Say Goodbye To "Net Neutrality" – New FCC Proposal Will Permit Discrimination Of Web Content

Tyler Durden's picture

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

The concept of “net neutrality” is not an easy one to wrap your head around. Particularly if you aren’t an expert in how the internet works and if you don’t work for an ISP (internet service provider). In fact, I think that lobbyists and special interest groups make the concept intentionally difficult and convoluted so that the average person’s eyes glaze over and they move on to the next topic. I am by no means an expert in this area; however, in this post I will try to explain in as simple terms as possible what “net neutrality” means and what is at risk with the latest FCC proposal. I also highlight a wide variety of articles on the subject, so I hope this post can serve as a one-stop-shop on the issue.

The concept of “net neutrality” describes how broadband access across the internet currently works. Essentially, the ISPs are not allowed to discriminate amongst the content being delivered to the consumer. A small site like Liberty Blitzkrieg, will be delivered in the same manner as content from a huge site like CNN that has massive traffic and a major budget. This is precisely why the internet has become such a huge force for free speech. It has allowed the “little guy” with no budget to compete equally in the “market of ideas” with the largest media behemoths on the planet. It has allowed for a quantum leap in the democratization and decentralization in the flow of information like nothing since the invention and proliferation of the printing press itself. It is one of the most powerful tools ever created by humanity, and must be guarded as the treasure it is.

People have been worried about internet censorship in the USA for a long time. What people need to understand is that censorship in so-called “first world” countries cannot be implemented in the same manner as in societies used to authoritarian rule. The status quo in the U.S. understands that the illusion of freedom must be maintained even as civil liberties are eroded to zero. In the UK, the approach to internet censorship has been the creation of “internet filters.” The guise is fighting porn, but in the end you get censorship. This is something I highlighted in my post: How Internet in the UK is “Sleepwalking into Censorship.”

In the U.S., it appears the tactic might take the form of new FCC rules on “net neutrality,” which the Wall Street Journal first broke earlier this week. While the exact rules won’t become public until May 15th, what we know now is that the FCC intends to allow ISPs to create a “fast lane” for internet content, which established content providers with big bucks can pay for in order to gain preferred access to consumers on the other end.

This is truly the American way of censorship. Figure out how those with the deepest pockets can smother the free speech of those with little or no voice on the one medium in which information flow is still treated equally. The nightmare scenario here would be that status quo companies use their funds to price out everyone else. It would kill innovation on the web before it starts. It’s just another example of the status quo attempting to build a moat around itself that we have already seen in so many other areas of the economy. The internet really is the last bastion of freedom and dynamism in the U.S. economy and this proposal could put that at serious risk. Oh, and to make matters worse, the current FCC is filled to the brim with revolving door industry lobbyists. More on this later.

So that’s my two cents. Now I will provide excerpts from some of the many articles that have been written on the topic in recent days.

First, from the article that started it all in the Wall Street Journal:

WASHINGTON—Regulators are proposing new rules on Internet traffic that would allow broadband providers to charge companies a premium for access to their fastest lanes.

 

If the rule is adopted, winners would be the major broadband providers that would be able to charge both consumers and content providers for access to their networks. Companies like Google Inc. or Netflix Inc. that offer voice or video services that rely on broadband could take advantage of such arrangements by paying to ensure that their traffic reaches consumers without disruption. Those companies could pay for preferential treatment on the “last mile” of broadband networks that connects directly to consumers’ homes.

 

Startups and other small companies not capable of paying for preferential treatment are likely to suffer under the proposal, say net neutrality supporters, along with content companies that might have to pay a toll to guarantee optimal service.

 

In Silicon Valley, there has been a long-standing unease with owners of broadband pipes treating some content as more equal than others. Large companies have been mostly silent about the FCC’s moves regarding broadband service, but some smaller firms or investors in startups have said the FCC needs to tread carefully so Internet policies don’t disadvantage young companies that can’t afford tolls to the Web.

 

“For technologists and entrepreneurs alike this is a worst-case scenario,” said Eric Klinker, chief executive of BitTorrent Inc., a popular Internet technology for people to swap digital movies or other content. “Creating a fast lane for those that can afford it is by its very definition discrimination.”

 

Some consumer advocacy groups reacted strongly against the proposal. The American Civil Liberties Union said, “If the FCC embraces this reported reversal in its stance toward net neutrality, barriers to innovation will rise, the marketplace of ideas on the Internet will be constrained, and consumers will ultimately pay the price.” Free Press, a nonpartisan organization that is a frequent critic of the FCC, said, “With this proposal, the FCC is aiding and abetting the largest ISPs in their efforts to destroy the open Internet.”

The New York Times also covered the story:

Still, the regulations could radically reshape how Internet content is delivered to consumers. For example, if a gaming company cannot afford the fast track to players, customers could lose interest and its product could fail.

 

Consumer groups immediately attacked the proposal, saying that not only would costs rise, but also that big, rich companies with the money to pay large fees to Internet service providers would be favored over small start-ups with innovative business models — stifling the birth of the next Facebook or Twitter.

 

“If it goes forward, this capitulation will represent Washington at its worst,” said Todd O’Boyle, program director of Common Cause’s Media and Democracy Reform Initiative. “Americans were promised, and deserve, an Internet that is free of toll roads, fast lanes and censorship — corporate or governmental.”

Let’s not forget that Comcast is attempting to take over Time Warner (I wrote my opinion on that here). So this whole thing seems like a gigantic, status quo consolidation cluster fuck.

Also, Comcast is asking for government permission to take over Time Warner Cable, the third-largest broadband provider, and opponents of the merger say that expanding its reach as a broadband company will give Comcast more incentive to favor its own content over that of unaffiliated programmers.

USA! USA!

“The very essence of a ‘commercial reasonableness’ standard is discrimination,” Michael Weinberg, a vice president at Public Knowledge, a consumer advocacy group, said in a statement. “And the core of net neutrality is nondiscrimination.”

 

“This standard allows Internet service providers to impose a new price of entry for innovation on the Internet,” he said.

Now from TechCrunch’s article, The FCC’s New Net Neutrality Rules Will Brutalize The Internet:

The FCC will propose new net neutrality rules that at once protect content from discrimination, but also allow content companies to pay for preferential treatment. The news, first reported by the Wall Street Journal, would in fact create a two-tiered system in which wealthy companies can “better serve the market” at the expense of younger, less well-capitalized firms.

 

The above is only “net neutrality” in that it protects all content from having its delivery degraded on a whim. The rubric reported doesn’t actually force neutrality at all, but instead carves out a way for extant potentates to crowd out the next generation of players by leaning on their cash advantage.

 

In practice this puts new companies and new ideas at a disadvantage, as they come into the market with a larger disadvantage than they otherwise might have. Any cost that we introduce that a large company can afford, and a startup can’t, either makes the startup poorer should it pay or degrades its service by comparison if it doesn’t.

 

This will slow innovation and enrich the status quo. That’s a shame.

So given the potential disastrous consequences noted above, why is the FCC pushing this through? After all, “net neutrality” was one of candidate Barack Obama’s key campaign promises (just the latest in a series of completely broken promises and lies).

As usual, you can simply follow the money. While FCC Chairman Tom Wheeler is hiding behind a recent court decision that seemingly struck down net neutrality, the court gave him the option to declare the internet a public utility, which would have prevented this outcome. Yet, he didn’t go that route. Why? The revolving door of course!

An article by Lee Fang at Vice sheds a great deal of light on the issue:

Earlier this week, the Wall Street Journal dropped something of a bombshell with leaked news that the Federal Communications Commission is planning to abandon so-called “net neutrality” regulations—rules to ensure that Internet providers are prevented from discriminating based on content. Under the new proposed system, companies such as Comcast or Verizon will be able to create a tiered Internet, in which websites will have to pay more money for faster speeds, a change that observers predict will curb free speech, stifle innovation and increase costs for consumers.

 

Like so many problems in American government, the policy shift may relate to the pernicious corruption of the revolving door. The FCC is stocked with staffers who have recently worked for Internet Service Providers (ISP) that stand to benefit tremendously from the defeat of net neutrality.

The American way.

Take Daniel Alvarez, an attorney who has long represented Comcast through the law firm Willkie Farr & Gallagher LLP. In 2010, Alvarez wrote a letter to the FCC on behalf of Comcast protesting net neutrality rules, arguing that regulators failed to appreciate “socially beneficial discrimination.” The proposed rules, Alvarez wrote in the letter co-authored with a top Comcast lobbyist named Joe Waz, should be reconsidered.

Today, someone in Comcast’s Philadelphia headquarters is probably smiling. Alvarez is now on the other side, working among a small group of legal advisors hired directly under Tom Wheeler, the new FCC Commissioner who began his job in November.

 

As soon as Wheeler came into office, he also announced the hiring of former Ambassador Philip Verveer as his senior counselor. A records request reveals that Verveer also worked for Comcast in the last year. In addition, he was retained by two industry groups that have worked to block net neutrality, the Wireless Association (CTIA) and the National Cable and Telecommunications Association.

 

In February, Matthew DelNero was brought into the agency to work specifically on net neutrality. DelNero has previously worked as an attorney for TDS Telecom, an Internet service provider that has lobbied on net neutrality, according to filings.

 

In his first term, Obama’s administration proposed net neutrality rules, but in January of this year, a federal court tossed the regulations in a case brought by Verizon. The decision left open the possibility of new rules, but only if the FCC were to reclassify the Internet as a utility. The Wall Street Journal story with details about the FCC’s leaked plans claims the agency will not be reclassifying the web as a utility. The revised rules to be announced by the FCC will allow ISPs to “give preferential treatment to traffic from some content providers, as long as such arrangements are available on ‘commercially reasonable’ terms,” reports journalist Gautham Nagesh.

Well how about chairman Wheeler himself?

Critics have been quick to highlight the fact that chairman Wheeler, the new head of the FCC, is a former lobbyist with close ties to the telecommunications industry. In March, telecom companies—including Comcast, Verizon, and the US Telecom Association—filled the sponsor list for a reception to toast Wheeler and other commissioners. Many of these companies have been furiously lobbying Wheeler and other FCC officials on the expected rule since the Verizon ruling.

 

But overall, the FCC is one of many agencies that have fallen victim to regulatory capture. Beyond campaign contributions and other more visible aspects of the influence trade in Washington, moneyed special interest groups control the regulatory process by placing their representatives into public office, while dangling lucrative salaries to those in office who are considering retirement. The incentives, with pay often rising to seven and eight figure salaries on K Street, are enough to give large corporations effective control over the rule-making process.

Ars Technica also covered the revolving door angle in its article:

The CTIA Wireless Association today announced that Meredith Attwell Baker—a former FCC Commissioner and former Comcast employee—will become its president and CEO on June 2, replacing Steve Largent, a former member of Congress (and former NFL player).

 

Largent himself became the cellular lobby’s leader when he replaced Tom Wheeler—who is now the chairman of the FCC. Wheeler is also the former president and CEO of the NCTA (National Cable & Telecommunications Association), which… wait for it… is now led by former FCC Chairman Michael Powell.

 

To sum up, the top cable and wireless lobby groups in the US are led by a former FCC chairman and former FCC commissioner, while the FCC itself is led by a man who formerly led both the cable and wireless lobby groups.

I mean, you can’t make this stuff up.

But wait, it gets worse.

Among current FCC commissioners, Republican Ajit Pai previously served as associate general counsel for Verizon and held numerous government positions before becoming a commissioner in 2012.

It is extraordinarily tragic that the greed of a small group of crony crooks revolving between the corridors of corporate America and Washington D.C. may be about to ruin the open internet as we know it.

Please share this article far and wide and perhaps enough public awareness can make a difference.