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Web Goes Ballistic Over FCC Net Neutrality Rules

Updated with comment from Chairman

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The FCC is set to propose new rules related to net neutrality, and they’re not exactly in favor of it. In fact, according to reports, these rules would enable broadband providers to give preferential treatment to content providers who pay for access to “fast lanes”.

So, you know, pretty much the opposite of net neutrality.

Can any good come from this? Let us know what you think in the comments.

The FCC said it will propose rules that would let content providers like Netflix, Google,Skype, etc. pay ISPs like Comcast (which is in the process of merging with Time Warner Cable) for those fast lanes.

Netflix has already been having a war of words with Comcast, publicly opposing the merger.

Netflix said in a letter to shareholders Monday, “If the Comcast and Time Warner Cable merger is approved, the combined company’s footprint will pass over 60 percent of U.S. broadband households, after the proposed divestiture, with most of those homes having Comcast as the only option for truly high-speed broadband (>10Mbps). As DSL fades in favor of cable Internet, Comcast could control high-speed broadband to the majority of American homes. Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix. The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers. For this reason, Netflix opposes this merger.”

Comcast fired back with its own statement, saying, Netflix’s opposition is based on “inaccurate claims and arguments.”

“There has been no company that has had a stronger commitment to openness of the Internet than Comcast and we are the only ISP in the country that is currently legally bound by the FCC’s vacated Net Neutrality rules,” wrote SVP, Corporate and Digital Communications Jennifer Khoury. “In fact, one of the many benefits of our proposed transaction with Time Warner Cable will be the extension of Net Neutrality protections to millions of additional Americans.”

On the FCC’s new proposal, the Wall Street Journal reports:

Developed by FCC Chairman Tom Wheeler, the proposal is an effort to prevent broadband Internet providers such as Comcast Corp. CMCSA +0.75% , Verizon Communications Inc., VZ +0.46% and Time Warner Cable TWC +1.04% from blocking or slowing down individual websites served up to the consumer. The idea is that consumers should be able to access whatever content they choose, not the content chosen by the broadband provider.

But it would also allow providers to give preferential treatment to traffic from some content providers, as long as such arrangements are available on “commercially reasonable” terms for all interested content companies. Whether the terms are commercially reasonable would be decided by the FCC on a case-by-case basis.

The report says the FCC will circulate its proposal on Thursday, and there will be a vote on whether or not to move forward with it on May 15th.

Ars Technica shares a statement from an FCC official:

“The FCC will be seeking comment on adopting Open Internet rules that achieve the goals of the 2010 Open Internet Order in a manner consistent with the D.C. Circuit’s decision in Verizon v. FCC. The NPRM [notice of proposed rulemaking] will propose, consistent with the Court’s analysis, that broadband providers would be required to offer a baseline level of service to their subscribers, along with the ability to enter into individual negotiations with content providers. In all instances, broadband providers would need to act in a commercially reasonable manner subject to review on a case-by-case basis. Exactly what the baseline level of service would be, the construction of a ‘commercially reasonable’ standard, and the manner in which disputes would be resolved, are all among the topics on which the FCC will be seeking comment.”

“The NPRM proposes to reinstate the same ‘no blocking’ rule adopted in 2010, but using a stronger legal rationale.” Beyond that, “new legal standard of ‘commercial reasonableness’ would be separately applied to the broadband network conduct to protect Internet openness.”

A lot of people are taking the news to mean that the FCC is killing net neutrality. Wheeler says: “There are reports that the FCC is gutting the Open Internet rule. They are flat out wrong. Tomorrow we will circulate to the Commission a new Open Internet proposal that will restore the concepts of net neutrality consistent with the court’s ruling in January. There is no ‘turnaround in policy.’ The same rules will apply to all Internet content. As with the original Open Internet rules, and consistent with the court’s decision, behavior that harms consumers or competition will not be permitted.”

Still, most of the reaction we’re seeing is very negative, and isn’t buying what the FCC is selling.







TechCrunch says the new rules will “brutalize the Internet.”

GigaOm says, “When it comes to net neutrality, either the FCC thinks we’re idtios, or it just doesn’t care.”

Longtime tech columnist MG Siegler says of the news, “Ugh ugh ugh ugh ugh ugh ugh ugh ugh. Bullshit.”

It would seem that what advocates for an open Internet and net neutrality have always feared may come to fruition. Many believe small businesses are in jeopardy.

More background here and here.

UPDATE: Wheeler has written a blog post called “Setting the Record Straight on the FCC’s Open Internet Rules,” to address the “misinformation” circulating. Here it is in its entirety:

There has been a great deal of misinformation that has recently surfaced regarding the draft Open Internet Notice of Proposed Rulemaking that we will today circulate to the Commission.

The Notice proposes the reinstatement of the Open Internet concepts adopted by the Commission in 2010 and subsequently remanded by the D.C. Circuit. The Notice does not change the underlying goals of transparency, no blocking of lawful content, and no unreasonable discrimination among users established by the 2010 Rule. The Notice does follow the roadmap established by the Court as to how to enforce rules of the road that protect an Open Internet and asks for further comments on the approach.

It is my intention to conclude this proceeding and have enforceable rules by the end of the year.

To be very direct, the proposal would establish that behavior harmful to consumers or competition by limiting the openness of the Internet will not be permitted.

Incorrect accounts have reported that the earlier policies of the Commission have been abandoned. Two points are relevant here:

1. The Court of Appeals made it clear that the FCC could stop harmful conduct if it were found to not be “commercially reasonable.” Acting within the constraints of the Court’s decision, the Notice will propose rules that establish a high bar for what is “commercially reasonable.” In addition, the Notice will seek ideas on other approaches to achieve this important goal consistent with the Court’s decision. The Notice will also observe that the Commission believes it has the authority under Supreme Court precedent to identify behavior that is flatly illegal.

2. It should be noted that even Title II regulation (which many have sought and which remains a clear alternative) only bans “unjust and unreasonable discrimination.”
The allegation that it will result in anti-competitive price increases for consumers is also unfounded. That is exactly what the “commercially unreasonable” test will protect against: harm to competition and consumers stemming from abusive market activity.

To be clear, this is what the Notice will propose:

1. That all ISPs must transparently disclose to their subscribers and users all relevant information as to the policies that govern their network;

2. That no legal content may be blocked; and

3. That ISPs may not act in a commercially unreasonable manner to harm the Internet, including favoring the traffic from an affiliated entity.

Do you think the direction the FCC is going in is a threat to innovation and small business? Share your thoughts in the comments.

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Web Goes Ballistic Over FCC Net Neutrality Rules
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