FCC votes to move forward with proposed net neutrality rules

The Federal Communications Commission voted unanimously this morning, although with some dissent from Republican commissioners, to authorize a notice of proposed rulemaking on network neutrality.

The notice is the next step in a prolonged process that could set formal limits on how network carriers can interfere with traffic from outside providers crossing their networks. The FCC has wrestled for five years to balance the need of carriers to manage their own networks against the rights of consumers and content providers to use those networks.

The FCC in 2005 adopted a policy statement embracing net neutrality, but did not formally adopt rules. FCC Chairman Julius Genachowski, who proposed the rules last month, said the issue has generated a record of more than 100,000 pages of comment from 40,000 persons and organizations.

“The heart of the problem is that, taken together, we face the dangerous combination of an uncertain legal framework with ongoing as well as emerging challenges to a free and open Internet,” he said at this morning’s meeting. “Given the potentially huge consequences of having the open Internet diminished through inaction, the time is now to move forward with consideration of fair and reasonable rules of the road, rules that would be enforceable and implemented on a case-by-case basis. Indeed, it would be a serious failure of responsibility not to consider such rules, for that would be gambling with the most important technological innovation of our time.”

Genachowski and commissioners Michael Copps and Mignon Clyburn voted for the rulemaking; commissioners Meredith Attwell Baker and Robert McDowell voted to “dissent in part and concur in part,” which allows the process to proceed.

The FCC has taken a stand against discrimination by network carriers for business reasons and declared in its 2005 policy statement that consumers are entitled to:

• Access the lawful Internet content of their choice,
• Run applications and services of their choice, subject to the needs of law enforcement,
• Connect their choice of legal devices to the network,
• Competition among network, application, service and content providers.

“All of these principles are subject to reasonable network management,” the policy statement said.

Genachowski in a speech at the Brookings Institution last month proposed that the FCC expand codify the principles of Internet neutrality it has been using for four years into formal rules, along with two additional principles of non-discrimination. Those principles would prevent carriers from blocking or degrading legal content over their networks; favoring some content, applications or providers over others; and provide transparency in network management, which would require carriers to make clear to users how traffic on a network is being managed to ensure that customers know they are getting the service they pay for.

Well before the proposal was released, service providers and network operators have squared off against application providers and consumer groups over the wisdom of network neutrality regulation.

“We have seen a massive amount of lobbying in a way that is unprecedented,” said Markham Erickson, executive director of the Open Internet Coalition, an umbrella group of technology companies, service providers and consumer organizations.

Incumbent telecommunications and cable companies who control the transport networks that deliver services, applications and content over the Internet, have conducted what Harold Feld, legal director of the Public Knowledge advocacy group, called a “shock and awe campaign” of misinformation about net neutrality.

Verizon Chief Executive Officer Ivan Seidenberg used his keynote address at the Supercomm trade show in Chicago Oct. 21 to laud the industry’s investments in infrastructure and technology, and warn of the dangers of net neutrality.

"Proponents of net neutrality [who suggest] that network providers like Verizon and applications providers like Google, Amazon and others occupy fundamentally different parts of the Internet ecosystem -- a binary world of 'dumb pipes' on the one hand and 'smart applications' on the other," are wrong, Seidenberg said. “It fundamentally misreads how innovation happens in a dynamic and collaborative industry.”

He warned against “pitting network providers and applications developers against each other” at the expense of encouraging investment that would expand availability of broadband.

The carrier industry, led by giants AT&T, Verizon and Comcast, responded immediately with a public relations campaign condemning what it called regulation of a traditionally open Internet. It warned that such regulation threatened industry investment in technology and infrastructure at a time when the country has adopted expansion of broadband Internet access as a priority.

Erickson, of the Open Internet Coalition, called the campaign a “classic lobbying attack to put pressure on an agency trying to do its job.”

Genachowski called much of the carrier PR campaign rumors, myths and half-truths, and pledged that the FCC process would be open and independent, balancing needs of carriers and content providers and addressing technical challenges. He said he commission will put a Technical Advisory Process in place to address engineering questions. It will be led by Julie Knapp, chief of the Office of Engineering and Technology, and Sharon Gillett, Ruth Milkman, and other senior FCC technical staff members.

Seidenberg on Oct. 21 called the communications market "one of the most dynamic and innovative" ever, and that its continued vitality and investment is necessary to the national economy.

"We've invested more than $80 billion over the last five years to build these platforms for growth -- and that's Verizon alone," he said. "In fact, if you exclude real estate, investment in information, communications and technology accounted for an astonishing 43 percent of all capital investment in the U.S. last year. This investment and innovation has never been more important than it is right now."

Derek Turner, research director of the organization Free Press, said that despite the large number of dollars spent by carriers, artificially high profits inflated by a lack of competition has actually limited investment and innovation. Investment by the industry in recent years has amounted to only 97 cents for each $1 of asset depletion, he said. Fair regulation and increased competition would likely increase investment, he said.

“It is wrong to suggest that any regulation will automatically have a negative impact on investment,” he said.

Genachowski said that net neutrality is not an “either-or” issue.

“I reject the notion that we must choose between open Internet rules and investment by service providers in their networks,” he said. “This argument is somewhat routinely made when the FCC considers rules on any variety of topics. History tells us that this, too, is a false choice.”