In a 3-2 vote along party lines, on February 26, 2015, the United States Federal Communications Commission voted to approve the so-called “net neutrality” rules. By treating all Internet traffic equally, these rules are designed to preserve online competition. FCC Chairman, Democrat Tom Wheeler (reflecting the position of the Obama Administration), announced that broadband access to the Internet was to be classified as a “telecommunications service” and, as a result, the FCC would be applying Title II of the Communications Act of 1934 (which prior to now has applied to telephone carriers) to Internet service providers. With this ruling, the FCC declared that there would be governmental enforcement of the concept of “net neutrality.”
While the detailed rules were not released at the time of the FCC’s announcement, the FCC did announce a few key elements of its ruling. First, and most profoundly, the FCC has stated that it will regulate the Internet, just as it regulates other telecommunications and broadcasts. Second, the newly approved rules prohibit Internet service providers (“ISPs”), such as Comcast, Verizon, AT&T, etc., from blocking or slowing the traffic of their rivals. Third, and probably most significantly, the rules prohibit ISPs from imposing new fees for faster download speeds that would create paid prioritization (or “fast lanes”) for certain Internet traffic. The FCC’s ruling seeks to protect smaller websites and Internet services who could not compete with larger, more commercially successful websites if they could not afford to pay higher fees to ISPs who imposed a “fast lane” fee. The FCC also felt that allowing for such “fast lane” fees would lead to higher charges to consumers because the companies who chose to pay those fees would simply pass along the increased costs to its customers.
What does this all mean? For companies that rely on the ability to move massive amounts of data over the Internet quickly (such as Netflix), this ruling means that ISPs like Comcast (which also is a competitor of Netflix for streaming movies through its Xfinity service) cannot charge higher fees to Netflix than it charges to any other customer, even though Netflix uses enormous amounts of bandwidth.
Proponents of net neutrality (which includes representatives of many in the technology industries) have argued that FCC enforcement of net neutrality was essential to ensure that there would be a “level playing field” for small companies to compete in the Internet space. By prohibiting the large ISPs from deciding whether to allow faster downloads of certain sites, these proponents argued that net neutrality would protect Internet entrepreneurs, small websites and consumers, by enabling greater competition and consumer options. These proponents seem comfortable with the U.S. government taking a role in regulating the Internet.
While there are many supporters of net neutrality (the FCC reportedly received over four million comments from the public supporting it), the FCC’s newly announced rules are not universally being applauded. In fact, it is highly likely that they will be challenged in court (AT&T already has announced that it will be filing such a suit) and the Republican-controlled Congress may introduce new legislation to overturn the rules. Interestingly, free speech advocates seem to fall on both sides, depending on their view of what interests are being protected by these rules.
The opponents of the net neutrality rules have various reasons for opposing them. Some feel that it will be the first step to a government takeover of the Internet in the U.S. While other countries (such as Russia and China) long have advocated and imposed governmental control over access to the Internet by its citizens, the US historically has sought to preserve an open and unregulated Internet. Second, Title II of the Communications Act, say the opponents, was never designed to be used with 21st century cyber-technology; rather, it was enacted in 1934 to regulate the telephone companies. Third, the opponents fear that these rules will allow the FCC to set rates that can be charged and by imposing burdensome regulations, both of which will lead to increased costs to consumers. Finally, and perhaps most significantly, the opponents fear that these rules will stifle competition in the Internet space by discouraging investment by the larger ISPs in new technologies.
The proponents of net neutrality have won the first round. However, given the changed makeup of Congress following last November’s mid-term elections and the likely litigation challenging these rules, it is clear that the net neutrality debate is far from over.
