Some people will tell you that the recent U.S. Court of Appeals ruling striking down the U.S. Federal Communications Commission's rules about Net neutrality was an unmitigated disaster for consumers and Internet innovation, and that over the long term it will quash innovation, cost consumers more, curtail competition, and put everyone at the mercy of big ISPs like Verizon and Comcast.
The people who say that are only half right. The ruling was a disaster, but not quite an unmitigated one. Everything Net neutrality advocates say about the long-term effects of the ruling are likely true -- but there's still time to do something about it, if the FCC is willing to put up a fight. It's not clear yet whether the FCC will do that.
To understand why the ruling is potentially so disastrous, let's take a step back and look at the court ruling. The concept of Net neutrality has governed the way the Internet has worked since its inception. It means that ISPs can't discriminate among the traffic they carry, treating it all equally. For example, they can't put YouTube traffic onto a fast lane, while putting the traffic of smaller, little-known competitors on a slow-as-a-snail lane. The idea is that all traffic is created equal, and all companies and consumers get an equal shot at using the Internet's pipes.
Up until now, Net neutrality has governed the Internet because that was the Internet's founding ethos. But it has also worked that way because of a long-standing legal concept called "common carrier" that governs telecommunications and other services. Applied to Internet infrastructure, it means that all traffic must be treated equally.
ISPs have long ached to change the rules of the game. They have advocated for being allowed to deliver traffic to consumers based on how much money websites pay them -- faster delivery for more money.
The first crack in Net neutrality appeared a dozen years ago. In 2002, the FCC under President George W. Bush made a decision that led in a straight line to this week's ruling to strike down the FCC's Net neutrality rules. The FCC back then decided to classify broadband as an "information service" instead of a "telecommunications service." That's important, because information services are exempt from common carrier requirements, while telecommunications services aren't. Still, Net neutrality has ruled since then.
Under President Obama, the FCC has been generally supportive of Net neutrality, and in 2010, it issued the Open Internet Order, which said that ISPs could not block traffic of any types of services and that it could not discriminate among traffic by putting some in a fast lane and some in a slow lane.
Verizon challenged it, and this week a U.S. Court of Appeals struck it down, based on the FCC's 2002 decision to categorize broadband as an "information service." Judge David Tatel said that the Open Internet Order should be overturned because "the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers" -- in other words, as an information service, not a telecommunication service.
What might be the effects of the ruling? Well-funded websites will be able to pay extra to have their traffic delivered speedily, making it much more difficult for startups and competitors to survive. In the long run, that means less competition and less innovation. Established services like Netflix will thrive because they'll be able to pay ISPs and pay big. Other services may wither and die, if they even get to start at all, because they'll be at a competitive disadvantage.
Consumers may end up paying more for services. For example, if Netflix pays the ISPs to deliver video more quickly, Netflix will need to get that money from somewhere, and that will likely mean higher subscription fees.
ISPs could also favor websites and services they own over others. Comcast, for example, owns NBC, and could give that network's websites and online services precedence over NBC's competitors.
ISPs could black out entire websites and services. This isn't as far-fetched as it might seem, and there is already a precedent for it. Last summer, Time Warner Cable and CBS were locked in an exceedingly nasty financial dispute about Time Warner Cable's payments to CBS for content. Time Warner Cable went nuclear and blacked out CBS broadcasts to its subscribers for weeks until the disagreement was settled. Now, with Net neutrality struck down, an ISP could do the same thing to a website, blocking access to all Google services unless Google paid what the ISP wanted, for example.
What will be the likely result of all this? A balkanized Internet that bears no resemblance to the freewheeling network that has revolutionized the way people live, work and communicate, while fueling massive economic growth.
But the FCC can do something about the ruling, and should. The court didn't give Verizon everything it wanted -- the court said that the FCC did, in fact, have the authority to regulate broadband traffic, even though it had exceeded its authority with the Open Internet Order.
As a first step, the FCC should appeal the decision. But that's not enough, because another judge may well rule that the FCC exceeded its authority. The FCC should also come up with a set of Net neutrality regulations that don't depend upon common carrier precedents, and therefore might pass court muster.
Even better would be the FCC reclassifying broadband as a telecommunications service that must follow common carrier rules. That would re-establish full Net neutrality. It's what should have been done back in 2002.
Doing that would infuriate congressional Republicans and unleash the ISPs' lobbyists and political might in an all-out war against the FCC. Scott Cleland, who runs NetCompetition.org, which represents broadband carrier interests, made it clear that that's exactly what would happen. Computerworld quotes him as saying, "It would be regulatory World War III."
But if that's what it takes, that's what needs to be done. Doing anything less would amount to an abdication of the FCC's responsibility and allow the Internet as we know it to die a slow death.
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