Verizon Challenges New Net Neutrality Rules

January 21st, 2011
in econ_news

Econintersect:  Step two in the new age of the internet has been taken.  Verizon Communications (VZ) has filed suit challenging new federal regulations announced in December.  The FCC (Federal Communications Commision) announcement was met with criticism from both sides of the so-called net neutrality argument:  liberals claimed the FCC has caved to pressure from carriers, right-wingers are calling the new rules a government takeover of the Internet.

Follow up:

Net neutrality refers to the concept that the internet is basically a public utility and its operation should be accomplished in a way that offers uninhibited access to all users.  However, the developers and operators of the internet system components must be allowed to operate in a competitive environment that will reward innovation and excellence of performance.

From GEI News December 21, 2010:

No matter what you think about the new rules, however, they signal an important turning point in the development of the Internet. We are going from Phase One, where everything is free and open and untamed, into Phase Two, which is all about centralization, consolidation, control—and money.

Because don’t kid yourself. Money is driving all of this. As in: Hey, we’ve created this marvelous new platform for communicating with each other. We’ve demonstrated that very large sums of money can be generated by sending stuff over these wires. Now let’s figure out who gets what.

Today’s new FCC rules grant two big concessions to carriers. First, the rules will apply to wired broadband connections, but they will pretty much leave wireless alone. Second, carriers remain free to create “fast lanes” on the Internet. They can charge Internet companies to ride on the faster pipes, and perhaps also charge consumers more money to get access to those speedy services.  

The complaint filed by Verizon argues that rules instituted by the FCC overstep the agency's authority.  Among the provisions announced in December are prohititions of carriers, such as Verizon, from discrimiating in transmission services between their own applications and those of competitors such as Skype (partially owned by EBAY), Vodaphone (VOD) and Netflix (NFLX).

From The Huffington Post today (January 21):

In a statement, Verizon said that while it is "committed to preserving an open Internet," it remains "deeply concerned by the FCC's assertion of broad authority for sweeping new regulation of broadband networks and the Internet itself."

The company is taking the case to the same federal court that ruled last year that the FCC had exceeded its legal authority in sanctioning cable giant Comcast Corp. The agency had cited Comcast for discriminating against online file-sharing traffic on its network – violating broad net neutrality principles first established by the agency in 2005. Those principles served as a foundation for the formal rules adopted by the commission last month.

Last year's court ruling forced the FCC to look for a new framework for regulating broadband to ensure the commission would be on solid legal ground in adopting net neutrality and other rules. The agency currently treats broadband as a lightly regulated "information service," as opposed to phone service, which is more heavily regulated as a so-called "common carrier."

Sources:  GEI News, The Daily Beast, and The Huffington Post









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