Tech Giants Protest FCC’s Net Neutrality Rules Ahead of May 15 Vote

More than 100 tech companies have written to the FCC to protest the agency's net neutrality proposal, which would allow companies to strike paid prioritization deals.

net neutrality

More than 100 tech companies have written to the Federal Communications Commission in opposition to the agency’s proposed net neutrality rules, which will be put forward at a meeting on May 15. The letter comes after several tech company leaders went to D.C. last week to plead their case.

In January, a U.S. Federal Court of Appeals struck down the FCC’s 2010 rules, and many tech and media industry leaders have since predicted the end of the open Internet as we know it.

The letter recognizes the role of the media in possibly misunderstanding the FCC’s new proposals, but clearly calls out “paid prioritization,” which would divide the Internet into faster and slow lanes. The 2010 order prohibits broadband providers like Time Warner Cable from blocking traffic on wired networks coming from Netflix, Skype and others by putting them into an Internet “slow lane.”

Wheeler’s new proposal would let broadband providers strike deals with Internet companies for paid prioritization, or preferential treatment, which open-Internet advocates say is in contrast to the principles of net neutrality because it gives wealthy companies an advantage over startups.

From the letter:

According to recent news reports, the Commission intends to propose rules that would enable phone and cable Internet service providers to discriminate both technically and financially against Internet companies and to impose new tolls on them. If these reports are correct, this represents a grave threat to the Internet.

Instead of permitting individualized bargaining and discrimination, the Commission’s rules should protect users and Internet companies on fixed and mobile platforms against blocking, discrimination and paid prioritization, and should make the market for Internet services more transparent. The rules should provide certainty to all market participants and keep the costs of regulation low.

Such rules are essential for the future of the Internet. This Commission should take the necessary steps to ensure that the Internet remains an open platform for speech and commerce so that America continues to lead the world in technology markets.

FCC Chairman Tom Wheeler, a former cable and wireless industry lobbyist, is facing internal dissent to his proposal as well. Two FCC commissioners recently expressed doubts about Wheeler’s direction.

In a speech on Wednesday, commissioner Rosenworcel urged the agency to delay next week’s vote on the rules by at least a month. “I believe that rushing headlong into a rule-making next week fails to respect the public response to his proposal.”

Wheeler said “reports that we are gutting the open Internet rules are incorrect” and the FCC has issued a statement reiterating Wheeler’s plan to hold the vote next week. According to Time:

In the wake of the January federal court ruling striking down the FCC’s open Internet order, many net neutrality advocates called for the FCC to reclassify broadband as a telecommunications service subject to the common carrier provisions of the Communications Act.

Such a move would restore the FCC’s authority to enforce net neutrality, but it also would prompt a major backlash from broadband giants like AT&T and Verizon — which bitterly oppose reclassification — and their lobbyists and allies on Capitol Hill. In his speech, Wheeler reiterated his current opposition to reclassification, but said the option remains on the table.

The Notice of Proposed Rule Making (NPRM) due out on May 15th will detail the FCC’s reasoning around the new framework and give the public an opportunity to respond with questions and concerns.

Public interest groups are questioning how the proposed rules will ensure that ISPs won’t discriminate against others crossing their networks. As Gigaom reports, “The agency will replace the ‘unreasonable discrimination’ clause from the original net neutrality rules that were defeated in court this year with standards associated with ‘commercial reasonableness.'”

It’s a subtle shift, but an important one. When the U.S. Court of Appeals gutted the open Internet Order that set forth the net neutrality rules in January, it did so on the basis that the agency didn’t use the right justification for its rules. It tried to turn ISPs into common carriers and regulate them that way, but the court declared that the FCC couldn’t put that burden on the ISPs without changing the law or going through regulatory process that was bound to cause a fight.

Instead we get a compromise by which the FCC attempts to honor the original intent of the 2010 open Internet Order with a new test for discrimination. That test is the “commercial reasonableness” standard.

Maintaining the court’s distinction between wireless broadband and wireline broadband, the FCC plans to make the shift by playing off its 2011 cell phone roaming order, which requires mobile carriers to offer roaming agreements to other such providers so long as they are commercially reasonable. Commercially unreasonable behaviors were classified in that order as follows:

  • Does this practice have an impact on future and present competition?
  • How does vertical integration affect any deals and what is the impact on unaffiliated companies?
  • What is the impact on consumers, their free exercise of speech and on civic engagement?
  • Are the parties acting in good faith? For example is the ISP involved in a good faith negotiation?
  • Are there technical characteristics that would shed light on an ISP practice that is harmful?
  • Are there industry practices that can shed light on what is reasonable?
  • And finally, a catch all that asks if there are any other factors that should be considered that would contribute to the totality of the facts?

“The agency wants to ensure that the spirit of network neutrality lives on, but legally it has to use a standard that opens the door to prioritization,” explains Gigaom. “The FCC even seems okay with prioritization in certain cases, with an agency official offering up the example of packets coming from a connected heart monitor as a protected class that could be prioritized over other traffic.”

Wheeler’s plan would allow companies to strike paid prioritization deals as long as they act in a commercially reasonable manner subject to review on a case-by-case basis. But what constitutes commercially reasonable behavior has not yet been identified.

A transparency provision would require that network operators share how they are managing consumer traffic and that ISPs are clear about charging for prioritization or access in an uncompetitive market.

Another rule would allow the FCC to avoid calling ISPs “common carriers” and to implement a no-blocking position. Gigaom says “the FCC plans to ask about establishing a baseline of broadband service and view anything that goes below this baseline as blocking.”

The courts struck down the original order’s anti-blocking provision that said ISPs on wireline networks couldn’t block lawful traffic and wireless ISPs couldn’t block competing over-the-top calling and texting services. The new FCC documents will make the case that because blocking traffic interrupts the “virtuous cycle” of broadband access — namely that people use broadband because it gives them access to a variety of services, and because broadband access is beneficial, anything that makes people less inclined to use broadband would cause harm.

Under new framework, an ISP must exhibit bad behavior before the FCC can intervene, but according the Gigaom report the agency plans to raise the possibility of flat prohibition against certain behaviors even if an ISP isn’t a common carrier.

“The agency would have to make the case that paid prioritization is such a consumer or industry harm that it should be prohibited altogether,” explains Gigaom. “But based on the thinking and attention devoted to the commercial unreasonableness standard, as well as the heart rate monitor example, it feels like the FCC isn’t keen to walk this path.”

The letter’s signatories include dozens of Internet startups alongside of Google, Microsoft, Facebook, Amazon, Twitter, LinkedIn, Reddit, Tumblr, Yahoo, Dropbox, Ebay, Etsy, Foursquare, Netflix, Reddit, Tumblr, Twitter, Yahoo and Contextly co-founder and net neutrality expert Ryan Singel.

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