Discrimination on the Internet – Net Neutrality

On November 10, 2011 the U. S. Senate Democrats  defeated an attempt to repeal a federal rule designed to prevent Internet service providers from discriminating against those who send content and other services over the Internet. While this may end the Congressional battle for now over FCC  “Net Neutrality” rules you can expect that this issue will be back after the 2012 elections with a vengeance.

FCC Adopts Anti-Discrimiation Rules

FCC Adopts Anti-Discrimination Rules

Since this topic is temporarily on break, it is an ideal time to stand back and examine what is at stake. Unfortunately Internet discrimination – framed in the context of  “Net Neutrality” rules – has developed into a highly partisan political debate, making it even more important to have your bearings.

Before discussing the FCC “net neutrality” rules, some background is useful. In 2005 AT&T suggested that it would like to charge some Web companies more for preferential treatment of their traffic. This caused a huge public outcry by consumer groups, Goggle, and Amazon, leading to AT&T shelving its proposed extra charge for preferential treatment for 2 ½ years in order to get approval of its acquisition of BellSouth. Next in 2007 Comcast slowed down or actively interfered with BitTorrent file sharing services bringing this to a head. The FCC sanctioned Comcast for its actions relating to its interference with BitTorrent file sharing services. Comcast appealed the decision winning on the grounds that the FCC did not have authority to sanction Comcast. Thereafter, the FCC regrouped and proceeded by using its rule making powers to adopt net neutrality rules. These rules are currently being challenged in the courts and in Congress, although the Congressional effort is stalled for now.

FCC Fights Internet Discrimination

The FCC Network Neutrality Report and Order adopted December 21, 2010 established three basic Rules. The Rules require transparency by fixed and mobile broadband providers and prohibits fixed broadband providers from blocking services and unreasonable discrimination. The transparency Rule requires fixed and mobile broadband providers to disclose their management practices, performance characteristics and terms and conditions of their broadband services. Disclosure helps the consumer and the FCC determine if the service provider is engaging in a discriminatory practice. The no blocking Rule prohibits a fixed broadband provider from blocking lawful content, applications, services, or non-harmful devices. Mobile broadband providers may not block applications or websites that compete with their voice or video telephony services. Fixed broadband providers may not unreasonably discriminate in transmitting network data. The Rules also make it clear that a fixed broadband provider may charge more for heavy users than light users and that they may offer tiered and usage based pricing.

According to an analysis by Miller & Van Eaton the Rules protect local government from broadband Internet access providers control although when providing certain mass marketed services like broadband Internet services, Wi-Fi or pay for access to highly specialized GPS maps local government is required to comply with the rules. The Miller & Van Eaton analysis provides a good starting point for understanding the Rules.

So what is the big fuss about? It is simple. You know the rule, follow the money. If an Internet service provider can unreasonably discriminate, block access, or slow the access of one company in favor of another it gets to pick winners and loser, while making billions.  Consumers and small businesses also have a stake in protecting the neutrality of the Internet. It is estimated that the economic benefits to the consumer is about $5,686 per year. A lot is at stake.

The Internet has been described as the most important invention since the printing press and is recognized as the communications tool of the 21st Century. At a recent meeting of Silicon Valley Innovators – discussing their vision of the future –made the following comments: “We’re moving from an ownership society to an access society.” “You’re not defined by what you own but by experiences you have.”  To reinforce this point consider Apple has recently replaced Exon Mobile as the world’s wealthiest company. Besides creating opportunities for new companies, Internet technology can in a blink of the eye change an industry. We now buy music on-line, not in stores. Borders, once a giant in the book industry, did not anticipate change and is gone as a majority of shoppers shifted to the acquisition of digital books. In a relatively short time period, the Internet has transformed our world, rewarding some businesses and punishing others.

On a personal level, when I wake up in the morning I am ready to go to work because I have at my fingertips a world-class high-speed legal research and information system that is cost effective and extremely efficient. The Internet has changed how I work, think, shop, and communicate in less than a decade.

At the community level, local government officials are users of Internet services, as well as providers of applications, services or devices that run on the Internet. Some communities, like North Kansas City and Springfield, also provide broadband Internet services and Wi-Fi services. If you want to find out information about a community, you go to their Web site where you can find all sorts of community information and links ranging from an application for a license, city council agendas, forms for applying for employment, paying taxes, or filing a citizen complaint. Generally, as noted in the Miller and Van Eaton, analysis it would appear that local government is protected. Even though the Rules have a minimal impact on local government as citizens, we have a big stake in the outcome of this battle. Well it is really more like a war with the current battle being fought over the FCC Net Neutrality Rules.

For the most part we love the Internet and you would think protecting it from discriminatory practices like blocking, slowing down communications, and other actions to favor one company over another would be a pretty simple sale. Not so, due to the sheer amounts of money and consequences that are at stake for winners and losers. So I ask, why are the net neutrality proponents having such trouble winning this battle?

My take is that part of the problem is bound up in basic terminology. Professor Tim Wu, a brilliant law school professor at Columbia University, in 2002 first used the term “net neutrality” when writing about broadband discrimination.  Professor Wu explains that he also used the term “net neutrality” to capture the concept of broadband discrimination.  To his surprise the term “net neutrality” became the default, which – in my opinion – was unfortunate because the term broadband discrimination is a better understood term by the average person. After all, when you say that an Internet provider is engaging in broadband discrimination by blocking my access, slowing down the transmission of information, or is unreasonably discriminating while favoring others most of us know this is a bad thing.  When you say an Internet service provider is violating the principles of net neutrality the average citizen does not immediately know what is meant by net neutrality, even though this concept can be stated in a few simple sentences.  If a term does not convey the message and needs an explanation – however simple – you have lost the communications battle at the outset.

So what is the big picture? This is a war and the battle over the FCC Net Neutrality Rules is just one battle in a larger war over control of the Internet by companies who want to exert monopolistic power.  Professor Wu has recently made an important contribution to our understanding of information empires with his book, “The Master Switch: The Rise and Fall of Information Empires.” He describes in great detail how information empires are built and how they organize so they can exercise monopoly power. He explains that after the court mandated breakup of AT&T in 1984 there was explosive communications growth and innovation. By 1996 the Baby Bells – who were spun off into separate independent companies  in the 1984 court mandated breakup – were able to slip out from the strictures of the court order as part of the Telecommunications Act of 1996. Ever since 1996, the Baby Bells have been consolidating back into what looks like the old pre-1984 AT&T structure with an east and west empire once again exerting monopolistic power by threatening to slow down communications to favor one company over another. It is as though the Evil Empire was blown into parts and thrown into space and is now reconstituting itself through the gravitational force of monopoly power. 

Professor Wu explores the question of whether or not the Internet is fundamentally different from earlier communication systems that resulted in monopolies. Will the structure of the Internet allow it to fend off discriminatory practices or will it remain open or will some company control and dominate the Internet?

This is a story that is still unfolding. Sir Tim Berners-Lee the founder of the Web described in his article called “Long Live The Web” what is at stake: “The Web is critical not merely to the digital revolution but to our continued prosperity – and even our liberty. Like democracy itself it needs defending.”  I echo his voice. “Long Live The Web.”

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