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The Net Neutrality Ruling – Part 1: The Origin


500px-NetNeutrality_logo.svgIntroduction

On January 14th the US Court of Appeals in the District of Columbia issued a ruling against the Federal Communications Commission’s (FCC) Open Internet Order, aka “Net Neutrality”, a ruling which is being heralded as “landmark”.

I would like to examine this topic in three parts.  First, we’ll explore the origins of Net Neutrality.  Secondly, we’ll analyze Justice Silberman’s opinion from a libertarian view of private property.  And finally, we’ll ask whether there is actually an economic need for Net Neutrality.

The Origin

The first so-called ‘net neutrality’ incident involving a major telecom carrier happened in 2007 when some angry Comcast subscribers (as Comcast subscribers generally are) filed complaints with the FCC because Comcast was interfering with their peer-to-peer network applications like BitTorrent.

Parenthetically, this is not at all surprising for anyone who has ever been a Comcast subscriber or who understands the technology behind their shared access network.  It’s a good bet that the sudden surge of BitTorrent traffic caused issues for all of Comcast’s customers and so they decided to throttle it, probably figuring that these people would not complain as they were most likely downloading “pirated” bits anyway.

The FCC issued an order prohibiting Comcast, and all other broadband providers like AT&T and Verizon, from interfering with subscribers’ traffic, claiming it had authority to do so under the Communications Act of 1934.  No, that is not a typo.  This should be a lesson in how laws stick around forever and can be used to justify anything the state feels like.

Comcast complied with the order but appealed the case.  The order was overturned in 2010 by the same DC appeals court that issued last week’s ruling.  The FCC, ever determined to control everything, announced they would not give up their fight for an “open Internet”.

They then issued the Open Internet Order, aka “Net Neutrality”.  The order required fixed line broadband providers (i.e. cable and DSL) to disclose their network management practices (how they throttle, discard, or forward different types of content) and prohibited them from blocking or “unreasonably” discriminating against lawful content.

In other words, the carriers could not slow down or block certain traffic (like BitTorrent) or charge more for a “fast lane” to ensure a content provider’s traffic (like Netflix) was prioritized.

The complaints may have originated with broadband subscribers but content providers soon joined the FCC’s side while the carriers clearly saw where this was heading and began fighting against Net Neutrality.

The Ruling

Verizon appealed the Order and arguments were heard in September of last year.  This time the FCC argued that the Telecommunications Act of 1996 gave it authority to issue the Order.

The court disagreed and ruled the following:

As we explain in this opinion, the Commission has established that section 706 of the Telecommunications Act of 1996 vests it with affirmative authority to enact measures encouraging the deployment of broadband infrastructure. The Commission, we further hold, has reasonably interpreted section 706 to empower it to promulgate rules governing broadband providers’ treatment of Internet traffic, and its justification for the specific rules at issue here—that they will preserve and facilitate the “virtuous circle” of innovation that has driven the explosive growth of the Internet—is reasonable and supported by substantial evidence. That said, even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates. Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the Commission from nonetheless regulating them as such. Because the Commission has failed to establish that the anti-discrimination and anti-blocking rules do not impose per se common carrier obligations, we vacate those portions of the Open Internet Order.

So the Open Internet Order is partially struck down.  Broadband carriers must still disclose their network management practices, but do not have to abide by the anti-discrimination or anti-blocking rules.

Opponents of Net Neutrality and advocates of the free market (not necessarily the same group of people) are rejoicing at the ruling, and at first blush it may sound good to libertarians, but I propose that it is bittersweet, and likely temporary.

Next Tuesday in Part 2, we’ll look at the private property implications of Net Neutrality.

One comment on “The Net Neutrality Ruling – Part 1: The Origin

  1. Pingback: The Net Neutrality Ruling – Part 2: Net Neutrality As An Attack On Private Property | Curmudgeons.net

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This entry was posted on March 4, 2014 by in Business, Government overreach, Legal, Libertarianism, Protectionism, The Internet Strikes Back and tagged .

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