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Net Neutrality: Why the Internet Must be Classified as a Utility

However you parse it, broadband providers are common carriers

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With the Federal Communications Commission (FCC) poised to propose new rules allowing broadband providers to slow down some content, while creating fast lanes for providers that pay extra (known as paid prioritization), it’s time to revisit a rancorous debate that has generated a lot of heat. Over the past decade, the FCC has made multiple attempts to force cable and broadband providers not to slow down or block online content, but the rules have failed court challenges.

Two recent court decisions are the focus of today’s net neutrality debate: Comcast v FCC in 2010 and Verizon v Federal Communications Commission this year. In both cases, judges ruled that the agency charged with regulating interstate communications via radio, TV, wire, satellite and cable did not have the legal authority to regulate high-speed Internet providers.

The reason: When the Internet was still in diapers back in 2002, the FCC classified it as an “information service”, not a “telecommunications service.” Title II of the Communications Act of 1934, which gives the FCC the power to regulate telecommunications services as a utility, doesn’t extend to broadband Internet services — and that technicality explains why the FCC’s attempts to police these providers have been bounced by federal courts.

The Internet Is a Utility

Right now, much of the net neutrality debate seems to be hung up on definitions. A good starting point would be for the FCC to simply call broadband Internet what it truly is in the 21st Century — an essential public utility like telephone or electric service.

While this seems to be a logical move that recognizes the impact of technological change on consumers’ lives, the FCC is likely to go in another direction. FCC Chairman Tom Wheeler is looking at proposed “net neutrality” rules that practically speaking would create a divide between the haves-and have-nots of the Internet content universe. The Information Superhighway that gave birth to YouTube, Netflix, Skype and the like would turn into a toll road — the wealthiest content providers can pay the toll to deliver fast services to consumers; next-generation innovators and start-ups might never get out of gridlock.

For 125 years, U.S. antitrust law has battled all forms of restraint of trade, monopoly power and anticompetitive practices that had the potential to harm consumers by restricting choice or leaving them vulnerable to predatory pricing. Specifically, “common carriers” like the public-switched telephone network are regulated by the FCC as utilities that can’t give preferential treatment to the traffic that runs over their networks. That approach worked pretty well in the pre-Internet days — after all, antitrust law broke AT&T into pieces in the 1980s to protect consumers from monopolistic practices and to unleash innovation.

And it has worked: The same Internet you’re using to read this article is as essential to your life today as electricity — and arguably more so than an FCC-regulated landline telephone — if you haven’t already ditched that dinosaur device entirely in favor of wireless or Voice over Internet Protocol (VoIP) services.

Net Neutrality: What’s at Stake

By allowing fast lanes and paid prioritization, broadband providers like Comcast (CMCSA) and Verizon (VZ) would be able to pick and choose the speed and consumer experience based on whether — or how much — the content provider pays to the broadband service provider. Translation: start-up content providers or others that can’t or won’t pay the premium could be locked out, and consumers would have little choice but to pay more or move on.

Article printed from InvestorPlace Media,

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