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Net neutrality, Verizon, open internet ... How can we solve this mess?

The finer points of telecoms policy explained in normal language

Analysis So President Obama chimed in this week over the issue of "net neutrality" – arguing that in order to protect netizens and keep the internet "free and open", cable companies should be reclassified as "Title II common carriers".

"Whether you use computer, phone or tablet, your internet provider should have a legal obligation not to block or limit your access to a website," Obama said on Monday.

"Cable companies can not decide which online stores you can shop at or which streaming services you can use. Or let any company pay for priority over its competitors."

Which all sounds like something everyone would agree with. So why is the US communications regular – the FCC – tying itself up in knots over the issue; why were there four million public comments about it; and why has the Wall Street Journal, Ted Cruz and the cable companies all reached for their copy of Terrifying Comparisons: Extreme Edition?

Word games

The key issue is defining what exactly cable companies provide to people when they get an internet connection.

A 1934 law on communications in the US was created to deal with America's phone system in the early 20th century. The phone system typically relays two people's voices to one another. An internet connection, a modern-day communications system, is vastly more sophisticated, allowing people to store, transfer, process, retrieve and use the data sent across through the connection.

Recognizing that reality, in 1996, the US Congress reviewed telecommunications policy for the first time in 60 years, and made the internet more of an "information service" to distance it from phone services. That moved the internet away from the old laws governing telephone lines.

However, as the internet has became more and more a part of our lives, the FCC realized it needed the equivalent of the 1934 legislation: a way to limit what private companies were able to do.

And so it drew up new rules to do exactly that, and called them the Open Internet Order [PDF]. They were pretty similar to the earlier phone legislation except in one crucial aspect: they were not enshrined in law and did not pass through US Congress, leaving them open to legal challenge.

When the cable companies realized that their core TV businesses were under threat from Netflix and other online video streamers, Verizon decided to challenge the FCC's rules in the courts. And it won.

How? Because the DC Court of Appeals said the FCC was effectively imposing the same phone company restrictions on internet companies while at the same time explicitly saying it could not classify them in the same way.

You can't have your cake and eat it, the court told the FCC, and tore up the Open Internet Order. It did note, however, that the FCC is allowed to impose restrictions: it just has to clearly classify how internet providers are viewed in law.


There are some problems with simply reclassifying cable companies as "common carriers" as consumers groups and now President Obama wants to happen.

Aside from the fact that the legislation is horribly out of date and no less than 90 percent of it would have to be thrown out (or "forebeared") in order to make it work, it is difficult to recognize the inherent difference between a phone line and internet access while at the same time saying they are the same thing in law.

In order to make this work, there have been two creative efforts: one developed by Tim Wu of Columbia Law School and put forward by Congressman Henry Waxman; and another put forward by the open-source software company Mozilla.

Wu and Waxman's approach would use Title II as a "backup." Primarily, cable companies would be classified under a one-paragraph description in the 1996 Telecommunications Act (section 706) allowing the FCC to pass rules restricting what they can do. If those rules were challenged by the cable companies, the FCC would put them under Title II.

The theory is that if cable companies picked a fight against the Section 706 rules, they would reactivate the FCC's authority over broadband, which would then be able to impose the old restrictions. In other words, a legal poison pill.

The second suggested approach, put forward by Mozilla, would look at internet access differently: they argue for "modernizing" the law's understanding of how the internet works.

At the moment, the "last mile" of cable from a person at home to the internet is assumed to be a commercial relationship between an ISP and the customer. You pay a provider money, you get internet access. What happens out there on the internet high seas is entirely separate.

Mozilla argues that a more realistic perspective is to assume there are two relationships going on at the same time. You have the commercial relationship with your cable provider but you also have relationships to other companies through that connection. A good example is Dropbox: you store your files on another company's servers that are made accessible through your internet connection.

This "remote delivery" service is effectively between your ISP and the "edge provider", in this case Dropbox. Your ISP is giving the edge provider access to its customers. And it is this relationship that Mozilla says should be made subject to Title II provisions, ie: the ISP would be prevented from discriminating.

The end result would be that ISPs are free to continue providing their services to consumers without any additional regulatory burdens, but they would be under greater restrictions in the relationships they have with the companies that provide online services. Everyone wins.

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