FCC kinda sorta backtracks on net neutrality

14 May 2014

You are no doubt aware that there has been much dithering in the US over the new net neutrality rules the FCC is proposing to replace its previous rules, which were overturned by a court at the start of the year.

In essence, the FCC proposed to allow ISPs to set up higher-priced “fast lanes” for heavy-bandwidth users, but in a way that would not allow ISPs to throttle competitors or censor certain sites. Net-neutrality proponents promptly dismissed the latter as either meaningless or a complete lie and denounced the former as the end of net neutrality and the death of the internet as we know it.

Which I feel is drastically overstating the case to the point of discrediting the whole net neutrality movement. On the other hand, hyperbolic histrionics have (evidently) become the only way in America to get policymakers to even notice you, much less listen to you.

That seems to be the case with the FCC, whose chairman is now backing down from his original proposal – or at least wording it more clearly.

Ever since the proposal was first leaked last month, FCC chairman Tom Wheeler has been under heavy sustained fire from the pro-neutrality camp (which does have heavy hitters like Google in its corner). And despite his constant reassurances that he is very much in favor of net neutrality, he has been remarkably unsuccessful at convincing his critics that you can have prioritized traffic and net neutrality at the same time.

Consequently, according to the Wall Street Journal, he’s now redrafted the proposal to make his approach more clear:

In the new draft, Mr. Wheeler is sticking to the same basic approach but will include language that would make clear that the FCC will scrutinize the deals to make sure that the broadband providers don't unfairly put nonpaying companies' content at a disadvantage, according to an agency official.

The official said the draft would also seek comment on whether such agreements, called "paid prioritization," should be banned outright, and look to prohibit the big broadband companies, such as Comcast Corp. and AT&T Inc., from doing deals with some content companies on terms that they aren't offering to others.

So basically, it’s the same idea, but with the added requirement that any deals made between ISPs and content providers pass FCC muster before being approved. Also, Wheeler has put reclassification of ISPs as common carriers on the table, if only because it was their current classification that got the previous net-neutrality policy thrown out.

Will the net-neutrality camp accept it? Probably not. They’ve made clear that any “fast lane” approach is not neutral (and will kill the internet), end of argument, and they will not settle for anything less.

For them, the fear of innovation being stifled by the system the FCC is proposing is very real – so much so that a number of VCs are now avoiding start-ups whose services require fast connections for video, audio, or whatever.

Technology Reviewreports:

[…] if deep-pocketed players can pay for a faster, more reliable service, then small startups face a crushing disadvantage, says Brad Burnham, managing partner at Union Square Ventures, a VC firm based in New York City. “This is absolutely part of our calculus now,” he says.

Burnham says his firm will now “stay away from” startups working on video and media businesses. It will also avoid investing in payment systems or in mobile wallets, which require ultrafast transaction times to make sense. “This is a bad scene for innovation in those areas,” Burnham says of the FCC proposal.

On the other hand, Jon Brodkin at Ars Technica argues that while a few VCs might steer clear of Internet start-ups, plenty more are more than willing to step up to the plate:

The FCC's net neutrality rules that outlawed blocking and discrimination against Web services were overturned by the court ruling on January 14, and that decision was no surprise: net neutrality advocates and opponents alike had expected it for months. Still, the Internet gravy train continued with "Venture capitalists invest[ing] $2.3 billion into 219 Internet-specific companies during the first quarter of 2014," according to MoneyTree. "Four of the top ten deals for the quarter were in the Internet-specific category."

If a lack of net neutrality rules would spell doom for venture capital investment in Internet firms, we should have seen a dearth of funding for mobile technology.

In other words, both sides in the US will probably argue about this forever.

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