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“NET” NEUTRALITY Presentation for Kennesaw State University Michael J. Coles College of Business November 7, 2010. Walt Sapronov Sapronov & Associates, P.C. 400 Northridge Road, Suite 515 Atlanta, Georgia 30350 Telephone: 770-399-9100 Facsimile: 770-395-0505

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“NET” NEUTRALITYPresentation forKennesaw State University Michael J. Coles College of Business November 7, 2010

Walt Sapronov

Sapronov & Associates, P.C.

400 Northridge Road, Suite 515

Atlanta, Georgia 30350

Telephone: 770-399-9100

Facsimile: 770-395-0505

Email: [email protected]


Contents
Contents

  • Overview

  • Net Neutrality Basics

  • FCC Authority

  • Origins of the Comcast Decision

  • D.C. Circuit Court Reversal

  • FCC “Third Way” Proposal

  • Net Neutrality By Other Means

  • Future Developments

  • Final Thoughts


Overview
Overview

Historically:

  • Federal Communications Commission (FCC)

    • Has asserted jurisdiction over:

      • Telecommunications

      • Wireless

      • Cable

    • BUT NOT OVER:

      • Information Services

    • What about Internet?


Overview1
Overview

  • Internet Content (the “Cloud”)

    • Clearly an unregulated information service

  • Internet Access (the “Pipes”)

    • Classification not so clear

    • Cable, DSL, Wireless

      • Are all regulated services?

      • Provided by regulated cable and telcos

      • But when combined with Internet Content?

    • They Create an Information Service

      • (U.S. Supreme Court “Brand X” Decision)


Current internet regulation title i
Current Internet Regulation (Title I)

Portal

Cloud

Computer processing

Access component

Pipe

Title I

“Information Service”

Unregulated

5



Net neutrality basics
Net Neutrality Basics

  • Neutral and open public network (the “Internet”)

  • No restrictions on equipment or modes of communication

  • Principles do not permit discrimination, either in pricing or access, of the type, quantity, content, sites, or applications


Net neutrality basics1
Net Neutrality Basics

Fundamental Principles

  • Consumers are entitled to:

    • Access the lawful Internet content of their choice;

    • Run applications and services of their choice subject to the needs of law enforcement;

    • Connect to their choice of legal devices that do not harm the network; and

    • Enjoy positive externalities of competition among providers (network, application, service, and content)


Net neutrality basics2
Net Neutrality Basics

Fundamental Principles (con’t)

  • Other Proposed Principles

    • Balance customer’s need for unfettered access to content/applications with Internet Service Provider’s (ISP’s) network management needs

    • Ensure transparency of ISP’s network management practices

  • BUT

    • Does FCC have statutory authority to enforce Net Neutrality principles?


Fcc authority
FCC Authority

  • Federal Communications Act

    • Title I (Ancillary Jurisdiction)

    • Title II (Common Carrier)

      • Telecommunications Carriers

      • Rate, Entry, Complaint Procedures

    • Title III (Wireless)

      • Broadcast

      • Commercial Mobile Service

    • Title VI

      • Cable Companies


Fcc authority1
FCC Authority

  • Ancillary Jurisdiction

    • General FCC Policy Making Authority under Title I

    • Used by FCC to Deregulate Enhanced Services

      • Computer Inquiry II, III

    • Basic (Regulated – Title II) v. Enhanced (Unregulated -- Title I)

    • 96 Act:

      • Telecommunications Service/Information Service

        • (Same as Basic/Enhanced)

      • FCC now has Forbearance Authority

        • May forbear from regulating under certain conditions


Origins of the comcast decision
Origins of the Comcast Decision

Background

  • Comcast customers complained -- difficult to use “P2P” applications (e.g. BitTorrent)

  • FCC investigation -- Comcast monitored customer’s content, not destination

  • Result: Comcast blocked Internet traffic and limited customers’ Internet use


Origins of the comcast decision1
Origins of the Comcast Decision

The FCC required Comcast to:

Disclose its network management practice details;

Submit a compliance plan by end of year (2008); and

Present new, non-discriminatory network management practices to customers and the Commission

13


Origins of the comcast decision2
Origins of the Comcast Decision

Enforcing an “Open” Internet -- Concerns

  • Bypassing open Internet protections

    • Specialized services offered in bundles?

  • Specialized services -- circumventing the rules

    • Network capacity not expanded as intended

  • Anti-competitive conduct among broadband providers

    • The FCC labeled Comcast’s failure to disclose their practices as “anticompetitive”


D c circuit court reversal
D.C. Circuit Court Reversal

Comcast argued that the FCC:

  • Asserted its authority based on provisions of the Communications Act which do not apply to Comcast

  • Did not abide by notice and comment procedures in adopting rules applied against Comcast


D c circuit court reversal1
D.C. Circuit Court Reversal

  • D.C. Circuit Court Holding:

    • FCC Has No Jurisdiction Over Comcast Network Management Practices

    • Ancillary Jurisdiction Must Be “Ancillary” to Other FCC Statutory Authority

      • e.g. to Title II (Telecom), or Title VI (Cable)

      • Not a Standalone Grant of Authority

  • Reversed and Vacated FCC Comcast Decision

    • Did not reach other issues

      • e.g., whether FCC may enforce a policy and not just its own rules


Fcc third way proposal
FCC “Third Way” Proposal

  • FCC Response to D.C. Circuit Reversal

    • “Third Way” Approach to Internet Access Regulation

  • Proposed by FCC Chairman - Public Notice

    • Regulate Broadband Internet Access by:

      • Transmission Component (“Pipes”)

        • Regulate as Title II “telecommunications service” (currently unregulated under Title I)

      • Forbearance

        • Piecemeal application of Title II (USF, consumer protection)

      • Network Processing (“Cloud”)

        • Leave unregulated


Fcc third way proposed regulation
FCC “Third Way” Proposed Regulation

Portal

Cloud

Still “info” service

(Title I)

Pipe

Regulate as “Telecommunications Service” (Title II)

- Forbearance

- USF


Fcc third way proposal1
FCC “Third Way” Proposal

  • Practical Application and Questions

    • Does the FCC have statutory authority to make this change or do they need Congressional approval?

    • Internet and Title II

      • Legal and practical implications?

19


Net neutrality by other means
Net Neutrality By Other Means

Policy Enforcement:

  • FCC Proposal - Case by case basis

    • Citations

    • Forfeiture penalties

  • FCC policy making authority (“Third Way”)?

    • FCC released “Framework for Broadband Internet Service” NOI on June 17, 2010.

20


Net neutrality by other means1
Net Neutrality By Other Means

National Broadband Plan (NBP)

  • Part of the 2009 American Reinvestment and Recovery Act (“Broadband Stimulus Bill”)

    • $7.2 billion allocated for national broadband deployment

  • Will the Internet be subject to USF assessment?

    • NBP contemplates USF, access and intercarrier compensation schemes should be reformed together

    • Implications for 21st century communications -- wireless applications (Google voice)

21


Net neutrality by other means2
Net Neutrality By Other Means

  • Meanwhile “Third Way” NOI -- Awaiting Public Comments

  • FCC spectrum management – a “back door” approach to net neutrality?

  • A Republican controlled Congress will likely chill Net Neutrality legislative initiatives

    • Sept. 2010 -- Open Internet Act of 2010 failed to make it out of the House Commerce Committee

22


Final thoughts
Final Thoughts

FCC agenda will emerge in the future – but meanwhile:

  • Clear emphasis on broadband deployment (especially wireless)

  • Belief in merits of net neutrality

  • Agency’s focus for now is on data gathering and broadband stimulus funding

  • USF enforcement will almost certainly be a priority


Final thoughts1
Final Thoughts

All of this is very complicated – and a bit fuzzy…

BUT… DO REMEMBER:

WHEN IN DOUBT – ASK YOUR LAWYER!

Sapronov & Associates, P.C.

400 Northridge Rd., Suite 515

Atlanta, Georgia 30350

Telephone: 770-399-9100

Facsimile: 770-395-0505

Email: [email protected]

Website: www.wstelecomlaw.com


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