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FCC Pushing Net Neutrality Rules That Focus More On Network Providers, Less on Software Makers

Federal Communications Commission Chairman Julius Genachowski is pushing for new open-Internet rules that would focus more on broadband network providers than on software and applications firms such as Yahoo, Google, and Amazon, according to a source in the agency and sources outside the agency who are familiar with the contents of a draft proposal.

Current guidelines in place at the FCC call equally for open-Internet practices from network access providers such as AT&T, Verizon, Comcast and Sprint Nextel; and applications, service and content providers such as Skype, Microsoft, and Google. The new regulations envisioned by Genachowski would apply net neutrality requirements more heavily on the broadband network providers, the sources said.

On Oct. 22, the FCC will vote on a proposal to create new net neutrality rules. If the rulemaking proposal is approved next week by the five-member commission, the FCC will begin what is expected to be a months-long process of drawing up new rules governing the degree to which Internet service providers can control content on their networks. The proposed policies, announced last month by Genachowski, would prohibit carriers from acting as the Web's gatekeepers and allow consumers to get whatever legal services and content they want.

The sources spoke on the condition of anonymity because the draft of the proposal that has been circulated to staff at the FCC is not yet public.

Specifically, the language in the 4th principle of an Internet policy statement at the FCC reads:

"To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to competition among network providers, application and service providers, and content providers."

According to sources, that language is rewritten in the draft proposal by Genachowski and has been changed in a way that suggests broadband access providers cannot impair competition for Web applications, service and content providers.

By Cecilia Kang  |  October 14, 2009; 5:24 PM ET
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Gee, after the latest on Google Voice discriminating against rural phone numbers does anybody think the fix is in for Google? They get secretly written out of important regulations? Why isn't this a scandal?

Posted by: christianm1973 | October 14, 2009 6:37 PM | Report abuse

From the above, it does, indeed, seem that the rules are being changed to say that your telephone company should have competition but Google can have a monopoly.

Which is not a surprise. Google has armies of lobbyists in DC -- some obviously in its employ and others working for organizations that have been "bought" by large "contributions" from Google or its executives.

Other parts of the rules may well favor Google and other content providers too. While Cecilia Kang claims, above, that the rules would "prohibit carriers from acting as the Web's gatekeepers and allow consumers to get whatever legal services and content they want," this is misleading because in fact consumers can already do that. What the rules would CHANGE is that they would prevent competition from arising for Google. They would also allow content providers to use ISPs' bandwidth at no charge by setting up servers on users' computer systems (possibly without their consent or even their knowledge -- that's what P2P does). And they'd prevent ISPs from doing things such as requiring that equipment be properly engineered and not slow down or hog the network.

The only parts of the proposed regulations that MAY be a good idea are the portions which require transparency and prohibit anticompetitive conduct. And these should be imposed equally on ISPs and on content providers. See more in my brief paper at

Brett Glass
Owner and Founder, LARIAT
The world's first wireless Internet service provider (WISP)

Posted by: squirma | October 14, 2009 7:40 PM | Report abuse

With services like Netflix and others wanting to stream BlueRay (HD) video to millions of home, does the internet have the capacity to do this? Will the FCC force ISP's to provide this bandwidth and capacity and do it for "free"? Or will monthly charges increase for everyone, so that people who only do minimal browsing will be subsidizing those who have 3 HD TV's in their homes and stream television all day long?

Posted by: moonwatcher2001 | October 15, 2009 9:53 AM | Report abuse

"moonwatcher2001," that's a very good question. Here is how I, as an ISP and engineer, would solve the problem. Since many users don't need HD bandwidth all the time, they might prefer an arrangement in which their bandwidth gets a boost just for Netflix. Just as one might pay extra to have a mail order company ship to you via FedEx Overnight, you'd pay Netflix a little extra for HD delivery. They, in turn, would arrange with your ISP for more straming bandwidth. This covers the cost of the extra bandwidth and is perfectly fair and reasonable.

But sadly, the proposed rules are likely to prohibit this. Why? Because it might give companies like Netflix a way to challenge bigger ones like Google, which have their own networks of fast pipes. And it's primarily Google that's lobbying for these rules.

Brett Glass
Owner and Founder, LARIAT
The world's first wireless ISP (WISP)

Posted by: squirma | October 15, 2009 10:31 AM | Report abuse

P.S. -- By the way, these changes come shortly after AT&T, in meetings with the FCC, pointed out that the original wording of its "four principles" would clearly prohibit Google Voice from blocking calls to certain numbers. (See AT&T's filing at at page 12.) Could someone at the FCC have reacted to AT&T's excellent analysis by changing the draft of the rules so that they no longer prohibited this specific behavior by Google? If so, it indicates very worrisome and undue corporate influence.

Posted by: squirma | October 15, 2009 8:27 PM | Report abuse

And Brett, why should I be stuck with Netflix, if I want to get my video from Hulu, or from any of fifty startups, or directly from ABC, or whoever?

THAT is precisely what people are objecting to - having the ISPs pick winners and losers in the application service providers.

Google does not provide video on demand - and these rules actually make it harder for big market players to keep the small guys out. In your scenario, Netflix essentially has a monopoly.

Bottom line is that 40-50% of bandwidth right now is video - not p2p downloads, but streaming video - and its increasing exponentially.

10% of Internet users take up 80% of the bandwidth.

Solution? You use more, you pay more. It covers the cost of the bandwidth, its self limiting (people don't have infinite budgets to buy infinite bandwidth) and it allows rate CUTS to the other 90%.

Posted by: VirginiaGal2 | October 16, 2009 8:02 AM | Report abuse

Brett, I missed your earlier note, and I would like to respond to that as well.

Users should pay for the bandwidth they use. They - NOT the content providers - are the ones who initiate that usage and control the amount of that usage.

Charges to content providers cost the user, not the content provider - it gets passed back immediately either in higher charges (for pay applications) or less content out in the Internet (for free applications.)

How, precisely, do you envision charging me when users visit my "fun" personal page or my small business's web site? I, and everyone else with a personal or business web site, am a content provider. You are asking us for an absolute right to charge us an amount that we cannot control.

When Brett says "content provider", realize - that is you, and me, and everyone else who has a web page.

As far as P2P, it is a rapidly decreasing percentage of Internet usage. Streaming video (the ads we see in online magazines, free TV shows, legal online movie downloads) are 40-50%, and its usage is exploding.

Who controls the use of bandwidth? The consumer. 90% of us use only 20% of the bandwidth.

Because no additional charge is levied for heavier users, 10% of users use 80% of the bandwidth - forty times more than the rest.

If you charge for use of bandwidth, those users will pay for what they use. Either they will use less, or they will pay more, or most likely a combination of both.

Making the marginal cost of a scarce good "free" is not a good strategy to manage resources.

You can't justify trying to take away freedoms based on the fact that some people use more than their share when its "all you can eat". Instead, charge users for what they "eat."

90% of us get a rate cut, 10% of us either pay more or moderate our behavior.

Posted by: VirginiaGal2 | October 18, 2009 9:21 AM | Report abuse

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