Policy Memo on Net Neutrality

As part of my political analysis class, I have to write a series of policy memos on a given issue. I selected net neutrality, and the first of four memos is reprinted below. I'd appreciate any comments or feedback.

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Introduction

The federal government has recently been deliberating over the issue of network, or net, neutrality, a topic which, while obscure, may have far-reaching implications for the Internet and its place in society. Briefly stated, net neutrality is a principle that forbids Internet carriers from discriminating among content or applications. Thus, for example, an Internet Service Provider (ISP) can neither block nor unfavorably treat a given website or other forms of Internet usage, e.g., streaming video or online gaming. While net neutrality has been the norm since the creation of the Internet over two decades ago, some, notably major network operators, have begun to question whether net neutrality is needed for the Internet's continued evolution. Supporters of net neutrality, for their part, say that without it, the innovative and participatory nature of the Internet risks being stifled. Policymakers will now have to determine the best course of action.

Issue Background

In the early days of the Internet, the range of its features was restricted to a few applications, such as e-mail, chat rooms, and some primitive websites. ISPs at the time provided only telephone dial-up access, which meant long load times and a limit on what Internet-based entrepreneurs could provide. Since the turn of the millennium, however, broadband (or high-speed) access has become more and more common; according to one study by the Pew Internet and American Life Project, broadband usage in the United States has grown from 6% in 2000 to 42% in 2006. Meanwhile, there has been a continued explosion in both the number of people going online (73% of Americans according to another Pew study) and the number of ways in which the Internet is being put to use. In addition to email, news, and online shopping, new forms of interaction, e.g., social networking sites like MySpace and Facebook and blogs like the Daily Kos and Instapundit, are having a great influence on the cultural and political landscape. Looking into the future, many in the communications field see a "convergence" of electronic media, with TV, movies, music, games, email and the Web all becoming available through the Internet. Already audio and video are increasingly integral aspects of the Web, and Internet telephony, or Voice-over Internet Protocol (VoIP), is now a reality, thanks to companies like Vonage.

It is this coming "convergence," however, that is leading the major operators of broadband networks, mainly large telecommunications firms like Verizon and Comcast, to question whether the Internet as it is currently constituted is able to support the next generation of applications. They see net neutrality as the main roadblock to building the necessary infrastructure: Because neutrality prohibits operators from prioritizing content, they cannot devote the necessary bandwidth to make such things as VoIP or video on demand feasible. In addition, the telecom firms argue, the capital costs for building next-generation infrastructure are so great that there needs to be some kind of financial incentive, e.g., charging content operators for better-than-average service, to encourage building.

Standing in opposition to this view, and in favor of preserving net neutrality, is a coalition of Internet-based companies, consumer advocates, and political groups from both the left and the right. They argue that the Internet has been a great engine of innovation precisely because it is content-neutral. Companies like Google and Amazon, for example, were able to go from startups to highly successful businesses due in no small part to the fact that network carriers did not stand in their way or demand payment for high-quality service. (Not coincidentally, both Amazon and Google are proponents of keeping net neutrality.) They also fear that a non-neutral Internet would allow the telecom firms to tip the scales of competition in their favor, by giving websites and services they support preferential treatment, or, conversely, by giving rival providers of services inferior treatment. Lastly, the supporters of net neutrality worry that the culture of transparency and participation that have characterized the Internet would be damaged, and that freedom of speech on the Web would only be as good as what the network operator allowed.

Recent Developments

The fight to preserve or eliminate net neutrality began in earnest last year in the wake of two major rulings. The first was the Supreme Court case National Cable & Telecommunications Assocation v. Brand X Internet Services, in which the Court upheld the right of cable companies to not have to share their networks with rival ISPs. The second was a Federal Communications Commission ruling which granted a similar right to telephone companies with respect to rival providers of digital subscriber line (DSL) service. In effect, these rulings gave the cable and telephone companies the right to discriminate on the basis of content, and therefore would pave the way for a non-neutral Internet.

Both pro- and anti-neutrality forces then attempted to have their respective versions of Internet policy written into the major telecommunications bill that was to be considered by Congress this year. The Communications Opportunity, Promotion, and Enhancement Act, or COPE (H.R. 5252), and its companion bill, the Communications, Consumer's Choice, and Broadband Deployment Act (S. 2686), were to update the Telecommunications Act of 1996 to include provisions regarding broadband and other new technologies, but neither bill included any provisions for net neutrality.

At first, it appeared the anti-neutrality forces had the upper hand: On June 8, the House overwhelmingly passed the COPE Act 321-101, while defeating an amendment by Rep. Edward Markey (D-MA) designed to preserve net neutrality 269-152. But by the time it got to the Senate, pro-neutrality forces had rallied public opinion in their favor. On June 28, the Internet Freedom Preservation Act (S. 2917), cosponsored by Sens. Byron Dorgan (D-ND) and Olympia Snowe (R-ME) received a 11-11 tie in the Commerce, Science, and Transportation Committee. Meanwhile, in the face of mounting public opposition, Sen. Ted Stevens (R-AK), lead sponsor of S. 2686, was unable to get the bill out of committee in time for the fall midterm recess. It is unlikely that any telecommunications legislation, let alone net neutrality legislation, will be taken up again until the next Congress comes into session.

Current Policy and Policy Options

Current policy. When the FCC issued its ruling on DSL, it also issued a separate non-binding statement (PDF) affirming its support of net neutrality on the grounds of protecting consumer choice. Taken together with the DSL ruling and the Brand X case, it makes the actual status of net neutrality uncertain. While the pro-neutrality forces' fears of the telecom companies becoming the gatekeepers of the Internet have yet to materialize, there have been a few incidents of ISPs engaging in anticompetitive behavior. In March of this year, the FCC fined Madison River Communications of North Carolina for interfering with VoIP calls from Vonage and Nuvio in favor of their own VoIP service. And in April, America OnLine was accused of blocking emails sent to AOL accounts that contained a link to DearAOL.com, a website critical of AOL's proposal to start charging fees for sending email.

Passage of S. 2686/H.R. 5252 without net neutrality provisions. These two bills were concerned mainly with establishing regulations for VoIP and video franchising, which would allow telephone companies to broadcast TV over telephone lines. Passage of either bill would not substantially change the situation outlined above, where net neutrality is neither eliminated nor fully enforced.

Passage of S. 2917/Markey Amendment. These two measures would seek to give force to the above mentioned FCC statement. In effect, it would restore the pre-2005 status quo. However, it would not address the broader questions of extending broadband access to areas currently unreached (e.g., rural areas), nor would it address matters of upgrading infrastructure mentioned above, which anti-neutrality advocates say is the main drawback of mandating neutrality.

Network diversity. Christopher Yoo, a law professor at Vanderbilt University, has proposed that, rather than mandating net neutrality, policymakers should seek to ensure competition among network carriers, such that, even if they do engage in content discrimination, it will not ultimately impede consumers' ability to access information as they please, nor prevent web-based entrepreneurs from being able to compete. While such a proposal is intriguing, and would be consonant with the FCC's defense of consumer choice, it has not been proposed in Congress.

Conclusion

While the issue of net neutrality itself is narrow, it is tied in with a number of other aspects of telecommunications policy. Going forward, we must ask what the purpose of that policy is. How shall we balance the need of consumers to have unfettered access to communication and the need of business to run a profitable enterprise? What place should the Internet have in society? Indeed, we might ask, who owns the Internet?