Wednesday, November 5, 2014

Hybrid Approach to Net Neutrality

As discussed in the class this week, Federal Communications Commission (FCC) is considering a Hybrid Approach to Net Neutrality. The chairman and staff of the FCC are moving towards a proposal that would give the government agency regulatory authority over how the Internet traffic flows. The FCC will have a say in the Internet traffic flow between content providers and the companies that provide Internet service to consumers. The head of the FCC, Tom Wheeler is said to be laying the groundwork for this regulatory measure.

Net Neutrality is the principle that all the Internet traffic should be treated equally. FCC’s new plan won’t satisfy all the proponents of “net neutrality” as it would still allow broadband providers to cut deals with content companies for special access to customers. Unlike policies previously considered, which treated the entire Internet ecosystem as a single universe, the hybrid proposal would establish a divide between “wholesale” and “retail” transactions. The wholesale portion will cover the data exchange from the content providers like Netflix, Hulu etc. to the Internet Service Providers like Verizon, Time Warner Cable, and Comcast etc. The retail portion will cover the data flow from the Internet Service Providers to the end consumers and allow them to stream any legal content on the web. The Hybrid rule is supposedly expected to affect mostly the wholesale portion. The retail portion is expected to receive only a few guidelines from the regulators.

The motivation for the FCC behind this new Hybrid Proposal is to set up a net neutrality framework that will hold up in courts unlike the previous attempts made the regulatory authority. If and when this plan gets formally finalized and is put into effect, FCC expects the Internet service providers to fight this ruling in court. Companies like Verizon have already came out in opposition after the details were leaked in media. AT&T took to twitter to express its displeasure against the upcoming ruling. It tweeted through its official twitter feed “any use of Title II would be problematic.” This entire regulatory action should have the maximum impact on the Internet Service Providers. Content providers and consumers are supposed to be affected in only a mild manner by direct effect of this regulation. Indirectly consumers might see an increase in their Internet bills if this motion gets approved and is passed as a law.

By splitting net neutrality into wholesale and retail, the FCC wants to avoid putting consumer Internet service under a burdensome utility like regulatory regime. Critics of such an approach say it would discourage investment and slow the type of technological advances that have fueled the growth of online systems. FCC plans on leveraging the Title II of the Communications Act of 1934 to validate stricter regulation on the wholesale portion. As far as the retail portion is concerned, FCC plans on using Section 706 of Telecommunications Act of 1996 which will provide FCC with broad powers to ensure that broadband capabilities are being deployed to all Americans in a reasonable and timely fashion.


For the purpose of agreeing to transport content from a company like Netflix through its network, an I.S.P. would be treated as a “common carrier,” subject to stricter regulation. In that instance, an I.S.P., as a common carrier, could not give an unfair advantage to one content provider over another. One of the major downside of this policy is continued existence of the Paid prioritization or fast lane. Paid prioritization, where a content provider pays for a fast lane to consumers, would be restricted unless it could be proved to be just and reasonable. Small companies are a major loss if the fast lane policy is not regulated with a high scrutiny by the FCC. Individual users and open source community have taken to social media like Twitter, Reddit etc. to voice their side of the story. They all agree that the ruling is a step in a positive direction by the FCC but they would like to receive more clarification on Title II laws and the application of prioritization. The entire ruling when seen as a whole should allow the FCC to enforce a rule against blocking of legal Internet content, to install restrictions on discrimination among Internet traffic and still provide some allowance for unique delivery arrangements for specialized services.

Sources: 
  1. http://online.wsj.com/articles/fcc-net-neutrality-plan-calls-for-more-power-over-broadband-1414712501
  2. http://online.wsj.com/articles/fcc-broadband-plan-no-one-loves-it-1414795584
  3. https://www.eff.org/deeplinks/2014/11/no-compromise-fcc-should-reject-risky-confusing-hybrid-net-neutrality

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