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Posted at 8:13 AM ET, 01/21/2011

Verizon sues to stop net-neutrality rules it suggested

By Rob Pegoraro

My first reaction to yesterday's news that Verizon is suing the Federal Communications Commission to overturn its pending, half-hearted net-neutrality rules was one of a Verizon customer.

To wit: Okay, so you're going to spend some of my money to fight a minimal set of regulations written to stop you from tampering with my Internet access? How is that supposed to make me feel comfortable doing business with you?

(Note to Verizon: You are not only an enormous telecom conglomerate, you are The Phone Company. You don't get to say "trust me.")

Then I got more annoyed.

The regulations that Verizon regards as an affront to the Constitution match up closely with the proposal that Verizon published with Google in August--a suggested regulatory framework that many people, myself included, criticized for its minimal restrictions on wireless broadband services..

Take a look at Ars Technica's chart comparing the Verizon-Google proposal to the FCC's upcoming framework. The only notable daylight between the two comes in the category of wireless, where the FCC's rules would prohibit carriers from blocking access to legal Web sites or to voice and video applications that compete with their own services--things that Verizon doesn't do.

Not only is Verizon refusing to take "yes" for an answer, it's using a questionable legal theory to file suit in the same federal court that threw out earlier net-neutrality rules involving Comcast--and even wants to be heard by the same judges who rules in that earlier case.

Bearing in mind that I am not a lawyer, I understand that there is a worthwhile argument to be had over the FCC's authority to write net-neutrality rules. In this case, the commission acted without a specific say-so from Congress--something requested in the Verizon-Google proposal, but which was also never going to happen even in the prior Congress. Instead, the FCC says it finds authority in existing provisions of telecom law, but its reasoning may not be far off from what got rejected in the Comcast case.

But Verizon is not a lawyer either. The legal footing of a particular set of regulations doesn't change their bottom-line effect on the company.

And not only did Verizon think that its proposed set of rules would be good for business last summer, it did so as recently as 2:25 p.m. Thursday, when a post on its public-policy blog favorably cited those suggestions.

You could say this company was for net neutrality before it was against it. But the prospect of the FCC's authority on this issue not being fenced in by a strict Congressional mandate seems to have made the entire enterprise unacceptable.

Meanwhile, I'd like to think that it would be fitting if the FCC responded by returning to the regulatory strategy it should have adopted in the first place: putting broadband Internet services back under a simplified form of the "Title II" common-carrier regulation that most operated under until 2005.

But if the FCC couldn't find the gumption to choose that more aggressive but more legally grounded option before, why would it now?

By Rob Pegoraro  | January 21, 2011; 8:13 AM ET
Categories:  Net Neutrality, Policy and politics, Telecom  
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Comments

All good points. As a Verizon customer and stockholder, however, I expect the company to maximize shareholder value based on what it sees today, not on what it saw 6 months ago. It may not make us comfortable doing business with them, but consider doing business with the alternatives.

Posted by: RepealObamacareNow | January 21, 2011 10:48 AM | Report abuse

Bob, it is clear you are not a lawyer. The FCC's rules are anything but minimal - they are in effect Title II / onerous telephone regulations without saying so directly, as I have blogged on here:

http://mediafreedom.org/2011/01/caveat-emptor-no-way-to-make-sound-public-policy/

Posted by: MikeWendy | January 21, 2011 11:40 AM | Report abuse

How does (what appear to be) a psychotic flip-flop "maximize shareholder value"? Truth is it makes one wonder if this wasn't their intention all along - propose something that they could challenge in court. VERY scummy.

Posted by: OttoResponder | January 21, 2011 11:54 AM | Report abuse

I suspect Verizon has recalculated the true-cost associated with selling and provisioning the iPhone and has decided they want to offer some proprietary services and block any non-Verizon similar products; for example, video conferencing. Same crap AT&T pulled more than once. Such new a$piration$ would run aground of the currently written wireless net neutrality FCC rules.
How I would love to see a nationwide wireless coop emerge in this brave new wireless world.

Posted by: MRayBurne | January 21, 2011 12:00 PM | Report abuse

"All good points. As a Verizon stockholder, however, I expect the company to maximize shareholder value based on what it sees today, not on what it saw 6 months ago. It may not make us comfortable doing business with them, but consider doing business with the alternatives." - Fixed this by removing customer from RepealObamacareNow's post.

A customer is never interested in maximizing shareholder value. A customer is interested in the services provided to them remain consistent with what they signed up for or even improved over time. A customer is not interested in increased costs to themselves as Verizon (and other providers) does not provide value, but simply splits existing capacity while charging premiums for something that was already available.

Verizon was looking at more onerous rules coming at them, so they worked out something that appeared to be a bit of a compromise. Now they are working at eliminating that compromise. This is simply standard business practice to maximize profits, not provide superior services. There isn't enough competition today and Verizon is profiting handsomely by that...they want even less competition to continue increasing profits without providing anything of increased value.

Posted by: unbound55 | January 21, 2011 12:35 PM | Report abuse

Rob,

You should continue to feel comfortable doing business with Verizon. Verizon does not tamper with your Internet access, nor will we.

So why then, you ask, would we be challenging the FCC rules that you (and ARS Technica) say are similar to what we previously agreed to with Google?

The answer: because what we agreed to was a legislative proposal in which Congress would set the rules and limit the extent of regulatory intrusion into the Internet.

That is not the case with the FCC order. The FCC has now claimed for itself the right to define its own authority, and has asserted broad authority for sweeping new regulation of broadband networks and the Internet itself. That claim of authority extends well beyond the particular rules here, and certainly beyond anything we agreed to in our legislative proposal.

One of the central tenets of our legislative proposal was that no central authority, public or private, should exercise control over the Internet. Yet that is the authority the FCC has now claimed for itself. And that is why we are challenging the order.

Posted by: davideyoung | January 21, 2011 3:16 PM | Report abuse

Very informative post. Maybe Verizon fighting the rules it suggested reflects how competitive the telecom market is and how fast the landscape is changing.

Posted by: Techtalker | January 21, 2011 3:19 PM | Report abuse

@davideyoung: You didn't seriously mean to say that the FCC has given itself authority to "exercise control over the Internet," did you? If you did, I'd like you to explain how a set of regulations written to stop Internet providers from tampering with their customers' Internet access amounts to government control over the same. Does that also mean that the new food-safety law represents the government "exercising control over our stomachs"?

- RP

Posted by: robpegoraro | January 21, 2011 4:01 PM | Report abuse

The so-called "network neutrality" rules, which are not in any way "neutral," were not "written to stop [Verizon] from tampering with [your] Internet access." They were written to transfer revenue from Internet service providers and their customers to Google, which wrote the rules. If they go into effect, they'll raise the cost of service, lower quality of service, deter investment and innovation, and leave consumers with fewer choices of providers. Verizon may have made nice with Google when the two companies were just publishing a general policy statement, but now that the actual rules are out we can see just how bad they would be. Three cheers for Verizon for - at least in this circumstance - looking out for consumers!

Posted by: LBrettGlass | January 21, 2011 5:07 PM | Report abuse

Oh, and Rob: Your analogy above fails big time. A food safety law regulates suppliers of food, not users' stomachs. Likewise, the FCC's illegal attempt to regulate the Internet doesn't regulate users' computers but rather Internet providers and their networks. And the FCC's regulations - should they see the light of day, which we can hope they do not - will harm users, not keep them safe.

Congress has made it abundantly clear that its will is to keep the Internet "unfettered by state or Federal Regulation" (47 USC 230(b)). The FCC's strained, twisted attempts to construe the law differently can't override this clear, explicit statement of how the law should be interpreted.

Posted by: LBrettGlass | January 21, 2011 5:15 PM | Report abuse

But it's okay to keep the Internet "unfettered" by regulation of commercial enterprises. If it's not prohibited by either regulation or statute, THEY WILL DO IT. Comcast has done it already more than once. The FCC is not the Chinese government -- despite what Glenn Beck says. If American free enterprise is doing such a brilliant job of building out Internet infrastructure, why does this country consistently lag behind other developed countries in both broadband speed and availability?

Posted by: 54Stratocaster | January 21, 2011 8:50 PM | Report abuse

Rob, there is so much misinformation in this article it's hard to know where to start.

Since davideyoung did such a good job differentiating between the VZ-Google proposal vs. the FCC's NN rules, let me focus on your claim that VZ is spending "your" money to fight NN.

Lemme give you some examples: your doctor, dentist, barber, auto mechanic, etc. all provide you services. After they provide you said services, they bill you for those services. And if you're not a dead-beat, you pay them for the services rendered. Do you see where I'm going with this?

Once you pay those service providers, do you take the position that it's still "your" money? Do you feel like you can tell them what they can (or cannot) spend "your" money on?

Of course you don't -- so why is it that after you pay VZ for the service they render you, that you feel the money you paid for the service is still "yours"?

I'll give you a hint: it isn't.

Mercy, it's hard for me to believe that WaPo actually PAYS you to write this stuff . . .

Posted by: fgoodwin | January 21, 2011 11:15 PM | Report abuse

You're dealing with The Tephone Cumpny. They are omnipotent. That's "potent" with omni in front.

Posted by: BoteMan | January 21, 2011 11:49 PM | Report abuse

@fgoodwin, I think your doctor, dentist, etc analogy is incomplete. To make it comparable I think you need to add at the end that your doctor then tries to lobby the government to make sure that they are the only doctor you can go see, or that you must always consult them regarding anything, or something of the like. There needs to be something added on to the end where your service provider is trying to strong arm you into restricting your choice.

I took Rob's meaning of "my money" in terms of the fact that as the customer, the money we pay for services rendered is how Verizon gets its war chest to go lobbying the government. I don't think the term "my money" is intended to mean that we as the customers should be dictating how the money is spent, but the idea that "my money" is being used to lobby for something that on the surface appears against my best interest as the customer. Verizon is a monopoly so unfortunately the only recourse we have a consumer is Government regulation.

Posted by: jasoncostello42 | January 24, 2011 2:37 PM | Report abuse

@LBrettGlass: It would help if you could explain exactly how a net-neutrality rule will "transfer revenue from Internet service providers and their customers to Google." How, exactly, do you as the head of an ISP expect to be forced to hand over money to Google that you could collect in the absence of net-neutrality regulations. If your answer is "because I could bill Google for their server traffic," I think you are going to be disappointed by the reception you'll get.

@fgoodwin: Setting aside the snarkiness--it's not as I don't engage in the same thing myself--there is a reasonable issue to discuss here.

I do, in fact, feel that I have an interest in what a company does with my money. Apparently other customers share this mindset, to judge from all the ads companies run to testify to their upstanding corporate citizenship. (The ads I see on this page as I type this: one from BP about its Gulf-restoration campaign, another from the auto-manufacturers' lobby about the fuel efficiency of recent models.)

That doesn't mean I'm claiming the right to take my money back; the fee-for-service transaction is over. But that doesn't mean I need to feel good or even neutral about what a company does with my contribution if I don't agree with its conduct later on.

- RP

Posted by: Rob Pegoraro | January 24, 2011 5:21 PM | Report abuse

@rob: I apologize for my rude remarks -- they were uncalled for.

@jasoncostello: it's true that for traditional telephone service, VZ has a monopoly in its assigned markets. But in many of those markets, customers can select service from other telephone companies (CLECs), from the local cable company's VOIP service, from "over the top" VOIP providers using broadband provided by either the telco or the cable co, and from 2-3-4 different wireless companies.

If VZ customers don't like what VZ is doing with their money, they can vote with their feet (and wallets) and take their business elsewhere.

The days of being tied to one phone company are long gone.

Posted by: fgoodwin | January 25, 2011 12:49 AM | Report abuse

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