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The net neutrality rules, published Friday, represent the realization of a long dream of Democratic President Barack Obama and his appointed FCC Chairman, Julius Genachowski (pictured).  (Source: Television Broadcast)

The rule ensures that content delivery services like YouTube can not be discriminated against by ISPs.
Limitations to new rules won't please everyone, though

It was the night before Christmas and all through the halls, not a creature was stirring -- except for the U.S. Federal Communication Commission's five man board.  They were busy delivering a special holiday present to internet firms -- the first publication of the net neutrality rules, which they (largely begrudgingly) passed on Wednesday.

The rules, available here (PDF; 1.0 MB) directly from the FCC, offer many predictable terms and a few seasonal surprises as well. 

I.  What's Inside

The rules will give the FCC for the first time the ability to regulate internet networks and prevent service providers from blocking any "lawful" traffic or throttling it. 

Some companies, such as Comcast, America's largest cable internet provider, have already been accused of trying to shake down internet content providers to maintain access.

One slight surprise is that the rules also make it difficult for service providers to accept fees to speed up traffic.  Many expected this to be legal. 

Telecom attorneys fought to allow it.  But Democratic Commissioner Michael J. Copps ardently opposed it, saying it would stifle innovation and make providing internet content a business only accessible by the wealthy.  The FCC apparently agreed with Mr. Copps' complaints, writing, "In light of each of these concerns, as a general matter, it is unlikely that pay for priority would satisfy the "no unreasonable discrimination" standard."

II. Tiered Usage Fees?

Parts of the bill bear some ambiguity.  The bill does seem to allow for tiered data usage schemes, but it indicates that it would monitor such systems for abuse.  This make it unlikely that telecoms could achieve their dream of charging heavy users (such as those who stream Netflix) hundreds in monthly fees ($0.01-$0.03 MB fees has been proposed by some).  Ultimately, with little profit incentive, telecoms may be reticent to adopt tiered usage.

III. Throttling "Illegal" Traffic -- Allowed, but is it Feasible?

Another ambiguous concept is the idea that "illegal" traffic may be throttled.  States the document:
In the Open Internet NPRM, the Commission proposed that open Internet rules
be subject to reasonable network management, consisting of "reasonable practices employed by a provider of broadband Internet access service to:(3) prevent the transfer of unlawful content; or (4) prevent the unlawful transfer of content."
The problem here is that ISPs like Comcast would have to prove that bittorrent or peer-to-peer (P2P) traffic was illegal.  Some legal services use these formats to distribute music, movies, or other file types, and the academic world often relies on them for file transfers.  All it would take would be one case of mistaken throttling and the ISPs could be slammed with big legal fees and fines.

Of course the government is considering, under the pending ACTA internet treaty, forcing taxpayers to fund the government monitoring networks for copyright infringement and other illegal behavior.  However, it is questionable whether this is even possible why maintaining sufficient service fees and avoiding false positives.

IV.  Mobile Limitations

As widely assumed, the document makes exceptions for mobile internet, something that angered FCC Chairman Julius Genachowski's Democratic Commission colleagues.  The document states:
However, as explained in the Open Internet NPRM and subsequent Public Notice, mobile broadband presents special considerations that suggest differences in how and when open Internet protections should apply... Moreover, most consumers have more choices for mobile broadband than for fixed (particularly fixed wireline) broadband... In addition, existing mobile networks present operational constraints that fixed broadband networks do not typically encounter.  This puts greater pressure on the concept of "reasonable network management" for mobile providers.
The document suggests that mobile internet "openness" may be revisited by rulemakers once it becomes more established.  And pending schemes -- like the idea of "pay per site" revealed by top telecom firms at a recent conference -- may be ruled by the FCC to be outside the realms of "reasonable" management.

V. Could this "Gift" Get Returned?

Ultimately the rules could face challenges from multiple sources.  Telecom firms and internet service providers could file suit against the provisions in federal courts.  Their fate in such cases, though, would be uncertain.  While they won past suits, such as the spring federal court ruling that Comcast could throttle traffic, those wins came largely because the FCC had been unable to ratify an official series of rules -- which it has now done.  With those rules in place, the courts would likely be more hesitant to override the FCC and diminish its Congressionally granted ability to regulate national communications.

Other challenges could come from Congress.  Telecoms have funneled millions to the campaigns of certain politicians, which will likely help them secure future challenges to the legislation by Congress.  The funded candidates are largely Republicans -- Sen. John McCain (R-Ariz.) alone accepted from AT&T and Verizon $237,000 in direct donations, $3.6M in lobbyist-raised funding, and free personal service to his Arizona ranch.  Republicans are about to gain control the House of Representatives, but are in the minority in the Senate -- plus they do not control the White House.  Thus the possibility of legislative opposition remains very viable, but will have to wait for future election years.

ISPs, besides wireless firms, likely will be less than happy with the new rules, which set limits on their internet profiteering.  However, they still have many viable options to maintain their profits and tight control of local markets.  One option is to lobby state officials to ban citizens in counties or townships from banding together and creating their own faster, cheaper municipal Wi-Fi services.  ISPs have already tried to kill several municipal efforts in such a fashion.

For content deliverers like Google (owner of YouTube), the rules definitely fulfill a key item on their wish list.  But they have expressed concerns about the rules apparent allowance of telecoms breaching net neutrality in the mobile realm.  Thus it might not be exactly how they wished for it, but the ratified and published "In the Matter of Preserving the Open Internet Broadband Industry Practices" regulations document still gives them something thankful for this year.

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By jmunjr on 12/26/2010 3:01:15 AM , Rating: -1
It is just disgusting how much Americans are putting up with these days... Instead of letting the true free market sort this out we've resorted to the government. For some reason many Americans have this false notion that the government will solve all the problems and do so without the intrusion of corruption... This new regulation could ultimately end up hurting consumers by squelching competition and giving the net provider corporations more power through their checkbooks.. Nice...

By theslug on 12/26/2010 3:36:04 AM , Rating: 3
No. The whole point of this, which net neutrality advocates point out, is to prevent ISPs from acting unfairly. The idea is to prevent problems from occurring to begin with. Without some sort of intervention, ISPs can just throttle, block, and slow down whatever data they want to. We can't trust them to police themselves, so some organization needs to step in and set standards. I'm not saying it should be the FCC, but someone needs to regulate this and make sure things are geared towards the consumer, not the telecoms.

By Shinei on 12/26/2010 5:49:48 AM , Rating: 2
"The idea is to prevent problems from occurring to begin with. Without some sort of intervention, ISPs can just throttle, block, and slow down whatever data they want to."

The problem is that exclusive domain allows ISPs to behave non-competitively, without legal repercussions. The FCC's net neutrality stance is just a band-aid for a much larger issue that they introduced years ago, giving ISPs essentially infinite authority over any region they decide to provide 'service' to and disallowing competition in those areas.
Also, ISPs can currently throttle, block, and slow down whatever data they want to; if they're all evil criminals waiting to take your internet away while twirling their mustaches, why haven't they done it already?

"I'm not saying it should be the FCC, but someone needs to regulate this and make sure things are geared towards the consumer, not the telecoms."

Companies that cheat customers don't stay in business very long in a proper competitive environment. Suppose Comcast decided to throttle the internet and create a sheltered garden for its users instead.
If Comcast has no competition (current situation), users are forced to suck it up or rely on FCC legislative beatdowns (the extension of government power never being released when its time is up).
If Comcast is forced to contend with competitors, users can tell Comcast to go die and use a company that doesn't throttle or mutilate the internet. The FCC doesn't need to be involved at all, since it's not their job to legislate what private companies do and don't do with the services they provide to customers.

By Lugaidster on 12/26/2010 10:27:59 AM , Rating: 1
The problem is that companies already throttle, and, according to the article, have won suits further giving throttling strength. For competition to exist you need high mobility of factors and low market entry barriers. Neither exist in the market for obvious reasons.

Comcasts aren't in the business to take away my internet, they are there to charge me big sums of money just to check my email. So the whole "if they're all evil criminals waiting to take your internet away while twirling their mustaches, why haven't they done it already?" doesn't apply.

You can't force competition when there are no competitors. And it's pretty dificult to enter the market so I don't see new competitors in the horizon. In the end, you'd have to be a moron or work for any of those companies to be agaisnt the concept of net neutrality. Implementation is a whole 'nother deal though, but it can be improved upon.

Besides, companies that cheat consumers have stayed in business for a pretty long time, and will stay there as long as they have piles of cash and good lawyers. A small company might not be able to sustain bad press, but Comcast can't get much worse in that regard and it still exists.

By LilBambi on 12/26/2010 12:46:06 PM , Rating: 1
How long did AT&T keep us all shackled before the government finally stepped in to break them up and make it so we could actually buy our own phones, faxes, allow more than one phone and pay for each additional, and prevent their highly inflated pricing structures?

The corps in this country do not learn their lessons well at all.

By Kurz on 12/26/2010 1:41:03 PM , Rating: 2
And how long did government help AT&T keep their monopoly?
Research, learn and understand that government isn't here to help you.

“Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one.”

“That government is best which governs least.”

Thomas Paine

By Lugaidster on 12/26/2010 2:33:50 PM , Rating: 2
"And how long did government help AT&T keep their monopoly?" The government changes because the people that constitutes it changes. But that really doesn't matter. A market needs regulation when it doesn't behave like a free market, and guess what, the internet providing market doesn't behave like a free market!

I want my ISP to stay neutral, whether I'm watching videos or reading my email I don't want to get throttled, simple as that. If you like to get screwed by ISPs, that's your cup of tea, not mine.

By Kurz on 12/27/2010 11:30:29 AM , Rating: 2
I must restate... The government (Local) caused the problem in the first place. So undo the regulation, Deals, contracts that the government made with the ISP's.

By aegisofrime on 12/26/2010 7:16:24 AM , Rating: 2
The free market is overrated.

I can cite for example, a situation where major players in a market collude to fix prices. Instead of a price war benefiting consumers as your free market dictates, the companies agree to keep prices at a certain level to prevent a costly price war that will hurt each other.

Sometimes, you need Governments to protect you. Businesses are out there to make a profit; The welfare of consumers is secondary to that, despite what you may think. Can you imagine a situation where for example, the pharmaceuticals market is unregulated and there's no FDA testing?

By kslavik on 12/26/2010 11:01:39 AM , Rating: 2
The Government allowed those major players to have dominant positions at the first place by creating barriers to enter the free market for the small players. Creating regulations and more restrictions to enter the market will only make the problem worth for the completion to enter the market.

If you take any case where you say the government needs to protect you, if you look a little deeper, you would realize the government itself created the problem by allowing a monopoly to exist at the first place by restricting competition by creating regulations. Creating more regulations will only make the problem worth.

I would love to see FDA gone. FDA is making drugs and food expensive and restricting consumer choice of what food to eat and what drugs to take. If you were sick and there was a drug which might help you, would not you want to have a choice to use it even if is not approved by FDA? I think FDA did more bad than good by prohibiting drugs from US market and waiting 5-10 years to see how those drugs perform in other markets.

By Lugaidster on 12/26/2010 12:13:16 PM , Rating: 2
So you're basically saying that the government created a problem by not monitoring, then it can't solve it by monitoring?

You can't stop a monopoly without ensuring that monopolies don't happen. Besides, the government is not the same throughout the time. It certainly wasn't the same five years ago.

On the whole FDA thing, what do you prefer, go back to the times where pharmacies sold dog shit as medicine? The FDA certainly isn't ideal, but I'd prefer to keep it and have it change it's regulations than to eliminate it completely. In any case, let's stay on topic.

By Kurz on 12/26/2010 1:32:30 PM , Rating: 2
Did you fail at comprehension?

By Lugaidster on 12/26/2010 2:13:43 PM , Rating: 2
No. And your point is...?

By Kurz on 12/29/2010 12:09:18 PM , Rating: 2
Reread what he said and what you said.

By jmunjr on 12/27/2010 3:13:33 AM , Rating: 2
If there is collusion it isn't a free market! There is a place for minimal regulation when dealing with antitrust issues. The market today effectively is monopolistic which is why we have these issues. Take away their ability to operate like this and net neutrality is unnecessary.

By Lugaidster on 12/26/2010 10:31:39 AM , Rating: 2
Perfect competition in a true free market requires 6 conditions to be met, of which at least 3 aren't. For this cases and many others, someone has to protect the consumer. There's no panacea, nor a magic solution for everything.

By diggernash on 12/26/2010 10:48:32 AM , Rating: 2
Or people can choose to not consume and the companies will change. We are not talking about water here. You don't die without internet.

By Lugaidster on 12/26/2010 11:55:01 AM , Rating: 3
Your statement is naive at best. I don't die without many things and yet I still want them: a car, a big house, a big hometheater, a computer, to travel to Paris when I want to, to eat sushi if I want to, etc. I thought that was the whole point of not living in a communist country, I can have what I want and not get screwed for having it.

And I know I have a choice, in this case get screwed by my ISP, get screwed for not having internet connection or have someone else screw my ISP. It's pretty obvious. I want to be connected to the internet and I don't want to be screwed by my ISP, so that leaves only one option.

I want someone else to ensure that I don't get screwed. Better yet, I don't want to be bothered with this things. That's why I have someone that represents me in the House of Representatives. After all, that's how democracy works ain't it?

By Kurz on 12/26/2010 1:36:27 PM , Rating: 2
Except if the government keeps limiting those choices, it'll end up costing more and becoming less efficient and the end product is worse.

If you have a Beef with your ISP go to your lower government and demand they finally allow others to compete in the market.
They often have contracts with ISP's to give them kickbacks.

By Lugaidster on 12/26/2010 2:37:44 PM , Rating: 2
The point is that new ones won't solve the problem. They will still have the same incentives. Every major telecom in whatever country that has no regulation behaves the same. That's the point. Changing a monopoly for an oligopoly won't solve the issues at hand.

By diggernash on 12/26/2010 11:18:14 PM , Rating: 2
Good luck affording a big house when government regulation of our faux footprint hits. I like big vehicles, now I'm going to get slammed with extra regulation on them. Based no these other products, I will be surprised if government intrusion at the federal level does anything except harm internet consumers over the long haul.

I don't want anyone telling someone that invests capital and maneuvers shrewdly to put them selves in a position of power in an industry that they've done too good of a job and now they need to play nice. I want the idea of becoming that billionaire to drive others to develop new and better products for me to consume.

And I don't need the guvubmint attaching greed taxes to anything that I wish to buy. This will evolve into a fee to cover the costs associated with enforcing this regulation. Write it down and wait for it to happen.

You failed to mention the 4th option of becoming the one what does the screwin', eliminating getting screwed all together. ;)

By Lugaidster on 12/27/2010 9:06:30 PM , Rating: 3
I'm not discussing all regulations, I'm discussing net neutrality. I want the consumer (me) to have some power (which is what happens when you have lots of suppliers which this market does not), maybe there are better alternatives to achieve the same but if that is for me to actively get involved in changing that status quo, I'd rather have some regulation in place.

I don't understand what's so bad about ensuring that my ISP stays neutral no matter what the hell I'm using my internet connection for. There's a difference between the possibility that my next ISP won't screw me and the certainty that it won't happen (well, almost). Even if the government had no involvement for a new competitor to appear, it's not that good a deal to become an ISP (it requires a lot of investment in infrastructure). Unless wireless broadband gets cheap, that won't change all that much. Since this barely affects wireless broadband it won't matter much when it becomes cheap and widely available.

That fourth option you mention would actually work if I had the power to actually screw my ISP, which regretfully I don't, unless I take it to some authority or, even, the court. Since there have already been previous suits that favor them, I'll refrain choosing that path. Another way would be if I cut my internet connection, since I don't have alternatives, it's my loss, sure they'll receive less money but that won't affect them all that much. So unless I'm missing something, there's isn't much I can do to screw them without actually screwing myself.

By HoosierEngineer5 on 12/26/2010 12:46:26 PM , Rating: 2
More and more, the Internet is no longer just a curiosity or toy. In the not-too-distant future, it will be as important as having a vehicle, mail delivery, or telephone service. Even the government is encouraging Internet use for tax filing. More and more software applications REQUIRE an internet connection for installation or execution.

By LilBambi on 12/26/2010 12:51:44 PM , Rating: 2
The Internet is the new phones of this age. We and many people we know do not even have landlines anymore.

We could never afford to pay for both cellphone/cellular Internet and landlines that we would not be using except in emergencies.

"People Don't Respect Confidentiality in This Industry" -- Sony Computer Entertainment of America President and CEO Jack Tretton

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