2nd Policy Memo on Net Neutrality

The following is the second of four memos concerning network neutrality; the first one is also available for reading.

***

Introduction

The issue of network neutrality -- whether providers of Internet access should be allowed to give preferential or adverse treatment to content and applications on their networks -- has given rise to two competing policy options, and with it, two competing coalitions of interest groups. Supporters of codifying the principle of neutrality into law, in order to, as they see it, preserve free expression and innovation online, include a diverse array of Internet-based firms, small businesses, consumer groups, and political advocacy groups from both the left and the right. Opponents of mandating neutrality, on the grounds that it would amount to needless government regulation, include the major telephone and cable companies, as well as some pro-business and conservative interest groups. This memo will describe the positions and strategies of the two rival coalitions, as well as the opinions of policy makers and of the country at large on the matter, and what impact the efforts of the two coalitions have had on them. As will be shown, net neutrality is not on the front burner of public debate, but it has generated a considerable amount of controversy, both in and beyond Washington. And while both sides have been able to claim victories in Congress, where the battle over a proposed telecommuncations bill has brought net neutrality to the fore, the issue is still far from resolved.

Public Opinion

In part due to the technical nature of the debate and the relative novelty of the issue, net neutrality has yet to assume a high profile in the public consciousness, as mentioned above. A national poll commissioned in September 2006 by Verizon, one of the largest telephone companies in the country and a staunch foe of neutrality legislation, found that only 7% of respondents had heard of the term. However, the vast majority of respondents expressed support for a "Consumers' Bill of Rights" that would provide many, but not all, of the things neutrality advocates want, including keeping network carriers from "blocking, degrading, altering, modifying, or changing the data consumers send or receive over the Internet." As for the term "net neutrality," the poll found little support for it. Many neutrality advocates have criticized the poll for being biased in favor of the telecom firms, and for characterizing net neutrality as inhibiting innovation and competition. Nevertheless, the poll does show that there is broad approval for choice and open access with respect to Web, TV, and other communications services. For each side, the key to winning will be to translate that general approval into support for the more detailed policy positions in the neutrality debate.

"Save the Internet"

The coalition trying to preserve net neutrality is comprised of two groups. The first, Save the Internet, consists primarily of public-interest organizations, such as the ACLU, Common Cause, the Free Press, and the Consumers Union. In addition, numerous small businesses, church groups, and bloggers who see net neutrality as essential to their livelihood are members. The organization is unusual in that it includes both liberals and conservatives; seldom does one see MoveOn.org and the SEIU on the same side of an issue as the Christian Coalition and the Gun Owners of America. The second group, It's Our Net, is composed mainly of Internet-based companies, including giants like Google, Amazon, eBay, and Microsoft.

Both Save the Internet and It's Our Net believe in the same goals: No changes should be made to communications policy without adequate provisions for net neutrality. They see the current telecommunications bill, which was passed by the House and is pending in the Senate, as unacceptable without those provisions. They are especially opposed to what is called access-tiering, in which carriers would charge providers of content, such as a website or Internet telephone service, a fee to have their content be given priority in transmission. Not only would this hurt the ability of small businesses and startup companies to compete and innovate, they argue, but by giving that kind of power to the network carriers, it would have the potential to drastically limit what people can read, hear, and watch online.

The key to the neutrality advocates' strategy has been to engage Internet users from all walks of life and make the case to them that the Internet as they know it is threatened. Besides a massive letter-writing and petition campaign, as well as a nationwide series of public rallies in favor of net neutrality, the coalition has used many of the tools of the Internet, from blogs to the video site YouTube, to make their case to the public. They scored a significant coup in June when they helped circulate an audio clip of a speech by Sen. Ted Stevens (R-AK), a neutrality opponent and lead sponsor of the Senate telecom bill, in which he notoriously referred to the Internet as "a series of tubes." Not long after, several Senators came out in support of net neutrality, making passage of the bill much more difficult. In general, the pro-neutrality coalition has sought to depict their opponents as being ignorant about the Internet's potential as a democratic medium, or else more interested in profits than freedom of speech, which neutrality advocates see themselves as defending.

More recently, the pro-neutrality coalition has been trying to block a proposed merger between AT&T and BellSouth, which was approved by the Justice Department without any conditions (including provisions for net neutrality) and currently awaits final approval by the FCC. Amid protests from members of the pro-neutrality coalition, the FCC has delayed a vote on the matter several times.

"Hands Off the Internet"

The opponents of net neutrality legislation are not quite as diverse as its supporters: Besides the cable and telephone companies and their respective trade associations, there are only a handful of pro-business and conservative advocacy groups, such as the National Association of Manufacturers and the Center for Individual Freedom, listed on the website for the main anti-neutrality coalition, Hands Off the Internet. Despite that, the groups wield an enormous amount of clout in Washington and in the state legislatures. Verizon's top lobbyist, for example, is former Rep. Tom Tauke (R-IA), and the cable and phone companies have collectively donated about $10.8 million in campaign funds to both Republicans and Democrats this past election cycle alone.

The goals of the anti-neutrality groups can be summarized as follows: They believe that network operators should have as much control over their networks as possible, and should be allowed to make whatever deals they like with content providers. Net neutrality legislation, in their eyes, will hamper their ability to improve and expand their networks, primarily because there would be not much incentive for the carrier to do so. In particular, the telephone companies have a keen interest in what is called video franchising, or television over phone lines. They wish to compete in the TV market with cable companies, who are already starting to provide phone service themselves, and believe that net neutrality legislation would make such capital-intensive projects prohibitively expensive, since they could not charge bandwidth-intensive content providers, e.g., Internet telephone companies like Vonage, more for their rate of usage.

Originally, the anti-neutrality coalition hoped to have quickly enacted new telecommunications legislation that would augment the regulatory changes wrought by the 2005 FCC and Supreme Court rulings, institute desired video franchising and Internet telephony rules, and eliminate net neutrality. And indeed, Congress early this year seemed eager to pass such legislation. But it was not long before neutrality advocates started to make their voices heard. Neutrality opponents responded by forming Hands Off the Internet and launching an agressive, multi-million dollar media campaign. Their ads portrayed the dot-com companies who favor net neutrality as trying to have the government "regulate" the Internet, while claiming that only the unregulated market can deliver the Internet, TV, and phone services that consumers want.

However, since Congress has failed to pass telecommunications legislation this year, the telephone companies, for one, are planning to move to the states to obtain video franchising legislation there; already such a bill has been proposed in the Pennsylvania state legislature. Outcry from consumer groups and local governments, however, forced a delay in the vote on the bill. Also, as mentioned above, AT&T and BellSouth hope that their proposed merger will go through with no strings attached, and therefore free them from neutrality requirements. There may also yet be action in Congress on the matter: Sen. Stevens has said he intends to bring the stalled telecom bill to a vote in the Senate during the lame-duck session.

Conclusion

Arguably, the net neutrality debate has been a kind of asymmetric warfare. Neutrality opponents have used their longstanding influence among policy makers to seek their desired legislation, while spending heavily to shape the media environment in their favor. By contrast, neutrality supporters have taken a more decentralized, individual-centered approach; one of the more popular appeals for net neutrality, for example, was a YouTube video made by a 21-year-old aspiring filmmaker from Alabama. The result so far, however, has been a stalemate: the cable and telephone companies have not yet gotten the regulatory changes they have sought, nor have the neutrality advocates secured their desired protections. Despite the intensity of the respective interest groups, the public debate has not yet provided a solution.

Tags: net neutrality