Net neutrality, American style

The US tries to decide on the future of Internet.

The Federal Communications Commission, the agency that regulates the US telecommunications market, had not been expecting such a reaction when 3.9 million predominantly negative comments jammed their inboxes. The cause of the furore was a proposal put forth in April by Commission Chairman Tom Wheeler that cast doubt on the future of net neutrality, the key principle of the Internet that determines that service providers must treat all data equally.

The proposal would have allowed the major US Internet service providers, such as Verizon and Comcast, to create ‘fast lanes’ – paid prioritization for faster, higher-quality Internet access – for those websites or companies willing to shell out extra. The final outcome of this particular match, however, is still in the balance.

Wheeler backed down following protests from the public and professional sectors, and promised a new proposal by the end of the year. The subject even prompted a response from President Obama, who on 10 November issued a strong message in favour of an outright ban on pay-forplay fast lanes. 

The intricate sequence of events began last January when a US federal appeals court, ruling in favour of Verizon, effectively cancelled the net neutrality regulations established by the FCC in 2010. Just a few days later, Netflix, the successful on-demand movie and television streaming provider and producer of the hit series House of Cards, had to pay tens of millions of dollars to Comcast in order to guarantee that their end users would be able to stream content at a reliable speed.

In April, when the FCC made its initial proposal backing a scheme for a two-speed Internet, the response was immediate: 150 of the top Internet technology companies (including Microsoft, Amazon, eBay, Facebook, Google, Netflix, Twitter and Yahoo) wrote to the agency, calling the idea a “grave threat” to the Web. Even 50 or so of the country’s leading venture capitalists spoke out, noting that many startups wouldn’t be able to afford access to the fast lanes.

Advocates of net neutrality have proposed that the new FCC directives should regulate Internet service providers in the same way they do telephone companies, effectively reclassifying Internet services as a public utility and preventing any discrimination between users. This position was even shared by Obama, who released an official statement in November requesting the reclassification of consumer broadband services under Title II of the Telecommunications Act.

The question is also one of great significance on a global level: in 2010, in the G20 countries alone the Internet economy amounted to $2.3 trillion (€1.8tn) or 4.1% of GDP, according to a 2012 study by the Boston Consulting Group.

The Web has successfully transformed every sector, from food logistics to finance, and has broken down entrance barriers. But there are numerous examples in recent years of how Internet service providers have tried to put the brakes on innovation: from 2005 to 2008, Comcast monitored its clients’ data flows in order to secretly obstruct peer-to-peer services such as BitTorrent and Gnutella; from 2007 to 2009, the contract between AT&T and Apple required the latter to block Skype and similar services on the iPhone when customers were connected to cellular networks; and from 2011 to 2013, AT&T, Sprint and Verizon all blocked the Google Wallet payment system on Google Nexus cellphones.

Companies in favour of fast lanes, however, hold a different view. According to the website dontbreakthe.net, reclassifying consumer broadband as a public utility, “would crush broadband investment and it won’t even ban practices like fast lanes. It would hurt startups by saddling them with excessive regulation, and it would protect big broadband companies from new competitors.”

It is worth noting that in the United States true competition in Internet services does not exist. Even in large markets such as New York, there are zones in which only one provider offers highspeed connections. Luckily the picture is beginning to change.

Around 10 years ago, cable operators realized that the cables that brought analogue TV signals into consumers’ homes could also transmit highspeed Internet connections. The shift to digital TV freed up space and allowed giants such as Comcast to offer a vast range of broadband services.

Now telecommunications providers, with AT&T and Verizon leading the charge, are striking back. Meanwhile, in drawing up its new proposal, the FCC will have to consider not only the significant backlash against Internet fast lanes but also the powerful telecommunications lobby.

It is possible, therefore, that a compromise will be reached. This is the opinion of Luca Passani, Chief Technology Officer of ScientiaMobile, a startup that provides mobile apparatus recognition software for Facebook and Google.

So, should fast lanes be authorized or not?

“It’s a complex question. If I had to make a straight choice, I’d say that the FCC should not authorize them. A more long-term vision, however, should take into account that it is right for investors to be able to earn a return on their investment: this is a key element of the market economy and technological progress. A solution is necessary that safeguards both the neutrality of the Web and the investment capacity of Internet service providers.”

“There are risks for users too,” he adds. “Mobile Internet has already offered a glimpse of what it means for consumers to have a ‘fragmented network’ or fragmented services, whose availability depends on networks or operators that are effectively gatekeepers for access to these services. Then there’s the question of preserving the possibility of equal network access for the ‘little guys’ in order to protect the innovative energy of the new players.”

“For all of these reasons,” concludes Passani, “governments, especially the US government, need to think very carefully before authorizing the creation of fast lanes.”