We may be in a world divided by hip-hop and bubble gum pop, but I remain a passionate jazz lover. Unfortunately for many years now it’s been getting increasingly hard (outside of New York City) to find a good club in which to hear it or a broadcast station that will play it. But being a raging moderate on net neutrality (as I have been throughout) is even lonelier, and the FCC’s full-bore move to regulate the Internet under the century-old common carrier model ensures a long wait until we jazz fans get to hear our music in this arena.
We still only have the FCC’s press release, as the actual rules have not yet been publicly released. But battle lines are pretty clearly drawn. On the one hand, the FCC espouses hard-to-argue with overarching principles – for example, that the Internet should be “fast, fair and open.” The order also sets out what it calls “bright line” rules against blocking or “throttling” any Internet content, which all but rabid free market ideologues would generally accept as noncontroversial.
But the FCC’s action contains plenty that is causing agita for Internet Service Providers or "ISPs" (Comcast, Verizon, AT&T, etc.) as well as those who simply fear the impact of an old-fashioned regulatory framework on a dynamic sector of the economy. For example, the prohibition on “paid prioritization” will be far more problematic in its oversight, giving disgruntled ISP corporate users (Netflix, Facebook, Amazon, Google among them) plenty of opportunity to turn tough negotiations into FCC proceedings.
The new rules reclassify Internet service (whether wired or mobile) as a “Title II” common carrier service, thus identifying a range of behaviors that will be subject to complaint and adjudication by the FCC. Expect epic battles over what constitutes “reasonable” network management and which private interconnection arrangements (the exchange of telecommunications traffic between broadband providers and other private parties) would be “just and reasonable.” The order “forbears” from regulation (withholds exercising enforcement authority) in areas such as “utility-style rate regulation”, but the law requires a series of regulatory proceedings to justify forbearance. Even without the details (or maybe especially because of that), the looming new regime has struck fear and loathing into a critical component of Internet service.
My biggest disappointment with the FCC’s decision lies in the lost opportunity to forge a more middle of the road approach (as FCC Chairman Tom Wheeler himself had long hinted it). That might have provided at least a chance for some degree of bipartisan – or at least multi-industry - acceptance. But there’s no melodic jazz flowing out of this – we just have a very loud trumpet blare that will kick off a long cacophonous legal fight. Even without the devilish details, you already can see a range of ways in which the FCC action will be anything but “neutral” in its environmental impact:
It’s not party-neutral: This is a Democratic decision pure and (not so) simple. Republicans at the FCC and in Congress have been given little incentive to or role in crafting any reasonable approach to the implementing regulations and enforcement actions. Every step forward will be entirely partisan, and should the Republicans win back The White House, it will be all the easier to imagine a huge reversal given no stake in the current structure.
It’s not government branch-neutral: Remember that the FCC is supposed to be an agency “independent” of the executive and legislative branches of government. But that notion has never seemed more debatable than in the last throes of the net neutrality proceedings. Whatever the facts, the very powerful perception (supported among other sources by a well-reported piece in The Wall Street Journal) is that when President Obama weighed in definitively after the election, all hope of a middle ground on net neutrality was over.
It’s not neutral for the communications bar: As soon as the FCC hits send on the rules, we will see a mélange of court challenges. And even if the rules survive, there will be an endless flood of forbearance proceedings in which (ironically) the FCC will have to find ample justification for not regulating under the rules it just passed because it found there is no competition. Market participants use both the threat and reality of new adjudicatory proceedings to put ISPs in a constant defensive posture.
It’s not investment-neutral: Putting a regulatory thumb on the scale like this will only discourage competitors to existing ISPs from investing in new broadband services (especially in the face of their own Title II regulation), and will only inhibit greater investment in the network by those incumbents, who will now have to assess the risk-reward calculation differently for every such investment.
It’s not consumer-neutral: Imagine (if you will) that once the FCC effectively has in place restrictions on wholesale internet pricing (arrangements between ISPs and commercial entities using their facilities), those ISPs are inevitably going to turn toward usage-based pricing (which the FCC has previously blessed, and which I have written about previously). For that Netflix/Vine/multi-player gaming pro net-neutrality junkie, get ready to have your broadband bill look a lot like a slim data plan from your wireless provider. Certainly not everybody will feel the same pain – but those who do may wonder what it was that they wished for when all of this began. Maybe one of them will even want to invest in a jazz club!
