FCC net neutrality plan gets picked apart from all sides

By Cecilia Kang



A net neutrality regulation proposed by the chairman of the Federal Communications Commission is getting picked apart from many sides.

Verizon Wireless’ chief executive Daniel Mead met on Friday with Chairman Julius Genachowski his staff and argued that the broadband market doesn't need new rules. A public interest group and a coalition representing tech giants Google and Skype also met with FCC officials Friday to urge that the rules apply equally to wireless and fixed-wire broadband networks and that they clearly state priority delivery of content won’t be tolerated.

The FCC's net-neutrality proposal has garnered support from labor unions, Web founders like Craig Newmark of Craig's list and some venture capitalists. And it's received cautious support from carrier AT&T and Comcast.

But in the days leading up the Dec. 21 FCC vote on the rules, officials are also hearing criticism on details of the proposal, which hasn't been made public.

In a meeting with FCC officials, including Republican Commissioner Robert McDowell, Mead said if the agency decides to pursue net-neutrality rules, it should follow a framework proposed by Rep. Henry Waxman (D-Calif.) last November that would, among other things, include a “sunset provision” that would end the regulations in a couple years, according to a filing.

Markham Erickson, head of the Open Internet Coalition and Gigi Sohn, head of public interest group Public Knowledge, met last Friday with John Giusti, chief of staff to Democratic Commissioner Michael Copps.

In the meeting, Erickson and Sohn, stressed that Genachowski's proposal should include a clear definition of what a broadband access provider is. Erickson and Sohn urged Copps – a pivotal ally whom Genachowski must win over – to apply such a definition to wireless access providers and other broadband companies who want to escape regulation.

According to a source who has seen a draft of the rules, the chairman’s proposal introduced last week omits such a definition, an idea he put out in his initial policy proposal more than one year ago:

As such, we propose to define broadband Internet access service for purpose of these rules as "[a]ny communication service by wire or radio that provides broadband Internet access directly to the public, or to such classes of users as to be effectively available directly to the public.

Erickson and Sohn also pressed Copps to ensure that the rule “make[s] clear that paid prioritization [of content] is presumptively unreasonable.”

A source who has seen the draft rules said the FCC would view paid prioritization of content as “a negative thing,” but the agency doesn’t put the burden on a carrier to show that the activity is reasonable.

That means the FCC wouldn’t automatically presume violations of net-neutrality when a company like Verizon Communications gives better delivery of online video from partner YouTube than, say, to Netflix or Hulu. On a case-by-case basis, the agency would take up investigations of alleged discrimination and apply its rule on “unreasonable” network management.

Some telecom law experts say that such an approach would bode well for the biggest network operators.

“This could be a total, huge gaping loophole,” said Marvin Ammori, a communications law professor at the University of Nebraska. “We know that carriers are very powerful and they want a vague rule that makes it harder for a startup like Zynga to come in and claim unreasonably discrimination. That’s a tough battle for any of these innovators who don’t have the deep pockets the carriers do.”

Paul Gallant, a research analyst at the MF Global investment firm, said cable operators will generally like usage-based pricing options offered by Genachowski in his proposal. But that could hurt competitors such as Netflix.

"Depending on where the tiers were set, usage-based pricing on wireline broadband could end up deterring some people from dropping cable for over-the-top video," Gallant wrote in a recent research note.

"To the extent that Netflix’s growth plan anticipates significant mobile subscribership, wireless carriers’ network management decisions could have a material impact on Netflix’s mobile offering," he wrote.

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FCC net neutrality plan: paid prioritization and higher fees

FCC Chairman to propose a plan for net neutrality

FCC net neutrality plan faces Republican opposition, uphill battle