Washington Update: Will Fed Intervention Curb or Protect Your Digital Freedom?

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Broadband Reclassification, or Net Neutrality Part Deux

Welcome to one of the longest-running shows in telecom regulation: the ongoing fight over the issue known as "net neutrality," now in its second or third iteration since its debut on the regulatory scene in 2005.

Federal Communications Commission
What once began as a fairly simple technical conflict--centered mainly on the phone companies' desire to keep applications like Internet-based phone calls off their broadband networks--is now a full-scale battle royal that has the Federal Communications Commission attempting to change regulatory rules to bring the broadband operations of cable companies and big telecommunications firms back under agency purview.

How did that happen? The idea of net neutrality, at its most basic level, espouses the belief that network service providers--those companies that offer DSL, fiber, or cable-modem broadband services--shouldn't be allowed to block or degrade their users' ability to connect to any legal content or applications on the Internet.

Though cable and phone companies will tell you they have no desire to block any user access to the Internet, their political and economic DNA basically requires that they use their massive resources to fight any additional regulatory requirements about doing so--and hence you have the political battle without end.

In 2008, the FCC slapped the wrist of cable giant Comcast for the company's secretive attempts to stop its users from downloading peer-to-peer video files.

This spring, an appeals court in D.C. struck down that ruling and basically said that the FCC didn't have the necessary jurisdiction to enforce the net-neutrality principles the agency had adopted in 2005.

In response, the FCC, under new chairman Julius Genachowski, has proposed new rules to restore some of the FCC's old regulatory power over phone-company and cable broadband services, rules that need congressional approval to be put in place.

Who are the major players? On one side are the large service providers, namely telcommunications companies led by AT&T and Verizon, and cable behemoths like Comcast and Time Warner Cable.

Though fierce competitors in the marketplace, the big service providers are consummate professionals at presenting a unified lobbying message backed up by big campaign contributions, television advertisements, and millions more spent in support of "advocacy" groups that parrot the service providers' no-regulation talking points.

(Point of reference: AT&T, in 2008, had 700 or so lawyers working in its regulatory departments; Google, at the same time, had fewer than a dozen staffers in its D.C. offices. While Google's regulatory troops have probably grown in size since, they still are likely dwarfed by the telecommunications companies' legal armies.)

President Barack Obama
On the pro-regulation side is a somewhat looser coalition of net-neutrality backers. It's a group with firepower, however, since it includes President Obama, his FCC chairman, powerful members of the Democratic majority in Congress, leading consumer-protection concerns--and Google.

What this group ultimately wants is some regulatory or law-focused backstop to prevent service providers from using their market- and infrastructure-based power to determine winners and losers in the Internet marketplace.

Though they may not have the legal or marketing muscle of the service providers, the pro-regulation forces have presidential air cover, with his congressional majority (at least until the next elections), which can mean the most when the votes are counted.

What does this battle mean for the average high-tech consumer? If the service providers win the day and keep the regulators away, it is possible that broadband prices for some types of services--like streaming video--could increase, with preferential treatment given to companies that enter paying partnerships with service providers.

Service providers, however, repeatedly say that competition will keep such moves from happening--and that approval of net-neutrality regulations or a reclassification scheme could lead to decreased investment in network buildouts and a loss of broadband-industry jobs.

Verizon Wireless
The reality? Expect neither doomsday scenario to emerge. Instead, expect a lot more political posturing (with Republicans typically backing the carriers, and Democrats behind net neutrality) as the FCC moves to implement its rules sometime this summer or early fall--an exercise that will be followed quickly by lawsuits challenging the reclassification process.

Even as potential foes such as Verizon and Google find ways to work together, the issue known as net neutrality will be a political football kicked around for another year, at least.

Paul Kapustka is editor and founder of Sidecut Reports, an independent research firm that specializes in wireless technologies.

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