The FCC is converging on a net neutrality order, bringing “clarity” to the broadband regulation process. In fact, the process has been murky since the Telecom Act, nothing in the current order (as we know of it from the FCC’s released “fact sheet”) un-murks much, and in any event this is something only the courts can hope to make final and clear. Everyone will hate the new order, of course, and it doesn’t do what it might have done, but it’s not as bad as it might have been.
The high-level position the FCC is taking shouldn’t surprise anyone who knows what the FCC is and what it can and can’t do. The question that’s been raised time and time again, most recently and decisively by the DC Court of Appeals on hearing the FCC’s previous neutrality order, is jurisdiction. The position the Court took was that the FCC having previously declared that the Internet was not a common-carrier service, cannot now issue regulations on it that are permitted only for services of that type. And that is that; the FCC has no jurisdiction under its own rule. Fortunately for the FCC, it is not bound by its own precedents, so it can reverse a prior ruling in a stroke, which is what Wheeler is going to propose. Broadband, wireline and wireless, would be reclassified as Title II.
What this does not mean (as TV commercials and some comments have suggested it does) is higher fees and taxes imposed on broadband providers and paid by consumers. The FCC has said all along that if it made the Title II decision it would then apply Section 706 of the Act to “forbear” from applying many of the Title II rules to broadband. This would include fees and taxes but also requirements for wholesaling.
The combination of these rules generates as harmless a result as anything is in this political age. Yes, the FCC can change its mind. Yes, the courts could rule this is invalid too (I doubt they will). Doomsayers notwithstanding, the legal foundation of this order is as good as we can get without going back to Congress, a fate I’d be reluctant to wish on the industry. The biggest real issue neutrality had was jurisdiction of the FCC to treat violations and the order fixes that without generating much unexpected disruption with operators.
So what is the FCC going to do with its authority? In many cases that’s at least semi-harmless harmless. It boils down to “no fast lanes” and “equal regulation for all broadband”. The former bars paid prioritization of traffic. The latter is the biggest change; the FCC is applying all its rules to wireline and wireless alike. There will be gnashing of teeth on this, of course, but the truth is that everyone knew we were heading in that direction. Deeper in the fact sheet the FCC released are some interesting points, though. These could have significant consequences depending on just what the FCC does with the authority the order would give it.
At the top of my list is the fact that the FCC would hear complaints on ISP interconnect/peering. This is consistent with the fact that the FCC has jurisdiction over common-carrier peering and tariffs, so at one level it’s not a surprise. The question is how this new authority would be used, given that we’ve just had a flap between ISPs and content providers like Netflix, resulting in the latter paying a carriage charge to some access providers.
Video traffic is disruptive to network performance, because it demands fairly high capacity and at least stable if not low latency. It swamps everything else and so if you let it run unfettered through the network it can congest things enough for other services to be impacted. The FCC’s new order permits throttling traffic for management of stability and to prevent undue impact on other services. If the FCC were to say that Netflix doesn’t have to pay for video carriage, operators could either suck it up and invest in capacity, further lowering their profit on broadband, or let things congest and try in some way to manage the consequences.
The FCC would, under the new order, have the power to impose settlement—rational settlement—on the Internet. That could be the biggest advance in the Internet’s history but for one thing, that politically inspired and frankly stupid ban on paid prioritization. With a combination of settlement and paid QoS, the Internet could become a limitless resource. With paid prioritization off the table completely, we might see settlement but it won’t do much more than preserve the status quo, under which operators are already seeing critical revenue/price convergence.
I’m not sure whether the details of the order will shed light on this point. In the past, the FCC has looked askance at provider-pays prioritization, but not at plans where the consumer pays. The fact sheet doesn’t seem to make any distinction but the order might read differently. We’ll have to see when it’s released.
The other interesting point in the fact sheet is that the FCC intends to insure that special IP non-Internet services (including VoIP and IPTV) don’t undermine the neutrality rules, presumably by having operators move services into the category to avoid regulation. This sort of thing, if it went far enough, could create a kind of growing “Undernet” that would absorb applications and services by offering things like paid prioritization.
The devil again will be in the enforcement details. There’s a fine line between IPTV and streaming services on the Undernet. The FCC could lean too far toward regulation and make IPTV seem risky, or too far away and encourage bypass of the Internet. Will the order make its bias clear, or will we have to wait until somebody is ordered to do, or not do, something?
Waiting is the name of the game, regulation-wise, of course. This order will be appealed for sure. Some in Congress will propose to preempt it, reverse it, toss it out. We probably will have years of “uncertainty”, but the good news is that we’ll probably know shortly after the order comes out, whether there is a reasonable risk that any of the reversing/undoing will succeed.
I believe that the order as summarized in the fact sheet is better than we’d likely get if Congress intervened. The original Republican stance of a very light touch has been amended of late to include support for “no fast lane”, and that creates the classical problem of a part-regulated market. Light touches aren’t distinctively no touch or a push, and all the current Republican position really seems to do is to give the FCC authority to do its regulating on neutrality without (in fact, barring) Title II regulation applying to ISPs. I think that the details of that would confound Congress, as it always has with telecom regulation. The FCC was created to apply expert judgment to the details of regulating a technical industry, and we need to let them do that.
The thing that’s clear is that “no fast lanes” has become a flag-waving slogan for everyone, and fast lanes might have been the best thing ever for the Internet. No matter what consumers think/want or regulators do, you can’t legislate or regulate an unprofitable operation for very long, and we’ve closed down the clearest avenue to profit for ISPs. Not only that, we’ve closed down the only avenue that would have made generating bits a better business. Cisco and others should be wearing black armbands on this one because it decisively shifts the focus of networking out of L2/L3 and either upward into the cloud or downward into optical transport on the cheap.
The administration should have stayed out of this; by making a statement on neutrality the President made it a political issue, and in today’s world that’s the same as saying we’ve foreclosed rational thought. We can only hope the FCC will enforce its policies with less political bending and weaving than it’s exhibited in setting the policies in the first place.