FCC and Net Neutrality

The FCC has published its notice of proposed rule-making on net neutrality rules (see also News Release, Genachowski Statement, 
Staff Presentation).

Under the draft proposed rules, subject to reasonable network management, a provider of broadband Internet access service:
1. would not be allowed to prevent any of its users from sending or receiving the lawful content of the user’s choice over the Internet;
2. would not be allowed to prevent any of its users from running the lawful applications or using the lawful services of the user’s choice;
3. would not be allowed to prevent any of its users from connecting to and using on its network the user’s choice of lawful devices that do not harm the network;
4. would not be allowed to deprive any of its users of the user’s entitlement to competition among network providers, application providers, service providers, and content providers;
5. would be required to treat lawful content, applications, and services in a nondiscriminatory manner; and
6. would be required to disclose such information concerning network management and other practices as is reasonably required for users and content, application, and service providers to enjoy the protections specified in this rulemaking.

One quick aside: the proposed rules are limited to broadband internet access providers: AT&T’s complaint against Google Voice will go nowhere.

The relationship between this proposal and the FCC’s earlier deregulation of fixed broadband networks seems odd. In a range of decisions from 2003 to 2005, the FCC took cable, DSL and fibre out of the scope of access obligations under the 1996 Telecoms Act. The FCC then claimed that the broadband market was sufficiently competitive that mandated third party access would harm consumers more than it would help them. (It did this, without looking at whether different market conditions prevailed in different geographic areas; drawing a single overall conclusion on the basis of widely differing conditions in different geographic areas would seem difficult to justify from an antitrust point of view.)

There are probably three interpretations of the reasoning behind the FCC’s proposed rules:
(1) competition (and antitrust enforcement) will not deliver the desired outcome for consumers;
(2) the FCC under the new administration is now doubting the efficacy of its previous deregulation;
(3) Both of the above.

I suspect that the answer is (3): even if the FCC were to reverse its position on (2), it would still want to maintain net neutrality rules. This also appears to be the EU position: the current draft of the legislative changes to the telecoms regulatory framework has both open access and net neutrality provisions.

I haven’t seen any comments from the new administration FCC on the previous FCC’s deregulation of broadband, but I suspect that it is building a case to reverse it, with the Berkman Center draft study being the first step.

The draft (press release, study), published for comments earlier this week, has a fairly explicit conclusion:

Our most surprising and significant finding is that “open access” policies—unbundling, bitstream access, collocation requirements, wholesaling, and/or functional separation—are almost universally understood as having played a core role in the first generation transition to broadband in most of the high performing countries; that they now play a core role in planning for the next generation transition; and that the positive impact of such policies is strongly supported by the evidence of the first generation broadband transition.

If this conclusion remains in the final version of the study, that would be a big push towards the FCC revising its access regulations, and would bring the US and EU regulatory systems into much closer alignment.