1hundredsixty8

One of the touchstones of American political and economic libertarianism is the free market. This is the one place where the contradictions inherent in America’s oxymoronic version of the social compact are on display. If you doubt this is so, please pay close attention to the coming battle over the FCC’s proposed net neutrality rules.

Last week, FCC Chair Tom Wheeler (a former cable industry lobbyist) proposed a new regulatory regime under which the Commission would classify Internet access as a public utility. In doing so, ISPs (Internet Service Providers, the private entities such as giants Comcast, Verizon and ATT) would be regulated in much the same way as telephone carriers were in the last century (under what is known as Title II of the Telecommunications Act). In simplest terms, it would mean the carriers would be forced to treat all traffic over their networks equally, and preferential pricing schemes would be barred. Wireless Internet access via mobile devices such as smart phones and tablets would be subject to similar rules. Other limiting practices such as throttling bandwidth or blocking specific web sites will also be banned.

Advocates of an “open Internet” are calling this a victory for innovation. This is doubtless premature, the equivilant of spiking the ball and doing your touchdown dance before you cross the goalline. Wheeler’s proposal is not yet established regulation but it does represent a walk-back by the Chairman from the original proposal he made last year. That approach called for a tiered scheme- the so-called “fast lane and slow lane approach”- which would allow the ISPs to charge different rates for different levels of service. Such a plan would allow the ISPs to discriminate, as an example, against content providers. The ISPs would not only own the pipeline that delivers content but, as content providers themselves, they would have an incentive to keep their offerings in the fast lane while competing content was relegated to the lower speed service or forced to pay higher access fees for higher speed. This is especially crucial for streaming services which require bandwidth and speed to be viable. It would inevitably become daunting for smaller players to compete financially. Faced with a surprisingly-vehement outcry and prodding by the public statements of President Obama, Mr. Wheeler evidently had a come-to-Jesus moment.  

No matter what the final regulations look like, what is true today is that here in the US, the country whose government funded the research to develop what became the modern Internet (remember Darpanet?), we pay among the highest rates for Internet access in the world for what is generally agreed to be poor service. Something had to give, but there will be a battle and the lines are being clearly drawn. The “open Internet” side includes both providers such as NetFlix and Twitter, and advocacy groups like the Center for Democracy and Technology and Common Cause. For their part, the ISPs and various industry associations have begun pushing back, issuing statements in reaction to the Wheeler announcement. The common theme of these press releases was to affirm what the carriers like to term “their commitment to an open Internet”, accompanied by their usual warnings that re-classification to Title II-type regs was unnecessary, that investment would be stifled and costs to the consumer increased. The spector of a prolonged legal battle was not-so-sublty hinted at. Certainly, gi-normus corporations such as Verizon and Comcast have the resources to mount an attorney-led blitzkrieg.

And there is the last wild-card, Congress. With the Kenyan-Socialist-Muslim President advocating for net neutrality rules, it is almost a lock that the Republicans in the House and Senate will oppose them. They have their own levers to pull to exert pressure on the FCC, either through the budgetary process or through statutes to limit the Commission’s powers.

This is high-stakes battle and there is some question on whether or not it will garner the public’s attention. I would tell you to tune in to see, but you might not have sufficient bandwidth to watch live news reports.