Internet groups in tricky position over US net neutrality
February 12, 2015 5:17 pm
Internet groups in tricky position over US net neutrality
Richard Waters in San Francisco
Be careful what you wish for. That is the message for
companies such as Google and Facebook as US regulators move ahead with a plan
to enshrine the idea of an open internet in regulation.
On the face of it, the big internet companies will have
scored a significant victory if the Federal Communication Commission votes, as
expected, for its new “net neutrality” rules this month. The regime is intended
to make sure broadband and other network providers cannot block or otherwise
hold internet services to ransom.
Who could take issue with such a noble purpose? Telecoms
regulation is not usually the kind of thing to excite much public interest, but
this is a cause that has reverberated widely. Populist campaigns like the one
waged over net neutrality, however, do not allow for much in the way of nuance.
The problem comes with the form the rules will take. With
heavy nudging from the White House, the FCC has opted to repurpose an authority
it was given under an old telecoms law, known as Title II, to make it apply to
the internet era.
Like all deeply technical issues that become political
footballs, it has not been hard for the rival camps to turn this into opposing
talking points. Depending on where you stand, it is either bold action to
protect an open internet or inappropriately sweeping, utility-style regulation.
What is indisputable is that the legislation the FCC is
relying on was designed for circuit-switched telephone networks in a different
age. The only way to adapt it to modern times is to suppress certain parts of
Title II and implement it piecemeal. The FCC promises a light touch: in
particular, it says it will avoid price regulation or any requirements that
might force operators to unbundle their networks.
If history is any guide, a challenge in the courts will
follow. There is simply too much at stake for the regulations not to be tested.
And, as was the case with the last approach to net neutrality, it is not beyond
the courts to reject the FCC’s compromise as unduly arbitrary.
This is where things could become dicey for companies
such as Google and Facebook. Who knows how some future FCC would interpret its
new Title II powers, or whether a court would order a different implementation
of the law. Price regulation of the internet’s interconnection agreements would
always be a looming threat.
It is not just the impact in the US itself that is at
stake. There is also the question of what message US regulators are about to
send to the rest of the world. The risk is that Washington will be seen to be
giving a nod of approval to the idea of extending traditional telecoms rate
regulations to the internet.
Telecoms operators in Europe have argued strenuously for
this in the past. They would like to see internet companies forced to pay more
to access customers over their networks. The idea has so far failed to carry
the day in the international forums where such issues are debated, but could
get a new lease of life if the US is perceived to be sanctioning telecom-style
regulation of the internet.
Even under the FCC’s current plans, there is a risk that
the informal agreements between internet companies and network providers
governing the terms on which they connect could be subjected to closer
scrutiny. That is unlikely to be welcomed at the likes of Google, which
operates one of the largest global networks for carrying internet traffic.
Some business models that favour the internet companies
could also be under threat. Ajit Pai, a Republican commissioner on the FCC,
claimed this week that the new rules would bar “zero-rating” arrangements.
These are the deals under which mobile companies offer access to certain
internet services without charging customers’ data plans — a marketing
arrangement that keeps mobile fees low but favours zero-rated services over
others.
Facebook has used this model extensively to provide
subsidised access to its service in the developing world. If the US is seen to
question the idea, international challenges may follow.
It is ironic, then, that the internet companies have
little choice but to keep their mouths shut and go along with the Obama
administration’s approach to net neutrality regulation. The groundswell of
public support — and the strong backing from within their own engineering ranks
— makes it hard to take a stand that would make them appear to be against the
idea. For better or worse, this is one regulatory bandwagon that now seems
unstoppable.
Copyright The Financial Times Limited 2015.
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