In January 2014, the FCC’s net neutrality directives were struck down in the US Court of Appeals, a ruling that was expected because in 2002, the FCC reclassified ISPs as “information services,” which prevents the agency from exerting much control over the infrastructure that powers these networks.
FCC Chairman Thomas Wheeler indicated that the agency will hold a vote on February 26, 2015, which is likely to return ISPs to being “telecommunication services” under Title II of the Communications Act of 1934. This will provide the FCC the legal authority to open access to utility poles to any interested company to build internet infrastructure, as well as prevent ISPs from throttling speeds from any remote servers, or prioritizing speeds from others in exchange for payment.
What this means for business
Cloud-connected businesses that rely on an unimpeded internet connection between them and the customer will be able to provide service without ISP interference. Foremost among these is Netflix, who amid its long-standing dispute with Verizon, relented and paid Verizon for prioritization. In a January 2015 blog post, Netflix Vice President of Content Delivery Ken Florance criticized this practice as being “in contrast to an open Internet and all its promise,” noting that “Those who can’t pay for fast lanes will suffer, entrenching incumbents while undermining the innovative power of the Internet.” With a level playing field, new startups face a reduced barrier to entry to the market.
In contrast to the doom and gloom forecast by ISP-funded lobbyists, Sprint CTO Stephen Bye stated in a letter to the FCC: “Sprint does not believe that a light touch application of Title II… would harm the continued investment in, and deployment of, mobile broadband services.” Google, which faced difficulty in deploying Google Fiber, notes in its comment to the FCC that reclassification would also (under Section 224) grant statutory access to utility poles to new providers, including Google Fiber.
What this means for consumers
The FCC’s enforcement of net neutrality prevents a situation in which end users paying for access to cloud-powered services in addition to their monthly ISP bill could face degraded performance because the cloud-powered service provider declined to pay the ISP for priority delivery. Although general interest platforms such as Netflix, Hulu, and Amazon Instant Video have a corporate backing with sufficiently deep pockets to pay for priority delivery, smaller special-interest platforms such as Crunchyroll, WWE Network, and HBO GO, which is expected to be available may not have the funds necessary to do so.
Users of cloud-connected video game services such as OnLive or PlayStation Now through which games can be played without downloading the actual game software (the client software pulls the video output and transmits user input to a cloud system) will similarly be able to use these services without degraded performance resulting from the provider declining to pay the ISP for priority delivery.
More conventional activities that are less demanding of bandwidth or sensitive to latency, such as purchasing programs through app stores, software and security updates, or downloading digitally purchased content such as eBooks — all of which are located on their respective cloud data repositories, be it from Microsoft, Apple, Amazon, or other vendors — would be similarly unaffected.
A target of corporate backlash
Naturally, the ISPs that are facing the potential for increased regulation and competition are pushing back against this proposed action by the FCC. The National Cable & Telecommunications Association (NCTA), a trade organization that represents ISPs such as Comcast (and Time Warner Cable, which is pending acquisition by Comcast), Charter, Cox, and Cablevision, has disseminated its own FUD-laden predictions of what would happen to ISPs under Title II. These member organizations service 45 million of the nearly 86 million ISP subscribers in the US. According to the Center for Responsive Politics, the NCTA spent approximately $12 million in lobbying in 2014.
ISPs independent of the NCTA have also voiced their displeasure at this pending action, with Verizon proclaiming that “there is no terminating monopoly in the case of Verizon’s wireline broadband services,” a claim that Netflix Public Policy Vice President Christopher Libertelli previously noted as being false, saying in a letter to the FCC that “Rather than providing access to ISPs across the country or the globe, as large transit providers do, ISPs like Comcast, AT&T, and Verizon merely accept data onto the networks serving their respective subscribers’ broadband access services.”
For comparison, the consolidation of ISPs in Australia, which exert a terminating access monopoly — and how this affects the finances of cloud service provider CloudFlare — was explained to TechRepublic by the company’s CEO in late 2014.
Congress attempts to obstruct the FCC
Pending legislation announced by Congress would amend the statutes in question to prevent the FCC from having the power to reclassify ISPs under the relevant statutes. Sen. John Thune (R-SD), the chairman of the Committee on Commerce, Science, and Transportation has scheduled a meeting for January 21, 2015 to cover the issue.
The legislation also includes language that modifies the Telecommunications Act of 1996, which the FCC is considering exercising to override state laws that prevent municipalities from building their own broadband networks, an act prohibited or impeded in some capacity in 20 states.
What’s your view?
Are you surprised by the action that the FCC is planning to take? Do you think that ISPs in the US should be subject to more stringent requirements than the FCC is planning to propose, or should the current — minimal — level of regulation be upheld? Let us know your thoughts in the comments.