One day after a major broadband provider reported that Comcast required an additional fee for streaming a rival's Internet movies, the chairman of the Federal Communications Commission offered a new Net-neutrality proposal. On Wednesday, Julius Genachowski proposed barring wireline providers from blocking "lawful content" or applications, and banning "unreasonable discrimination in transmitting lawful network traffic." But his proposal does allow "reasonable network management," including usage-based metering.
The proposal also includes "a basic no-blocking rule" for wireless providers, but since that environment is "evolving rapidly," Genachowski gives wireless more latitude, with unspecified monitoring for "anticompetitive or anticonsumer" conduct. While the FCC had been considering the reclassification of Internet providers as "telecommunications" rather than "informational" services to give the agency broader powers, the FCC is now trying a different approach.
'An Ingenious Solution'
Instead of reclassification, the FCC chairman is attempting to utilize a provision of the 1996 Telecommunications Act that allows the agency to step in if broadband goals are not being met, including fostering an environment for business innovation.
Genachowski's argument is that, unless service providers are prevented from discriminating against competing services, an innovation-friendly environment cannot be obtained. The proposed framework will be subject to a vote at the FCC meeting on Dec. 21.
Many industry observers expect Genachowski's proposal to be accepted by at least one, and possibly both, of the FCC's Democratic commissioners. One of the two, Michael J. Copps, has voiced support for more stringent regulations, while the two Republican commissioners are expected to oppose the framework.
Matt Davis, an analyst with IDC, described the FCC proposal as "an ingenious solution" to the issue of Net neutrality, since there has been substantial political and industry opposition to reclassifying Internet providers as "telecommunications" services.
He noted that the FCC has been "building its case that broadband is essential to the health of the nation" for the last 18 months, and now it's asserting its authority to maintain that health.
Davis pointed out that metering based on usage is already an "established practice," although it has only been implemented in test markets by service providers. On the one hand, he said, "it's hard to argue" that a provider can't charge based on usage, but, on the other hand, this approach only gives the providers "something they already have."
But the nondiscriminatory feature, he said, would mean that Comcast, as one example, couldn't charge more for carrying Netflix's streaming movies than it would for its own streaming service.
Comcast has been a key driver of the FCC's actions regarding Net neutrality. The agency ruled against the company for imposing bandwidth restrictions based on an application that allowed movies to be shared, but in April a federal court found the agency overstepped its authority under its current classification of Internet providers as "information services."
On Monday, Level 3 Communications announced that Comcast imposed a fee on the broadband backbone provider because it is used by Netflix to provide an expanded streaming video service. Level 3 blasted the move as setting up a "toll booth," which it said allowed Comcast, the largest cable provider in the U.S., to "unilaterally decide how much to charge for content which competes with its own cable-TV and Xfinity delivered content."
Comcast, which is expected to announce its own TV Everywhere streaming movie service this month, said that payment demand was "misportrayed" by Level 3, and was only part of the "commercial negotiations" between the companies.
Asked whether he thought Net neutrality advocates would be pleased with the FCC proposal, Davis said that, "in their core," most advocates would like a scenario where all applications or content are treated equally, delivered over an "ever-expanding broadband capacity."
But, Davis said, the FCC proposal may be "the best possible deal for Net neutrality." He noted that, after a recent joint proposal by Google and Verizon Wireless which "sought to shove the FCC into a corner, I thought the Net-neutrality advocates would get nothing."