Tuesday, February 9, 2010 - The Progress & Freedom Foundation Blog

Demystification of Net Neutrality

"Demystifying Net Neutrality" was the topic of a February 4th Webinar hosted by The Diffusion Group and VideoNuze, which is now available on the VideoNuze website. As a presenter, I endeavored to shed light on the controversial topic, along with Chris Riley of Free Press and two moderators, Will Richmond and Colin Dixon. While we may not have achieved full demystification of the concept, some interesting points of agreement and disagreement surfaced during the hour-long program.

The moderators set up the core questions: "Is net neutrality a solution in search of a problem? Or is net neutrality required to ensure a fair and open Internet?" As the reader may imagine, I argued, as I have in the past, that net neutrality remains a solution in search of a problem, and Riley argued, as Free Press has, that it is required to ensure a fair and open Internet. In my presentation, I focused on the lack of evidence of a market problem or consumer harms to be redressed by this regulatory remedy; the FCC's lack of "ancillary" jurisdiction to impose the proposed net neutrality mandates; and the possibility that the rules would be found to infringe on the First Amendment rights of broadband Internet service provider. Similarly, Riley, in his presentation, argued that broadband ISPs have the incentive and ability to engage in harmful discrimination in the carriage of Internet traffic; that we should not permit ISPs unbounded discretion to decide what traffic gets priority treatment; that the government need not wait for harm to occur but may be proactive in protecting consumers and competition; and that net neutrality would protect the free speech rights of consumers, as Free Press has maintained.

I was pleased, however, to find at least one, perhaps inadvertent, area of agreement. Riley gave as a policy goal of net neutrality the avoidance of "unbounded agency/provider discretion." Although we disagree on the need to curb provider discretion, I am in complete agreement with Riley's policy goal of avoiding unbounded agency discretion. In fact, that is why I have been so distressed by the FCC's claims that it has ancillary -- and utterly discretionary -- jurisdiction to regulate, or not regulate, the provision of Internet services without any regard to statutory limits. In comments that I filed in the FCC's net neutrality rulemaking, I demonstrated that Congress did not delegate to the FCC unbounded discretion to decide whether and how to regulate the Internet or the provision of Internet services. Such unbounded discretion is unacceptable as both a matter of administrative law and good government.

Of course, our remedies for the problem of unbounded agency are quite different. Riley argues that the FCC needs to adopt strict non-discrimination rules to avoid the problem of a later FCC deciding, in its unbounded discretion, that a practice like that engaged in by Comcast in the infamous Le Affair BitTorrent is in fact a form of reasonable discrimination. My solution is that the FCC stick to exercising the regulatory authority that Congress has explicitly delegated to it over common carriers, television and radio broadcasters, and cable service providers without extending its reach to improbable lengths by resort to the amorphous doctrine of implicit or ancillary jurisdiction, and that Congress determine whether and how the government can best preserve the "open Internet."

Another interesting difference between our views is over nomenclature. In my comments, I criticized the FCC's attempt to distinguish what it refers to as "the Internet," which it disclaims it will be regulating, from the broadband Internet service providers it does seek to regulate. As my net neutrality comments explain, by the FCC's own definition, as well as most other definitions of the Internet, the downstream Internet service providers appear to constitute "the Internet" just as much as the upstream Internet content, applications and services providers. Riley made very clear during the question and answer period that by regulating the broadband ISPs, the FCC would not be regulating "the Internet." The latter, in his view, consists solely of the Internet content, applications, and service providers the proposed rules are designed to benefit.

This is a very convenient linguistic dividing line for proponents of net neutrality regulation, because it endeavors to permit the FCC to regulate only the broadband ISPs, without having to concern itself with either potential or actual anti-competitive or anti-consumer activities of the Internet content, applications, and services providers that may also threaten the "open Internet." Thus, it would permit the agency to maintain that the Congressional policy contained in Section 230(b) of the Communications Act, that the vibrant and competitive free market that presently exists for the Internet remain unfettered by federal or state regulation, protects only upstream software companies and the like, no matter how any of them may imperil the "open Internet." Of course, this line cannot hold.

If the stated purpose of the FCC's proposed net neutrality rules is to protect the open Internet from censorship, blockages, filtering, and similar behavior, there is no reason to stop at the edge of the broadband ISP's network. In theory, if not in reality, a dominant search engine or content provider could just as easily imperil the open Internet with insidious blockages, filters, or censorship. But is the Internet marketplace really so broken that the FCC needs to regulate any of these Internet functions and service providers? Do we think Congress intended the FCC to be regulating in this area? Do we even want to go down this path of high tech "mutually assured destruction" where all participants in the complex ecosystem that comprises the Internet find themselves subject to FCC regulation because the "open Internet" theory used by net neutrality proponents to establish FCC jurisdiction knows no bounds? I think not.

When Congress stated in Section 230(b) that it is the policy of the United States that "the vibrant and competitive free market that presently exists for Internet and other interactive computer services" remain "unfettered by federal or state regulation," I believe it meant what it said. As I wrote in my net neutrality comments, the statutory definition of "interactive computer services" includes both "information services," and "a service or system that provides access to the Internet." Thus the FCC's attempt to cleave off "Internet access service" as something separate and apart from the services Congress intended to remain unregulated will likely be found unavailing by reviewing courts. Moreover, as I wrote in my comments, the FCC has said in four separate rulings over the course of a five year period that broadband ISPs provide information services. The Internet itself is an interconnected network of networks, and it includes the networks of broadband ISPs. It is they, after all, who provide Internet service to the public. The FCC's proposed net neutrality rules simply cannot be reconciled with Section 230(b), which is of course ironic, since the FCC relies on this provision as the principle basis for its ancillary jurisdiction.

The Webinar also touched upon many other of the now familiar net neutrality topics: whether the government needs to proactively protect Internet innovation or whether there is sufficient marketplace competition do so; the effect of the proposed rules on investment incentives; whether we can trust businesses to "do the right thing;" who should control network management decisions; whether broadband ISPs should be prevented from experimenting with new Internet service business models; and whether net neutrality rules would promote or violate free speech rights under the First Amendment.

I recommend this Webinar for those interested in a good overview of the on-going and ever-evolving debate that surrounds net neutrality. While many aspects of the net neutrality controversy will remain shrouded in mystery, the Webinar may help elucidate some of these key flashpoints.

posted by Barbara Esbin @ 8:32 AM | Broadband , Communications , Net Neutrality , Neutrality , Regulation , The FCC