FCC weighs in on Net Neutrality

The FCC chairman, Julius Genachowski presented a speech to the Brookings Institution, the centrist think tank this morning, supporting FCC intervention to preserve Net Neutrality.

I’m going to quote a whole bunch from the speech, but you really should see it or read it yourself [PDF], as it’s interesting for those of us interested in the Net Neutrality issue. In fact, it’s a pretty decisive turning point.

“Notwithstanding its unparalleled record of success, today the free and open Internet faces emerging and substantial challenges. We’ve already seen some clear examples of deviations from the Internet’s historic openness. We have witnessed certain broadband providers unilaterally block access to VoIP applications (phone calls delivered over data networks) and implement technical measures that degrade the performance of peer-to-peer software distributing lawful content. We have even seen at least one service provider deny users access to political content.

This is particularly important to companies that have any sort of “work at home” or “work on the road” users using residential broadband connections in order to get their work done – telecommuters and “telepresencers” – to have video meetings with co-workers and clients.

This is also especially important for on the road workers, whose service providers change daily (or even more frequently.) It is bad enough for a salesperson to worry about whether hotel X’s broadband has enough “oomph” to be able to access Web-based applications without undue delay (and indeed, hotel reservations have been made or cancelled based on the availability of broadband.) It’s another thing entirely to be assured of broadband power but find that the hotel’s service provider has blocked or degraded that particular application – something one is not likely to find out until after you check in and try to log on.

And as many members of the Internet community and key Congressional leaders have noted, there are compelling reasons to be concerned about the future of openness.

One reason has to do with limited competition among service providers. As American consumers make the shift from dial-up to broadband, their choice of providers has narrowed substantially. I don’t intend that remark as a policy conclusion or criticism — it is simply a fact about today’s marketplace that we must acknowledge and incorporate into our policymaking.

A second reason involves the economic incentives of broadband providers. The great majority of companies that operate our nation’s broadband pipes rely upon revenue from selling phone service, cable TV subscriptions, or both. These services increasingly compete with voice and video products provided over the Internet. The net result is that broadband providers’ rational bottom-line interests may diverge from the broad interests of consumers in competition and choice.

AT&T sells phone service and television and Internet, Time Warner sells television and phone service and Internet, Starbucks sells coffee and wireless Internet, which is important considering all those RFC 2324 (HTCPCP/IP) connections. The theory behind regulation is that it will prevent unavoidable conflicts of interest from affecting Internet service.

The third reason involves the explosion of traffic on the Internet. With the growing popularity of high-bandwidth applications, Internet traffic is roughly doubling every two years.

Indeed.

Technologies for managing broadband networks have become more sophisticated and widely deployed. But these technologies are just tools. They cannot by themselves determine the right answers to difficult policy questions — and they raise their own set of new questions.

For example, deep packet inspection and traffic shaping are highly effective, very powerful tools that can manage broadband networks and preserve the performance of some applications while degrading others. The “difficult policy questions” Genachowski is probably referring to boils down to: “Which applications are preserved and which are degraded, and who gets to decide the answer to that question?” The answer to the latter half, apparently, is the FCC, which is the point of the speech:

In view of these challenges and opportunities, and because it is vital that the Internet continue to be an engine of innovation, economic growth, competition and democratic engagement, I believe the FCC must be a smart cop on the beat preserving a free and open Internet.

One of the other interesting things to take away from the speech is that the FCC is not opposed to specialized, non-neutral Internet service providers designed to cater specifically to individual market segments. If a company were to pop up promising optimization of business-critical cloud computing applications – that would be fine, according to Genachowski’s speech, but that this should only be a supplement, not a replacement, for general purpose broadband Internet.

I also recognize that there may be benefits to innovation and investment of broadband providers offering managed services in limited circumstances. These services are different than traditional broadband Internet access, and some have argued they should be analyzed under a different framework. I believe such services can supplement — but must not supplant — free and open Internet access…

The big thing, of course, to take away from the speech is what policy changes the FCC will bring forward. Essentially, Genachowski announced that the “Four Freedoms” articulated by former chairman Michael Powell in 2004 as principles he proposes as enforceable Commission rules, along with two other, additional principles. So the policy of the FCC towards Network Neutrality is:

• Network Operators cannot prevent users from accessing lawful Internet content, applications, and services of their choice.
• Network Operators cannot prohibit users from attaching non-harmful devices to the network.
• (New) – Broadband providers cannot degrade or discriminatelawful traffic over their networks, nor disfavor an Internet service just because it competes with a similar service offered by that provider.
• (New) – Broadband providers must be transparent about network management practices.

There are some caveats, and the FCC will make determinations on a case-by-case basis – in the speech, Genachowski mentioned that “during periods of network congestion, it may be appropriate for providers to ensure that very heavy users do not crowd out everyone else.”

Genachowski also mentioned the possibility of “supplemental” non-neutral managed Internet services (for example, an Internet provider which focuses on cloud computing applications, and degrades everything else to ensure good application performance,) but maintained that these should not be a replacement for general purpose Internet access.

As for the transparency policy, it makes sense. In addition to giving consumers the confidence of knowing that they’re getting the service levels that they paid for, it will allow companies that use cloud applications to gauge whether a particular Internet service is adequate for their needs, in markets with multiple services, it allows one to make informed choices when deciding which service to use, and will help cloud application developers determine whether there is enough broadband infrastructure to develop new features in their products.

(Ed. Note: Here, we have to make clear that NetQoS, and proposed acquiring company CA, makes network monitoring and management solutions that would likely be placed in higher demand if traffic reporting becomes required by the FCC.)

Finally, Genachowski made clear that the policies are designed to curb problems that they are already seeing, not to curb possible problems that non-neutral networks would pose.

“This is not about protecting the Internet against imaginary dangers. We’re seeing the breaks and cracks emerge, and they threaten to change the Internet’s fundamental architecture of openness. This would shrink opportunities for innovators, content creators, and small businesses around the country, and limit the full and free expression the Internet promises. This is about preserving and maintaining something profoundly successful and ensuring that it’s not distorted or undermined. If we wait too long to preserve a free and open Internet, it will be too late.”