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Zombieland – The Return of Net neutrality

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(I apologize in advance for the length of this blog entry. If you get all the way through this post and think to yourself that net neutrality is more technical and more complicated than you thought, and that in all honesty you really don’t understand it well enough to form an opinion, than I have done my job. Business journalists take note: simplifying the story to make it readable doesn’t really help in a policy debate that is, unavoidably, confusing.)

In 2008, CNet’s Declan McCullagh declared the death of legislation floating around Congress that would enforce the so-called “Net neutrality” principle. His article, which made good sense at the time, was titled “Ten things that finally killed net neutrality.”

Well, Net neutrality has returned from the grave. Today, President Obama’s newly-confirmed head of the FCC, Julius Genachowski, announced a proposed rulemaking that would establish a neutrality regime over broadband, cable, and wireless Internet providers. The text of his speech is here.

I spend far too much of Chapter 6 of “The Laws of Disruption” laying out the case against net neutrality, an argument I also made briefly in an earlier CNet post and an article in CIO Insight. See “Preserve Internet Freedom…From Regulation” and "What's Wrong with Net Neutrality?"

I still think Net neutrality is a bad idea, top to bottom. As reader comments to today’s coverage of the Chairman’s speech reiterate, however, I recognize it has also become, unfortunately, an emotional subject, a proxy for all kinds of powerful emotions and unrelated topics. It’s hard to talk about it rationally with both proponents and opponents. Not unlike, come to think of it, another famous death and resurrection.

So instead of repeating myself, I’ll just highlight a few points worth noting about today’s developments.

What does a “proposed rulemaking” mean? Many of the stories from the business press today described a fundamental shift in Internet policy. Not quite. The Chairman gave a speech, in which he announced an upcoming rulemaking process to develop and possibly adopt new rules. That process is long, political, and weird. What actually comes out of it can’t be predicted. And if history is any guide, any rules ultimately adopted will be vigorously challenged in court. It may be years before any enforceable new rules come into effect, and they may bear little resemblance to the six guiding principles announced today.

Rulemaking vs. legislation. In its earlier incarnation, net neutrality was being considered not by the FCC but by Congress. The difference is significant. Congress can add to or remove from the authority of the FCC; the FCC cannot expand its own jurisdiction. In the Commission’s earlier decision to sanction Comcast for violating the FCC’s original neutrality principles (which were never formally adopted as rules), Comcast objected on the grounds that the FCC has no authority over its Internet business.

A federal appellate court is considering that argument now, but given the Supreme Court and the FCC’s own interpretation of the Communications Act of 1996, it seems quite plausible that today the FCC has no regulatory authority over cable or wireless Internet providers, only phone companies such as AT&T. Doesn’t make much sense, but that’s the law as it stands now. And changing such a fundamental feature of communications law is even less likely than getting through the rulemaking process.

Chairman Genachowski’s retcon. The Chairman is certainly right to say that the Internet’s original architects designed an “open system,” but what exactly does that mean? Open to any device or software that supports its underlying protocol, TCP/IP, or “not biased in favor of any particular application,” as the Chairman defined it today? I think he’d be hard-pressed, if it matters, to find any indication that the Internet architects were even thinking of applications, let alone bias for or against.

In any case the protocols—that is, the Internet—still aren’t biased. Net neutrality has everything to do with techniques (good, bad, or otherwise) for managing network traffic, about which the original architects of the Internet wisely architected nothing. As the Chairman later said, using that horrible “it’s not about/it’s about” formulation, “This is not about government regulation of the Internet. It’s about fair rules of the road for companies that control access to the Internet.” (emphasis added) The architects of the original Internet couldn’t possibly have designed a system that built in “open” principles for companies that would come to control access to the network for consumers.

The “open” design of the Internet couldn’t possibly have said anything about access, in other words. As it stands, the concerns of those who are pushing for Net neutrality have to do with traffic management between the ISP and the end-user, that is, on the last mile. No ISP can tinker with the flow of packets once they enter the cloud, which is part of the genius of the design. Let’s be clear that it isn’t the design of the “Internet” that’s at issue here, but rather the regulation of access provisioning. Rhetorical devices are part of the reason no one can talk calmly about the subject.

Why has the Internet succeeded? I agree with the Chairman that one lesson of the Internet’s success has been that “we cannot know what tomorrow holds on the Internet, except that it will be unexpected…and that the fewer obstacles [ ] innovators face…the greater our opportunity.” But what sort of obstacles do the most damage, those introduced by network operators or those introduced by federal regulators? Put another way, has the Internet succeeded because network operators have so far treated all packets with identical priority in routing traffic, or has the Internet succeeded because there has been little if any interference with the development of an enormous new industry by state or federal regulators?

Phyrric victories all around. Let’s say the rulemaking goes forward and in the end, the six principles of Net neutrality proposed by the Chairman become law. DSL, Cable and Wireless Internet providers will be forbidden (subject to “reasonable network management” exceptions to be determined) to block or otherwise throttle high-bandwidth applications including IP telephony, file-sharing, and video streaming.

In order to keep the networks operating efficiently, the likely response will be to switch from unlimited bandwidth plans to metered plans, where high-volume users will pay more for access, or pay more during peak periods, much as happens today with large commercial water and electricity users (or even consumer users during droughts, heat waves, and other emergencies). The mechanism for metering adds cost and overhead, reflected in everyone’s rates. Perhaps more ominously, metering means closer tracking and inspection of traffic, which will raise legitimate new privacy concerns.

Furthermore, the Chairman has proposed that the FCC “evaluate” alleged violations on a “case-by-case basis” using “fact-based determinations.” What does that mean? Imagine for a moment that you want to complain to the FCC because you believe your ISP has violated the Net neutrality rules. The facts the FCC will need in order to “evaluate” your complaint will, of necessity, include details of the applications, content, and information you were trying to send and receive, and perhaps that of other network users trying to access the Internet at the same time. To me (although no one else seems to mind), this raises even more privacy concerns.

If nothing else, these new “fact-based determinations” will require the FCC to build new capacity, including significant network expertise on its staff. Even if the rules get enacted, Congress will have to appropriate new funding for enforcement.

Good luck with that, Chairman Genachowski.