Will the Internet remain open?
- October 28, 2010
So far the main rule for doing business on the Internet is that there aren’t too many rules, at least when it comes to access. Companies can get on a network and sell content or applications, and Internet users decide what content and applications they view. That’s what net neutrality is all about: equal access to the Internet.
Julius Genachowski, chairman of the Federal Communications Commission, said he wanted to preserve that concept when he proposed a set of rules last year governing broadband Internet access. Genachowski called “a free and open Internet … an engine for economic growth, for jobs, for investment and innovation.”
Sounds fair enough, but the effort has traveled a rough road. Many inside and outside the industry fear that the FCC’s stated intentions could end up producing the opposite result. Among them is Heather Gold, a senior vice president for Herndon-based XO Communications. The firm operates its own fiber network, withmore than 90,000 customers, including half of the companies in the Fortune 500.
At issue is whether the FCC should — and whether it has the legal power to — impose net neutrality on broadband providers at a time when new technologies are emerging and some major carriers want more control over their networks.
Gold and others argue that if major phone and cable companies such as AT&T, Comcast and Verizon were given more control, it would open the door for paid prioritization. In exchange for a fee, these players could give certain content and Web applications more Web speed than others.
“That’s why this is important to the many small and medium-size businesses that have developed and grown their business using the Internet,” Gold says. Certainly, they don’t want to be muscled out by bigger players who would be willing to pay a Web provider to have their name come up first and come up faster. “The incumbents argue that we’ll thwart investment if we regulate. The truth of the matter is, none of us decides whether to invest based on [the level of] regulation. We decide based on customer demand.”
It could be a long wait, though, before there’s a policy change. For now, the FCC is essentially toothless. Last year it tried to flex its muscle and penalize Comcast for blocking subscribers from using BitTorrent, an online file-sharing service used to swap movies and other large files. However, a federal court ruled in April that the FCC didn’t have legal authority to do so. Now the FCC’s rulemaking is on hold.
Over the summer, a congressional committee drafted a bill that would have given the FCC the authority to enforce open Internet principles, but the bill died a partisan death. Meanwhile, lots of worst-case scenarios are being touted.
David M. Fish, Verizon’s executive director of public affairs for policy and communications, says doomsayers are wrong. “Verizon is committed to an open and robust Internet, and we’re investing billions in the future of broadband. Blocking content doesn’t square with that vision,” says Fish, who is based in Washington, D.C. “We love our customers and want to keep them.”
Peter Jarich, a telecom analyst with Sterling-based Current Analysis, says it’s hard to figure out what will make sense because there’s still so much uncertainty — not just about the rules — but how to deal with still-emerging technologies. For example, should wireless networks be included in net-neutrality regulations? Google and Verizon have already proposed a net-neutrality rule that would leave wireless alone, but supporters of unfettered access protested. Jarich, though, asks if it’s fair to tell operators that they can’t set priorities in managing their networks, when they’re the ones investing in additional capacity.
Jarich says AT&T, for example, can now shift smart-phone broadband traffic off of its strained 3G network to any available Wi-Fi network whenever the user gets close to a hotspot. So companies already are making those kinds of decisions, he says. “Little by little the operators are getting us to understand the concept of the spectrum being scarce.”
Jarich also thinks that, no matter what happens, users still will get what they want and be willing to pay for it. “You can think of situations where you really need to have on-demand access to lots of stuff on your mobile device, so you pay a different price than my mom, who sends e-mail and maybe looks at pictures every now and then. So she pays less. It doesn’t have to be the operator wins and users lose.”
Supporters of net-neutrality regulation, though, are deeply suspicious. Eric London, spokesman for the Washington, D.C.-based Open Internet Coalition, agrees that businesses and consumers are still unsure of how it will affect them. Still, London says the threat is real. “If companies need to go to the big telecoms to get permission to run their applications, it could have a very widespread impact,” he says. Right now he thinks many aren’t paying attention. “If all these services start to go up in cost, people will start to say, ‘Wow, I guess that net neutrality issue mattered a lot.’”
For now it’s hard to say which side has the upper hand. Public interest groups like London’s and others are pushing hard to preserve an open Internet. Jarich with Current Analysis says while they’ve got the moral high ground, the groups may not emerge victorious. “It’s a tough game. The fact is, the operators own these networks, and there’s no shortage of equipment that can allow them to limit the bandwidth in particular ways. There’s definitely a lot of maneuvering going on.”
At this juncture, the game is going into overtime. Earlier this year, the FCC extended its public-comment period on net neutrality until early November to allow more debate over whether to include wireless networks in proposed regulations. It could vote on the issue at its meeting Nov. 30, but isn’t expected to do so.
A U.S. House of Representatives committee, lead by House Commerce Committee Chairman Henry Waxman, D-Calif., tried to negotiate a compromise bill that would have prohibited discrimination among Internet traffic over wireline networks while allowing broadband providers more freedom to manage traffic on wireless networks. The bill died in late September for lack of support among Republicans. At the time, Waxman said in a statement, “If Congress can’t act, the FCC must,” which puts the ball back into the FCC’s court. A shift in the balance of power in Congress in the midterm elections could complicate the issue even more.
Gold, with XO Communications, thinks the issue has gotten far more complicated than it needs to be. The principle of net neutrality has been the FCC standard and industry practice for years. “We’ve strongly supported putting these principles in place. The FCC proposal now just seeks to codify what they’ve already been doing,” Gold says. “It’s amazing to me how worked up people have gotten over these rules.”