Models for the Internet’s Future: Obama-Open or Julius-Closed

Apparently before the year is out, on Dec. 21, the Federal Communications Commission will issue rules to help shape the future of  the Internet. In fact, the FCC Chairman may be circulating those rules to fellow commissioners on Wednesday, tomorrow. These rules will decide how much control AT&T, Verizon, and Comcast will have over the websites you can visit and the online software you can use. This rule will impact the future of businesses, political actors, and people who now rely on an uncontrolled, open Internet.

There are at least two competing regulatory models for the FCC to adopt.

One is a model being pushed by AT&T and Verizon –also known as key opponents of network neutrality. This model derives from an attempted compromise offer from Congressman Henry Waxman to congressional Republicans. The proposal, never introduced, failed to gain Republican support–but the FCC Chairman does not need congressional Republican support on a Commission that is majority Democrat. AT&T has been meeting repeatedly with top FCC staff to push this option, after spending five years and hundreds of millions in lobbying fees to oppose real network neutrality protections.

The other model comes from an agency controlled by President Obama, called the NTIA (or National Telecommunications and Information Administration), which is less well known than the FCC, an “independent” agency not under the president’s direct control. Early in this administration, the Obama NTIA implemented tough rules to ensure Internet freedom on all private Internet networks under that agency’s jurisdiction–those networks were those receiving even a penny of stimulus money under the NTIA stimulus program.

The FCC could choose rules favored by AT&T and Verizon … or those adopted by the Obama’s own agency, in keeping with Obama’s campaign promises and the public declarations by the FCC itself.

So, for the benefit of all of you who have not spent much of the last five years thinking about (and lawyering on) network neutrality, I figured I’d include a primer on the two potential models–the Obama NTIA model and the other, weaker model, urged by AT&T.

Network Neutrality Models–Generally

Any “network neutrality” rule should be designed to forbid phone or cable companies from controlling the Internet. Evidence and economic theory suggests that control of the Internet by the phone and cable companies would lead to blocking of competing technologies (as in the Madison River case), blocking of innovative technologies that may not even compete with the phone/cable cartel (according to Comcast itself, the Comcast/BitTorrent case would be an example), and increased spying on Internet users. It would have major effects on speech by raising the costs of speech for campaigns, individuals, and organizations, as well as the blocking of “controversial” speech by religious groups or abortion-rights activists.

There are many models (and factors) for implementing a network neutrality rule, but we will discuss two. For completeness, some of the other models include: the Republican FCC’s 4-principle Policy Statement, the Republican FCC’s “strict scrutiny” elaboration in the Comcast, the principles found in the Democratic dissents-and-concurrences to Republican FCC orders, the Obama campaign promises and presidential pledges, the NTIA rule, the somewhat unspecified Genachowski NPRM proposal, the Verizon-Google pact, the Henry Waxman proposal, the French rule, the Canadian rule, and others.

We’re only discussing two here: the NTIA rule (because it represents the Obama position) and the “Waxman proposal” (because AT&T is pushing this proposal hard at the FCC).

The key factor for such models is whether they actually preserve an open Internet or whether they have gaping loopholes. The main loopholes would be

  • exceptions for wireless Internet, an exception unjustifiable based on consumer preferences or technology, especially while the FCC is betting on wireless technologies to expand broadband access,
  • defining unlawful discrimination in a narrow way that would let AT&T and other carriers charge companies for priority treatment, even though a ban on paid priority is generally considered a basic principle for any meaningful net neutrality rule,
  • defining unlawful discrimination to forbid targeting only those technologies that already compete with services offered by phone and cable carriers; this would allow carriers to target non-profits, political speech, and technologies too new to compete with the carriers’ services;
  • a blanket exception for still undefined “private Internet” services,
  • and an exception for “network management” that swallows the rule.

In addition, a network neutrality rule could result in mere “slaps on the wrist” or involve such expensive and difficult litigation procedures that no small company or consumer could ever bring a case. Finally, it could rest on clearly flawed jurisdictional grounds.

Model I:

The first model is even worse than the widely-criticized Verizon-Google pact and a far cry from the Obama/NTIA rule. This model is one that:

  • fails to protect wireless Internet access. This proposal would forbid carriers from blocking technologies only if a broadband provider already had an interest in a competing application. As a result, AT&T and Verizon would be able to block anything truly new or innovative–that is, anything the carrier had not already deployed or even yet imagined. Essentially, it would ensure that the most innovative applications get the least protection.
  • defines nondiscrimination vaguely, and is silent on whether paid prioritization would be banned. Even the Verizon-Google proposal had a ban on paid priority.
  • expired in two years anyway.

So, in the end, Model I is not even a model for net neutrality; it’s make-believe. It’s a model of a Congressman trying valiantly to help a Chairman and reach a compromise with other elected legislators in Congress. It is not a model for “consensus” with an unelected industry when a regulatory agency has the necessary votes after many years of study and an enormous record.

Model II: Obama-Open, Obama-Tough

The second model is better for America and all of us relying on an open Internet for commerce and speech.

President Obama is a big supporter of keeping the Internet open. During his presidential campaign, he pledged his support to net neutrality repeatedly (on MTV, at Google) and made net neutrality a centerpiece of his technology agenda. Net neutrality was, in fact, central to his argument to Silicon Valley against his primary opponent, Hilary Clinton. As a senator, he co-sponsored the lead network neutrality bill.

Obama’s campaign promises are explicit on several details where the carriers have tried to find loopholes: Obama would forbid carriers from imposing any “toll charges” (also called “access charges” or “paid prioritization”); he hints at no exception for wireless Internet access; and he would forbid online discrimination regardless of anticompetitive effect, protecting non-profit and individual speakers.

As president, Obama pledged support for net neutrality in rolling out his cybersecurity agenda and in answering the “most commonly asked question” about the economy (which was on net neutrality) in a Youtube interview. He was unequivocal, and opposed paid prioritization there, despite “pushback” from the biggest carriers. White House officials told Time that a net neutrality rule must cover wireless technologies.

Beyond this, and more importantly, President Obama actually imposed a network neutrality rule. He implemented a real rule through the stimulus bill. The two executive agencies that decided which companies received stimulus money for broadband networks–the NTIA and the Rural Utilities Service–imposed strict network neutrality rules on those who received this stimulus money.

The NTIA is also the agency that speaks directly for President Obama; it is known as his “voice” on telecommunications. For example, when the administration files its thoughts on telecommunications in any proceeding of an independent agency (even the FCC’s proceedings), the NTIA that files those thoughts on the administration’s behalf.

The NTIA neutrality conditions apply to both wireline and wireless networks, include a nondiscrimination mandate, and have tight language on any exception for network management. For example, on nondiscrimination: applicants could “not favor any lawful Internet applications and content over others.” And management of networks appears limited to the carrier addressing harmful attacks and managing congestion in a way that does not treat applications and content differently.

There is no reason why strict net neutrality rules should be limited only to companies accepting stimulus funding. Net neutrality advocates, including President Obama (and Senator Obama in 2007 and 2008), have never limited their proposals to stimulus networks. In addition, phone and cable companies receive huge subsidies from the government, through tax write-offs for accelerated depreciation and the FCC-administered universal service fund. Both cable and phone networks were built and maintained for decades under monopoly protection, with government-guaranteed returns, an advantage upstarts lack.

Perhaps the most important thing to know about Model II is this: the FCC consulted the NTIA and RUS on the rule. The stimulus bill  (Section 6001(j) of the Act) required “coordination” with the FCC.

I am not sure how this coordination went, but I highly doubt the FCC tried to water down President Obama’s rules then, for those networks. It shouldn’t go for watered down rules now, when the Internet’s future depends on a solid rule.

Cross-posting at Balkinzation, Huffington Post, Stanford CIS blog, and The Faster Times.

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