January 01, 2015

Road Warrior: The Road Warrior Looks at Net Neutrality

Jeffrey Allen

As this issue focuses on dispute resolution, I have decided to take on the concept of neutrality from the perspective of a road warrior and explore an issue that has the potential of impacting us in all Internet-related aspects of our personal and professional lives: net neutrality.

What Is Net Neutrality?

Many of you have likely heard the term before; for others, this may prove your first exposure to it. Let me take a moment to define it so that we will all stay on the same page. Net neutrality refers to the concept that all data on the Internet should receive equal treatment from Internet service providers (ISPs) and governments, and that the providers should not discriminate or charge differentially as a function of the user, content, site, platform, application, mode of communication, or equipment. The most common example of the violation of the concept of net neutrality is the throttling of communications speeds by ISPs. Such actions can reduce dramatically our ability to stream information or to transfer information from one point to another.

It is important to understand what net neutrality does and does not address. Net neutrality is about the flow of traffic through the Internet. When someone sends a message over the Internet, it gets broken up into tiny packages called “packets.” Each packet gets passed around from node (location) to node, eventually arriving at its destination, where it is reassembled and presented. It’s as if you tore up a letter, packaged the pieces separately, and sent the different packages via overnight carrier. When the packages arrive at their ultimate destination, they can be reassembled in the proper order so you can view the content.

Net neutrality is a policy that mandates that all packets receive the same handling, regardless of who sent them, where they are going, or what they contain, subject to the restriction that illegal, malicious, or unwanted traffic should not receive protection (and should be prevented, if possible).

As the use of the Internet grows increasingly important to us in almost all aspects of our personal and professional lives and more and more people have regular access to it, the issue expands in importance. In addition to serving as the information highway, the Internet has become a multi-billion-dollar business. Many of those providing Internet access see it as a cash cow that requires (or at least allows) regular and consistent milking. The lines between the sides on the issue of net neutrality are drawn, and people are lining up on one side or the other.

The Argument for Net Neutrality

The issue of net neutrality has received increasing levels of attention. President Barack Obama and the American Civil Liberties Union (ACLU) have joined the side favoring net neutrality. The president has spoken in favor of it and is believed to be applying pressure to the Federal Communications Commission (FCC) to formulate viable rules regulating the Internet in a manner not dissimilar to telephone services. The FCC had previously taken a position relatively consistent with that advocated by the White House, but a decision in 2014 by a federal appellate court determined the FCC had overstepped its bounds and threw out the rules promulgated by the FCC. Since that decision (Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014)), the debate has heated up and sides have endeavored to pressure the FCC to provide a new set of rules (or not to provide rules) regulating the Internet to ensure and protect net neutrality. The FCC has advised that it intends to issue a new set of rules that will pass muster, but the FCC recently advised that it has chosen to postpone its adoption of the new rules until later in 2015. Some think that owing to the now highly political nature of the debate, the FCC may further delay the process by choosing to wait until after the conclusion of Obama’s term.

Those who favor net neutrality see access to the Internet as a vital necessity to all (or at least most) of us. To the ACLU, net neutrality presents a First Amendment issue requiring vigilance and protection of access. Others, including President Obama, believe a free and open Internet to be as critical to Americans’ lives as electricity and telephone service and think that access to the Internet should be regulated like those utilities for consumer protection. Essentially, the idea behind net neutrality is to turn ISPs into a regulated monopoly, similar to what we have done with other utility companies. The president has argued that the FCC should adopt the strictest possible standards to prevent broadband companies from blocking or intentionally slowing down the transmission of legal content and stop arrangements allowing content providers to pay for a fast lane to reach consumers. The president’s position, in essence, requires thinking about both wired and wireless broadband service as public utilities. As President Obama stated on November 10, 2014:

For almost a century, our law has recognized that companies who connect you to the world have special obligations not to exploit the monopoly they enjoy over access into and out of your home or business. . . . It is common sense that the same philosophy should guide any service that is based on the transmission of information—whether a phone call, or a packet of data.

The Argument Against Net Neutrality

Those who oppose net neutrality generally do so either as a result of opposition to growing federal regulation or for primarily economic reasons.

Those who oppose net neutrality out of concern over increased federal regulation raise issues of an Orwellian society in which the federal government acquires the power to review data transmitted across the Internet in order to ensure its ability to regulate that transmission. There may be some truth to this concern if the government seeks to eliminate the transmission of illegal or unwanted information, but otherwise these powers would not be required to protect net neutrality. Moreover, there are other processes that apply when the government seeks access to such information for law enforcement purposes. And then, of course, there is the whole debate about National Security Agency access, but that exceeds the scope of this column and the discussion would require more than the available space.

The economic issues raised by opponents of net neutrality generally relate to the assertion that net neutrality will impair the ability of ISPs to recover the funds that they must invest in infrastructure to provide Internet service. They contend that the ability to surcharge certain users or usages is vital to their ability to recover their investment. The flip side of that coin is that ISPs may choose not to invest funds in infrastructure to improve their coverage and the speed of their service if the FCC adopts rules perceived as depriving them of the ability to recover their investment.

The ISPs often argue that large content providers such as Google or Netflix abuse the current system. ISPs contend that such users receive the benefit of faster service to the end user without paying more for it. There is some deception in this argument, however, as content providers generally pay for bandwidth. This means that they pay for the amount of information drayage that they use from the provider. So if the information suppliers of the world send more information, they use more bandwidth and then pay more. If the service is faster and they can send more, this generally means that they pay more during that period, as they used more bandwidth. On the other side of the transmission, when we download the information, we pay the drayage costs for what we download (we pay for bandwidth, too). While we may or may not use the same provider, the bottom line is that the ISPs, as a group, get paid for the information coming and going.

The ISPs have also argued that setting up tiers is a natural evolution of a free-market economy and that it should, therefore, be allowed. They contend that in a free market it should be the market that decides how much they can charge and whether it will tolerate a stratified structure. The problem with this argument is that the free-market analysis only works when it is an open market with real competition. It does not work in a monopoly or a duopoly or even an oligopoly.

Picking Sides

It appears that the lines are drawn and that net neutrality may become the next big battleground of the Internet. Pick your side. It is probable that the FCC will make a decision as to the nature of the rules it will issue to regulate the Internet within the year. It is also likely that whatever regulatory structure it settles on, someone with sufficient funding to address the issue will take it to court. This is an issue you should get familiar with and weigh in on with your legislative representatives in Congress.

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Jeffrey Allen

Jeffrey Allen (jallenlawtekblog.com) is the principal in the law firm of Graves & Allen in Oakland, California, Editor-in-Chief of GPSolo magazine and GPSolo eReport, and a member of the Board of Editors of Experience magazine.