The Costs of Internet 'Fast Lanes'

Expect to hear a lot of I-told-you-sos from those who were worried about having a former cable lobbyist chair the Federal Communications Commission. The FCC is set to introduce a new set of rules on how Internet service providers can treat different services in different ways, and they reportedly will hew closely to the cable industry’s line.

Late Wednesday the Wall Street Journal reported that the FCC would release new rules developed by its chairman, Tom Wheeler. This was bound to happen after a federal court struck down the FCC’s Open Internet Order in January. Wheeler’s approach to the issue of net neutrality has been the subject of much hand-wringing, as his public statements have always left some question about his position on the issue. The new rules will reportedly embrace the idea that Internet service providers can create so-called fast lanes, where they charge companies to send content to customers faster. If that principle becomes law, here are a few things to expect

1. This Could Be the End of Net Neutrality: Wheeler told the New York Times that critics saying the agency was gutting the open Internet order were “flat out wrong.” In a statement, he said the same rules will apply to all Internet content. “As with the original Open Internet rules, and consistent with the court’s decision, behavior that harms consumers or competition will not be permitted,” he said.

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But if the rules go through as reported, the FCC would be rejecting the core principle of net neutrality: that Internet service providers don’t offer special treatment for a price. While Wheeler’s statements hint at a prohibition against undermining services as a way to weaken direct competitors,  he isn’t opposing letting Internet providers charge the highest bidders for better service.

The standard would be commercial reasonableness. In other words, anything that didn’t pass the FCC’s smell test would be in trouble. This is small comfort to net neutrality supporters, because it’s just another way of saying that the FCC will keep an eye on the industry it regulates. “The very essence of a ‘commercial reasonableness’ standard is discrimination,” says Michael Weinberg, vice president of open-Internet advocate Public Knowledge. “The core of net neutrality is non-discrimination. This is not net neutrality.”

2. Then Again, Net Neutrality Isn’t a Silver Bullet: There are a number of things wrong with net neutrality as a sole guiding principle for maintaining a healthy Internet. The name, for one, is awful. It also only applies to a certain portion of the Internet, leaving open other means to achieve the same ends. The controversial deal in which Netflix paid Comcast for a more direct connection to its network applied to a part of the Internet not subject to the rules. But you could make the argument that Comcast was using its position as a gatekeeper to its customers to extract payment. Netflix did just that, saying the FCC should expand the idea of net neutrality to so-called peering agreements like the one in question. The FCC disagreed.

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The FCC rules that were shot down in January also didn’t address smartphone-based Internet services. Mobile carriers argue that such tight rules ignore the tendency of wireless networks to get congested, and say their industry remains new enough that excessive regulation could have even worse impacts than it would on a mature industry like broadband. AT&T’s announcement in January that it would begin a “sponsored data” program for wireless would have been a net neutrality violation for broadband. Now, it seems, the company will be free to pursue one if it chooses.

3. The Real Issue Is Anticompetitive Behavior: This approach would put more power in the hands of Internet providers. They will inevitably push companies that offer Internet services toward their fast lanes. It will be up to the FCC to police their strategies for doing so, and watch to see when the Internet providers’ use of persuasion and punishment crosses the line. It’s unclear where the FCC will draw such a line, but it certainly seems to be erasing the absolute one that net neutrality advocates support.

It just so happens that the federal government is weighing a merger that could have major competitive implications in this very industry. A commonly-raised concern about the proposed union of Comcast and Time Warner Cable is how much power the combined company will wield over the broadband industry. Its scale will make it pretty persuasive when approaching Internet companies looking to ensure that customers have reliable access to their services.