Maybe Bert will find this analysis on net neutrality more to his liking...
Regards
Craig
http://knowledge.wharton.upenn.edu/article/the-net-neutrality-ruling-a-new-era-for-broadband/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2016-06-29
The Net Neutrality Ruling: A New Era for Broadband?
A favorable court ruling the U.S. Federal Communications Commission obtained
last week reaffirms its regulatory authority over broadband internet access and
thereby the rules it passed last year on “open internet” or net neutrality. The
court also gave the FCC powers to deal with privacy issues as they relate to
broadband service providers, taking those powers away from the Federal Trade
Commission. With its authority now made clear, the FCC could get down to
transparently resolving various issues facing the industry, said experts at
Wharton and Wesleyan University.
“A number of issues are teed up” that need regulatory intervention as broadband
services providers compete in the marketplace, said Kevin Werbach, Wharton
professor of legal studies and business ethics. These include a controversial
feature called zero-rating where consumers get free data for sponsored content
but with riders beyond that; usage-based pricing; caps imposed on data usage;
and interconnection rules that govern networks connecting between one another.
“The companies on either side will make their arguments before the FCC and work
this through,” he added.
Werbach, a long-time expert on internet policy and digital convergence,
believed that the dispute between the industry and the FCC that went to court
in the latest instance was perhaps needless. “This long fight about the FCC’s
legal authority hasn’t helped anyone,” he said. “There are [many] gray areas,
and there are a lot of important issues where there are two sides to the
argument. [Now], you’ve got an expert regulator that is going to be a fair cop
on the beat to resolve them.”
According to Christiaan Hogendorn, professor of economics at Wesleyan
University in Conn., the FCC’s win is significant for the endorsement it gives
to net neutrality. “The main logic behind net neutrality is to provide a
lower-risk environment for innovators,” he said. “You don’t have to worry that
if you come up with an idea, you would be kept out of the dance by the powers
that be at the [internet service provider].”
“The main logic behind net neutrality is to provide a lower-risk environment
for innovators.” –Christiaan Hogendorn
FCC chairman Tom Wheeler expressed a similar thought in a statement after the
court ruling Tuesday last week. “Today’s ruling is a victory for consumers and
innovators who deserve unfettered access to the entire web, and it ensures the
internet remains a platform for unparalleled innovation, free expression and
economic growth,” he said.
Werbach and Hogendorn discussed the main takeaways from the FCC’s court win on
the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111.
(Listen to the podcast at the top of this page.)
What ‘Open Internet’ Means
Essentially, the U.S. Court of Appeals for the D.C. Circuit last week upheld
stricter rules in place linked to net neutrality contained in an FCC order of
March 2015. In a 2-1 ruling, the court required service providers like Comcast
and AT&T to avoid discriminating between users in terms of internet speed
delivery, where those who can afford to pay more get higher speeds. According
to the FCC, the ‘open internet’ (or net neutrality) means it must remain “open
for commerce, innovation, and speech; open for consumers and for the innovation
created by applications developers and content companies; and open for
expansion and investment by America’s broadband providers.”
The FCC’s ability to push for that ‘open internet’ was achieved with the court
upholding the regulator’s legal authority to reclassify broadband internet
access as a telecommunications service, which is the same category used for
telephone services. Werbach noted that the debate on net neutrality began
before 2000. This was the third time the FCC has tried to adopt enforceable
‘open internet’ rules, he said. Twice before it had been challenged in court
and its proposals were overturned, he added.
The latest case arose from a petition filed in May 2015 by USTelecom, the
association of broadband service providers, seeking a stay on the FCC’s open
internet order. This time around, expectations were mixed on the outcome of the
case. Werbach said the FCC was expected to win on the basic issue of its legal
authority to reclassify broadband internet access as a telecommunications
service. However, it was seen as vulnerable on other aspects of its order last
year, such as classifying wireless services under net neutrality and
interconnection rules, he added. “The FCC won across the board; it was a
sweeping victory for the FCC.”
According to Werbach, the dispute is not about whether any firm is making too
much money. “This is capitalism. It’s entirely appropriate for Comcast and
Verizon and AT&T to want a return for their shareholders,” he said. “The
question is [about] allowing this to be done in a way where if anyone engages
in some anti-competitive, unreasonable discrimination, where essentially they
are using their gatekeeper control to disadvantage customers and disadvantage
innovation, then there is the opportunity for the FCC to step in.”
“The FCC won across the board; it was a sweeping victory for the FCC.” –Kevin
Werbach
Impact on Consumers
Werbach noted that internet service providers have said that they would have to
slow down their investments — and that would be worse for consumers — if they
have to adhere to the rules that prevent blocking, discrimination,
prioritization and so forth. However, he did not expect service providers to
follow through on that warning. The new rules on the open Internet have been in
place for more than a year, but no slowdown in investment has occurred, he
noted. In fact, the FCC has had some form of open internet rules for several
years, he added.
Hogendorn said rapid technological advances have ensured that consumers get
more bandwidth without having to pay more, and that it is possible that would
continue. However, if congestion occurs and that necessitates new equipment, it
raises the question of who would pay for it, he added. In specific cases
involving a service such as a Netflix or a Hulu, advertisers may pick up a part
of that extra cost and the consumer could actually end up paying less, in
exchange for viewing some advertising, he added.
Zero-rating and Transparency
The zero-rating practice is expected to be among the most contentious in the
foreseeable future. “The FCC has said that zero rating … might be a problem,
but [it will] not across-the-board forbid it,” said Werbach. He noted that
service providers have advanced arguments that zero-rating might be a good
thing for consumers. “It might be a way to give consumers cheaper service, and
is used in some low-income areas to give subsidized, free service but only to a
limited subset of content,” he added.
Hogendorn noted FCC chairman Wheeler’s recent comments on the need for “instant
scalability” where startups would get more server capacity and bandwidth if
they need to rapidly grow their operations. In such a scenario, zero-rating
without transparency in how data caps are set would be problematic, he said.
“Hopefully, this court decision means we’ve gotten beyond the point of fighting
about the legal authority, and now we can have the real debates about the real
issues.” –Kevin Werbach
The right way to go about resolving those issues “is to get the experts in, get
the economic data in,” said Werbach. “Let’s have this all out in the open – not
just some secret handshake deals behind the scenes by companies. And then we
can see – if this is actually beneficial for consumers, then [it would be]
great.”
Industry Will Dig In
Broadband service providers are not likely to let the latest court ruling go
unchallenged. Werbach said he expected companies like Comcast and Verizon to
seek a re-hearing, but added that such a move is unlikely to succeed. Next, he
expected them to appeal to the Supreme Court, but they would fail there as
well, he predicted.
Meanwhile, Werbach expected the industry to continue to push Congress to act in
their favor. “Congress can change the FCC’s legal authority or can tell the FCC
what to do,” he said. “The Republicans have done a lot of saber-rattling about
net neutrality [and] about limiting the FCC’s legal authority.” He noted that
President Barack Obama has threatened to veto any such move, and therefore the
service providers are unlikely to get the traction they want in Congress.
“But they would keep trying,” said Werbach of the service providers pushback on
net neutrality, adding that it would be in right order. “This is the
infrastructure of the 21st century … [and] the platform for the internet,” he
said. “You have lots of very sophisticated, very large companies on all sides
as well as innovative startups in this world. There will be points of friction,
and that is okay. It has happened every time before we had a transformative
platform.”
According to Werbach, the challenge is to chart a path through those tough
issues that is realistic. “The problem has always been on both sides,” he said.
He noted that each emphasizes either “the absolutism” of black-and-white rules,
or a world without rules where regulation would bring a stop to all innovation
and investments. “Neither of those is reality,” he said. “Hopefully, this court
decision means we’ve gotten beyond the point of fighting about the legal
authority, and now we can have the real debates about the real issues.”