Lacking Authority

By Brad

Via InfoTech & Telecom News, the Electronic Frontier Foundation — long supportive of net neutrality principles — is arguing against the FCC imposing new regulations:

In comments filed with the FCC in February, the San Francisco-based organization said the agency lacks the authority to issue neutrality regulations that would ban Internet Service Providers (ISPs) such as Comcast from favoring some forms of Internet traffic over others.

“Congress has not deputized the FCC to be a free roving regulator of the Internet,” the group argued in a filing that came as a shock to net neutrality supporters such as the intensely pro-regulation “public advocacy” groups Free Press and Public Knowledge.

“So while EFF strongly endorses the goals of this commission ... a limitless notion of ancillary jurisdiction would stand as an open invitation to future commissions to promulgate ‘policy statements,’ issue regulations, and conduct adjudications detrimental to the Internet,” EFF wrote.

Read the full Heartland Institute report, which also quotes IIA Co-Chairman Bruce Mehlman.

A Question of Authority

By Bruce

One of the questions surrounding the current net neutrality debate is whether the Federal Communications Commission has the authority needed to impose new regulations on the Internet. As Computer World reports, former solicitor general Gregory Garre believes the FCC must ask Congress for authority before it acts:

If the FCC wants to create new Internet regulations, it should have the backing of Congress, Garre added. “It would be appropriate for the FCC to go to Congress,” he said. “This isn’t some minor regulatory issue we’re talking about. The FCC itself has described the Internet as something that ‘has transformed our nation’s economy, culture and democracy.’”

Innovation in the Ecosystem

By Bruce

The American Consumer Institute has released a new study, “Innovation and National Broadband Policies: Facts, Fiction and Unanswered Questions.” From the Executive Summary:

“Innovation” has emerged as a pivotal element in the debate over whether the Federal Communications Commission (FCC) should impose new constraints on managers and providers of broadband network infrastructures. This study brings to bear facts and analysis emerging from a review of much of the literature on innovation and especially that bearing on claims by advocates of “net neutrality,” “open networks” and related notions.

We find that innovation is thriving at both the core and the edge of the network in the current policy environment, which has fundamentally allowed the Internet to evolve with little government involvement. Further, we find no evidence that greater FCC involvement in markets for broadband services would protect or promote innovation in the Internet Ecosystem. Indeed, we believe that such intervention is more likely to discourage innovation than stimulate it.

The full ACI study is available on their website (PDF).

The Chilling Effect of Net Neutrality

By Bruce

At the Huffington Post, Digital Society Fellow (and IIA Broadband Ambassador) Bret Swanson writes about the negative effect proposed net neutrality regulations would have on jobs and the economy:

Supporters might argue Net Neutrality will protect consumer access to the Internet and promote long-term innovation. These are crucially important goals. But I think they are wrong on these policy virtues as well. I’ve made the case elsewhere that Net Neutrality could have prohibited important business and technical innovations, from the exclusive handset arrangement that spawned the iPhone to the content delivery networks (CDNs) that enabled YouTube.

Regardless of one?s view of long-term effects, however, there is little chance Net Neutrality regulations could improve the near-term jobs picture. There is, on the other hand, a substantial possibility for harm. Net Neutrality could substantially reduce the willingness of service providers to invest in new wired and wireless networks. And it could do so immediately. Any capital expenditure reductions would directly affect tens of thousands of workers who build and maintain these networks. Capex reductions would also ripple through the whole network equipment and software value chain, starting with large companies like Cisco, Juniper, Corning, and Qualcomm; then damaging the prospects of hundreds of smaller suppliers in the high-end semiconductor and software sectors.

For more, check out Swanson’s report for Entropy Economics on net neutrality and jobs.

Against Title II

By Bruce

As proposed new regulations on the Internet continue to be debated, some of America’s major Internet providers — including Verizon, AT&T, and Time Warner, among others — have sent a letter to the FCC arguing that the broadband industry should not be classified as a Title II telecommunications service. From the letter:

Some net neutrality proponents believe that economic growth is propelled primarily by investment at the “edge” if the Internet, and not by network providers who operate the Internet’s core and access networks, but that is a dangerously flawed vision. Continued investment and innovation by each group mutually expands opportunities for the other. The greater ability of network operators to offer innovative, revenue-generating enhanced capabilities and features to application and content providers, the greater the ability of the network operators to expand the potential reach and robustness of those networks for consumers. And the better the network capabilities available to “edge” providers, the greater the opportunity for them to develop innovative services that increase consumer demand for broadband. The current, stable Title I regulatory environment has facilitated this “virtuous cycle” of investment and innovation all levels of the Internet, just as the Commission expected.

This is certainly no time to retreat from those policies. Many of our nation’s core priorities in education, health care, energy conservation, environmental protection, technological innovation, job-producing investment, and economic growth depend on the continued flow of private capital for deploying and expanding broadband networks.

Read the industry’s full letter to the FCC.

Net Neutrality vs. the Goal of Universal Broadband

By Bruce

From a Huffington Post op-ed by Julius H. Hollis of the Alliance for Digital Equality on the national broadband plan:

More than $100 billion has already been spent to deploy high-speed systems across America. But the FCC has estimated that $350 billion is necessary to achieve universal broadband access. As such, the focus of the FCC should be on speeding this process, either through federal programs or by incentivizing the investment of private companies.

Throughout this process, we must also strive to ensure that access remains affordable. To achieve this, I see one logical solution - to have the build-out in these communities financed in part by agreements between the companies paying to lay the wires and the companies that will use those links to sell services.

Largely missing the point, proposals for new “neutrality” rules do nothing to help us realize these important goals. Instead, it is widely thought that new net neutrality regulations will reduce much needed investment in infrastructure, thus causing broadband to become less affordable and accessible to underserved and un-served populations.

Wireless, Net Neutrality, and Innovation

By Brad

One of the major lightning rods in the FCC’s proposed net neutrality regulations is the idea new regulations should extend to wireless networks. Writing for Tech Liberation Front, Steven Titch explores what new regulations on wireless would mean for future innovations like Apple’s iPhone:

Much has been written about the deleterious effect that regulating network management would have on broadband investment and innovation, and when applied to wireless, which is what FCC Chairman Julius Genachowski proposes to do, problems would only get worse.

The non-discrimination principle that Genachowski seeks to mandate would prohibit service providers such as AT&T, Verizon Wireless, T-Mobile and Sprint from using their network resources to prioritize or partition data as it crosses their networks so as to improve the performance of specific applications, such as a movie or massive multiplayer game. Yet quality wireless service is predicated on such steps. The iPhone, for example, would not have been possible if AT&T and Apple did not work together to ensure AT&T’s wireless network could handle the increase in data traffic the iPhone would create.

The entire article, which delves into the history of the iPhone, is worth reading.

Net Neutrality & Investment

By Bruce

Last week, Entropy Economics released a detailed report on the effects net neutrality would have on jobs. After examining the official comments submitted to the FCC, Entropy found that those who could be counted as “Net Neutrality Skeptics” directly employ 1,440,021 people. “Net Neutrality Supporters,” meanwhile, only employ 148,936 — a difference of 10 to 1.

The Entropy report also looked at the amount of Capital Expenditures for skeptics and supporters, and the result was even more startling. From an article at Digital Society by the report’s author, Bret Swanson (who is also an IIA Broadband Ambassador):

We have often noted the communications sector’s important capital investment role in the U.S. economy. In 2008, U.S. info-tech capital investment totaled $455 billion, or 43% of all U.S. non-structure investment. The communications service providers alone invest $65 billion or more annually. Among companies filing FCC comments, the Net Neutrality Skeptics invested $189 billion over the last three years, compared to $18 billion for the Net Neutrality Supporters. Two of the nation’s largest infrastructure investors, AT&T and Verizon, each have more employees than all the Net Neutrality Supporting companies combined.

Net neutrality supporters often dismiss the effect new regulations will have on private investment. But as the Entropy report makes clear, discouraging private investment from net neutrality skeptics would have a chilling effect on the U.S. economy. And with the FCC’s own estimates for the cost of a national broadband plan reaching as high as $350 billion, a reduction in private investment could put the goal of bringing broadband to everyone out of reach.

IIA in the News: David Sutphen in Ebony

By IIA

IIA Co-Chairman David Sutphen has penned a piece for Ebony magazine about why the FCC should direct its attention to the National Broadband Plan and closing the digital divide, as opposed to divisive new regulations. Check it out.

Net Neutrality & Jobs

By Bruce

Entropy Economics has published a new report examining the effect proposed net neutrality regulations would have on the U.S. job market. From the report (PDF):

Regardless of one’s view of long-term effects… there is little chance Net Neutrality regulations could improve the near-term jobs picture.

There is, on the other hand, a substantial possibility for harm. Net Neutrality could substantially reduce the willingness of service providers to invest in new wired and wireless networks. And it could do so immediately. Any capital expenditure reductions would directly affect tens of thousands of workers who build and maintain these networks. Capex reductions would also ripple through the whole network equipment and software value chain, starting with large companies like Cisco, Juniper, Alcatel-Lucent, and Qualcomm; then damaging the prospects of hundreds of smaller suppliers in the high-end semiconductor and software sectors.

Entropy also looked at the number of employees of both net neutrality skeptics and supporters, and finds that skeptics directly employ 1,440,021 people, while supporters employ just a fraction of that — 148,836.

Read the full report.

Net Neutrality & the Digital Divide

By David

10 Reasons Why New Internet Regulations Impede Common Goals of Connecting All Americans and Closing Digital Divide

1. Considerable progress has been made in our first broadband decade – progress that has only been achieved because of the FCC’s longstanding, deregulatory approach to the Internet. In roughly ten years we have gone from practically zero broadband deployment to more than 95 percent availability and 63 percent adoption, according to the FCC and Pew.

2. The open Internet exists today. We have been living with ‘net neutrality’ since 2004, when it was established that companies cannot control the content and applications that people are able to access online.

3. The net neutrality debate, which only concerns those already online, is a distraction from creating an effective National Broadband Plan. The people who have the most to lose from this balancing act are the socially and economically disenfranchised – members of rural, low-income, urban, tribal, minority, non-English speaking, unserved and underserved populations.

4. The Commission’s recent request for an extension of time to deliver a National Broadband Plan underscores the need for the agency to devote more – not less – attention and resources to completing a national strategy.

5. Experts on the digital divide have not cited “lack of net neutrality regulations” as either a cause or a cure for race or income-based differences in broadband adoption. The current net neutrality war that has erupted in Washington, DC has very little to do with the interests of the unserved and underserved.

6. It is impossible to know for sure how new Internet regulations would impact private investment, and a decline in capital investments in broadband could have a harmful effect on jobs and the US economy. In fact, a reduction by five percent would reduce employment by 47,073 according to research from the ITIF or 78,455 according to former FCC commissioner and economist Harold Furchtgott-Roth.

7. Today’s open Internet is making possible huge innovation. We reduce the possibilities and raise barriers if we don’t give everyone access to smart networks.

8. Lack of net neutrality regulations cannot be reduced to “charging more fees and extracting more money from wealthier customers.” On the contrary, the FCC has laid out six principles of net neutrality, which have the potential to impact Americans at every level of income.

9. In a 2009 poll of 900 African Americans and Hispanics conducted by Brilliant Corners Research, led by Obama Presidential Campaign and Democratic Pollster Cornell Belcher, 43 percent of these minorities cited either not knowing how to use the Internet or not seeing the need for the Internet as the reason why they are not online; however, 44 percent of these same respondents said they would be more likely to subscribe to Internet services if they were provided free lessons on how to use the technology and 30 percent would be more likely to adopt if they had more information about how they could benefit from going online.

10. There are more significant policy challenges and opportunities demanding FCC attention and cooperation with industry, such as reforming the universal service fund, expanding spectrum availability for commercial use, and improving digital literacy.

More Minority Groups Warning Against Net Neutrality

By Bruce

Via Broadband Breakfast, three minority business groups — the National Black Chamber of Commerce, the National Gay and Lesbian Chamber of Commerce, and the U.S. Hispanic Chamber of Commerce — held a conference call yesterday to express their concerns over the effect of proposed net neutrality regulations:

The business officials expressed concern over internet regulation, emphasizing their priority to bring broadband access to minority populations.

They said that broadband plays a role in job creation and as a vehicle for innovation, growth, and competition. This, they said, was a reason to avoid net neutrality regulations, as they could slow down the deployment of broadband networks in underserved areas.

With estimates for the final tab of a national broadband plan reaching as high as $350 billion, private investment will be critical for wiring America. Any new regulations that stall investment could put nationwide broadband out of reach.

Re-Committing to Net Neutrality

By Bruce

During a special YouTube event yesterday, President Obama re-declared his commitment to proposed net neutrality regulations. Via Multichannel News:

“I’m a big believer in net neutrality,” he said. “I campaigned on this. I continue to be a strong supporter of it. My FCC chairman Julius Genachowski has indicated that he shares the view that we’ve got to keep the Internet open, that we don’t want to create a bunch of gateways that prevent somebody who doesn’t have a lot of money but has a good idea from being able to start their next YouTube or their next Google on the Internet.”

The president went on to say that the administration was getting “pushback, obviously, from some of the bigger carries who would like to be able to charge more fees and extract more money from wealthier customers.” Not addressed, however, were the concerns from many of the people against new regulations that imposing net neutrality could hurt private investment in the Internet and further exacerbate the digital divide.

A Court Challenge

By Bruce

With the FCC moving forward with its proposed net neutrality regulations, at least one member of the commission is already warning that any new regulations will surely face a legal challenge once enacted. Reports PC World:

If the U.S. Federal Communications Commission adopts broad new net neutrality regulations, the agency’s authority to do so will be challenged in court, predicted Robert McDowell, a member of the commission.

It’s unclear whether the FCC has the authority to create net neutrality rules for broadband providers, which under current FCC rules are classified as largely unregulated information services, McDowell said Friday during a speech at a Free State Foundation broadband policy forum. And the suggestion by some advocacy groups that the FCC reclassify broadband services as more heavily regulated common carrier services would also face lawsuits, he said.

A Discussion About Net Neutrality and the Digital Divide

By Brad

Last week, James Rucker of the group Color of Change penned an op-ed for the Huffington Post taking aim at the position of some civil rights groups when it comes to net neutrality:

Net Neutrality is the principle that prevents Internet Service Providers from controlling what kind of content or applications you can access online. It sounds wonky, but for Black and other communities, an open Internet offers a transformative opportunity to truly control our own voice and image, while reaching the largest number of people possible. This dynamic is one major reason why Barack Obama was elected president and why organizations like ColorOfChange.org exist.

So I was troubled to learn that several Congressional Black Caucus members were among 72 Democrats to write the FCC last fall questioning the need for Net Neutrality rules. I was further troubled that a number of our nation’s leading civil rights groups had also taken positions questioning or against Net Neutrality, using arguments that were in step with those of the big phone and cable companies like AT&T and Comcast, which are determined to water down any new FCC rules.

Most unsettling about their position is the argument that maintaining Net Neutrality could widen the digital divide.

Today, Maximum Leverage Solutions President Navarrow Wright offered a rebuttal to Rucker’s op-ed, also on the Huffington Post:

We all know the fight today is between Google and the ISPs. And just because the arguments you make sound just like those made by Google and Public Knowledge, it doesn’t make you a bad guy. What I don’t understand though is why you are criticizing people who are looking for answers. You seem surprised that the CBC and civil right leaders are concerned that when the big companies fight each other the under served may lose?

Don’t you think the FCC should answer the questions raised by the civil rights leaders and CBC? Why is it wrong to ask the FCC to make sure the rules they are proposing will not widen the digital divide? Why is it wrong to ask the FCC to make sure the rules they develop will not lead to regressive pricing which would shackle poor people? Why is it wrong to ask that the costs be borne by the people that cause them and not by the underserved? Why are you so afraid of the answers to these questions?

Jobs and the Case Against More Regulation

By Bruce

A new study from Larry F. Darby, Joseph P. Fuhr, and Stephen B. Pociask of the American Consumer Institute helps shed light on the effect the FCC’s proposed net neutrality regulations could have on investment and job creation. The study, titled “The Internet Ecosystem: Employment Impacts of National Broadband Policy,” calls for “regulatory forbearance toward broadband networks” in order to stimulate investment and the creation of new jobs. From the executive summary:

• By eliminating business options successfully practiced by proponents of more regulation, the Commission’s proposal would dramatically increase market risk, lower expected growth, suppress network investment, and dampen opportunities for network providers to maintain and create jobs.

• The proposed change from Ex Post to Ex Ante regulation would create lengthy regulatory delays and increase regulatory risk for investors, while dampening prospects for new job creation in the Internet sector and in others it supports.

• These and other threats to investment incentives and job creation opportunities are out of line with both the emerging national broadband policy and the growing imperative to create more good, permanent jobs.

The study also warns that the proposed regulations would “shift risk, returns, growth and opportunity away from ‘core’ network providers and in favor of ‘edge’ applications and content providers.” Given that core companies (such as providers) historically invest more and create more jobs compared to “edge” companies (such as content providers), new regulation would have a chilling effect on both a national broadband plan and the creation of much-needed jobs.

The full study is available in a PDF on the American Consumer Institute website. It ends with an important message recently delivered from the Communications Workers of America to the FCC:

Put network investment and associated job creation at the center of the discussion, acknowledging that the telecommunications sector is essential to recovery in the current downturn and to our nation’s long-term economic competitiveness.

Net Neutrality and Unintended Consequences

By David

While the FCC sifts through comments from a reported 200,000 + people in response to its proposed net neutrality regulations, minority groups continue to voice concerns about the effect those regulations will have on the digital divide. Yesterday, groups of minority legislators circulated letters around Capitol Hill warning of unintended consequences from new regulations. Reports Multichannel News:

The Jan. 22 letters came from the National Black Caucus of State Legislators, National Foundation for Women Legislators, National Organization of Black Elected Legislative Women, National Conference of Black Mayors and the National Association of Black County Officials.

The groups called closing the digital divide “one of the most pressing social and civil rights issue of our day.”

They asked President Obama to intercede to keep the FCC focused on a broadband plan that closes that divide and does not include any new rules they say could threaten that end.

Broadband Fact of the Week

By IIA

In 2008, more than $140 billion was spent purchasing goods and services over the Internet.

— Salmon, Matt. “Net Neutrality Threatens the Balance of the Internet.” Washington Examiner 16 Sept. 2009.

More facts about broadband.

The Price of Net Neutrality

By Bruce

At the Huffington Post, Navarrow Wright, President of Maximum Leverage Solutions, has a must-read post breaking down the negative effects net neutrality could very well have on minorities and the urban poor:

The FCC is playing a dangerous game here, and the people who have the most to lose are already the socially and economically disenfranchised members of our national community - low-income, rural, urban, non-English speaking, tribal, minority, underserved and underserved populations. Neither the Commission nor the American people can rightly afford to preoccupy themselves with corporate interests over the greater priority interests of people. As responsible citizens, we have an obligation to speak out for and protect the interests of those who are not already digitally connected. I applaud the minority elected officials, the civil rights leaders and the consumer groups who are making their voices heard. I encourage the FCC to listen to the people.

Net Neutrality: Pro and Con

By Bruce

Sphere has an interesting debate today on the FCC’s proposed net neutrality rules. In the pro camp, Timothy Karr writes:

Because of net neutrality, consumers have had unfettered access to new content and ideas online; our preferences and choices have determined which new ideas succeed and which don’t. Net neutrality simply means “no discrimination,” and this user-powered architecture is the reason the Internet has become such a powerful engine for consumer choice and democratic empowerment.

These protections have worked brilliantly. For two decades, the Internet thrived. It became a competitive market in the truest sense. Under net neutrality, doctoral students working out of their dorm room created Google; college students started Facebook; a Pez hobbyist invented eBay; an Israeli teenager wrote the code for instant messaging.

These innovators started small and used the Internet’s level playing field to become major forces in the new media marketplace. Their ideas have disrupted the status quo of information gatekeepers to usher in an era where content and consumers are king.

Taking the opposing view is Stephen Pociask:

The fact is that different services have different requirements in order to work properly. Activities like online videos or remote medical monitoring are easily disrupted by tiny delays—often measured in milliseconds—that keep them from working properly. Others, like e-mail, tolerate delays with little problem.

To ensure the best performance possible, network operators need the flexibility to work with the providers of content, software developers, creators of online games, and other Internet-related businesses and services. But proposed Internet regulations under consideration at the FCC would greatly limit such collaboration.

Supporters of Internet regulations, typically advocated to ensure “network neutrality,” say regulations are needed to make sure that consumers can go to whatever Web site they want. But when was the last time that your Internet provider blocked you from any activity you wanted to perform online? Chances are you’ve never had that problem. And if it occurred, the FCC already has the authority to step in quickly and clear things up.

Both editorials are worth reading in their entirety. You can also read IIA’s thoughts on the issue (PDF).