Politics 117

The regulation of the InternetThe dot bomb: prelude to the crisis

Early cable television• 1972: 70 cable

systems serving about 14,000 subscribers, mostly in mountainous or hill areas

1968 – 1972: FCC rules on cable television

• 1968:– movies and sports events on

cable have to be at least two years old

– Pay TV sites can only run in cities with more than four operating commercial stations

– No commercials• 1972:

– Cable can expand to the top 100 markets, but has to offer channels to municipal governments and provide public access

NBC’s Sylvester “Pat” Weaver tried to build a cable network in California

Pacifica vs. FCC, 1978• FCC cannot edit

broadcasts in advance• But right to privacy

trumps First Amendment

• FCC can prohibit “indecent” broadcasts when children likely to be listening

1984-1992: Congress unleashes cable

• 1984 Act deregulated cable• From 1984 - 1992, cable

subscribership rises from 37 million to 57 million.

• 1992, the percentage of homes passed by a cable wire goes from 71 percent in 1984 to 97 percent.

• But prices rose too fast• 1992 Act gave cities and

counties authority over cable rates again

• Requires cable companies to broadcast local TV signals

Telecommunications Act of 1996

• Eliminated market barriers• Abandoned the utility model of

media regulation (one company in charge of cable, telephony, etc)

• Anybody can get into anything: phone, video, ISP service

• Almost 70 percent of U.S. households subscribe to cable by 1999: 65 million people

Computer Inquiry decisions(1966-1976)

• FCC calls for “functional separation” between basic phone service and data processing services among telcos (especially AT&T)

• From this concept Congress grafts the concept of “telecommunications services” and “information services” onto the Telecommunications Act

What is net neutrality?

• ISPs can’t – Block applications

because they compete with an ISP content service

– Play favorites among content providers

– Keep its network management practices secrret

“a neutral network should be expected to deliver the most to a nation and the world economically, by serving as an innovation platform, and socially, by facilitating the widest variety of interactions between people. ”

Tim Wu

Brand X decision, 2005• FCC rules that cable systems are not

“telecommunications” common carriers, they are “information” services

• Don’t have to follow common carrier rules

• Don’t have to interconnect with smaller providers at wholesale rates

• Takes cable ISPs off the regulatory hook

• 2005: Supreme Court approves the decision, 6-3

The FCC’s Internet Policy Statement (August 2005)

• “consumers are entitled – to access the lawful Internet

content of their choice”– Run applications of their choice”– Connect their choice of legal

devices that do not harm the network.”

– Have competition among network providers”

Peer to peer (P2P) networking

• A system in which a network of people have the same files, and they allow their computer to become part of an open network for sharing files

Silicon Valley wants an Open Internet

• Google• eBay• Netflix• Amazon• Facebook• Skype• Twitter

Did Comcast engage in P2P blocking?

• Associated press and EFF share digital version of King James Bible using BitTorrent

• It repeatedly gets slowed down and blocked

• Comcast admits it uses network management techniques, then admits that it just plain blocked the app

FCC decision on Comcast, August 2008• Comcast must disclose the details of its

discriminatory network management practices to the Commission

• ·Submit a compliance plan describing how it intends to stop these discriminatory management practices by the end of the year

• Disclose to customers and the Commission the network management practices that will replace current practices

FCC hearing at Harvard Law School: Timothy Wu of Columbia; below right: David Cohen of Comcast

FCC Chair Kevin Martin on Comcast• “Would it be OK if the post office opened

your mail, decided they didn’t want to bother delivering it, and hid that fact by sending it back to you stamped “address unknown – return to sender”? Or would it be OK, when someone sends you a first class-stamped letter, if the post office opened it, decided that because the mail truck is full sometimes, letters to you could wait, and then hid both that they read your letters and delayed them?”

• “Unfortunately, that is exactly what Comcast was doing with their subscribers’ Internet traffic.”

What Comcast did• Used the RST (reset) method in the TCP

protocol to interrupt P2P transmissions the company didn’t like– “When Comcast judges that there are too

many peer-to-peer uploads in a given area, Comcast’s equipment terminates some of those connections by sending RST packets”

– “On its face, Comcast’s interference with peer-to-peer protocols appears to contravene the federal policy of ‘promot[ing] the continued development of the Internet’”

Comcast was not clear about what it was doing

• Comcast’s claim that it has always disclosed its network management practices to its customers is simply untrue. Although Comcast’s Terms of Use statement may have specified that its broadband Internet access service was subject to “speed and upstream and downstream rate limitations,” such vague terms are of no practical utility to the average customer.”

Why the FCC sanctioned Comcast:The August 2008, Order

• Comcast has motive to discriminate:– “Peer-to-peer applications, including

those relying on BitTorrent, have become a competitive threat to cable operators such as Comcast because Internet users have the opportunity to view high-quality video with BitTorrent that they might otherwise watch (and pay for) on cable television. Such video distribution poses a particular competitive threat to Comcast’s video-on-demand (“VOD”) service.”

FCC: We have the authority• FCC has power to act via Sec 230(b) of the

Communications Act– (b) POLICY.--It is the policy of the United States--– (1) to promote the continued development of

the Internet and other interactive computer services and other interactive media;

– (2) to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation;

– (3) to encourage the development of technologies which maximize user control over what information is received by individuals, families, and schools who use the Internet and other interactive computer services;

FCC: We have the authority

• FCC has power to act via Sec 706(a) of the Communications Act

• Congress charges the Commission with “shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.”

Ancillary power

• This language (and other parts of the Comm Act), give the agency “ancillary” authority to issue the Internet Policy Statement and to regulate

• Ancillary = “supplementary”

When we approved Adelphia buyout, we set conditions

• Comcast and Time Warner given ok to buy out Adelphia cable, but

• “[i]f in the future evidence arises that any company is willfully blocking or degrading Internet content, affected parties may file a complaint with the Commission,”125 and noted that Commission’s Internet Policy Statement “contains principles against which the conduct of Comcast[ and] Time Warner . . . can be measured.”

Adelphia under arrest; FCC approves TW and Comcast buyout of Adelphia network

McDowell’s dissent: ancillary authority isn’t enough

• The majority’s view of its ability to adjudicate this matter solely pursuant to ancillary authority is legally deficient as well. Under the analysis set forth in the order, the Commission apparently can do anything so long as it frames its actions in terms of promoting the Internet or broadband deployment.

Robert M. McDowell

McDowell’s dissent: we never made any rules

• “We have no rules to enforce. This matter would have had a better chance on appeal if we had put the horse before the cart and conducted a rulemaking, issued rules and then enforced them.”

Comcast’s Helgi Walker (left) and the DC Circuit Court of Appeals (the guys)

DC Circuit throws out the FCC’s Comcast Order

• "Statements of policy, by themselves, do not create 'statutorily mandated responsibilities'," -- David Sentelle

May 2010: The “Third Way”• To the Four Freedoms Internet

Policy Statement , the FCC would add– A non-discrimination rule (ISPs can’t

block)– A transparency rule (ISPs must

disclose what they’re doing)

• FCC would “reclassify” ISPs as Title II common carriers, but “forbear” from regulating anything except non-discrimination rules

• For example, wouldn’t regulate rates

Partisan pushback

• Republicans declare opposition to new net neutrality rules

• ISPs promise to sue FCC if agency establishes rules

• FCC delays proceeding . . .

Google reverses on net neutrality• Issues “legislative framework”

statement with Verizon calling for wireless to be exempted from net neutrality non-discrimination rules

• Lots of possible exemptions for priority access deals

• FCC wouldn’t issue rules, just make “case-by-case” decisions based on a “community” advisory body (probably dominated by Google and ISPs)

Darrel West, Brookings Institution

Where are we now?