FCC Chairman Tom Wheeler attempted to clear the air today about newly proposed FCC rules on net neutrality.
Wheeler’s proposal says online content providers like Netflix, Hulu, YouTube, etc., are allowed to pay Internet providers for direct access to you. That means you’ll get faster streams of your content and your Internet provider will get more money.
This really aggravates proponents of net neutrality, the notion that all content distributed online should be treated equally. The fear is that Internet providers will be able to favour some content sources over others, especially if they own that content through their own streaming services. Imagine if your cable provider created its own streaming-video service and provided it to you at full speed, but slowed down rival services like Netflix or Hulu. That would stink. It would also set up a messy precedent that would make it harder for other streaming services without the backing of Internet providers to get started.
In his statement today, Wheeler tried to assure everyone that his proposal won’t damage the state of the Internet. He said Internet providers won’t be allowed to block or slow down legal content and aren’t allowed to “harm the Internet” or “favour traffic from an affiliated entity.”
In short, the new FCC proposal says all content will be treated equally over the Internet. It’s just that some content will be treated more equally than others if the owners pay Internet providers directly.
Here’s the problem with that.
The proposal still favours big companies like Netflix that can afford to pay Internet providers for direct access to customers. Other competitors may not be slowed down, but they won’t be able to compete on the same level as the big guys. That hurts competition and innovation.
There has been a great deal of misinformation that has recently surfaced regarding the draft Open Internet Notice of Proposed Rulemaking that we will today circulate to the Commission.
The Notice proposes the reinstatement of the Open Internet concepts adopted by the Commission in 2010 and subsequently remanded by the D.C. Circuit. The Notice does not change the underlying goals of transparency, no blocking of lawful content, and no unreasonable discrimination among users established by the 2010 Rule. The Notice does follow the roadmap established by the Court as to how to enforce rules of the road that protect an Open Internet and asks for further comments on the approach.
It is my intention to conclude this proceeding and have enforceable rules by the end of the year.
To be very direct, the proposal would establish that behaviour harmful to consumers or competition by limiting the openness of the Internet will not be permitted.
Incorrect accounts have reported that the earlier policies of the Commission have been abandoned. Two points are relevant here:
The Court of Appeals made it clear that the FCC could stop harmful conduct if it were found to not be “commercially reasonable.” Acting within the constraints of the Court’s decision, the Notice will propose rules that establish a high bar for what is “commercially reasonable.” In addition, the Notice will seek ideas on other approaches to achieve this important goal consistent with the Court’s decision. The Notice will also observe that the Commission believes it has the authority under Supreme Court precedent to identify behaviour that is flatly illegal.
It should be noted that even Title II regulation (which many have sought and which remains a clear alternative) only bans “unjust and unreasonable discrimination.”
The allegation that it will result in anti-competitive price increases for consumers is also unfounded. That is exactly what the “commercially unreasonable” test will protect against: harm to competition and consumers stemming from abusive market activity.
To be clear, this is what the Notice will propose:
That all ISPs must transparently disclose to their subscribers and users all relevant information as to the policies that govern their network;
That no legal content may be blocked; and
That ISPs may not act in a commercially unreasonable manner to harm the Internet, including favouring the traffic from an affiliated entity.
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