The FCC and Internet Neutrality

In a much anticipated speech at the Brookings Institute in Washington D.C. this morning, FCC Chairman Julius Genachowski delivered a message outlining the general guiding principles which his agency will use for future rule-making on the subject of internet neutrality. The principle of internet neutrality maintains that all (legal) content and applications should have equal access; i.e. no preferred treatment or restrictions can be implemented by service providers.

As the internet is increasingly going mobile, and smartphone adoption is exploding, the CTIA (aka - The Wireless Association®) is especially concerned that the FCC will extend wired internet neutrality rules to them, and enact new rules that could dramatically alter the way that cellular providers do business:

1. Handset exclusivity agreements(most famously AT&T and the iPhone) could be banned.
2. Blocking user access to competitive applications, such as Apple/AT&T versus Google Voice, would be outlawed.

In last year's 700 MHz auction, Verizon acquired the largest "C-block" of spectrum which came with open access restrictions. The openness requirement was the direct result of Google's influence in lobbying the FCC on the auction rules. While CTIA continues to criticize the open access provision, Verizon wisely recognizes the benefits to be derived from establishing an open development community.

While Chairman Genachowski's speech has been criticized by some for a lack of specifics, the truth is that it served to demonstrate the philosophy of openness in how the debate will be conducted, and in fact the FCC has created a new website for this purpose: www.openinternet.gov. I'm sure that the wireless industry would rather that they were just left alone to run the show without oversight, but hey... there are plenty of credit default swaps they can have as insurance if it makes them feel better.

I extracted just a few of the most significant points from Genachowski's speech, with my comments below. You can watch a video replay or read the transcript for yourself on the Broookings Institute website.

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Selected remarks from FCC Chairman Julius Genachowski speech at the Broookings Institute on Sept. 21, 2009:

• ... it is vital that the internet continue to be an engine of innovation, economic growth, competition, and democratic engagement, I believe the Federal Communications Commission must be a smart cop on the beat, preserving a free and open internet.

"This is how I propose we move forward. To date, the FCC has addressed these issues by announcing four internet principals that guide our case by case enforcement of the communications laws."

• These principals can be summarized as follows: network operators cannot prevent users from accessing the lawful internet content applications and services of their choice, nor can they prohibit users from attaching nonharmful devices to the network.
  

"Today I propose that the FCC adopt the existing principals as Commission rules, along with two additional principals that reflect the evolution of the internet and that are essential to ensuring its continued openness."

• The fifth principal is one of non-discrimination, stating that broadband providers cannot discriminate against particular internet content or applications.

• This means they cannot block or degrade lawful traffic over their networks or pick winners by favoring some content or applications over others in the connection to subscriber’s homes, nor can they disfavor an internet service just because it competes with a similar service offered by that broadband provider.

• This principal will not prevent broadband providers from reasonably managing their networks. During periods of network congestion, for example, it may be appropriate for providers to ensure that very heavy users do not crowd out everyone else

• The sixth principal is a transparency principal, stating that providers of internet access must be transparent about their network management practices.

"In considering the openness of the internet, it is also important to recognize that our choice of technologies and devices for accessing the internet continues to expand at a dizzying pace. New mobile and satellite broadband networks are getting faster every day. And extraordinary devices like smart phones and wireless data cards are making it easier to stay connected while on the go. And I note the beginnings of a trend toward openness among several participants in the mobile marketplace."

• Of course, how the principals apply may differ depending on the access platform or technology.
  
• The rule-making process will enable the Commission to analyze fully the implications of the principals for a mobile network architecture and practices and how as a practical matter they can be fairly and appropriately implemented.
• And as I indicated earlier, I will propose a series of detailed questions on how the internet openness principals should apply to mobile broadband.
  

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So.. let the discussion begin! The time is right to establish the future rules of the road. Our nation's radio spectrum is a public asset that is best managed in the public interest. It's time for the garden walls to come down.

It's interesting to note that Clearwire, the early leader in deploying a nationwide 4G wireless network, came out in favor of Genachowski's speech, while AT&T said they "are concerned".

“Clearwire applauds the Chairman’s efforts to safeguard an open Internet and his desire to strike a balance between consumers’ need for open, rich access to the Internet and appropriate network management practices.”

As I concluded in my report on "The Emerging 4G Wireless Landscape in the U.S.", Clearwire has an opportunity to be a major disruptive force against the stubborn incumbent wireless operators such as AT&T.