"Net Neutrality" Refined by Regulators in EU and U.S. to Provide Concessions to Broadband Carriers     Print Email

(Dec. 8)   Key regulators of broadband internet service on both sides of the Atlantic seem set to adopt rules that will allow the “carriers” (such as phone companies) to “amend” notions about the prevailing doctrine of “net neutrality.”  The touchstone of “net neutrality” is the impermissibility of discriminating among users and providers. But increasingly, particularly in wireless broadband, some discrimination is starting to be countenanced to ensure that large carriers, who provide the “pipes” for the internet, continue investment in the infrastructure to permit wide access to high-speed Internet. 

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Sympathy for this view has clearly gained ground both in the Federal Communications Commission in Washington and in the European Commission in Brussels. While FCC head Julius Genachowski and Neelie Kroes, the Commissioner for the Digital Agenda, continue to pay lip service to the canons of net neutrality and an open and free worldwide web, both have now indicated publicly that they are inclined to give ground to the demands of the big utilities.  Their arguments resonate with governments, which have promised to extend high-speed internet service to virtually the entire population in Europe and the U.S. – a goal requiring massive investments.  Both top regulators now seem receptive to the utilities’ demands for “flexibility” – a term that amounts to deregulation and freedom and a step away from “net neutrality.”
 
Signs of this shift in regulatory policy have alarmed consumer groups on both sides of the Atlantic. Their concern focuses on the possibility that free internet based services (such as Skype) may not be available if providers “tax” users who use these services or otherwise discriminate against certain services for the benefit of others.  This concern is a center of controversy about the proposed merger between Comcast, which is a major carrier, and NBC, a television network generating content to be delivered and sold via the internet. Critics worry that a combined company might use its carrier power to favor the delivery of its own content against competitors trying to deliver their products via the internet.
 
In this conflict, regulators on both sides of the Atlantic are seeking to tread a careful line that takes into account legitimate needs of pipe providers to make return on their investment while at the same time guarding against abuses by powerful alliances in the industry. FCC head Genachowski has now indicated that he favors a change in the rules that would allow broadband providers to charge consumers different rates for different levels of service, provided the changes are cost justified and fully disclosed. The new rules – which he foreshadowed in a recent speech and which will be put to a vote by the five-member FCC later this month -- will prohibit all carriers, wired and wireless, from blocking lawful content.
 
In Europe Commissioner Kroes gave an address recently to a joint meeting of the Commission and the European Parliament in which she indicated that no new restrictions or regulations are deemed necessary at this time.  (Advocates of net neutrality have argued that additional regulations ARE necessary to insure non-discrimination.)  “We have to avoid regulation which might deter investment and an efficient use of the available resources,” said Ms. Kroes.
 
She was making her first comments after a four-month comment period on the Commissions EU’s new telecommunications law that takes effect in May and will require national regulators to outline “reasonable” network management practices. Kroes’ remarks indicated that the commission was not likely to try to stop operators like France Telecom and Deutsche Telecom from their practice of charging mobile customers additional fees to use the VoIP (Voice over Internet Protocol) service.
 
Kroes is the Commission official responsible for EU telecoms regulation – roughly comparable to Genachowski in the U.S.  In his recent speech, Genachowski said he has decided not to advocate using the powers of the Commission, currently used to regulate telephone service as the statutory authority, to regulate the internet, notwithstanding that huge amounts of telephone service now travels over the internet.  Using this so-called “Title II” telephone powers to regulate the internet has been violently resisted by large carriers like Verizon and AT&T.  Their appeals seem to have had an impact in forcing a change of strategy on Genachowski, who said that in foregoing the Title II option he will seek regulatory authority under another section of the Communications Act. That will put the issue on untested ground since the new section he would invoke has never been used to enforce anti-discrimination rules of the type guaranteed under Title II.
 
Genachowski also indicated in his speech that he recognizes the differences between fixed and mobile broadband, and will allow flexibility in wireless rules.  This seems to be a concession to an earlier joint proposal by Verizon and Google, that rules for wireless broadband, which is enjoying explosive growth, should be different from rules for wired service. Google’s apparent abandonment of net neutrality for wireless is still sending shock waves through the telecom world – and may well be harbinger of more sweeping changes to come for the Internet.
 
 
Bill Marmon is Managing Editor of European Affairs Journal and a former telecom industry executive.

 
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