I Own the Internet and I’ll Charge What I Want!

Written by: Adam Gottlieb
Researched by: Kirk Strohman
Edited by: Jeff Hinman
Managing Editor: Brady Iandiorio

For every dreamer, every entrepreneur, every person with a wild idea that they want to share with the world, the internet has become their first choice and best Net Neutralityopportunity.  Some of these dreamers have gone on to great success, such as Google, and others remain at the fringes but are grateful for the opportunity to be heard.  Since the early 1990s, a conflict has been brewing between proponents of equal access to the internet, led by Columbia Law professor Tim Wu and Stanford Law professor Lawrence Lessig, and major telecom companies who want a tiered pricing structure which may give preference to established business. This conflict was brewing in the internet underground for many years, but with President Obama’s appointment of Julius Genachowski (a staunch proponent of net neutrality) to head the FCC, the issues of internet ownership and regulation are becoming more prevalent.

There is very little legal precedent supporting either side of the argument and during this period of advanced globalization and social upheaval both sides of the debate are gearing up for a long-fought battle. Only one state has officially codified net neutrality and the FCC has only recently weighed in on the issue. Inherent to this argument is a discussion on whether the internet can be regulated at all-by telecom companies or the government. The battle over net neutrality raises other fundamental questions, such as: Has equal access to the internet become a fundamental right? Do telecom companies have a duty to provide equal access over an infrastructure massively invested in and from which a profit should be expected?

Net Neutrali-What?

The best way to conceptualize the issues surrounding net neutrality is to think of the internet as a major road in a large city. Currently, drivers on this road jockey for position on a fairly level playing field, but the roads are crowded.  City planners (internet service providers), concerned with the possibility of more congestion, and seeing the potential to raise money, are considering installing a toll on the road. The envisioned toll road forces drivers (content providers) to wait with all of the other vehicles on the road to pay the toll. Once the toll fee is coughed up, a driver passes through and shares the road with everybody else. If waiting in line won’t work, a driver can pay extra to purchase a “Fast Pass” that allows them to bypass the line, zip right through the toll, and then take advantage of special lanes to avoid congestion.

This is the type of access scheme that the major internet service providers want to establish. The idea is that as the number and quality of websites continue to grow, the amount of data being passed through to the end user is putting a strain on the delivery network. The telecom companies want to create a tiered system of content delivery and charge companies and website publishers a fee in return for special treatment, their own “Fast Pass,” to get their content to consumers in a preferred access channel.

Proponents of net neutrality argue that every website, regardless of content or ownership, should have equal treatment and equal access to the internet. This idea is based on the traditional free-market concept that without free access smaller companies or minority ideas can get squashed. Google is a major advocate for net neutrality and attributes a portion of their success as a company to their ability to launch and grow, unhindered by artificial fee structures. The inventor of the World Wide Web, (no, not Al Gore) Tim Berners-Lee also falls into this camp and believes that “the Internet thrives on lack of regulation. But some basic values have to be preserved…. Democracy depends on freedom of speech. Freedom of connection, with any application, to any party, is the fundamental social basis of the Internet, and, now, the society based on it.”

Opponents of net neutrality, including AT&T, Verizon, and Comcast, argue that from a legal perspective, antitrust laws are available to dissuade illegal discriminatory practices by the few large international providers of internet access. Opponents also argue that without charging on a tiered scale, telecom companies will have difficulty recouping costs invested in developing infrastructure essential to the internet’s survival. Furthermore, the quantity and density of information has become increasingly complex and has put a strain on the infrastructure. Isn’t it only fair to charge more or limit access to the individuals who are responsible for the data overload instead of passing that cost on to every consumer?

Status of the Debate

Very little legislation or case law speaks to either side of this debate. However, Comcast recently filed an appeal to an August 2008 FCC decision that banned bandwidth throttling and adopted the FCC’s Internet Policy Statement. Comcast had been surreptitiously limiting the bandwidth of heavy downloaders from full speeds down to “DSL levels” for 20 minutes at a time in an effort to manage bandwidth. If the FCC decision is sustained, it will set a precedent that limiting bandwidth goes against the principles of consumer access to the internet outlined in the Internet Policy Statement-for the first time limiting how far ISPs can go in managing their networks. The Internet Policy Statement includes four fundamental assertions. In order “[t]o encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to…”

1.      access the lawful Internet content of their choice;

2.      run applications and use services of their choice, subject to the needs of law enforcement;

3.      connect their choice of legal devices that do not harm the network; and

4.      competition among network providers, application and service providers, and content providers.

The most recent development in the battle over web neutrality has appeared in an unlikely place, the American Recovery and Reinvestment Plan of 2009, also known as “the stimulus package”. Buried within the bill, on pages 399-402, are provisions for grants to build out internet and wireless service in “unserved” areas of the country. Tied into these provisions are requirements that any newly developed networks operate on an “open access” basis. Coincidentally, “open access” is not defined in the bill, and since the role of the courts is to interpret legislation, any FCC definition of “open access” will be subject to the scrutiny of the courts.

Although net neutrality proponents were hoping for more, they should not be disappointed in this development. It may seem like a small step, but it is some of the first language in passed legislation directly referring to net neutrality. Further legislation is in the pipeline and the states are weighing in on the issue as well. As of this publishing, only New York has officially codified net neutrality in their telecommunications standards, but other states have been eagerly watching New York to see if these standards are challenged in the courts.

Opponents of net neutrality shouldn’t lose hope either: arguments based on traditional constitutional free speech issues may gain traction. The telecom and cable companies draw an analogy between the landmark Supreme Court case of Turner Broadcasting Systems Inc. v. FCC and the belief that government-imposed bandwidth-use criteria violates their First Amendment right to free speech. Under Turner, the Court held that “must carry” provisions requiring cable companies to give access to local broadcast stations compelled the companies to promote speech with which the companies disagreed.

Further requiring internet providers to offer an equal playing field to any web content provider bears a striking resemblance to requiring cable companies to allow public access channels on cable television. As in Turner, this argument would be subject to intermediate scrutiny, which requires “content neutral regulation [to] be sustained if it advances important governmental interests unrelated to the suppression of free speech and does not burden substantially more speech than necessary to further those interests.” This level of scrutiny puts the onus on the government entity trying to regulate the telecoms to prove there is an “important government interest” in requiring equal access to the internet, and the courts have traditionally leaned towards finding in favor of private individuals.

Where Do We Go From Here?

Six pieces of proposed net-neutrality legislation have been introduced to Congress since 2006, and all have died on the House floor. The most recent attempt at legislation promoting net neutrality is H.R. 5353, which would establish some broadband policy and direct the FCC to hold hearings to assess competition, consumer choice issues relating to broadband internet, and other issues. Should it pass, this legislation will be yet another small step towards net neutrality but likely it would have no drastic effect.

It is impossible to say with any accuracy how this debate will end. Antitrust litigation has been almost non-existent for the last ten years, and with the economy struggling Congress is unlikely to pass legislation that might hurt businesses. Then again, the proponents of net neutrality argue that the “problem” isn’t going away and, regardless of external pressures, something needs to be done. President Obama has expressed his support for the concept of net neutrality but, with so many other pressing issues, net neutrality may end up simmering on the back burner until it finally boils over.  The end of this story is not written and it is yet to be seen who will win out: the dreamers on the edge, or the conventions of modern business practice.  Neither party is ready to give up the fight for their beliefs, and only time will tell how access to the internet will evolve.

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