The Open Internet's Day In Court: What You Need To Know

Blog ››› ››› SIMON MALOY

The Federal Communications Commission's Open Internet Order, which puts net neutrality principles in place for U.S. internet providers, is getting its day in court. Immediately after the FCC voted to approve the order in 2010, internet providers sued to have the order thrown out, arguing that the FCC overstepped its authority. After years of false starts, some suspect briefs, plaintiff changes, and sundry delays, oral arguments in the case begin today.

Before those arguments actually get going, it's important to nail down precisely what the Open Internet Order does and doesn't do, and what exactly is going on with all the legal wrangling. It's complicated stuff and easy to tune out, but it's an important case that will have far-reaching effects both on U.S. internet policy and the role of the FCC in regulating the broadband industry. Sen. Al Franken (D-MN) called net neutrality "the most important First Amendment issue of our time," and there are many people on both sides of the net neutrality debate who agree with that sentiment.

What Is Net Neutrality?

At its most basic, the idea behind net neutrality is that the person who decides what content you can access online is you. The companies that provide your internet access -- Verizon, Comcast, Time-Warner Cable, etc. -- have an interest in controlling how you use the internet in order to boost profits.

Let's take as a hypothetical example two popular streaming video services: Netflix and Hulu. Right now, you can access both competing services at the same speed. But let's say you get your internet through Comcast, which owns 32 percent of Hulu and provides 20-plus percent of residential broadband subscriptions nationwide. Comcast wants to boost Hulu's competitiveness, so it starts offering you "preferred access" to Hulu over other streaming video services (faster downloads, not counting Hulu's data against your monthly data allowance, etc). Netflix would flip its lid, and rightly so. Comcast would have leveraged its role as internet gatekeeper to tilt the competitive balance in favor of its own interests. You, as a Comcast subscriber, would be incentivized to patronize Hulu over Netflix not because Hulu offered better service, but because Comcast was rigging the market. (Scenarios like this happen in the real world, as I'll explain below.)

Net neutrality argues that Comcast must treat traffic from Hulu or Netflix or wherever equally, so as to not confer an artificial advantage on certain online entities over others. Its purpose, to borrow a popular phrase from conservatives, is to keep internet providers from picking winners and losers -- a very real concern given that many internet service providers also produce online content.

What Is The Open Internet Order?

The FCC's Open Internet Order is the federal government's attempt to establish net neutrality principles for U.S. internet providers. The FCC commissioners approved the rules in December 2010 after a 3-2 vote that was split along partisan lines (three Democrats and two Republicans.) The order divides broadband internet into two categories -- fixed, for internet delivered via cables; and mobile, for internet delivered wirelessly -- and sets rules for ISPs for the provision of both.

For fixed broadband, the FCC says ISPs can not block subscribers from accessing legal online content, nor can they prohibit subscribers from accessing the internet on a "nonharmful device." ISPs are allowed to conduct "reasonable network management" -- slowing traffic to relieve network congestion or address security issues, for example -- but they have to publicly disclose whatever network management steps they take. The rules also prohibit ISPs from engaging in "unreasonable discrimination" when transmitting network traffic along fixed lines. Simply put, this means no ISP can prioritize or discriminate against lawful online content for financial reasons or political considerations (the provision that would prevent the Comcast/Hulu scenario described above).

For mobile broadband, the rules are less stringent. ISPs can't block subscribers from accessing legal websites on a mobile device, and they are not subject to the prohibition on "unreasonable discrimination."

Why Is Verizon Suing The FCC?

Verizon's legal action has less to do with the policy laid out in the Open Internet Order than it does the process through which the order was put in place. Verizon is arguing that the FCC, since it was not specifically empowered by Congress to enact net neutrality rules, lacks the authority to enforce the Open Internet Order. The FCC argues that it doesn't need congressional authorization because the Telecommunications Act of 1996 empowers the FCC to "encourage the deployment on a reasonable and timely basis of advanced telecommunications capability," and the Open Internet Order falls under that definition.

There's legal precedent that could support both arguments. Bolstering Verizon's case is a 2010 net neutrality ruling from the U.S. Court of Appeals for the D.C. Circuit, the same court that will hear Verizon's suit against the FCC, which found that the FCC had not established the authority to regulate broadband services under Telecommunications Act of 1996 (the FCC bases their current argument on a different portion of the statute). Potentially supporting the FCC's case is a Supreme Court ruling from earlier this year which found that if Congress has not specifically defined a regulatory agency's jurisdiction, then the agency should have leeway to define it on its own.

Verizon is also arguing that it retains the First Amendment right to "editorial discretion" over the content that passes through its network, and the Open Internet Order infringes on that right. This argument is problematic, given that Verizon has previously ducked liability issues by arguing (successfully) that it is merely a neutral conduit through which information passes.

For a more detailed examination of the legal arguments at play, I encourage you to read Harold Feld over at Public Knowledge.

Who Supports Net Neutrality/The Open Internet Order?

That depends on who you ask, and when you happened to ask them. Verizon, obviously, is no fan of the FCC's rule, and it was so eager to have the rule struck down that its first lawsuit against the FCC was thrown out on a technicality because it filed the suit before the rule officially entered the federal register. Prior to the FCC's 2010 vote, however, Verizon had been partnering with Google to try and work out a compromise legislative framework on net neutrality (pretty much everyone hated their draft proposal). Metro PCS, a smaller wireless carrier, also sued the FCC to have the rule thrown out, but it withdrew its lawsuit earlier this year after it merged with T-Mobile, leaving Verizon to carry on alone. Other big internet providers like AT&T never issued a formal challenge to the FCC's rule, but are nonetheless working hard to undermine net neutrality.

While the providers of internet generally stand athwart the FCC, powerful online content providers stand (mostly) in solid support of net neutrality. Reddit co-founder Alexis Ohanian is a vocal champion of internet freedom and net neutrality, as is Reed Hastings, the CEO of Netflix whose real-life battles with Comcast over net neutrality closely mirror the hypothetical example I laid out above. Google, Facebook, Amazon, eBay, and other online giants filed a brief with the DC Circuit Court defending the FCC against Verizon. Of all these groups, Google will be the most interesting to watch: it's been one of the strongest supporters of net neutrality, but it's also transforming itself into an ISP with its ultra-fast Google Fiber service, and there are already signs that Google is wavering a bit in its commitment to a neutral internet.

The picture is also fairly muddled on the activist side. Generally speaking, the fight over the principle of net neutrality can, as with so many other fights, be neatly divided into liberals-versus-conservatives, Republicans-versus-Democrats. But when you start talking about the Open Internet Order, the lines become less clear. Consumer advocacy groups like Public Knowledge support the FCC's order and its "basic consumer protections that we believe will help to preserve an open Internet," even as it acknowledges "several glaring shortcomings." Other pro-net neutrality groups feel the FCC's order is far too weak, and the media reform group Free Press actually sued to challenge the Open Internet Order because it didn't go far enough to "preserve openness for mobile Internet access."

Pretty much everyone on the conservative/libertarian side of the equation disapproves of the Open Internet Order. Some of these people, like Timothy Lee of the Washington Post, argue in good faith against government regulation of the internet. Others, like Seton Motley of Limited Government and Phil Kerpen of the Internet Freedom Coalition, fearmonger about Marxism and scream incoherently about a "government takeover" of the internet.

But Does The Open Internet Order Allow The Government To Take Over The Internet?

Overheated claims that the Open Internet Order "mandates the that the government regulate the entire Web" are a common conservative attack on the rule specifically, and net neutrality generally. But they're wrong. The order does not grant the government any authority to control internet traffic or to control access to the internet.

Will The Open Internet Order Destroy The Internet?

Well, it's been law for nearly two years, and you're reading this right now, so...

Does The Open Internet Order Work?

The FCC's rule puts in place some protections for broadband consumers, but the rules were left intentionally vague and have some gaping holes that ISPs are already taking advantage of.

Remember the hypothetical from earlier about Comcast and Hulu? Well, last year Comcast tried something similar, announcing that its Xfinity streaming video service for Microsoft's Xbox 360 would be exempt from subscribers' monthly data cap of 250 gigabytes. All other streaming video services, however, would still eat into that monthly allowance. Comcast was prioritizing its own online content, to the detriment of competitors. Netflix's Reed Hastings blasted Comcast for "no longer following net neutrality principles."

But here's the hitch: Comcast could very easily argue that it was not in violation of the Open Internet Order. The order gives the FCC regulatory power over broadband services, but the Xfinity streaming video service for the Xbox 360 is not considered "broadband" under the FCC's rule. It's a "content delivery network service" -- a dedicated network that utilizes the same infrastructure as cable broadband but is reserved for exclusively for specific services -- and the FCC excludes content delivery networks from its definition of "broadband."

The thing to keep in mind here is that Comcast is not just an internet provider. It's a massive, vertically integrated media conglomerate which owns properties like NBC television, Universal Studios, and USA Network. It wants you consuming Comcast internet and consuming Comcast-produced online content, and the fact that it controls the means through which you access the internet gives it a great deal of leverage in determining which content you consume, as the Xbox 360 case illustrates. And Comcast is not alone here. Providers and broadband internet are always looking for new ways to generate additional profits by artificially tilting the competitive balance in their favor, and this is particularly true of mobile broadband providers, who have even more leeway than their fixed broadband counterparts.

Mobile broadband providers have long been exploring ways to squeeze more money out of consumers and content providers without actually providing additional service. This past May it was reported that ESPN was interested in paying mobile providers to allow subscribers to access unlimited ESPN content through their mobile devices. Right now many mobile providers cap the amount of data subscribers can use monthly; under this arrangement, ESPN's content would not count against that cap. This sort of pay-to-play preferential treatment of data would not be permissible for a provider of fixed broadband, but for mobile providers there's really nothing in the Open Internet Order to prevent it.

On the other hand, the Open Internet Order has had some success in reigning in bad behavior. AT&T recently had plans to charge subscribers to use Apple's FaceTime video chat app. That charge would have been on top of the monthly rate subscribers pay for data, thereby forcing AT&T customers to pay to use data they had already paid for. After consumer groups complained that this was a clear violation of the Open Internet Order, AT&T backed down.

So What's At Stake Here?

Really quite a lot. The case will help to determine just how much authority the FCC has to regulate the broadband internet industry, a key component of the modern economy. It's an industry that trends toward consolidation and is already divided up into local fiefdoms across the country in which certain providers enjoy de facto monopolies. Broadband providers are already apt to engage in anti-competitive policies -- Comcast and Verizon have a joint-marketing agreement in place that allows the two companies to promote each other's services -- and there's every reason to think that the competition-stifling behaviors described above will become commonplace if the rules preventing them are thrown out.

More generally, Verizon v. FCC is the latest battle in the fight for the soul of the "open internet." On one side you have groups that emphasize consumer protection and universal access to affordable broadband as a way of keeping the internet innovative and free. On the other side you have a growing movement that views "internet freedom" as freedom from regulation and what it views as government interference.

Caught in the middle are consumers and producers of online content, and their ability to use the internet to make their living or as a medium for self-expression. And given how central online communications and commerce have become in our daily lives, pretty much all of us have a stake in how this fight shakes out.

Posted In
Media Structures & Regulations
Stories/Interests
Internet Freedom
We've changed our commenting system to Disqus.
Instructions for signing up and claiming your comment history are located here.
Updated rules for commenting are here.