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Debate Over Net Neutrality Plays Out Across Atlantic

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Americans expect broadband Internet to function like the electricity in an apartment where utilities are included in the rent — plug in a lamp or a refrigerator and, no matter how much juice they drain, the cost is the same every month. Similarly, when you connect a laptop to the Wi-Fi at home, you can view millions of videos of gamboling kittens on YouTube without paying your Internet service provider (ISP) by the minute or browsing by the byte.

By that same token, just as Frigidaire doesn’t owe money to the power company for providing the electrical current and infrastructure needed for its appliances to function, YouTube doesn’t fork over a slice of its revenues to Comcast or Verizon on account of its users watching videos over their ISP pipelines — at least not yet.

If this is an arrangement you enjoy, thank “net neutrality,” a regulatory principle the Federal Communications Commission embraced a decade ago and formally adopted in 2010. Its Open Internet Order says that ISPs must provide equal access and speed to all Internet traffic and they can’t charge customers more for visiting certain websites or for using services that eat lots of bandwidth. Nor can the ISPs make the bandwidth-hogging websites pony up.

But a recent decision by the D.C. Circuit’s U.S. Court of Appeals has curdled that status quo and, some say, thrown the Internet as we know it into jeopardy. The ruling favored Verizon in a complaint against the FCC and curtailed the agency’s powers, forbidding it from treating ISPs like phone companies unless it fundamentally changes how they are designated. The judge did leave open the possibility, however, that the FCC could still regulate the Internet under other reworked conditions, albeit with significantly less latitude than the agency had claimed.

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Photo: ShutterStock

Already, there’s been an outcry among net neutrality advocates over this and the pending merger between Comcast and Time Warner Cable, the nation’s two biggest ISPs, as consumer advocates worry that the new company would be a sprawling monopoly that could gouge customers.

On top of that, after the court decision, reports grew that ISPs were throttling the bandwidth for Netflix videos, resulting in hiccups for users. Then, at the end of February, the world’s largest video-streaming service announced it had reached a deal to pay Comcast for faster transmissions.

For now, the FCC is working to fine-tune its regulations to comply with the ruling while keeping safeguards in place to prevent ISPs from favoring certain content providers that pay more (a cost that many worry will trickle down to consumers). The goal is to preserve the Internet “as an open platform for innovation and expression,” as the FCC’s new chairman, Tom Wheeler, put it in a statement.

The flurry of developments in the longstanding legal fight has thrust the highly technical and once obscure issue of net neutrality before American consumers like never before.

Some contend that rich companies like Netflix, which reportedly accounts for one-third of all Internet traffic in North America, should have to pay extra because, after all, they are using the infrastructure and network capacity that ISPs have invested megabucks to build. But advocates of the so-called “open Internet” argue that if ISPs are allowed to extract a premium for better service from deep-pocketed outfits like YouTube and Netflix, then the nonprofit websites, news publications and the little guy who runs an esoteric blog from his living room will be outspent and may suffer or even disappear. That, they say, will render many features of the Internet that we cherish and rely on unsustainable. It’s a slope they say we can’t afford to slip down, for the sake of the free flow of information, creativity and competition.

Just as this debate is roiling in the United States, net neutrality also has been grabbing headlines across the pond as the European Union voted on a landmark package of regulations on telecommunications policy.

The parallel efforts to deal with the issue offer an interesting comparison of U.S. and E.U. governance and regulatory culture. And the ultimate outcomes of each will shape the Internet around the globe for years to come, as ISPs, mobile operators and content creators all look ahead to determine their business models.

There are some key distinctions in how net neutrality is being addressed on each side of the Atlantic. For the most part, in the United States, net neutrality has been a distinct issue that is being judged on its own merits. In the European Union, however, it is sandwiched together with a broader desire among many citizens and politicians to reform the telecommunications markets of the 28 member states.

To that end, Neelie Kroes, the European Commission’s digital agenda chief, has pushed a “Connected Continent” single telecoms market that would integrate the member states’ technologically, akin to how they have been drawn closer together economically and politically.

As is, each nation in the EU writes its own laws regarding net neutrality. In some countries, ISPs are allowed to boost revenue by cutting side deals with Google, for example, whereby YouTube’s parent company pays the ISP for its websites to load faster.

For many Europeans, however, the big thorn that telecom reform promises to remove is the costly, unpredictable and ubiquitous roaming charges they experience with their cell phones. Because the countries’ mobile networks are part of separate, national markets, customers can accrue international roaming charges for voice and data every time they cross a border with their devices. It can be a maddening experience for frequent business travelers, or someone living in Luxembourg, which is only 35 miles wide.

Last fall, Kroes, who hails from the Netherlands, introduced a sweeping package of legislation that sought to alleviate these irksome charges while also enshrining the principle of net neutrality across all member states. It would unify all the mobile providers and ISPs under one market, which could be regulated by a central EU authority.

“The European Commission proposes a single EU-wide law to give certainty to all stakeholders and that would ban all traffic discrimination and blocking,” Ryan Heath, a spokesman for Kroes, told The Diplomat in a statement. “Self-regulation is not working in the EU’s single market. Today 25 percent of users are lacking full and neutral Internet access. This is also bad news for content creators like app developers and other entrepreneurs.”

In early April, the European Parliament overwhelmingly voted to phase out roaming charges across the EU by December 2015 and preserve net neutrality, restricting the ability of ISPs to charge content providers fees in return for faster Internet access. "This vote is the EU delivering for citizens," Kroes said of the decision — a big win for net neutrality supporters and consumer advocates.

Back home in the United States, there is no legislation on the horizon that’s likely to clarify our policy on net neutrality. The judge who ruled that the FCC overstepped its bounds cited the Telecommunications Act of 1996, an aging bill of more than 250 pages that only uses the word “Internet” about a dozen times.

Nonetheless, the court cited this bill when it constrained the FCC’s ability to enforce net neutrality in January. The judge didn’t say that Chairman Wheeler could not set such limits, but he said that some other justification in the law would be required.

As the judge pointed out, the Telecommunications Act actually offers a couple of other means for the FCC to reassert its authority over ISPs.

First, it could reclassify broadband services as “common carrier utilities, which is how phone companies are regarded. Roughly speaking, the concept says that some industries, such as railroads, provide essential services to the public that require extensive infrastructure and cooperation from the government, and so therefore the companies involved may be granted de facto monopolies in exchange for being subjected to increased government regulation.

Instead, the FCC announced in late February that it planned to exercise the other option — to justify new net neutrality rules under Section 706 of the Telecommunications Act, which orders the FCC to “encourage the deployment … of advanced telecommunications capability to all Americans” and grants it the power to “intervene” in instances when companies fail to meet this goal. However, this is considered a much weaker leg for the FCC to stand on, and it will almost certainly have to scale back its net neutrality regulations. At some point, the agency may opt to designate Internet service as a common carrier, although that would likely bring new legal challenges. 

In general, Wheeler is known to support the “open Internet,” although some critics have suggested that he may have an underlying pro-industry bias because of his work as a top lobbyist for the cable and telephone industries, which are the two largest providers of broadband Internet. But the ball is in Wheeler’s court now, because almost no one thinks Congress is going to pass new net neutrality legislation any time soon.

Craig Aaron, president and CEO of the public interest group Free Press, told The Diplomat that he doesn’t see “any serious movement happening on a telecoms act rewrite, barring a Democratic sweep in the next election, before a new president takes office.”

In early February, Sen. Ed Markey (D-Mass.), who has been one of net neutrality’s biggest backers in Congress, did file the Open Internet Preservation Act, which would give the FCC more explicit power to prevent ISPs from giving preferential treatment to big companies that can cough up lots of dough. But most observers say don’t hold your breath.

“I think it would be difficult to pass a law,” Darrell West of the Brookings Institution told The Diplomat, “because of the court cases that have come down, and also the political environment will not be very favorable. There are many Republicans who do not support net neutrality.”

Even Rep. Henry Waxman (D-Calif.), the ranking member of the Energy and Commerce Committee, seemed unoptimistic about the fate of the bill he co-sponsored in the House.

“I think it’s important to put out a position for net neutrality, as we did,” Waxman told us. “But the FCC is working on it, and they’ve got the court opinion to review and figure out how to get it right.”

When pressed on whether it might be preferable for proponents of net neutrality, such as Waxman, to have explicit legislation on the topic instead of relying on the FCC and the courts to interpret an old law (which pre-dates Google), the congressman volleyed the responsibility back to the executive branch: “It would never hurt to have legislation to pin it down carefully, but if we don’t do that, at least the FCC we know has the ability to act, and they should.”

Waxman is undoubtedly aware that such a bill would have scant chance of getting out of the committee, which is chaired by Rep. Fred Upton (R-Mich.), a frequent critic of what he calls the administration’s overreach on the policy of net neutrality.

Katherine Maher, advocate director for Access Now, said there was an “inherent partisan bias” whereby many of the Republicans who control the House have often favored the ISPs in what has become a war of influence — with the tech companies and online content distributors such as Netflix on one side, and telecom and cable companies such as Verizon and Comcast on the other.

It should go without saying, however, that both sides throw lobbying dollars all over Capitol Hill, and that the span and scope of the conglomerates involved means that loyalties can become murky, such as with Comcast, which merged with NBCUniversal a few years back, or Google, which recently got into the game of providing Internet to customers through Fiber, a super-high-speed service that’s available in a few parts of the country.

For his part, Aaron of Free Press said the 1996 Telecommunications Act, an accomplishment led by Markey when he was in the House, “is a good piece of legislation, if they would actually enforce it. The problem we’ve had is that since 1996, companies like Comcast, AT&T and Verizon have spent all of their lobbying and influence and energies trying to distort and water down that law.”

As such, Aaron hopes public pressure can sway Wheeler to reclassify broadband Internet as a common carrier so the FCC can exert more regulatory pressure in enforcing net neutrality.

While he is skeptical that there will be any quick movement, Aaron did add that he thinks the January court decision is the “first step toward a rewrite” of the nation’s telecommunications laws.

As the parallel debate around net neutrality unfolds in Europe, Maher of Access Now said these recent developments in the United States, including the agreement between Comcast and Netflix, might actually serve as a warning to Europeans.

“The U.S. is a real indication of what can happen in Europe if the conservatives’ definition of specialized services is adopted,” she said, admonishing that such deals put the principle of net neutrality on thin ice and could leave the Internet resembling the gated, pruned and high-priced garden that is cable TV.

On the day that a U.S. court invalidated the FCC restrictions, European Commission Vice President Kroes offered a more buoyant note, at least for how the ruling might benefit her home continent. She tweeted: “Watching US #netneutrality news. Maybe I [should] invite newly disadvantaged US startups to EU, so they have a fair chance.”


About the Author

Luke Jerod Kummer is the congressional correspondent for The Washington Diplomat.

Last Edited on April 10, 2014