Legal ruling

Verizon challenge reignites net neutrality debate

Net neutrality was all the rage a couple years ago as the FCC battled against Internet providers like AT&T, Comcast, and Verizon to implement guidelines governing how Internet service is delivered. It hasn’t been making headlines for a while, but it’s back with a vengeance as Verizon gets its day in court to challenge the net neutrality framework. What's really at stake, though, is the scope of the FCC's authority over the Internet, and Verizon's desire to control and profit from the content that crosses its network.

The FCC developed the Open Internet Framework to establish some guidelines for Internet providers. Supporters of the Open Internet Framework see it as essential to a healthy, open Internet that doesn’t deliver varying access to information depending on which provider you use or how much money you pay. For Verizon, and other opponents of net neutrality, it represents an unnecessary regulatory burden that creates uncertainty and stifles investment and innovation.

Verizon is fighting against net neutrality rules developed by the FCC.

The business of ‘uncertainty’

Corporate America likes to run out the canard of “uncertainty” to justify bad, unethical, or immoral business decisions. If there is an unpopular choice to be made, the “uncertainty” card is supposed to somehow trump logic and judgment. Uncertainty is one of the tactics that have been used in the net neutrality battle, as Internet providers claim the FCC guidelines introduce uncertainty that will somehow hinder investment and innovation for the Internet.

Rob Enderle, principal analyst with the Enderle Group, argues that uncertainty isn’t always a sleight-of-hand distraction. “Actually uncertainty doesn’t rationalize corporate decisions it tries to explain corporate behavior,” he says. “Executives don’t like to take blind risks—the more they know about future conditions the more they are willing to risk capital. When they don’t feel comfortable about the future they tend to lock up the assets and hide the wife and kids.”

Business analyst and consultant Adam Hartung understands the business logic of understanding and managing risk, but believes that “uncertainty” is used primarily as a “sky is falling” excuse. “Far too many leaders these days will look for any excuse to not invest—to not invest in anything,” he says. “That is why cash hoards in corporations are at all-time highs in absolute dollars and as a percent of assets.”

Hartung added that the reason CEOs and other corporate leaders are in the roles they’re in, and the reason they’re paid the exorbitant amounts of money they’re paid, is to be able to take risks—smart risks. Their value is a measure of their ability to steer the company through the uncertainty, not the ability to avoid uncertainty entirely. “It is a lazy executive who uses uncertainty as a reason to not invest, or to take a simple action like layoffs or other cost cutting," he says. "It is the smart leader who analyzes trends, creates future scenarios and invests when others refuse to do so because they are fearful—and uncertain.”

Case in point: at the same time Verizon, Comcast, and others were engaging the FCC to fight over net neutrality and claim that FCC oversight hampers innovation and investment, Google stepped in and invested in Google Fiber—delivering significantly faster broadband speeds at a fraction of the cost of competing broadband providers.

A matter of perspective

Google was initially a staunch supporter of the FCC and the noble pursuit of net neutrality. Now that Google is also an Internet provider—operating its pilot Google Fiber networks in a handful of cities across the United States—it seems to have a different point of view.

Google has been a champion of unrestricted Internet service—basically favoring the idea that the ISP simply provides the pipe and has no jurisdiction to control the content that flows through the pipe, or discriminate against certain types of traffic by throttling the speed at which it flows through the pipe. That is, unless you try to run a server on a Google Fiber network. Then all net neutrality bets are off, and Google reserves the right to shut you down.

In Google’s defense, it seems reasonable to draw a line between the core concept of net neutrality and the difference between consumer and business class Internet services as defined in the terms of service. Google isn’t suggesting that traffic to Google be given priority and traffic to Bing be throttled, and Google isn’t trying to block access to Apple or Microsoft sites on its networks.

On the other hand, it can get very sticky very quickly when you start trying to determine what qualifies as a “server.” The Google ToS clearly bans “any type of server,” but there is a significant difference between setting up an Exchange Server and reselling email hosting services from your home broadband connection and setting up a Minecraft server to play a game with some friends. The challenge is finding language for the ToS that can differentiate between the two.

It all comes down to money

It's really about the ability of providers such as Verizon to play both ends against the middle and make money from both sides.

The FCC net neutrality guidelines prohibit Verizon (and other broadband providers) from selectively throttling or blocking Web traffic. That means that Verizon has to treat all traffic equally, and can't--for example--block traffic from Netflix if Netflix refuses to pay a toll or give prioritized traffic to HBO because it gives more money to Verizon.

Verizon's attorney, Helgi Walker argued in court, “But for these rules, we could be pursuing those types of commercial arrangements,” adding, “My client wants freedom to explore that.”

The problem is that the broadband provider is already being compensated for the pipe from the customer. The content provided, and the speed at which its deliveredm, shouldn't then also hinge on how much the broadband provider can extort from the sites and services themselves.

It's like a company owning the water pipes charging both the customer for receiving the water and the water supplier for the privilege of allowing the water to reach the customer.

If there is part of this debate that creates uncertainty and has the potential to stifle investment and innovation, it's the absence of net neutrality rules. The ambiguity of not knowing whether a given site or service will be allowed to reach users, the doubt sown over how much money the broadband provider might demand, and the fear that those fees could change would make it much harder for online startups to get off the ground with any sense of stability.

The sole purpose of the FCC is to
oversee and regulate communications.

Net neutrality should win

The reality is that the Internet providers can't be trusted to invest, innovate, and act responsibly. The drive to establish net neutrality rules is a response to unethical decisions made by broadband providers, and an effort by the FCC to protect consumers and the Internet itself from unfair business practices.

There shouldn't be any doubt that the FCC has the authority to oversee and regulate Internet providers. When Congress established the Federal Communications Commission, it gave it a charter to regulate interstate and international communications by radio, television, wire, satellite, and cable. Challenging the authority of the FCC to impose net neutrality guidelines is ludicrous because overseeing and regulating communications is the sole purpose of the agency. It’s like claiming the brakes on your car have no “authority” to impede or decrease the speed of your vehicle, or that a police officer has no “authority” to intercede to prevent a crime from occurring. That’s what they do.

The finer debate about what qualifies as a server, and whether or not an Internet provider should be able to draw a line between consumer broadband service, and a customer running a business, or hosting services on a server from their home is a debate that should be had. It has echoes of net neutrality, and it could set precedent that’s hard to enforce, but that question is still significantly different than whether Comcast can choose to throttle or block access to rival networks while boosting performance for NBC (a network that Comcast owns),or whether AT&T should be able to block FaceTime for its customers, or use it to extort customers to enlist in higher-cost service plans.

It’s not rocket science. The only reason Verizon and other providers are arguing against FCC oversight and net neutrality guidelines is so they can control the content customers receive, and that should not be allowed.

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