Net NeutralityNet Neutrality — it is the Internet policywonks’ battle cry for all that is fair and decent about the Internet.  And now, in light of President Obama’s request that the FCC “implement the strongest possible rules to protect net neutrality” it has become a major political battlefield.   What happened?

What happened is that the Republicans claimed the Senate.  And the Democrats have bet that Net regulation is going to be a defining issue in the 2016 elections.  More specifically, the Democrats are hoping that the openness of the Internet will resonate with young voters who did not bother voting in 2014.   For the next two years, access to the Internet will be one of the big political battleground.

The Democrats can be expected to advance the proposition that all Internet users deserve equal access to online information, no matter which  service provider you use to connect to the Internet. Put another way, Internet service providers should be “neutral” to the content their customers consume.  Unfortunately, it is more at risk than ever in light of two recent occurrences. Much as been written about the import of net neutrality, and it won’t be repeated here.  A good primer on the issue can be found here.  And, for those who prefer to get their policy information in video format, check out this video.

But if you really want to know why Internet services are faster and cheaper in so many other countries in the world, you might want to read this illuminating article.   It explains how Internet and mobile service in France is 1/3 the price of lower quality service in the U.S.   And it wouldn’t take long to find so much more credible documentation showing how overpriced and relatively poor U.S. network services are compared to, at least 35 other countries in the world.   And U.S. download speed ranks 31st in the world, below that of Belarus, Slovenia and Uruguay.   Indeed, the country that invented the Internet has some of the crappiest network services among first and second world countries.

Going back to President Obama’s call for Net Neutrality regulation, here are the two big things you should know that have happened in early 2014 that threatens to derail fairness and decency……and, yes, we are speaking euphemistically.

The FCC created its own problem……sort of.   In the early 2000’s, the FCC made a big mistake, although it may not have actually been a mistake.   It ruled that Internet providers like Verizon and AT&T, were not utilities like phone companies, but instead were information service, like a TV studio or something.  At the time, the FCC was heavily lobbied by the carriers who threatened to pull out of Internet services if they were classified as utilities. They used this FCC ruling against the regulatory agency years later, when Verizon challenged the FCC’s net neutrality mandate.  The federal court reviewing the Verizon appeal pointed to the FCC’s earlier ruling and said “you don’t have the jurisdiction to govern them because you, yourself, didn’t classify them as utilities.

1.  More specifically, in Verizon v. FCC, a federal court  ruled that regulators can’t enforce Net Neutrality.   This very controversial case which  providers –such as  Comcast, AT&T, Verizon and other internet providers — freedom to charge extra to have content from certain content providers like Netflix streamed more quickly.   The providers claim they won’t necessarily slow down or block anything per se, but they could make it more costly for some of the most commonly used (albeit high-bandwidth) sites to operate.   By the way, they are currently using this same technique for wireless service;  many new cellular plans come with “throttled” speeds when customers use too much bandwidth.   You better believe they are going to use the same throttling scheme to wrest more money from webizens whose websites attract more attention and traffic.

2.   The FCC recently announced that it was going to revisit its rules about what constitutes discriminatory handling of content — which is the regulatory term for Net Neutrality.  In April 2014, the FCC issued an announcement that it planned to look at a scenario in which “ “broadband providers would be required to offer a baseline level of service to their subscribers, along with the ability to enter into individual negotiations with content providers…..In all instances, broadband providers would need to act in a commercially reasonable manner subject to [FCC] review on a case-by-case basis.”  In other words, the FCC might be satisfied with fast-lane agreements as long as they are billed and sold in an above-board manner. It’s be looked at on a case-by-case basis which is regulatory speak for “we won’t create any clear rules, right now, but will react if enough people complain about a certain deal.”

The “case-by-case” part of the FCC’s April 2014 announcement is the part that has generated a storm of teeth gnashing by Net Neutrality supporters — and for good reason.   It implied that some degree of Net Inequality will be tolerated by regulators — but it won’t say by how much or under what circumstances.   “Case by case” is the regulatory equivalent of Justice Potter Stewart’s infamous definition of pornography as “I know it when I see it.” Ugh!   But just as Stewart’s dicta in Jacobellis v. Ohio is somewhat taken out of context, so is the FCC’s interest in reframing the Net Neutrality debate.   In light of Obama’s November pronouncement, that doctrine is dead.   The FCC will not act in anyway to compromise the President’s commitment to making this matter a major political issue.

Just so everyone is on the same page, the real obstacle standing in the path of regulatory protection of Net Neutrality can be found in the halls and offices in Congress.   The courts have resisted the FCC’s efforts to require Net Neutrality because Congress has continually failed to pass a law expressly authorizing the FCC to impose rules upon Internet providers.    The entire issue would disappear if Congress were able to get its hands around this issue — but the current deadlocked Congress can’t and won’t anytime soon.  And now that the Republicans will control both houses of Congress,  there is no possibility that they’ll impose any restrictions upon Net providers.   The special interests have too much money and access to media for the Republicans to risk alienating the carriers.

Full disclosure:   we here at SanDiegoCAN support an open Internet.  Our biggest concern concerns Internet startup companies.  Because the Internet carriers like Comcast and Verizon own content companies, they’ll have an economic incentive to stifle competition by demanding higher prices from any potential competitors — from Netflix to small Internet startups.   o interesting startup companies — perhaps the next Facebook, the next Google — won’t have the big dollars to pay for the faster Internet service.  The result:  they’ll be killed by higher carrier fees.   But we think it is important to stakeholders in this issue know that both political parties view this issue as being a defining issue in the 2016 election…..as well as a big fundraising issue for each of the parties.

Even though the FCC finally passed “net neutrality” rules, we expect that carriers will challenge the rules in court and, if they succeed in getting a stay, this  stalemate will drag on through 2016, until the elections are over.  So far, the FCC is faring well, as a federal Court of Appeals unanimously voted to uphold the net neutrality rules.   This decision will likely be appealed to the carriers and the Supreme Court will be asked to make a decision in 2017 — a Supreme Court that may be far more receptive to government oversight than in the past.  But until competition develops,  don’t count on any major improvements in network services.   And competition isn’t going to happen without a policy El Nino occurring within Congress.