When It Comes to Net Neutrality, No One’s Neutral

by Wendel, Rosen, Black & Dean LLP

Will new FCC rules result in an internet

Will new FCC rules result in an internet “fast lane” for companies like Netflix?

Earlier this month, the Federal Communications Commission voted to open for public debate new rules designed to guarantee an open internet.  The FCC’s Democratic chairman boldly proclaimed: “This agency supports an Open Internet. There is ONE Internet. Not a fast internet, not a slow internet; ONE Internet. . . .  Today we take another step in what has been a decade-long effort to preserve and protect the Open Internet.”  As Mr. Wheeler was celebrating a brave new world of open internet, however, congressional Republicans were mobilizing to block the new rules through legislation, and an email from MoveOn.org popped into my inbox under the subject:  “KISS THE INTERNET GOODBYE?”

So, why is everyone so worked up over the FCC’s action?  Well, it naturally starts with what the proposed rules do and don’t do.  For Republicans, the new rules represent a monumental overreach by unelected officials trying to solve a problem that does not exist.  For net-neutrality purists, the FCC’s failure to preclude a “fast lane” for those who want their content to reach customers more quickly spells certain doom for a free and truly open internet.

Did the FCC go too far?

The rules put out for public comment prohibit internet service providers (“ISPs”) like Comcast and AT&T that connect customers to the internet from slowing the service those customers buy when they attempt to access certain internet content.  The rules were adopted by the FCC by a 3 2 margin, with the voting going along party lines.  One of the dissenting Republican Commissioners, Michael O’Rielly, said after the vote that “the premise for imposing net neutrality rules is fundamentally flawed and rests on a faulty foundation of make-believe statutory authority.”  Mr. O’Rielly went on to warn of the “slippery slope of regulation.”  This week, the National Journal reported that congressional Republicans will soon introduce a bill to block the reforms proposed through the new rules.

Did the FCC go far enough?

Although ISPs would not be able to block or slow legal content under the proposed rules, the rules would allow ISPs to make a “fast lane” available to those who want to pay for quicker delivery to customers.  The result of this allowance, say net-neutrality activists, will be that only wealthy companies will be capable of delivering their content effectively to the public, leading to an undemocratic internet and greater expense for customers as content providers pass on the cost of faster service.

What Is Really Going On?

Understanding why so many are so concerned with net neutrality is easier when examining the practical implications of the proposed rules on the way we receive internet content.  There are three basic constituencies involved every time someone pulls up a webpage: the content provider (e.g., Netflix, Facebook, Wendel Rosen), the ISP (Comcast, AT&T), and the end user (you, reading this blog post while the latest episode of House of Cards plays on the other side of the screen).  At issue is whether and to what extent companies like Comcast can exercise control over how fast your Facebook page and this post pull up and how frequently Kevin Spacey’s diabolical monologues are interrupted for buffering.

Netflix comes up a lot in this discussion, and for good reason.  The streaming video provider accounts for nearly a third of all evening internet bandwidth, and it offers a prime example of both the benefits and detriments of net neutrality.  Obviously, Netflix customers want to be able to watch their movies and television shows from start to finish without interruption.  Without being able to reliably offer such a service, fewer and fewer customers would view Netflix as a reasonable alternative to cable providers, such as—that’s right—Comcast.

So, Comcast has a theoretical incentive to slow Netflix service to its customers.  Prior to the introduction of the newly-proposed FCC rules, in fact, Netflix entered into agreements with Comcast and other ISPs to ensure that its customers could receive faster service.  Whether these deals were simply designed to provide more direct connection between the ISPs and Netflix’s content or, rather, involved payment to the ISPs in exchange for not slowing Netflix service is a matter of debate, but Netflix’s deals with ISPs followed a federal appeals court decision striking down the FCC’s previous net neutrality regulations.  The newly-proposed rules would preclude Comcast from treating Netflix in a discriminator manner, unless…

… it pays for the privilege of even faster connections than other content providers receive.  According to experts, the new rules would allow for the creation of an internet “fast lane” populated by those who can afford to pay for more streamlined connections to their customers.  Instead of paying Comcast not to slow it down, Netflix would pay Comcast to speed it up.  Consumer rights advocates, however, point out that the result for the consumer is the same: more expensive service.  Likewise, the “fast lane” could also put fledgling content providers at a greater disadvantage in competing with larger companies.  Fast speeds mean quicker download times and fewer interruptions.  If it cannot afford to pay for the “fast lane,” a would-be Netflix competitor would have a harder time obtaining significant market share.  And it is fair to ask how well-tended the free connections from ISPs to customers will be once the ISPs begin promoting premium paid connections.

Clouding the discussion of net neutrality is the fact that this is all new ground and the internet continues to develop on an hourly basis.  As such, no one likely knows precisely how the FCC’s proposed rules will alter the internet landscape.  What seems certain in the short term, however, is that for the foreseeable future, net neutrality will continue to be a divisive issue, and you will be able to stream as many episodes of Scandal as you are able to stay up for—though you may soon see your monthly bill rise a dollar or two.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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