(Source: AGBeat)
Revised draft is expected to bend towards net neutrality advocates' requests

Federal courts have resoundingly ruled that the U.S. Federal Communications Commission (FCC) lacks the Congressionally granted authority to regulate internet service providers (ISPs) at present.  But crucially they also ruled that such regulation would be possible if their status under Title II of The Communications Act of 1934 [PDF] (and the act that recently revised the half-century old law, the Telecommunications Act of 1996).

I. Common Carrier Reclassification Cometh?

This Thursday the FCC's lobbyist-turned-top-regulator Chairman Thomas Edgar "Tom" Wheeler will internally unveil a plan to revamp and revitalize the FCC's net neutrality agenda.  

In its earliest form, his plan would have replaced net neutrality with a set of laissez-faire rules so ineffectual that even the worst offenders would be likely to embrace "net neutrality" in its new watered down form.  But amid widespread outcry and amid the threat that his plan would be ruled as legally groundless as the last, Wheeler has been forced to revamp his plan.  Net neutrality activists hope his new plan will be better than the last, and will be legally defensible.

Net Neutrality
[Image Source: AGBeat]

At the heart of the plan would reportedly be an order to reclassify most internet service providers as "telecommunications services," changing their current classification as "information services."  That change would be a crucial one, as Congress has granted the FCC power to enforce a "vibrant and competitive free market" (see: 47 U.S.C. § 230 Chapter 5, Subchapter II), but that provision applies solely to telecommunications services and not other types of services, such as "information services."

For a layman this strange distinction may seem like a bunch of bureaucratic hoo-ha, but it was seemingly well intentioned.  The idea was to avoid regulating emerging technologies with strict rules that governed mature markets, i.e. the landline phone marketplace.

Cable Carrier
The crux of the current net neutrality debate is reclassification of broadband internet service providers as "common carriers". [Image Source: Bounce Energy]

The distinction made sense, the problem was that the deadline for recodification when a technology mature was poorly codified.  As a result, cable internet -- once a rare and new luxury in the time of dialup -- became a ubiquitous service, yet to date it's not recognized as such under the FCC's regulatory policy.

II. Net Neutrality: A Poor Man's Substitute for a Free Market

Some may ask what's the worse that can happen without regulation.  Indeed in a healthy, competitive services market net neutrality might be a moot question.  Unfortunately in many markets in the U.S. just one or two corporate cable internet providers maintain a monopoly on local communications -- a monopoly the government wittingly or unwittingly helped create.

As a result a powerful ISP like Comcast can seek to squeeze additional tolls out of the internet's top content providers like Netflix Inc. (NFLX).  These fees pad ISP profits, but leave customers paying.

Comcast on South Park
Net neutrality might be unneeded in a truly competitive market, but America's telecommunications market is growing less free and competitive by the year. [Image Source: South Park Studios]

The natural solution would be to break up the collusive ISPs that have a monopoly grip on the American telecommunications market.  But the U.S. government, awash in money from telecommunications interests shows little interest in playing the role of monopoly breaker.  If anything it appears content to let things proceed in the opposite direction, as evidenced by its consideration of the proposed $45.2B USD merger of the nation's two largest cable internet firmsComcast Corp. (CMCSA) and Time Warner Cable Inc. (TWC).

Comcast has already aggressively moved to violate net neutrality, looking to offer customers "unlimited" internet lines and high speed connections, then denying them the service they paid for.  

Net Neutrality activists
Fed up: net neutrality activists march towards the FCC headquarters last May demanding true net neutrality protections. [Image Source: AFP/Getty Images]

And since there's no alternative (as this isn't a truly free market), if customers want to view high speed video from Netflix or others, those service firms have been forced to pay fees or have their services deteriorated to antediluvian data rates.  The services effectively pass these fees on to consumers, forcing them to pay twice.

III. Deadline Draws Near

While President Barack Hussein Obama II (D) might not be the most impartial party, given the millions Comcast Corp. (CMCSA), Time Warner Cable Inc. (TWC), and other net neutrality opponents raised for him during the 2008 and 2012 elections, even he recently pushed Wheeler to pursue reclassification (perhaps given that net neutrality advocates like Google Inc. (GOOG) and Microsoft Corp. (MSFT) donated even more to his campaign).

Tom Wheeler Net Neutrality
FCC Chairman Tom Wheeler speaks at CES 2015. [Image Source: Getty Images]

Now Wheeler shows signs of changing his tune.  In comments to the press in January at the 2015 Consumer Electronics Show (CES), he remarked:

[I]t became obvious that [the term] 'commercially reasonable' [in the original proposal] could be interpreted as what is reasonable for the ISPs, not what’s reasonable for consumers or innovators. And that’s the wrong question and the wrong answer. Because the issue here is how do we make sure that consumers and innovators have access to open networks.

We’re going to propose rules that say that no blocking, no throttling, [no] paid prioritization, all that list of issues, and that there is a yardstick against which behavior should be measured. And that yardstick is 'just and reasonable.'

The FCC's final draft -- which is expected to include reclassification plans -- is expected to be distributed internally to FCC staffers on Feb. 5. Past drafts have traditionally been leaked to the press, so we can expect to know for sure next week whether the proposal includes reclassification.

Net neutrality -- Washington D.C.
[Image Source: Breaking News]

The final step on the road to a new plan for net neutrality will be a Feb. 26 meeting of the FCC, at which time a vote on the internal draft will be held.  If the proposal passes the rules would be made public and the FCC will look to enforce them and defend their legality in court.

Are we about to enter a new era of net neutrality in the U.S., or is this just premature optimism?  It's too early to say, but we'll find out soon enough.

Sources: The New York Times, LA Times

"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki

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