Can the Federal Communications Commission force Internet service providers to treat all data the same? That is the question Verizon Communications presented to the U.S. Court of Appeals and the court said no. As a result, the FCC has dumped net neutrality.
The court ruled the FCC had overreached its authority by preventing broadband providers from blocking or slowing certain Internet traffic. The FCC, or its head Tom Wheeler, decided not to appeal, but instead took the opportunity to re-write the rules.
One reason that the FCC may have decided not to appeal is the way the decision was worded. Judge David Tatel wrote for the three-judge panel that although the FCC has the power to regulate Verizon and other Internet providers, it chose the wrong legal framework for its Open Internet regulations. Basically, the judge sent the FCC back to try again.This was the FCC’s third attempt to regulate Internet service providers and how they handle web content.
On the fourth try, the FCC opened up the gates for the big Internet service providers to charge more for bandwidth. This decision directly impacts companies like Netflix and other content providers that require a lot of bandwidth for their service.
The decision could drastically reshape the Internet experience of consumers. The problem, as proponents of net neutrality see it, is that competition and innovation on the Internet could be hindered.
Larger and wealthier companies like YouTube or Facebook can afford the higher prices for bandwidth. However, smaller, newer companies can't. As a result, streaming content from these smaller competitors could be negatively affected. Bandwidth restrictions could cause halting or freezing because of buffering or customers could see low-quality images.
Well aware of this argument, the FCC stated in its blog that the new rules would prohibit broadband providers from outright blocking sites or slowing down content that would be considered anti-competitive. The FCC is expected to outline criteria for its determination of unfair and anti-competitive business practices soon.
The full commission still has to vote on the new rules and that is expected to take place on May 15.
The FCC has clearly backed down from the earlier position of maintaining absolute net neutrality. Consumer advocates have argued that the big ISPs should be treated like phone companies and should have far more rigid regulations imposed on them. Wheeler, a former lobbyist for the cable and wireless industry, has declined to take that step.
Critics have blasted the new rules, saying they would give Comcast, Verizon, and Time Warner Cable too much power.
"With this proposal, the FCC is aiding and abetting the largest ISPs in their efforts to destroy the open Internet," said Free Press president Craig Aaron.
Netflix probably saw the handwriting on the wall and seemed prepared to deal with the new FCC regulations. Back in March, CEO Lowell McAdam of Verizon said he was seeking a deal with Netflix to prioritize traffic and deliver better service. Netflix made the same deal with Comcast.
As an alternative to cable television, consumers are turning more and more to streaming television and movies on demand. Subscriptions to services like Netflix and Hulu climbed $3.2 billion in 2013, according to IHS Technology. And, more streaming services are appearing on the horizon.Sony and DirecTV may be ready to jump into this lucrative market. Amazon, Google, Target, and Verizon/Redbox are also expanding their presence in the market.
Internet service providers, because of the court ruling, are in a position to rake in billions from these bandwidth-gulping streaming services and it seems that the FCC will not stand in the way.
On the other hand, it should be noted that this battle involves far more than just the big streaming media companies. Net neutrality could impact anyone who uses the Internet. Some experts believe that the ruling by the court could cause the Internet to become more like your cable television.
“People are going to be upset. What I hate about my pay TV service you are going to do to my Internet service too?” Phil Swan, president of TVPredictions.com, remarked.
Advocates of net neutrality argue that Verizon’s victory in the courts may mean that other websites and companies will be forced to negotiate with Internet service providers for tiered services. This means that some websites will have slower data flow or limited connections while those paying for better service will have faster service and more connectivity.
Big web companies like Google and Yahoo could pay for greater access and higher-quality delivery for their content against smaller, emerging search engines. To some, that is the anti-competitive nightmare.
“And the consumer will never know because all they will know is that this service is working better than others,” says Corynne McSherry, Intellectual Property Director for the Electronic Frontier Foundation.
Rashad Robinson, executive director of the minority consumer group, ColorofChange.org, said in a statement that the Internet "could very well soon start looking like cable TV, where one corporation holds the power to decide which content we’re able to access.”
Across the Atlantic, Europeans are moving in the opposite direction on net neutrality. The European Parliament has passed a package of telecom laws that protect net neutrality.
Photo Credit: POLITICO