Verizon is making an alarmist argument in its response to the Federal Communications Commission's network neutrality proposal. Classification of broadband as a common carrier service—a step called for by public interest groups who want to prevent ISPs from charging Web services for faster access to consumers—would instead require ISPs to charge Netflix, YouTube, and other Web services for network access, Verizon claims.

This goes a bit further than claims previously made by ISPs, who have been imploring the FCC to avoid reclassifying broadband as a "telecommunications service," a move that would subject them to common carrier rules under Title II of the Communications Act.

In addition to saying that utility-style regulation would stifle network investment, the ISPs have generally argued that reclassification would force the FCC to apply every possible Title II rule to broadband. That isn't true, as telecommunications experts such as Harold Feld of Public Knowledge have explained. The legal concept of "forbearance" means that the FCC can classify broadband as a Title II service and then choose which regulations to apply.

Verizon isn't done beating that drum, though. Here's what the company says (see page 51 of this FCC filing):

While reclassification would pose considerable risks of disrupting the sustained momentum that has made the Internet more robust and useful to consumers, it would not even achieve the main results desired by its proponents: namely, banning two-sided arrangements or any arrangements that would result in some bits being handled differently than others. By the terms of the Communications Act, a “telecommunications service” is an offering of “telecommunications for a fee directly to the public.” Thus, by reclassifying the service that broadband providers afford edge providers as a separate “telecommunications service,” the Commission would require that broadband providers charge edge providers for that service. In fact, two-sided arrangements have existed for decades under Title II, as both customers and long distance providers have contributed to the cost of providing local telephone service. Far from preventing two-sided arrangements, reclassification would mandate them.

"Edge providers" in this context are companies like Netflix that offer Internet services to consumers over Verizon's network. While Netflix has paid Verizon for a direct connection to the edge of Verizon's network, it has not paid for prioritization of its traffic after it enters the Verizon network and travels to consumers.

There are several problems with Verizon's argument, Public Knowledge Senior Staff Attorney John Bergmayer told Ars.

"Reclassification doesn't necessarily say that 'the service that broadband providers afford edge providers' is a Title II service," he said. "The simple version says that the service they offer to consumers is telecommunications and that to offer telecommunications in a nondiscriminatory way, certain things follow (for example, no paid prioritization). If they violate a paid prioritization rule, an ISP would be violating its obligations to consumers not to edge providers."

Even if the FCC were to accept Verizon's argument that ISPs offer a telecommunications service to edge providers, that doesn't mean Verizon would be required to charge Netflix and other Web services for access to consumers. "'For a fee' doesn't do the work they think it does," Bergmayer said. "The Commission has mandated 'bill and keep' before, setting a 'fee' of $0. So even if you come up with an 'edge provider' service it doesn't mean much."

More broadly, "looking to Title II to actually determine this or that policy isn't the right way to think about things. Title II is legal authority. Title II could be used to support good policies and bad ones," Bergmayer said. ISPs "like to pretend that certain policies follow ineluctably from Title II."

Verizon also claims that utility-style regulation would force it to spend less money on network upgrades. "In reliance on the Commission’s decisions to refrain from applying utility-style regulation to new broadband networks and services, Verizon has invested more than $23 billion deploying our all-fiber FiOS network, and tens of billions more deploying mobile broadband facilities," the company said.

This argument ignores the fact that Verizon used its utility status to gain perks that helped it build its fiber network.

“Reasonable person” standard isn't reasonable, Verizon says

Verizon's take on the FCC's new net neutrality proposal is an important one, because Verizon is the company that sued the FCC over its original neutrality rules from 2010, winning a ruling that invalidated most of the rules.

The original rules prohibited ISPs from blocking content and discriminating against content. The original order didn't strictly ban all forms of paid prioritization but said it's "unlikely that pay for priority would satisfy the 'no unreasonable discrimination' standard."

The FCC's latest proposed rules are weaker. They would outlaw blocking but do not attempt to prevent paid fast lanes. The FCC proposal doesn't determine exactly how the no-blocking rule would be implemented. Instead, it asks the public to comment on several possible approaches.

Verizon thinks the new no-blocking rule could end up being too strict if the FCC applies what's known as a "reasonable person" standard. In describing this possible standard, the FCC said, "a typical end user may reasonably expect the ability to access streaming video from any provider, place and receive telephone calls using the VoIP service of the end user’s choosing, and access any lawful Web content. Under this approach, a broadband provider that satisfies these and other reasonable expectations would be in compliance with the no-blocking rule."

"Best effort" is another possible approach that the FCC floated, and that's the one Verizon likes.

"The 'reasonable person' standard would substitute the Commission’s view of what consumers expect for the choices made by actual consumers. This result would reduce consumer welfare, because different customers have different preferences," Verizon wrote. "There is no reason for the Commission to try to divine what a hypothetical 'reasonable consumer' might expect in terms of service or mandate such a one-size-fits-all approach when consumers are making actual, observable choices every day about the levels of service they require, and different 'reasonable' consumers use the Internet in very different ways."

Verizon argued that "all Internet traffic, regardless of who sent it, should get the same best efforts treatment."

Verizon said it won't "block any lawful Internet traffic" and that it "does not block or degrade any content or application within our Internet access services on the basis of the views expressed, the source of the traffic or identity of the content provider, or the extent (if any) to which the content or application competes with a Verizon service offering."

Verizon also said it doesn't plan to offer paid prioritization over the network's last mile, but it wants the FCC to allow "individualized agreements beyond paid prioritization, such as sponsored data, two-sided pricing, or other benign arrangements."

Paid prioritization for last-mile Internet traffic wouldn't even provide much benefit, Verizon argues, because big content companies like Netflix have already built content delivery networks (CDNs) to improve performance.

Of course, the traffic Netflix was sending over its CDN to Verizon was getting caught in congested paths that Verizon refused to upgrade due to some high-profile money disputes. Netflix eventually agreed to pay Verizon for a direct connection, but Verizon has been slow in setting up the links, resulting in continued performance declines.

Netflix also filed comments on the FCC's proposal, arguing that companies like itself shouldn't have to pay ISPs for interconnection. "The Commission should adopt clear and strong open Internet protections that prevent blocking, interconnection access tolls, unreasonable discrimination, and paid prioritization on any point in the network controlled by the terminating ISP," Netflix said. "Allowing ISPs to monetize congestion will likely create more congestion, threatening the current model that has made the Internet so successful, and likely raising barriers for innovative services. In a pay-for-priority model, if the ISP has foregone infrastructure deployment in order to monetize prioritization, the edge provider is really only purchasing the same slow lane it has today; not a fast lane that provides opportunities for better and more innovative services."

Verizon Wireless escapes tough rules, for now

Verizon, owner of Verizon Wireless, also argued that the FCC shouldn't apply network neutrality rules to cellular carriers, saying that "Wireless broadband services face technological and operational constraints arising from the need to manage spectrum sharing by a dynamically varying number of mobile users at any time."

So far, Verizon is getting its wish on that front, as the FCC has tentatively decided to continue treating wired and wireless Internet differently. Comcast, which doesn't operate a cellular network, argued that the FCC should re-examine its treatment of wireless.

The FCC is taking initial comments on its net neutrality plan until Friday, and then the group will take reply comments until September 10.