Federal regulators are putting off efforts to regain authority over the nation's internet providers while they seek renewed public input on net neutrality.
The delay shows the intractability of the debate over wireless and wireline openness rules, and the ongoing shock waves of last month's joint policy proposal from Google and Verizon to create a framework for Congress to enact new competitive rules for ISPs. That proposal in turn seeks to fill a vacuum left by a federal appeals court, which effectively stripped the FCC of its authority to oversee broadband earlier this year.
The delicacy of the negotiations to reassert federal control of the internet were made clear on Wednesday when the FCC announced that, due to unnamed recent events -- a clear reference to its failed talks and Google and Verizon's recent policy "compromise" statement -- it needs even more comments on "what framework will guarantee Internet freedom and openness, and maximize private investment and innovation."
Specifically, the FCC wants feedback on whether ISPs should be allowed to build special web services for their own customers (.pdf), or if they should be prevented from competing directly with companies that create services for the general internet and thus depend on unbiased service from network providers.
At stake is an arcane administrative ruling issued during the Bush administration that reclassified internet providers as "information services" rather than "telecommunications services." The FCC is specifically authorized to regulate only the latter. Now anti-regulatory factions, which naturally include the giant telecom monopolies that control the fixed and wireless broadband markets in the U.S., are fighting tooth and nail to keep the distinction intact, and the FCC off their turf.
Until the FCC finds a way through the thicket, there is still no federal authority that can prevent your ISP from dictating what browser you use, what brand of mobile phone computer or router you plug into the network or blocking your favorite website or protocol.
Your ISP and mobile phone company can make their services go faster than their competitors without fear of federal regulators fining them, and they can throttle your connection at any time, for any reason, without having to explain to anyone why they did it.
Free market groups argue that's fine, since the market is competitive enough that ISPs will have to play fair with their customers. Others argue that the very basis of the internet is a transport layer that simply works, tries its best and doesn't play favorites, and letting large telecoms muck with that puts all the innovation of the last two decades and those of the decades to come at risk.
Google and Verizon had long been at opposite ends of the net neutrality debate. Google, which makes its money on the web, wants the government to ensure that people have the right to use whatever services, devices and applications they want, and that wireless and traditional wired ISPs should be required to act as disinterested conduits -- simply ferrying packets back and forth. Innovation, according to Google and many net neutrality supporters, happens in the development of applications and services, not in the network itself, regardless of whether that network is cable or 3G.
But telecoms including Verizon, the nation's largest wireless company and one of its biggest fixed broadband companies, protest that such rules would be heavy-handed, reduce innovation and throttle investment in new infrastructure, especially in the wireless world.
Making good on an Obama campaign promise, the FCC announced last fall that it was going to formally adopt six broad principles of so-called net neutrality. The first four had been established informally in 2005 for cable and DSL customers: People would have the right to use whatever legal online services, devices and applications they wanted, and Americans would have the right to choose service providers from among various competing ISPs.
FCC head Julius Genachowski, a law school classmate of President Obama, wanted to add two more rules: One, broadband providers cannot discriminate against services or applications by slowing them down, and two, broadband providers must tell customers how its engineers manage the network congestion.
The FCC also wanted apply some of the rules to the growing mobile broadband industry, something that Skype and Google had been fighting for. That fight included a $4.6 billion bet by Google that forced Verizon to buy wireless spectrum with open access rules applied to it. (The FCC has never ruled one way or the other if the original rules applied to wireless.)
Last fall's FCC announcement had the wireless industry howling about government interference, Wall Street began punishing telecom stocks by forseeing lower (though steady) profits, and Republican senators threatening to cut off the FCC's funding.
Despite that, the FCC seemed on track to put the new rules into place.
Then, in December, a federal appeals court struck down the original four rules, saying the FCC lacked any real power to make rules for the nation's ISPs after the agency re-classifed ISPs as information rather than telecom services in the early 2000s.
In response, the FCC announced this spring that it would undo the Bush adminstration FCC's reclassification -- a move that some critics have blasted as an intellectually dishonest, de-regulatory sleight of hand -- and bring ISPs under their purview once again as "telecommunication providers." That would give the FCC the power to enforce basic rules on ISPs and carry out the national broadband plan's mandates to bring fast broadband to the entire country.
Not surprisingly, the FCC's reclassification proposal met with even stronger resistance from telecoms, free market groups and Congress, including large numbers of Democrats. Critics worried that the FCC would seek to apply the rate-setting authority it currently wields over telephone service to the internet. In fact, under the FCC's proposal, only a few of the rules that apply to phone companies would be applied to ISPs.
To figure out how to counter this political logjam, the FCC convened a series of private meetings with the largest industry players this spring, but that attempt at a compromise fell apart when Google and Verizon, which have become close business partners due to Google's drive into the mobile internet market with its Android operating system, issued their own compromise policy and pressed Congress to pass it.
That framework would require cable and DSL broadband providers to allow whatever services, devices and applications a user might want, not pick favorites among applications, and be transparent about how they manage their network. However, ISPs would have the right to build their own separate services (for instance, a Hulu-competitor) just for their own customers and wireless companies wouldn't have to obey the rules at all.
So now, the FCC is asking for more information about what those "special" services might be and how they would affect the internet at large.
In a worst case scenario, such services could lead to a Balkinzation of the internet, where innovative new services could be undermined by ISPs seeking to defend their turf from rivals. It is unclear what types of services ISPs might ultimately seek to build or block -- however, video offerings that compete with cable, such as Apple's newly announced Apple TV rental service, are considered a prime example.
Wednesday's request for public input also buys the FCC some time to find a path to policing ISP bandwidth-shaping policies, which can be abused to block or degrade data intensive services, such as YouTube and peer-to-peer file sharing.
Indeed, the FCC tried to make clear Wednesday it's not giving up.
"As we move forward, the FCC will continue to be vigilant in guarding against threats to Internet freedom. We will be focused on a vision of a ubiquitous and superfast Internet, with flourishing entrepreneurship and vibrant start-ups, and massive private investment in Internet infrastructure, content, and services -- an Internet that is an engine for our economy, and provides a world of knowledge and free speech accessible to all."
Clearly, the reclassification is the cleanest, fastest and most legally sound path. But the opposition from the well-connected telecom industry is fierce and that path's biggest corporate backer, Google, has abandoned it. Furthermore, some Republicans are threatening to make net regulation a campaign issue.
Those who want to file comments about "special services" can do so at the FCC's website.
UPDATE: The story and the headline was edited to reflect that the FCC's unnamed recent events referred to more than just the Google-Verizon compromise proposal.
Photo: Grabbing fiber optic cables. Kainet
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See Also:
- Here's The Real Google/Verizon Story: A Tale of Two Internets ...
- Why Google Became A Carrier-Humping, Net Neutrality Surrender Monkey
- Court Drives FCC Towards Nuclear Option to Regulate Broadband
- FCC Backs Net Neutrality — And Then Some
- FCC Offers Regulation Lite for Broadband Providers, Pleasing Few
- FCC to Release Ambitious, But Pragmatic, National Broadband Plan
