Internet access battle far from over in Congress

Two weeks ago during a Washington, D.C., “fly-in” of technology groups, companies, and carriers, one of five members of the Federal Communications Commission held aloft the 332-page plan touted as necessary to treat all Internet traffic equally.

Commissioner Ajit Pai said the plan — which would give the FCC the power “to decide the future of the online world” — would not be available for others to inspect, including members of Congress, until after the commission itself acted.

His point: Something as significant as regulations that could alter the founding rules and economic dynamics of the Internet are too important to be decided inside the cloistered walls of a single regulatory agency.

Pai was on the losing side Feb. 26 when the FCC voted, 3-2, to approve “net neutrality” rules that aim to preserve competition online via more regulation. He is among those who fear those rules may do precisely the opposite by ruining the economic model that made the Internet one of the most successful innovations of a generation.

After the courts struck down past efforts to regulate Internet fees, President Obama proposed to take it a new — or, perhaps, old — regulatory level. He asked the FCC to reclassify Internet service providers as common carriers under Title II of the 1934 Telecommunications Act, thus treating the service as a public utility.

That is essentially what the FCC did. The rules, which could take effect in about two months, forbid Internet service providers from blocking or slowing the traffic of their rivals, and ban new fees for faster download speeds that would create so-called “fast lanes.” Among other things, the rules will affect how some major companies that rely on fast download speeds, such as Skype or Netflix, compete among themselves.

Republicans in Congress appear determined to examine the FCC ruling and work to modify it before the commission acts on its power to regulate Internet transaction rates, a step that critics say could harm investment and slow innovation.

“Net neutrality” is one of those buzzwords that inspires populist support, but it’s not as simple as the big guys conspiring to shove mom-and-pop websites into the Internet’s slow lane.

Behind the scenes, it’s also about a small handful of heavy users — the Internet’s so-called “lane hogs” — hoping to avoid paying for the right to dominate available capacity.

Internet capacity today is being driven by video in its many forms, not voice, text, or website traffic. Video consumes huge amounts of Internet capacity, and most ISPs are struggling to keep up through investments in wireless networks and other backbone services.

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Remember when Netflix Inc. delivered videos by mail? Today, Netflix and similar services are accommodating customers through the Internet — and gobbling up capacity in the process. With 37 million U.S. subscribers, Netflix alone generates about one-third of U.S. online traffic during the evening hours on weekdays.

Defenders of net neutrality have warned that, without new rules, smaller content providers would be unable to pay higher fees to ISPs. Critics agree that’s a legitimate concern but ask: How will ISPs pay for making network upgrades, which cost billions of dollars, unless they are free to charge those who use the most?

There are Internet corporate elephants on both sides of the debate, of course, so entrepreneurs are rightfully worried about getting trampled in the tall grass. If the Internet had not been free and relatively open over the past 20-plus years, entrepreneurs may well have been deterred from creating a wide array of services and products. That kind of innovation has transformed the economy and created millions of jobs.

Bills expected to emerge in Congress will seek to uphold that principle of openness but offer a legislative remedy that could encourage continued investment and provide certainty in a regulatory landscape primed for lawsuits. Such a bill would need to survive a presidential veto, however, or wait until after the 2016 elections.

The Internet is one of the uniquely American innovations of the last quarter century. It has functioned pretty well so far with light-touch regulation and self-policing functions. The same regulatory approach that spawned the old Ma Bell oligarchy and stifled telecom innovation for generations may not be a timely fit for the Internet.

Still attended the mid-February “fly-in” organized by TechAmerica, CompTIA, and TECNA.

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