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Cable Beats ‘Dirty Quilt’ of Title II

WASHINGTON — The cable industry and other fans of light-touch Internet-neutrality regulation were pushing back hard last week on the idea that Title II should still be on the table as Federal Communications Commission chairman Tom Wheeler ponders how to craft legally sustainable rules.

In an op-ed for The Hill magazine, National Cable & Telecommunications Association president Michael Powell, himself a former FCC chairman, offered up a new metaphor for common-carrier style regulation of the Internet, calling the potential blanket prohibition of some conduct under Title II of the Telecommunications Act a “dirty quilt.”

Powell pointed out that Wheeler is a historian and said that as the FCC again weighs in on net neutrality, history and experience clearly show competition will be “thwarted” if “the commission buckles to those who are baying to blanket the Internet industry with the dirty quilt of common-carrier regulation.”

Powell’s own history as FCC chairman a decade ago was characterized by efforts to ensure that the Internet was not subject to mandatory-access regulations under Title II.

Also making that effort last week was economist and Clemson University professor Tom Hazlett. At an FCC forum on the economics of broadband, which Wheeler attended, as well as in a separate talk at the Hudson Institute, Hazlett argued that the Internet has never been neutral and shouldn’t be.

Among his examples of non-neutrality that have fueled the creation of the open, wildly successful Internet have been paid peering, university efforts to block bandwidth-consuming services like Skype and movie downloading, and Google’s payment early on to be the default search engine on AOL’s startup page.

One of the mantras of proponents of strong netneutrality rules is “treat all bits the same.” But Hazlett said there is a “pro-efficiency rationale” for treating bits differently. For example, real-time calling via Skype gets handled differently than email, where a second or two of delay would not have the same effect.

For all the talk about Internet-service providers having market power for preferential deals, Hazlett said, those deals wind up tending to improve efficiency.

Foes of strong Internet regulations may need to keep hammering those points.

Wheeler has for weeks been signaling that his proposal to use his authority under Section 706 of the Telecom Act to support new anti-blocking and unreasonable discrimination rules was only a proposal and that Title II is — pound the lectern, as he does frequently for emphasis — very much in play.

Last week, Wheeler seemed to be making a case for them, or at least for strong rules to counter the threat of powerful ISPs.

At the same economics of broadband forum where Hazlett was a panelist, chairman Wheeler, an amateur historian, suggested the government might be at a key point in history in terms of ensuring that the Internet is not controlled by “terminating monopolies,” an increasingly popular term for ISPs among advocates of Title II-based regulations.

Wheeler at least raised the possibility that the Internet economy is at an “inflection point,” and the government may need to step in to ensure the continuing ability of innovative startups to scale up at the pace of highspeed broadband.

The chairman asked whether the Internet economy was qualitatively different from the industrial economy because of the unprecedented ability of small players to scale up (the “garage-to-Google” model).

Wheeler suggested that the ability to scale up was controlled by the “terminating monopolies,” who control the last-mile connection. One economist who agreed with that assessment said that was why the FCC needs to ban paid priority.

OPTIMIZE THIS

Elsewhere on the net-neutrality front, Verizon Wireless last week said it would not proceed with plans to “optimize” its network for customers with unlimited plans by managing speeds of the top 5% of data users at peak periods.

Wheeler had told Verizon Wireless in a July letter that he was concerned about its plans to “slow down customers’ data speeds” on its 4G Long-Term Evolution (LTE) network starting this month, suggesting it did not fall under reasonable network management but was instead a “loophole” designed to boost the bottom line.

Wheeler has signaled that he doesn’t think it is reasonable network management for consumers not to get the speeds they are paying for.

Verizon responded by dropping the plan.

Wheeler “saluted” the decision: “This is a responsible action, and I commend Verizon’s leadership on this issue.”

On July 23, the FCC released an enforcement advisory reminding broadband providers of their responsibilities under the transparency rule, the only Open Internet order rule that survived intact after court review, and last month Wheeler sent letters to the other three Big Four wireless carriers — AT&T, Sprint and T-Mobile — asking about their network-management practices.

Wheeler has shown he is willing to use the bully pulpit and the threat of the big stick to affect change. Cable operators are just hoping, ultimately, that the big stick of Title II is not used.