FCC Chairman Julius Genachowski

Federal Communications Commission Chairman Julius Genachowski has gotten the message.  After a report earlier this week in the Washington Post that the chairman was contemplating leaving broadband unregulated, without Net Neutrality protections, thousands of calls and e-mail messages poured into FCC headquarters protesting the report and asking for action.  Many also called their members of Congress and the White House demanding the administration keep its word on broadband reform policies.

Late Wednesday, the Wall Street Journal published news that Genachowski had apparently changed course:

In a move that will stoke a battle over the future of the Internet, the federal government plans to propose regulating broadband lines under decades-old rules designed for traditional phone networks.

The decision, by Federal Communications Commission Chairman Julius Genachowski, is likely to trigger a vigorous lobbying battle, arraying big phone and cable companies and their allies on Capitol Hill against Silicon Valley giants and consumer advocates.

Breaking a deadlock within his agency, Mr. Genachowski is expected Thursday to outline his plan for regulating broadband lines. He wants to adopt “net neutrality” rules that require Internet providers like Comcast Corp. and AT&T Inc. to treat all traffic equally, and not to slow or block access to websites.

The Journal’s framing language about “decades-old rules” aside, the decision by the chairman to reclassify broadband as a “telecommunications service” was the only way forward for an agency who had its authority cut from beneath it by a recent court decision.

The news that Genachowski was considering leaving things as-is, totally deregulated, met with opposition from both leaders of the House and Senate Commerce Committees which have jurisdiction over the FCC.  Rep. Henry Waxman (D-California) and Sen. Jay Rockefeller (D-West Virginia) wrote Genachowski urging the Commission to consider “all viable options” to regain authority over broadband.  When Congress speaks, the FCC listens.

The Commission had two choices — keeping broadband “regulated” under Title I of the Telecommunications Act under the now court-discredited “information service” paradigm, or reclassifying it under Title II as a “telecommunications service,” where the Commission enjoys the prospect of already court-tested and approved authority to regulate.  Either way assured legal challenges, but under Title II the Commission faced just a single lawsuit to reaffirm its authority to regulate such services.  Under Title I, every reform attempted by the Commission would face provider lawsuits, with precedent on the side of the cable and phone companies to win.

Net Neutrality opponents claim the policy would be ruinous to broadband providers, but when SBC and AT&T merged into a new super-sized AT&T, the company agreed to adhere to Net Neutrality guidelines for two years and didn't suffer any ill effects.

The telecommunications industry and their allies have attempted to frame such reclassification as a government takeover or regulation of the Internet.  Some of these companies even threaten to challenge any reclassification as a violation of their First Amendment rights, an absurd notion for a company that transports content from third parties to its customers.  Since when does a provider get to assert ownership over speech from someone else?  It’s overreach like this that helped fuel the demand for Net Neutrality in the first place.  The policies the FCC seeks to enact as part of the National Broadband Plan, including Net Neutrality, do not regulate or “take over” the Internet — it guarantees that providers can’t block or control that content for monetary gain.

Genachowski is signaling he’s intent on reclassifying broadband not to saddle broadband providers with 1940s telephone regulations, but to assure the Commission and the Administration it can bring the National Broadband Plan to reality without provider roadblocks thrown up along the way.

Sources have leaked details to the media that suggest Genachowski will propose a novel “third way” of broadband reclassification — asserting the right to regulate broadband under Title II, but exempting broadband providers from most of the regulatory provisions that were written to deal with Ma Bell.  In other words, the changes would turn the clock back, before the DC Circuit Court threw out the FCC’s regulatory authority to spank Comcast for throttling its customers’ broadband speeds.  With Title II authority in place, Genachowski hopes a court hearing the same case would have found for the FCC, not against it.

The telecommunications industry has already gone over the top suggesting Genachowski’s plan represents Broadband Armageddon.

One of the industry’s good friends is Senator John Ensign (R-Nevada).  He has their talking points down word for word:

“Using this heavy-handed approach to regulation … will jeopardize private investment and innovation in broadband and inject regulatory uncertainty throughout the entire Internet,” Ensign said in a statement.

“We would expect a profoundly negative impact on capital investment,” warned Stanford Bernstein analyst and lover of big cable Craig Moffett in a research note to clients Wednesday night titled “The FCC Goes Nuclear.”

“The only potential winners are the satellite providers, DirecTV and Dish Network, for whom incremental broadband regulation would dramatically reduce the risk of competitive foreclosure in the video business at the hands of bottleneck broadband providers,” he wrote.

The hue and cry over any broadband regulations or court decisions unfavorable to the industry always results in claims it will “dry up investment,” “retard growth,” or downright ruin the Internet for everyone.

Some in the business press even suggest today’s unveiling of Genachowski’s “third way” represents uncharted waters for America’s broadband story.

But how soon they forget.

When SBC and AT&T won approval to merge, one of the conditions was that the new super-sized AT&T respect Net Neutrality concepts for a period of two years.  They agreed:

Net Neutrality
1 . Effective on the Merger Closing Date, and continuing for 30 months thereafter, AT&T/BellSouth will conduct business in a manner that comports with the principles set forth in the Commission’s Policy Statement, issued September 23, 2005 (FCC 05-151).

2. AT&T/BellSouth also commits that it will maintain a neutral network and neutral routing in its wireline broadband Internet access service. 15 This’ commitment shall be satisfied by AT&T/BellSouth’s agreement not to provide or to sell to Internet content, application, or service providers, including those affiliated with AT&T/BellSouth, any service that privileges, degrades or prioritizes any packet transmitted over AT&T/BellSouth’s wireline broadband Internet access service based on its source, ownership or destination.

So for two years, AT&T lived under the same rules the FCC seeks to enforce nationwide for all broadband providers.  Did the company shut down?  No — it grew larger with additional mergers and acquisitions.  Did  broadband expansion stop?  No — AT&T has since unveiled its U-verse service and faster broadband in many cities across its service area.  Has it reduced investment in broadband?  What do you think AT&T is spending on deploying U-verse?

The sky never fell, the investment never disappeared, and there was no panic in the streets.  When consumer protections are enacted, the same companies that are currently proclaiming that such changes will ruin their businesses will be singing a different tune to their Wall Street investors once they are enacted.

Read Chairman Genachowski’s Full Statement Below the Jump!

… Continue Reading

Lauderback

Establishing a free and open marketplace for competitive broadband is impossible unless the Federal Communications Commission asserts its authority and enacts strong Net Neutrality protections.

Those are the views of self-proclaimed libertarian-leaner Jim Lauderback who runs Revision3, an Internet-based television network.

Penning a column in today’s Forbes, Lauderback strongly believes broadband services should be reclassified as a Title II common carrier service, and should be regulated by the Federal Communications Commission.

I fundamentally believe that customers should have unencumbered access to any service they wish to use or run, up to the bandwidth limits that they have purchased. The big broadband companies should be prohibited from granting favored bandwidth and quality of service preference to any site or application.

Why? Because Verizon, AT&T and Comcast are for-profit companies, and without restrictions they could–and probably would–grant preferred network access to their own services. Imagine the power Comcast could wield to promote its own video networks, particularly if the NBC merger is approved. Why wouldn’t Comcast ensure that NBC, G4, Syfy and MSNBC look great when streamed over its broadband network, while simultaneously throttling YouTube, CBS’ TV.com, movie and sports streams from Netflix and Major League Baseball, along with any other non-company owned video services (including those from my company, Revision3)? Comcast, Verizon and AT&T are in business to make money, and anything that will make their owned and operated networks more successful is just good business. It works for them, but not for their customers.

Lauderback declares today’s broadband marketplace a oligarchy — one cable and one phone provider.  With the increasing prevalence of term commitments, bundling, and other contractual obligations, many of today’s providers are successfully locking their customers in place.

“Service bundling gives these two even more power over their customers and makes it even harder to switch,” he writes. “I discovered this first hand last week, when I tried to move from AT&T’s increasingly spotty DSL service to Comcast. Comcast was happy to take my money, but it would have cost me almost twice as much unless I also shifted my TV and local phone service to Comcast.”

Those who support open hand-to-hand competitive combat in a free market understand that healthy competition cannot exist when a handful of players get to control how the game is played.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/PBS Bill Moyers Michael Copps Interview About Net Neutrality 4-23-10.flv[/flv]

Last Friday, Federal Communications Commissioner Michael Copps appeared on PBS’ Bill Moyers’ Journal.  He discussed the current state of America’s broadband industry, the implications of not having Net Neutrality protections, and how the Internet is transforming public debate and citizen-powered democracy across the country.  (4/23/2010 — 23 minutes)

BILL MOYERS: The industry wrote a letter to the commission and said that advocates of an open Net who are coming to the FCC and asking you to reclassify what you do as telecommunications want to steer the debate, and I’m quoting from the letter, “in a radical new way.” I mean, they’re calling you extremists and they’re calling you radical.

MICHAEL COPPS: Because I want to call telecommunications, “telecommunications” and go back to the openness that has characterized the net since it was first invented in the laboratories of the Department of Defense. That’s not extreme. That’s not radical. That’s called going back to basics. That’s called consumer protection 101.

BILL MOYERS: How threatened is the whole idea of an open Net?

MICHAEL COPPS: Oh, I think very. I think very. I think there are powerful players that are opposed to it. Are in a position to make their influence felt. None of these things are going to come easy. We’ve just been through the health insurance debate. We’ve got the financial debacle. None of this stuff gets solved without taking on taking on a fight. The government doesn’t work that way. You’ve studied this history, I’ve studied this history. It’s painful, it needs movements, it needs grassroots support, it needs the people.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Rockefeller Urges Genachowski to Regain Broadband Authority 4-14-10.flv[/flv]

At the Senate Commerce hearing on April 14, Sen. John Rockefeller (D-WV) told FCC Chairman Julius Genachowski that the agencies authority to protect an open Internet and connect more people to broadband is at risk because of the Comcast case.  Rockefeller pledged to support the chairman in reestablishing the agency’s authority to stop the Internet from falling under the control of companies like AT&T, Comcast and Verizon.  (3 minutes)

DC Circuit Court

The U.S. Court of Appeals for the District of Columbia has ruled the Federal Communications Commission has no authority to tell the nation’s largest cable operator to stop throttling broadband traffic crossing its network.  In a widely anticipated 36-page unanimous decision, the Court found the Commission exceeded its authority when it censured Comcast in 2008 for interfering with BitTorrent traffic.

The implications of the ruling could derail Commission plans to enforce Net Neutrality and implement the wide-ranging National Broadband Plan announced in March.

Judge David Tatel, writing for the court, found the Commission erred when it relied on policy statements issued by Congress as the basis for its authority to regulate broadband service:

The teaching of Southwestern Cable, Midwest Video I, Midwest Video II, and NARUC II—that policy statements alone cannot provide the basis for the Commission’s exercise of ancillary authority—derives from the “axiomatic” principle that “administrative agencies may [act] only pursuant to authority delegated to them by Congress.” Policy statements are just that—statements of policy. They are not delegations of regulatory authority.

Tatel

The seed for today’s authority-stripping ruling was first planted by the Bush Administration, which favored telecommunications deregulation.  When the FCC was tasked with finding a way to regulate fast-growing broadband, the Republican majority on the Commission was receptive to industry arguments that over-specific broadband regulation could hamper broadband development and have unintended consequences on private investment.  Urged instead to develop a general policy towards broadband, then FCC Chairman Michael Powell presided over the development of an “Internet Policy Statement” containing four informal principles the agency would rely on when assessing broadband:

1. Consumers are entitled to access the lawful Internet content of their choice.
2. Consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement.
3. Consumers are entitled to connect their choice of legal devices that do not harm the network.
4. Consumers are entitled to competition among network providers, application and service providers, and content providers.

The Commission’s often vague Internet Policy Statement was fatally flawed from day one, according to some legal experts.  First, the Statement was never codified by the Commission’s own rulemaking procedure.  Second, the Commission framed the broadband policy as a set of “guidelines,” a term considered legally vague.  Third, the FCC relied on the concept of “ancillary” authority — borrowing regulatory authority from so-called “policy statements” coming from Congress, to claim jurisdiction.

Even though some in the industry favored total deregulation of broadband, most providers agreed to adhere to the Four Principles, until Comcast decided it had the right to throttle down the speed of customers using file swapping software.  That violated Principle #2, and the Commission censured Comcast for purposely interfering with network traffic.

Comcast sued, claiming the Commission lacked the authority to regulate its network management policies.  Comcast first denied it was throttling broadband traffic, but later admitted the company was purposely governing the speed available to such software applications to protect their other customers.  Comcast argued that certain file swapping software does in fact harm its network (Principle #3) because the software utilizes as much broadband capacity it can find to move files back and forth.  Since Comcast customers in a neighborhood share a limited amount of bandwidth, a small number of customers ‘maxing out their connections’ running such software could potentially slow down everyone  else in the neighborhood.

Ultimately, today’s court decision agreed with Comcast — the Federal Communications Commission lacks authority over broadband.

It also did the industry one better by warning any regulatory authority the Commission believes it has over broadband better be backed up with specific authority granted by Congress, or the court may find those policies vulnerable as well.

In short, the court just fired a warning shot suggesting the FCC has no authority to enact Net Neutrality protections or the National Broadband Plan, at least not under Kevin Martin’s flawed approach.

The ruling comes as no surprise.  The attorney for the FCC found a hostile reception from the court during oral arguments back in January.  Where was the specific authority, granted by Congress, to oversee broadband policy they asked?  Why is the Commission relying on general principles to govern broadband?  By the end of the session, the FCC’s lead attorney was foreshadowing the imminent loss of his case by asking the court to make the decision against the FCC a teachable moment — giving advice in the ruling as to how to write policies that -will- survive a court test.  The court wasted no time telling the attorney that wasn’t their job.

Public interest groups and others advocating Net Neutrality and the National Broadband Plan issued statements warning about the implications of an industry freed from regulatory oversight.

S. Derek Turner, research director for Free Press:

“The decision has forced the FCC into an existential crisis, leaving the agency unable to protect consumers in the broadband marketplace, and unable to implement the National Broadband Plan. As a result of this decision, the FCC has virtually no power to stop Comcast from blocking Web sites. The FCC has virtually no power to make policies to bring broadband to rural America, to promote competition, to protect consumer privacy or truth in billing. This cannot be an acceptable outcome for the American public and requires immediate FCC action to re-establish legal authority.

“This crisis is not a result of a weak congressional law, but a direct consequence of the previous two Commissions’ misguided and overzealous attempts to completely deregulate America’s communications networks. Past FCC actions created a huge loophole in the law that leaves the agency unable to protect consumer privacy or promote universal broadband access.

“The FCC must have the authority to carry out its consumer protection and public interest mission in the 21st-century broadband marketplace. The current Commission did not create this existential crisis, but it now has no choice but to face these tough jurisdictional questions head on, and do what is necessary to protect consumers and promote competition.”

Ryan Singel – Wired Magazine:

A broadband company could, for instance, ink a deal with Microsoft to transfer all attempts to reach Google.com to Bing.com. The only recourse a user would have, under the ruling, would be to switch to a different provider — assuming, of course, they had an alternative to switch to.

Companies can also now prohibit you from using a wireless router you bought at the store, forcing you to use one they rent out — just as they do with cable boxes. They could also decide to charge you a fee every time you upgrade your computer, or even block you from using certain models, just as the nation’s mobile phone carriers do today.

While this might seem like a win for the nation’s broadband and wireless companies, the ruling could be so strong that it boomerangs on them. For instance, if the FCC is left without the power to implement key portions of the National Broadband Plan — a so-far popular idea — then Congress or the FCC may have to find a way to restore power to the commission. That could leave the FCC stronger than it was before the ruling.

Gigi Sohn, Public Knowledge:

“Today’s Appeals Court decision means there are no protections in the law for consumers’ broadband services. Companies selling Internet access are free to play favorites with content on their networks, to throttle certain applications or simply to block others. In addition, as of now, the Federal Communications Commission’s (FCC) ambitious National Broadband Plan to help boost the economy is in legal limbo. The ability of the FCC to support broadband through universal service is in jeopardy, as is the agency’s ability to protect consumer privacy, ensure access to broadband-based emergency communications or promote access to broadband for the disabled. In our view, the FCC needs to move quickly and decisively to make sure that consumers are not left at the mercy of telephone and cable companies.

“If it chooses, the Commission can continue to roll the dice and let the courts decide each time it wants to try to put some consumer protections on a broadband service. The court decision left open that option.

“We have a different idea. The FCC should immediately start a proceeding bringing Internet access service back under some common carrier regulation similar to that used for decades. Some parts of the Communications Act, which prohibit unjust and unreasonable discrimination, could be applied here. The Commission would not have to impose a heavy regulatory burden on the telephone and cable companies, yet consumers could once again have the benefit of legal protections and the Broadband Plan could go forward. The American public deserves no less.

“We need to emphasize that no one is talking about regulating ‘the Internet.’ No one is talking about regulating search engines or Web sites. We are talking about re-applying policies to a telecommunications service that the FCC incorrectly abandoned. That is the most simple solution and it’s the correct one.”

The FCC, despite the decisive loss in court, claims it will carry on.

“Today’s decision invalidated the prior commission’s approach, but in no way disagreed with the importance of preserving a free and open Internet,” FCC spokeswoman Jen Howard said in a statement.

Nick Summers, writing for Newsweek’s ‘Techtonic Shifts’ blog, believes FCC Chairman Julius Genachowski is likely to aggressively respond to today’s court decision by employing the “nuclear option,” reclassifying broadband Internet as a communication service just like the nation’s phone system, bringing it fully under FCC regulation.

Would Genachowski go that far, undoing virtually all of the Bush-era FCC’s policies? Yes. In September, he gave a major address about net neutrality without ever actually uttering the phrase. But he concluded with these strong words:

“We are here because 40 years ago, a bunch of researchers in a lab changed the way computers interact and, as a result, changed the world. We are here because those Internet pioneers had unique insights about the power of open networks to transform lives for the better, and they did something about it. Our work now is to preserve the brilliance of what they contributed to our country and the world. It’s to make sure that, in the 21st century, the garage, the basement, and the dorm room remain places where innovators can not only dream but bring their dreams to life. And no one should be neutral about that.”

The importance that Genachowski et al. place on net neutrality has never remotely been in doubt. In February 2009, months before he was confirmed as FCC chairman, at a private dinner in Manhattan, Genachowski spoke about the Internet’s role in the election of President Obama and in America’s future. He was circumspect about details, but Genachowski spoke unreservedly about the need for certain core protections if the country was to remain at the fore of the Internet revolution. It’s just that important.

[flv]http://www.phillipdampier.com/video/CNBC FCC Loses Comcast Case 4-6-10.flv[/flv]

CNBC reports the FCC’s loss in court could open the door to metered broadband service in the United States.  (2 minutes)

[Article Correction 4/15/2010: The original piece laid blame for the classification of broadband as an “information service” on former FCC Chairman Kevin Martin.  In fact, the classification was made by former FCC Chairman Michael Powell, who served during the first term of the Bush Administration.  We regret the error.]