Cause for consumer concern in ruling against FCC

Julius Genachowski , chairman of the Federal Communications Commission, which lost a ruling in part to Verizon. Bloomberg
Julius Genachowski , chairman of the Federal Communications Commission, which lost a ruling in part to Verizon. Bloomberg
Posted: January 17, 2014

Care about how much you pay for high-speed Internet access, or for video and other services or products you might want to buy over the Web?

Concerned about barriers to innovation - Internet roadblocks or tolls that might slow or stop the next Facebook or eBay, or kill some company with a data-heavy application you can't even imagine?

Conflicted over the growing power of a handful of companies, such as Philadelphia's Comcast Corp., that build impressive empires partly by choking off potential competition?

If you answered yes to any of those, you should care about net neutrality and this week's decision favoring Verizon Communications in its challenge against the Federal Communications Commission.

On Tuesday, the U.S. Court of Appeals for the District of Columbia Circuit voided key provisions of the FCC's 2010 "Open Internet" order - its most recent effort to ensure that the Internet remains something more than another channel on cable TV.

The court rejected the FCC's approach - in particular, its rules that treat broadband providers like traditional phone companies in order to bar them from discriminating against or blocking any data distributed over their networks.

The court said the FCC could not take that approach without explicitly reversing its own 2002 ruling that classified broadband as an "information service," not a "telecommunications service."

Thankfully, the ruling dodged two of Verizon's more extreme claims.

One was that broadband providers are essentially publishers, entitled under the First Amendment to "editorial discretion" over any data flowing to subscribers' homes. The other was a claim that any FCC rule limiting a broadband provider's ability to charge tolls for content traversing its network was an unconstitutional taking of property.

The result? Advocates such as Harold Feld, senior vice president of Public Knowledge, and Susan Crawford, a visiting professor at Harvard Law School and author of 2012's Captive Audience, say the court tossed the ball back to the FCC but left lots of room for a return volley.

"Common-carrier" rules are the kind traditionally imposed on network industries such as railroads or phone companies that have to carry anybody's freight or conversations. Crawford says regulators' decision a dozen years ago to exempt broadband was based on a wishful faith in markets and competition over the wisdom the nation acquired, more than a century ago, as other network industries arose.

Ironically, Feld says, the court also concluded that 1996's Telecommunications Act gives the FCC broad authority to regulate broadband providers on a case-by-case basis.

"The FCC could throw out data caps under this ruling," he says. "It could say, 'Your data cap is so low, it discourages people from using the Internet.' "

It's not clear what happens next. Although Comcast promised to abide by the Open Internet rules for seven years to win FCC approval for its takeover of NBCUniversal, we could start seeing some practices that neutrality advocates warn against.

For instance, Verizon and other providers could block access to content from streaming companies such as Netflix unless they pay new tolls.

Feld and Crawford say it's well past time for the FCC to admit its mistake and move to protect consumers and Internet innovators over the interests of a small group of powerful network owners.

"When it comes to high-capacity, high-speed Internet access, the vast majority of Americans have just one choice: their local cable monopoly," Crawford says. Verizon's FiOS is likely to reach just 14 percent of the country, and competition elsewhere is rare.

Even with FiOS, broadband is little more than a duopoly - not much better. It's no surprise Comcast's average revenue per customer has risen nearly 140 percent over the last decade, according to Crawford. That's what dominant companies can do.

Broadband isn't just a telecommunications service - it's the telecommunications service of the 21st century. It's time to acknowledge the obvious.

215-854-2776 @jeffgelles

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