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Latest Title II Opened: Property Rights Raid

February, 2015

After the extraordinary action of not making its document on applying Title II rules to the Internet before its formal meeting on the matter, resembling the behavior of a repressive regime, the FCC has voted on the order. Yet inexplicably, even an estimate of the timing of the release of the report that could have such a devastating impact on the ISP market has not been provided by the agency. One of the most egregious aspects of this whole regulatory shift is that after 30 years past the original divestiture of AT&T, the former Bell companies are still not allowed full freedom in the ownership and direction of their networks, a lot of which was built after 1984.

The chairman of the FCC actually had the gall to describe the process as “one of the most transparent proceedings that this commission has ever run.” He also appeared to be disingenuous in stating that “releasing a rough draft” would not have been easy in that it was “a work in process.” There are strong indications that a complete report was delivered to the commission by the White House (the FCC’s assertions of being fully independent notwithstanding) and the industry can only hope that the apparently slight drop in the number of original pages meant that at least some rules debilitating to the space were scrapped.

The entire “Open Internet” meeting was reminiscent of the movie, “Minority Report,” a futuristic film in which people were apprehended before a crime, which supposedly could be predicted in advance was committed. Despite clearly, not having any recent evidence or an argument to back up his nonsensical assertion, Mr. Wheeler said, “Broadband service providers have the economic incentive to impose restrictions on the Internet.”

Even more fantastic was his insistence that his plan does not regulate the Internet anymore than the First Amendment of the US Constitution regulates speech – and that they both stand for the same concept. The most ironic aspect of this point of view is that a strong argument can be made that the bulk of what the FCC does is a violation of that amendment in the Bill of Rights.

Furthermore, Wheeler stated that the Internet was too important to be left without rules and that we cannot possibly imagine what is going to happen on the web in the future. Actually, the net is the biggest threat to any strongly centralized government including the US. Paradoxically, in spite of the FCC arguing that its plan will protect freedom of speech, the right is actually at greater risk with the agency’s involvement.

Lastly, after the new FCC plan goes into effect, it is a ridiculous idea that the US will not lose credibility when it urges other countries to quit imposing restrictions on the Internet.

Verizon deserves kudos for its courageous press release with its 1933 look, which amply demonstrated the absurdity of applying a common carrier standard to the transport of broadband traffic. While the courts may come through in reversing much of this order, the strategy of tending to throw in everything but the kitchen sink, including a lot of vague references that have the potential to become rules, makes it more certain that harmful remnants will remain in effect. Of course, once a legal standard becomes established, it is awfully difficult to remove it later.

Perhaps the most disturbing portion of the order is close to an all-encompassing general conduct standard for unreasonable interference on the net. More bureaucrats will need to be hired, many of whom will lack sufficient experience on telecom matters, and will be making arbitrary judgment calls – resulting in ISPs making plans a nightmare.

It was the threat of regulation alone that offered the right kind of balance. The fundamental unfairness associated with unnecessary regulations could lead to a amount of abuse by the ISPs (once again, the law of unintended consequences). Moreover, in order to make the economics work, a backdoor way for the large content providers to pay the carriers the big bucks will need to be created.

[written by Mark Lutkowitz]

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