Net Neutrality Decision Cheered by Tech, Decried by Telecoms

While tech firms large and small urged regulators to take action, telecoms said reclassifying broadband as a utility could stunt innovation.

by Joe Garofoli, San Francisco Chronicle / February 27, 2015

(Tribune News Service) -- Silicon Valley tech firms lauded the Federal Communications Commission’s decision Thursday to preserve equal access online, while cable companies that stood to profit from a cloistered Internet warned that regulating the Web like a utility will lead to higher prices.

The commission’s 3-2 vote codifies the concept of net neutrality by barring Internet service providers such as Comcast, Verizon and AT&T from charging for access to an online fast lane, slowing loading times for certain sites, or blocking any site so long as its content is legal.

The rules “ensure that every American — no matter the size of their wallets or the color of their skin — has an equal chance to innovate and reach people online,” said Barbara van Schewick, a professor of law at Stanford University and director of the school’s Center for Internet and Society.

The once-obscure topic became a pressing economic and political issue last year when a Washington, D.C., appeals court struck down FCC rules barring service providers from discriminating against individual websites. Soon after, Netflix accused Internet service providers of slowing access to its streaming video service, leading the Los Gatos company to cut deals to guarantee its movies and TV shows would reach viewers quickly.

Fearing pay-for-speed deals would become the norm, tech firms large and small urged regulators to take action.

The FCC’s vote reclassifies broadband as a utility under Title II of the Telecommunications Act, giving the commission authority to referee the Internet’s open playing field. Chairman Tom Wheeler has said the commission won’t be a heavy-handed regulator overseeing monthly Comcast bills, but instead will monitor violations of the tenets of net neutrality.

The ruling probably won’t go into effect for several months as the formal language is being crafted.

Telecom industry’s warning

Telecoms were livid, saying the ruling could stunt innovation. Verizon was so incensed by the application of “antiquated ... 1930s-era” regulations that the company mockingly responded in Morse code to Thursday’s ruling on its website.

The Telecommunications Industry Association has argued that its members should be able to charge companies that suck up the majority of Internet bandwidth. The group warned that Thursday’s regulation would lead to a loss of $45.4 billion in capital investment in broadband networks over the next five years. In December, the trade group predicted in a letter to lawmakers that “the investment shortfall would then flow downstream, landing first and squarely on technology companies like ours, and then working its way through the economy overall.”

“That isn’t a scare tactic,” said Danielle Coffey, the association’s vice president of government affairs.

But in a call with investors in December, Verizon’s chief financial officer, Francis J. Shammo, suggested tighter net neutrality rules would “not influence the way we invest.”

“We’re going to continue to invest in our networks and our platforms, both in wireless and wire-line FiOS and where we need to. So nothing will influence that,” he said.

Stanford’s van Schewick doubted that Thursday’s ruling would lead to a price increase for customers because the telecoms “didn’t lose anything by Thursday decision. Why would they need to raise prices?”

In Washington, reaction to Thursday’s ruling cleaved predictably along party lines — just as it did on the commission, where three Democrats formed the majority. Progressive organizations praised the ruling as preserving the Internet’s underlying principle of fair access.

Obama’s involvement

Over the past year, the commission has received a record of more than 4 million comments on the issue, most urging the panel to regulate the Internet like a utility. The onslaught nudged President Obama in November to take the unusual step of urging the independent committee to create the “strongest possible rules” to protect net neutrality, which inspired FCC Chairman Wheeler to switch his position to largely mirror Obama’s three weeks ago.

Much as they did after the passage of the Affordable Care Act, conservatives sought to discredit the FCC decision by linking it to Obama. The conservative organization MediaFreedom.org derided the new “ObamaNet.”

“Unfortunately, so-called net neutrality has all the hallmarks of an Obama policy: a lack of transparency throughout the process, a glossy public relations campaign that seeks to mask the reality of the proposal, and guarantees that, if successful, the government’s hand will reach ever further into Americans’ lives,” said Rep. Darrell Issa, R-Vista (San Diego County), chairman of the Subcommittee on Courts, Intellectual Property, and the Internet.

'Years of litigation’

But little is likely to come from Congress. Even if congressional Republicans were to craft net neutrality legislation that is more friendly to the telecommunications industry, Obama would probably veto it.

Both sides do, however, agree on one thing: This won’t end soon.

The decision “is certain to lead to years of litigation,” said David L. Cohen, Comcast’s executive vice president.

“This is an epic battle between David and Goliath,” said Rep. Anna Eshoo, D-Palo Alto, a member of the Communications and Technology Subcommittee, “and David won this round.”

©2015 the San Francisco Chronicle. Distributed by Tribune Content Agency, LLC

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