Wednesday, April 7, 2010

Regulating the Ether: The FCC Confronts the Limits of Net Neutrality

The Internet is an odd thing. In some ways it is a medium that acts in essence like radio, but with a nearly infinite number of broadcast channels. Sometimes this "ether," as radio was termed in its early days, is used for one-to-many communications, as in Web sites and feeds, sometimes it's used for one-to-one communications, as in email, instant messaging and IP telephony. In all instances the general concept of the Internet is that any individual use of it is just a series of small data packets flowing through any number of different kinds of network connections. In other words, the Internet succeeds largely as a technology by being completely blind to the content of what is being transmitted through it, either in its human value or its internal form.

It is this fundamental form of being an infinitely scalable broadcast spectrum that seems to be at the heart of the U.S. Federal Communications Commission's troubles in trying to enforce its doctrine of "net neutrality." These efforts experienced a setback recently when a U.S. Court of Appeals decision (PDF) struck down the FCC's attempts to claim regulatory authority over cable Internet provider Comcast's efforts to throttle the Internet bandwidth available to file sharing services. The FCC had argued that it had the ability to stretch its existing regulatory mandates via "ancillary authority" to cover this specific issue. However, the appeals court found that the FCC's efforts were a stretch too far.

As The New York Times observed, the decision was written in a way that would make it difficult to reverse via further appeal to the U.S. Supreme Court, so this is more than just a one-shot setback for net neutrality. In reading the decision, it seems clear to me that the court is saying that the fundamental issue that the FCC has in pursuing net neutrality as a policy goal is that the legislation that empowers the FCC for regulation does not really support the concept of what net neutrality is trying to accomplish. In essence, net neutrality advocates seem to want the Internet to be a medium that is regulated in such a way that the private policies of Internet service providers would not interfere with a public policy of non-discriminatory access.

In pushing for net neutrality, in essence the FCC is asking all of the companies supplying Internet services to treat Internet traffic within its "pipes" as a protected public resource, such as water from a lake or river. A model of sorts for this type of access already exists within the structure of FCC regulations: the common carrier, such as a telephone service provider. Yet as Fred Campbell of the Wireless Communications Association International (WCAI) pointed out earlier this year, "Assuming the FCC does have jurisdiction to regulate the Internet pursuant to ancillary authority, it lacks jurisdiction to enact its proposed net neutrality rules as written, because the proposed non-discrimination rules are stricter than those applicable to monopoly common carriers..."

The main rub here is that the FCC is not at this time trying to regulate the Internet as a common carrier telecommunications service but rather as an information service. Ultimately the FCC doesn't want to have the type of common carrier regulation of Internet service that it already applies to telephone networks, in which phone service rates are regulated tightly. In essence the FCC is trying to say something rather simple - that the Internet is a common carrier from a non-discriminatory access perspective but an information service from most other perspectives. The "most other perspectives" has to take into account, of course, the growing use of the Internet for telephony services, including services such as AT&T's new in-building mobile phone services that employ Internet-connected devices to deliver mobile phone connectivity where their mobile service signals don't reach. AT&T applies a surcharge for this service, even though people are already paying both for the Internet service and the mobile phone services that provide this connectivity. So, like it or not, the issues that brought common carrier regulation to the telephone industry are encompassing the Internet already as the common carriers have come to dominate the Internet access business.

In the short term, one strategy that the FCC could employ is simply to shift its pursuit of net neutrality to leverage its common carrier authority more strongly. Yet with the decades of court precedents based on its existing claims to authority over the Internet, that may prove to be a fairly messy route. I wouldn't want to second-guess the regulators in the short run, but the real solution for net neutrality is one which is probably the most dangerous one politically: new legislation that will enable the FCC to redefine fundamental aspects of its regulatory authority more in line with the Internet era. This is long overdue, but not tackled easily in an environment in which there are many people wanting to do things with the "pipes" and the "water" of the Internet but few people able to speak loudly in favor of the non-discriminatory aspects required for the vibrancy of the medium.

This brings us back to that old concept of the "ether," a natural medium that somehow gets messages from one point to another. The Internet has become so ingrained as a tool for our economy and for our personal communications that it is far more like a growing natural resource needing nurturing to encourage its growth for public use rather than a fixed public utility needing close scrutiny. It's difficult for anyone to say with certainty what shape the Internet will take in ten, fifteen or fifty years. Certainly if some of the future scenarios that I paint in my book Content Nation come true, the pace of the Internet's integration with human life will become increasingly like dealing with truly natural resources. From this perspective, I think that the FCC needs to look at how to think of the Internet as a radio spectrum defined for public access, much as it regulates specific radio frequencies today, with some elements of common carrier regulation added.

From this perspective, it could be that the emerging U.S. broadband policy could be back-leveraged off of existing policies being established for wireless broadband communications. In other words, instead of broadband wireless connectivity being viewed as an extension of the Internet, perhaps the "wired" Internet now needs to be viewed as a common carrier extension of a radio-based Internet medium that is likely to dominate in coming years as the prevailing access method, be it over short distances, such as with in-home wireless routers or with AT&T's mobile phone repeaters, or over long-distance radio connections. The FCC licenses radio spectrum already to common carriers for mobile services, so this would seem to be the right "hook" on which to hang future net neutrality regulations.

While the appeals court did the FCC no favor in its ruling, it was at least right in pointing out that the FCC needs to face some harsh realities if it is to implement net neutrality effectively. After years of failing to address the critical impact of the Internet on the U.S. role in the global economy, the FCC is rightly trying to set the stage for even greater economic growth for the U.S. in the years ahead via net neutrality. Most importantly if affects the ability of businesses both large and small to communicate directly with their markets cost-effectively. The FCC needs to ensure that this commercial benefit of the Internet is protected by minimizing the role of "middle men" in trying to impose private regulation on public communications. Hopefully this will become the cornerstone of improved approaches to net neutrality regulations by the FCC.
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