almost certainly cause Internet providers to invest less in their networks, meaning consumers and internet-based services will see fewer speed and reliability improvements. If Congress doesn't rein in the FCC, broadband providers will soon look and act like power companies and the old Ma Bell telephone monopoly: stagnant, slow-moving, and anything but innovative."

The rules appear to be a lot less draconian than Radia and company contend, however.

According to an outline sketched Wednesday by senior FCC officials, Wheeler proposed outright prohibitions on only three things: blocking lawful sites, applications, services or devices; impairing or degrading lawful traffic based on its content or origin; and prioritizing traffic from sites for a fee ("paid prioritization") or from affiliates.

He also wants to require more disclosure from ISPs about their network management practices, as well as the prices they charge and the bandwidth their customers receive. And he would apply Title II rules that require telecommunications services to protect the personal information they collect from customers, accommodate people with disabilities and provide "just and reasonable" access to utility poles and conduits.

Granted, the privacy, disability and pole-access rules have nothing to do with net neutrality. But they're a far cry from requiring ISPs to obtain the commission's permission to raise prices or install new fiber-optic lines.

In fact, aside from the three no-no's outlined above, ISPs don't have to get the commission's permission to do anything. Instead, Wheeler's proposal would require consumers or site operators who object to something an ISP is doing to file a complaint, which the FCC's enforcement bureau will then review.

That's a much more flexible approach than the one the commission took with local phone monopolies, who had to obtain prior approval for seemingly every initiative.

This ex-post-facto review would be used in two ways under Wheeler's proposal, FCC staffers said Wednesday.

One is a general standard of openness and neutrality for ISPs. Such a standard would be applied when ISPs do things that appear to favor certain sites but don't actually block, degrade or prioritize traffic. In such a circumstance, the FCC would use Title II's just-and-reasonable standard to measure whether the ISP "unreasonably interfered with or unreasonably disadvantaged" rival sites, said a senior FCC staffer who spoke on the condition of anonymity.

A couple good examples are zero rating, which is when an ISP exempts selected services from the data caps it imposes on users, and sponsored data, in which case a site or service pays the data charges that consumers might otherwise be forced to pay. Noting that such practices can promote competition among ISPs and help consumers, FCC staffers said the commission will care more about exclusive arrangements or those that favor an ISP's affiliates than programs like T-Mobile's "Music Freedom" initiative, which exempts more than two dozen online music streaming services from its data caps.

The other situation when ex-post-facto review would be used is when a content provider or network operator outside the last mile believes that an ISP is hindering its ability to interconnect, that is, to deliver traffic into the ISP's network. Interconnection is not a net neutrality issue, but it's something the FCC has been exploring in response to complaints by Netflix. For those, the FCC would examine the ISP's actions to make sure they were just and reasonable.

That's not to say the FCC is trying as hard to preserve innovation by ISPs as it is by websites, app developers, services and device-makers. The rules Wheeler proposes wouldn't reach any of the latter, who would be free to engage in truly permissionless innovation. ISPs would have to tread more cautiously because their innovations were subject to FCC review should anyone complain.

The catch-all general standard that Wheeler is promoting also threatens to leave ISPs guessing about what may or may not be prohibited. That could force them to ask the government for guidance before launching a boundary-pushing service. Imagine how Silicon Valley would react to an arrangement like that.

But then, that's one of the drawbacks of being a potential gatekeeper to the most important communications medium on the planet. If we had the kind of competition in broadband that we did in dial-up services, we wouldn't need these kinds of safeguards. Instead, consumers in most communities have no more than two options for broadband. And barring some crazy spending by Google or the deployment of gigabit networks for smartphones, that's not going to change anytime soon.

For the record, The Times' editorial board supported neutrality rules based on a stripped-down version of Title II Thursday.

Follow Healey's intermittent Twitter feed: @jcahealey

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