The network neutrality debate has been a mess, but the politics seem to be shifting toward a specific approach the FCC can take: stick with current regulatory regime, but impose conditions on the parties involved in the two pending industry megamergers that would create a de facto regulatory regime that would severely limit the practice of paid prioritization.
The approach is called a hybrid model by The Wall Street Journal, which today said the FCC is leaning toward this approach, and a “grand bargain model” by others. Versions of the idea have been floated by academics, analysts and other policy experts for a few months, and the FCC has referenced the ideas, so it has clearly been aware of them. Wheeler will drop attempts at Title II reclassification, but in exchange will approve the Comcast / Time Warner Cable and AT&T / DirecTV mergers only with conditions that will bar them from engaging in paid prioritization.
The crux of the issue for the FCC is the bottom line for most consumers: competition in the service provider market falls far, far short of what would be desired for consumer benefit, with monopolies or duopolies in many markets, and pricing that reflects the situation.
The issue for the industry and for the free-market absolutists among consumers is as little regulation as possible.
The situation is complicated by arguments about how service providers deliver services. This is the network neutrality debate. Clearly, how service providers deliver services can have effects on competition. Network neutrality issues should, therefore, be a subsidiary issue to the competition issue, but the network neutrality debate initiated the debate about competition in the first place, and is therefore politically expedient to keep it stoked.
On the down side, keeping the network neutrality debate hot only serves to confuse the key issue of competition. First, few understand it is a subsidiary issue. Also because even though network neutrality principles can be simply stated, many are confused about how they apply in practice, and some parties are deliberately exacerbating the confusion for their own benefit.
For example, what consumers don’t want is for content originators like Netflix or Amazon to be able to pay MVPDs like Comcast or Verizon to prioritize their traffic. MVPDs might want to do that on their edge networks, but they don’t, because that would be a violation of network neutrality rules they’ve voluntarily agreed to.
What MVPDs will do – legally and without violating network neutrality principles – is charge content originators to link to their networks and avoid the public Internet. It’s a distinction hardly anybody understands, and most get wrong, including The New York Times, most other papers, and most consumers.
Through all this, the FCC is in a precarious position. It cannot pin its arguments for fostering increasing competition on the basis that its job is to encourage more competition, because that isn’t the whole of its job. Some argue that encouraging competition isn’t its job at all. The pertinent legislation on the matter is murky enough that that argument remains open.
What the FCC explicitly has the authority to do is regulate communications services (the legal shorthand for that is Title II). But 20 years ago, legislators either deliberately or through ignorance (probably a mix of both, on a legislator by legislator basis) decided that broadband would be an information service (Title I).
The FCC has been threatening to reclassify Title I services under Title II. Naturally, the industry is up in arms about this, and it has its proxies using words like “disastrous” and “unthinkable” when describing reclassification.
FCC Chairman Tom Wheeler has no interest in just dropping the matter, even if he could. The industry needs some revisions in communications law, because current law is an obsolete mess and as such is beginning to be a problem that has to be solved.
And thus we come to the compromise – the hybrid approach or the grand bargain, which is hard to see as anything but a retreat by Wheeler. It will do little or nothing to encourage competition, and it will extract a promise from MVPDs to not do something they were disinclined to do anyways.
Filed Under: Industry regulations