Reality check: FCC’s 'Open Internet' proposal

U.S. news has been abuzz with FCC Chairman Tom Wheeler's February 4 announcement about the agency's new net neutrality stance. In a nutshell, he plans to propose that Internet access be regulated under “Title II,” essentially turning broadband Internet into a public utility. The FCC would then ban any kind of traffic throttling or paid prioritization. While this is good news for net neutrality advocates, let’s have a bit of a reality check. First, Wheeler hasn’t proposed anything; he’s announced that he will propose something.  Although the FCC Fact Sheet uses the word “propose” and the phrase “is proposing,” formal FCC changes are subject to a public comment period before they’re further considered and eventually turned into regulations. We’re not at that stage yet. Second, Wheeler’s proposal hasn’t had its day in court, and it most assuredly will need to clear that hurdle. The major cable carriers in particular have made it clear they plan to use the courts to try and stop Wheeler from exercising greater authority over broadband Internet.  AT&T’s vice president for federal regulation posted on Monday that AT&T thinks it has a good case. Third, Congress—the legal entity that actually authorized the FCC—ain’t had its say, either, and a number of senators and representatives (John Thune of South Dakota, Fred Upton of Michigan, and Greg Walden of Oregon) have their own bill that would override anything the FCC did. That bill would also ban paid prioritization and throttling, but not permit broadband to be regulated as a utility. Fourth, there’s a potential downside. Wheeler’s proposal does not include rate regulation or tariffs. It doesn’t require carriers – notably, cable carriers – from unbundling Internet access from other services, which has been a major pain point for consumers. So Wheeler’s proposing to treat broadband as a utility—except, not as a utility, per se. What it means for individuals, businesses That last bit should be a little worrisome. The big carriers were looking to paid prioritization as a way of generating more profits from broadband and funding the build-out of their networks. Without that income, they’re going to turn elsewhere for the cash, and where do you think they’ll go first? Your pocket. And while home users might not get hit so hard, business broadband will most assuredly become even more expensive than it is today. If it does, that means businesses—increasingly reliant on the Internet as cloud services become a mission-critical part of their environment—are going to be facing extra expenses. If the FCC doesn’t also exercise some price controls, and possibly unbundling, everyone’s Internet could get a lot more expensive in the long run. Of course, right now the FCC knows that attempting to get into rate regulation and tariffs would definitely drag this into a bitter court battle, which is why Wheeler is likely avoiding it. Interestingly, the FCC anticipates that exact problem. In their Fact Sheet, they say, “…Wheeler’s proposal will modernize Title II, tailoring it for the 21st century, encouraging Internet Service Providers to incest in the networks Americans increasingly rely on.” Like many political statements, however, the Fact Sheet stops short of actually describing how the FCC will “encourage” ISPs to invest their networks without raising rates. Google, by the way, is entirely on board with the new proposal, which guarantees “…fair access to poles and conduits,” allowing companies like Google to run fiber optic cabling through existing utility rights-of-way. That is indeed a good thing on paper, because it’ll help increase competition, which is the one surefire way of controlling pricing. Right now, so many ISPs operate as monopolies or duopolies that market forces aren’t really brought to bear against them. Then again, few companies other than Google (or Apple, which has shown no interest) could afford the capital investment to take advantage of that right-of-way access. What’s missing The proposal also leaves out one of the strongest social benefits that Title II offers the FCC. Using the Universal Service Fund, covered by Section 254 of Title II, the FCC collects money to help disadvantaged families gain access to public utilities, like a landline. Most people would love to not have that Universal Service Fee on their bills, but we can probably agree that a well-informed populace is the cornerstone of democracy, and that the Internet is today’s best medium for educating the public. However, Wheeler’s neutrality proposal confusingly “bolsters Universal Service Fund support for broadband service” while “not requiring broadband providers to contribute to the Universal Service Fund.” Uh, OK. I wonder where the bolstering will come from? This obviously remains a very dynamic and evolving situation, but it’s one you should pay attention to. When the time comes for public comment, jump in— and do so both as an individual who pays a cable, phone or satellite bill and as a technology professional whose business might be financially impacted. While I’m by no means suggesting that paid prioritization is an answer, Wheeler’s proposal at this stage is long on rhetoric and short on hard facts—and it could certainly set up a situation that’s even worse, financially, than what we’ve got now. It’ll be interesting to see where this goes as the courts, Congress and major carriers jump into the fray.