The Daily Caller

The Daily Caller
Federal Communications Commission (FCC) Chairman Tom Wheeler and FCC Commissioner Ajit Pai testify before a Senate Appropriations Financial Services and General Government Subcommittee hearing on the FY2015 budget justification for the FCC, on Capitol Hill in Washington March 27, 2014. REUTERS/Jonathan Ernst Federal Communications Commission (FCC) Chairman Tom Wheeler and FCC Commissioner Ajit Pai testify before a Senate Appropriations Financial Services and General Government Subcommittee hearing on the FY2015 budget justification for the FCC, on Capitol Hill in Washington March 27, 2014. REUTERS/Jonathan Ernst  

Net Neutrality: A Light At The End Of The Pipe?

Photo of Alan Daley
Alan Daley
Writer, American Consumer Institute

The Network Neutrality saga began a decade ago when “bits just wannabe free” thinking embraced a theme of socialized broadband benefits from privatized investment. The early, aggressive Net Neutrality backers were website sources with the highest internet volumes at that time (search and email, music downloads, and a handful of video sources).

The Federal Communications Commission’s (FCC) rules from 2010 most benefitted high-volume video content providers (e.g. Netflix) and massive online multiplayer gaming sites by allowing them to cause costs that they refuse to pay. Their customers downloaded video that jammed the last mile of Internet slowing Internet service for all the other users in their neighborhood. The congestion problem could be solved by investing in more local capacity to accommodate the video-over-the-Internet households. But the rigid Net Neutrality rules prevented Internet Service Providers (ISPs) from collecting extra funds from high-volume sources.  Instead, all consumers had to endure the congestion and pay up for new-capacity to service high volume video.

To ISPs in the early stages of broadband investment, Net Neutrality was a serious financial threat that slowed rollout. It was unclear if there was enough flexibility in Internet retail pricing to collect funds for continually upgrading the local bandwidth.

Now, the FCC is making a third try at imposing Network Neutrality rules that can pass muster with federal courts. The courts shot down two earlier attempts because the rules were too rigid. The FCC’s new rules would allow negotiation of commercially reasonable arrangements for high priority/volume prices. The rules would prohibit blocking of free speech, prevent favoring a content affiliate, and would prevent unreasonable consumer price hikes.

But rigid Net Neutrality rules are still backed by the usual suspects – labor and anti-business groups. They want free or heavily subsidized service and hate the idea that an ISP might earn a profit. To sidestep compliance with earlier court dismissals, many of these rigid Net Neutrality proponents want Internet access reclassified as a telecommunications service (aka Title II or as a common carriage regulated service) instead of an information service (under Section 706). If classified as a Title II service, Internet providers would be forced to accept a baroque list of obligations (such as universal service and network buildout, averaged rates, and massive regulatory compliance costs). In practice, Title II also comes with give-backs that the free-lunch crowd will object to, such as free rights of way and prices set to guarantee reasonable return on investment.

The FCC hopes to complete the new rules by the end of the year. Unless meddling flows from mid-term election candidates, the FCC could close the book on a decade of vituperative arguments and slower than necessary broadband rollout. Ordinary consumers and ISPs deserve to win this – as the court suggested.

Alan Daley is a retired businessman who writes for The American Consumer Institute Center for Citizen Research