The End of Network Neutrality?

Today, the FCC will adopt an order sanctioning Comcast for restricting BitTorrent peer-to-peer file-transfer traffic on its broadband network. It’s a big victory for network neutrality advocates. Although the FCC adopted principles in 2005 and condemned a rural phone company for blocking voice-over-IP traffic, this is its first action against a major broadband provider for limiting Internet access. And it’s coming under a Republican FCC Chairman, Kevin Martin, who pushed for deregulation of broadband operators.

So, why am I worried?

Today’s FCC decision could be the end of the Network Neutrality war. I’m not sure the good guys won.

Let me preface this by stressing that I care deeply about preserving the open Internet. I’ve been arguing for broadband openness for almost ten years. I know that broadband deployment and competition in the US are limited. I respect the hard work — both intellectual and in the trenches — of Larry Lessig, Tim Wu, Susan Crawford, Gigi Sohn, David Reed, Marvin Ammori, and other friends who pushed the FCC to act. The technique Comcast employed, spoofing “RST” packets to terminate P2P transfers, is clumsy and problematic for a host of reasons; it belongs in the dustbin of data networking history. Having the FCC on record defending the freedom of Internet users and application providers is a powerful symbolic precedent. Nonetheless, I see serious problems with what the FCC is doing.

I think today’s action is actually designed to kill network neutrality.

First, the order stands a high likelihood of being overturned in court. I believe the FCC does have the jurisdictional authority to adopt network neutrality rules. However, the courts have repeatedly rejected attempted by the Commission to shortcut the analytical and administrative process. Sanctioning a company for violating a policy statement that never went through the administrative rulemaking process, and expressly denied that it was enforceable, seems like an invitation for judicial reversal. Once the courts get involved, muddling through the legal issues can take years.

Second, the order seems designed to encourage broadband providers to shift bandwidth caps and metered pricing, as GigaOm, DSLReports, and others have noted. By acting in this way, the FCC could head off nascent industry collaboration efforts between P2P providers and broadband operators, such as the P4P standard. Rather than forcing a serious examination of the connection between what broadband operators are doing and the legitimate network management challenges they face, this order creates a safe harbor zone for practices that may be more damaging than Comcast’s experimental “throttling.”

Third, the order could undermine more stringent network neutrality actions next year. If Obama wins, both Congress and the FCC will be poised to adopt network neutrality rules in 2009. After today’s FCC action, that’s significantly less likely. Everyone will point to the Comcast decision as proof that the FCC can and will address these issues without further legislation. (At least, until the decision is overturned, by which time the legislative energy will probably have dissipated.) And the FCC will have a hard time mustering the support for a more thorough proceeding, now that it’s on the course of time-consuming case-by-case adjudication.

Kevin Martin understands these dynamics. I think they are more central to his strategy than a personal dislike for the cable industry or a desire to woo liberal support for a future Congressional run. Remember the political masterstroke that vaulted him into the FCC Chairman’s office: joining with the two Democratic Commissioners to undermine then-Chairman Michael Powell’s plan for the 2003 “Triennial Review.” He’s making an eerily similar deal today. Back then, Martin gave the Democrats what they thought they wanted — modest extension of “UNE-P” unbundling for voice telephone competition — in return for what really mattered: DSL line-sharing and unbundling of fiber networks for broadband. The courts then gutted the pro-competitive parts of the order, to the surprise of no one who was paying attention. Five years later, we see the results. Compare broadband offerings in places that pushed forward with line-sharing, like France and Japan, with those in the US.

In hindsight, Martin’s deal on UNE-P was a terrible loss for competition and innovation. I fear his deal on network neutrality will have the same impact. Advocates of an open Internet need to appreciate that, after today, the battleground has shifted… not entirely in a good way.

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[UPDATE] Susan Crawford shares some of my concerns, but has a more upbeat take on the order.

[UPDATE] Blair Levin of Stifel Nicolaus points out in his note (no link, sorry) that Comcast will have to assess whether a new Congress or FCC would adopt stricter rules after the courts overturn this decision.

[UPDATE] AP: "Verizon Communications Inc., AT&T Inc. and the U.S. Telecom Association all released statements saying the FCC action proved there was no need for federal network neutrality legislation.&qout; Expect to hear this a lot during the next year.

[UPDATE] Arbor Networks illustrates my point in its lessons learned from the FCC decision, by explaining how “tiered services for business and consumer broadband customers” with “maximum downstream and upstream bandwidth rates for specific application types, such as peer-to-peer file sharing” are now the way to go. Isn’t that exactly what network neutrality was supposed to prevent?