The FCC Capitulates on Network Neutrality

As expected the FCC issued new rules to secure an open internet. They are summarized as follows:

1.       Internet service providers (ISPs) must provide services in a transparent manner by disclosing their network management practices and performance characteristics.

2.       ISPs must not block lawful content from their customers.

3.       ISPs may not unreasonably discriminate by prioritizing certain network traffic without sufficient reason.

While there have been many negative comments from both supporters and opponents of these net neutrality rules, oddly, I cannot agree with Julius Genachowski, FCC Chairman, that this was a “compromise between ideological extremes”. These rules do little if anything to address the key issues of net neutrality. And in fact, leave protection gaps wide enough for a Boeing 787 to fly through (if it is ever completed). Additionally, the rules do not apply to wireless carriers. Therefore, the fastest growing access method for utilizing the Internet, will be addressed at a “to be determined” date.

As the Canadian ISPs flex nearly unrestricted control, we see much higher fees to access the Internet using mobile devices and elevated charges have been establish for exceeding arbitrary data limits. While this was expected for mobile, leading Canadian service providers are also increasing fees for basic DSL usage. Earlier, the FCC Chairman indicated that he expect pricing methodologies and amounts to change with the indication that the FCC would safe guard the consumer if the changes pointed to dire consequences for the market. Do not, under any circumstances, believe that the FCC over the next couple of years will be safe guarding the public with regard to net neutrality.

First, the FCC has to give the new rules time to play themselves out. While I, as a Broadvox employee, look with some anxiousness upon how the third rule will affect our customers and service offerings, it will be the combination of application offerings, service quality, and pricing that will enable us to see how the ISPs and ASPs will execute business strategies in conjunction with the new rules. Additionally, with the changed Congress do not expect any legislative support for altering the rules. As far as Congress is concerned, any action related to net neutrality is dead. Instead, look to the courts for continued action. The initial test will be to determine if the FCC has overstepped its authority with these nearly unenforceable rules.

However, the Internet is not going to die, entrepreneurs are not going to abandon creating new applications and business models leveraging the Internet and US commerce is not going to be so devastated that the current economic conditions will be extended indefinitely (at least not by this). Ultimately, a wrong will need to righted, but the current cast of players in the FCC, Obama administration and Congress are not the ones to accomplish it.