April 21, 2014

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Is There a Future for Net Neutrality after Verizon v. FCC?

In a decision that was widely predicted by those who have been following the case, the Court of Appeals for the D.C. Circuit has invalidated the FCC’s Open Internet Rules (so-called net neutrality regulations), which imposed non-discrimination and anti-blocking requirements on broadband Internet access providers. The rules were challenged by Verizon as soon as they were enacted in 2010. The court held that, given the FCC’s past (and never reversed or modified) regulatory choice to classify broadband providers under the Telecommunications Act of 1996 as “information services” rather than “telecommunications services,” it cannot now impose on them common carrier obligations that apply under the statute only to services classified as telecommunications. Verizon argued in the case that the Open Internet Rules were not common carrier regulations, but the court didn’t buy it.
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Improve Connectivity in Rural Communities – Principle #9 for Fostering Civic Engagement Through Digital Technologies

In my recent blog posts, I have been discussing ways that citizens can communicate with government officials through the Internet, social media, and wireless technology to solve problems in their communities and to effect public policy. Using technology for civic engagement, however, should not be limited to communications with elected or appointed government officials. One of the themes I have sought to address across my series of posts – and will discuss in more detail today – is that citizen-to-citizen communication through digital technologies for civic purposes is extremely important in building healthy communities. This is particularly true in rural areas. Improving digital connectivity in rural areas will help people communicate more effectively with civic institutions, such as schools and libraries, and commercial entities, such as commodities markets, that effect residents daily lives and economic well-being.
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Arlington v. FCC: What it Means for Net Neutrality

[Cross-posted on my blog, Managing Miracles]

On Monday, the Supreme Court handed down a decision in Arlington v. FCC. At issue was a very abstract legal question: whether the FCC has the right to interpret the scope of its own authority in cases in which congress has left the contours of their jurisdiction ambiguous. In short, can the FCC decide to regulate a specific activity if the statute could reasonably be read to give them that authority? The so-called Chevron doctrine gives deference to administrative agencies’ interpretation of of their statutory powers, and the court decided that this deference extends to interpretations of their own jurisdiction. It’s all very meta, but it turns out that it could be a very big deal indeed for one of those hot-button tech policy issues: net neutrality.

Scalia wrote the majority opinion, which is significant for reasons I will describe below. The opinion demonstrated a general skepticism of the telecom industry claims, and with classic Scalia snark, he couldn’t resist this footnote about the petitioners, “CTIA—The Wireless Association”:

This is not a typographical error. CTIA—The Wireless Association was the name of the petitioner. CTIA is presumably an (unpronounceable) acronym, but even the organization’s website does not say what it stands for. That secret, known only to wireless-service-provider insiders, we will not disclose here.

Ha. Ok, on to the merits of the case and why this matters for net neutrality.
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Blocking of Google+ Hangouts Android App

Earlier this week, online news sites started reporting the apparent blocking of Google’s Google+ Hangout video-chat application on Android over AT&T’s cellular network [SlashGear, Time, ArsTechnica].

Several of the articles noted the relationship to an earlier controversy concerning AT&T and Apple’s FaceTime application. Our Mobile Broadband Working Group at the FCC’s Open Internet Advisory Committee released an case study on the AT&T’s handling of FaceTime in January of this year. Our report may help inform the new debate on the handling of the Google Hangout video app on cellular networks.

Addendum (5/21/2013): AT&T announces support for FaceTime over cellular under all pricing plans over LTE by the end of the year [MacObserver, The Register].

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First Principles for Fostering Civic Engagement via Digital Technologies: #1 Know Your Community

Over the first few months of my Fellowship at CITP, I have had the pleasure of meeting with a number of people from academia, non-profits, for-profit companies and government to discuss the role of digital technologies in fostering civic engagement.  In a series of blog posts, I plan to set out ten principles that local governments and communities should look to as they evaluate whether their community is using digital technology effectively to promote civic engagement and solve local problems.  Because I do not think that my work developing these principles is complete, I hope to use this forum as a way to offer ideas for further exploration.  Feedback is welcome!

Principle #1: Know Your Community
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FCC Open Internet Advisory Committee Progress

Earlier this year, I wrote about the launch of the Open Internet Advisory Committee (OIAC). The committee’s mandate is to, “track and evaluate the effect of the FCC’s Open Internet rules, and to provide any recommendations it deems appropriate to the FCC regarding policies and practices related to preserving the open Internet.” I’m chairing the group looking at the unique issues in Mobile Broadband networks. Our group just issued its first report, a case study about AT&T’s handling of Apple’s FaceTime application:

AT&T/FaceTime Case Study
Mobile Broadband Working Group, Open Internet Advisory Committee, Federal Communications Commission

I spoke about the progress of our working group, and about the open Internet issues facing mobile broadband networks more generally, here at Princeton as part of CITP’s luncheon series on December 13th: “Open Internet Challenges in Mobile Broadband Networks”. See the video below:

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The Decline of DVD-by-Mail, or Further Thoughts on the Digital Death of Copyright’s First Sale Doctrine

Netflix reported a second-quarter profit last week as customer demand continues to drive a transition in the company’s primary delivery model from DVD-by-mail to Internet streaming. According to The New York Times, “[t]he company’s net losses among DVD-by-mail subscriptions outpaced its gains in net streaming subscriptions in the United States, reflecting the continued challenge of converting from a physical disc business to one predominately online.” The company, of which I am a longtime subscriber and fan, has famously struggled with the business implications of this transition since it began offering streaming service in 2007. (Remember the Qwickster debacle?) Those business implications derive in some interesting ways from copyright law.

The DVD-by-mail model, on which Netflix built its success, was enabled by the first sale doctrine, which cuts off a copyright owner’s distribution right with respect to a particular copy of a copyrighted work when that copy is first sold. Because of the first sale doctrine, Netflix was not required to get permission from movie studios to set up its business. In the early days, Netflix simply bought DVDs—lots of them—from whatever retailers were selling them and then rented those DVDs to its customers. If the movie studios didn’t like that, well, too bad.
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Open Internet Advisory Committee kick-off

Last Friday, we had the first meeting of the Open Internet Advisory Committee (OIAC), called for by the FCC in the recent Open Internet Order. The members of the OIAC  consist of a mix of folks from venture capital firms, ISPs, governance organizations, community organizations, and academics like myself.  The OIAC’s mission is to “track and evaluate the effect of the FCC’s Open Internet rules, and to provide any recommendations it deems appropriate to the FCC regarding policies and practices related to preserving the open Internet.”  The video of our kick-off meeting is online.

In addition to the full meeting of the OIAC, we broke into four working groups — on mobile broadband, economic impacts of Open Internet frameworks, specialized services, and transparency. I’m chairing the group looking at Mobile Broadband, a tremendously important area since wireless and cellular networks are rapidly becoming the dominant way users access the Internet.  I’m looking forward to working with the rest of the working group, and the rest of the OIAC, to better understand how to ensure openness and transparency, while preserving the ability of service providers to manage their networks.  One thing is certain — fun and interesting times lie ahead!

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Regulating and Not Regulating the Internet

There is increasingly heated rhetoric in DC over whether or not the government should begin to “regulate the internet.” Such language is neither accurate nor new. This language implies that the government does not currently involve itself in governing the internet — an implication which is clearly untrue given a myriad of laws like CFAA, ECPA, DMCA, and CALEA (not to mention existing regulation of consumer phone lines used for dialup and “special access” lines used for high speed interconnection). It is more fundamentally inaccurate because referring simply to “the internet” blurs important distinctions, like the difference between communications transport providers and the communications that occur over those lines.

However, there is a genuine policy debate being had over the appropriate framework for regulation by the Federal Communications Commission. In light of recent events, the FCC is considering revising the way it has viewed broadband since the mid-2000s, and Congress is considering revising the FCC’s enabling statute — the Communications Act. At stake is the overall model for government regulation of certain aspects of internet communication. In order to understand the significance of this, we have to take a step back in time.

Before 2005

In pre-American British law, there prevailed a concept of “common carriage.” Providers of transport services to the general public were required to conduct their business on equal and fair terms for all comers. The idea was that all of society benefited when these general-purpose services, which facilitated many types of other commerce and cultural activities, were accessible to all. This principle was incorporated into American law via common-law precedent and ultimately a series of public laws culminating in the Communications Act of 1934. The structure of the Act remains today, albeit with modifications and grafts. The original Act included two regulatory regimes: Title II regulated Common Carriers (telegraph and telephone, at the time), whereas Title III regulated Radio (and, ultimately, broadcast TV). By 1984, it became necessary to add Title VI for Cable (Titles IV and V have assorted administrative provisions), and in 1996 the Act was revised to focus the FCC on regulating for competition rather than assuming that some of these markets would remain monopolies. During this period, early access to the internet began to emerge via dial-up modems. In a series of decisions called the Computer Inquiries, the FCC decided that it would continue to regulate phone lines used to access the internet as common carriers, but it disclaimed direct authority over any “enhanced” services that those lines were used to connect to. The 1996 Telecommunications act called these “enhanced” services “information services”, and called the underlying telephone-based “basic” transport services “telecommunications services”. Thus the FCC both did and did not “regulate the internet” in this era.

In any event, the trifurcated nature of the Communications Act put it on a collision course with technology convergence. By the early 2000s, broadband internet access via Cable had emerged. DSL was being treated as a common carrier, but how should the FCC treat Cable-based broadband? Should it classify it as a Title II common carrier, a Title VI cable service, or something else?

Brand X and Its Progeny

This question arose during a period in which a generally deregulatory spirit prevailed at the FCC and in Congress. The 1996 Telecommunications Act contained a great deal of hopeful language about the flourishing competition that it would usher in, making unneccessary decades of overbearing regulation. At the turn of the milennium, a variety of revolutionary networking platforms seemed just around the corner. The FCC decided that it should remove as much regulation from broadband as possible, and it had to choose between two basic approaches. First, it could declare that Cable-based broadband service was essentially the same thing as DSL-based broadband service, and regulate it under Title II (aka, a “telecommunications service”). This had the advantage of being consistent with decades of precedent, but the disadvantage of introducing a new regulatory regime to a portion of the services offered by cable operators, who had never before been subject to that sort of thing (except in the 9th Circuit, but that’s another story). The 1996 Act had given the FCC the authority to “forbear” from any obligations that it deemed unnecessary due to sufficient competition, so the FCC could still “deregulate” broadband to a significant extent. The other option was to reclassify cable broadband as a Title I service (aka, an “information service”). What is Title I, you ask? Well, there’s very little in Title I of the Communications Act (take a look). It mostly contains general pronouncements of the FCC’s purpose, so classifying a service as such is a more extreme way of deregulating a service. How extreme? We will return to this.

The FCC chose this more extreme approach, announcing its decision in the 2002 Cable Modem Order. This set off a prolonged series of legal actions, pitting the deregulatory-spirited FCC against those that wanted cable to be regulated under Title II so that operators could be forced to provide “open access” to competitors who would use their last-mile infrastructure (the same way that the phone company must allow alternative long distance carriers today). This all culminated in a decision by the 9th Circuit that Title I classification was unacceptable, and a reversal of that decision by the Supreme Court in 2005. The case is commonly referred to by its shorthand, Brand X. The majority opinion essentially states that the statute is ambiguous as to whether cable broadband is a Title I “information service” or Title II “telecommunications service”, and the Court deferred to the expert-agency: the FCC. The FCC immediately followed up by reclassifying DSL-based broadband as a Title I service as well, in order to develop a, “consistent regulatory framework across platforms.” At the same time, it released a Policy Statement outlining the so-called “Four Freedoms” that nevertheless would guide FCC policy on broadband. The extent to which such a statement was binding and enforceable would be the subject of the next chapter of the debate on “regulating the internet.”

Comcast v. FCC

After Brand X and the failure of advocates to gain “open access” provisions on broadband generally, much of the energy in the space focused to a fallback position: at the very least, they argued, the FCC should enforce its Policy Statement (aka, the “Four Freedoms”) which seemed to embody the spirit of some components of the non-discriminatory legacy of common carriage. This position came to be known as “net neutrality,” although the term has been subject to a diversity of definitions over the years and is also only one part of a potentially broader policy regime. In 2008, the FCC was forced to confront the issue when it was discovered that Comcast had begun interfering with the Bittorrent traffic of customers. The FCC sought to discipline Comcast under its untested Title I authority, Comcast thought that it had no such authority, and the DC Circuit Court agreed with Comcast. It appears that the Title I approach to deregulation was more extreme than even the FCC thought (although ex-Chairman Powell had no problem blaming the litigation strategy of the current FCC). To be clear, the Circuit Court said that the FCC did not have authority under Title I. But, what if the FCC had taken the alternate path back in 2002, deciding to classify broadband as a Title II service and “forbear” from all of the portions of the statute deemed irrelevant? Can the FCC still choose that path today?

Reclassification

Chairman Genachowski recently announced a proposed approach that would reclassify the transport portion of broadband as a Title II service, while simultaneously forbearing from the majority of the statute. This approach is motivated by the fact that Comcast cast a pall over the FCC’s ability to fulfill its explicit mandate from Congress to develop a National Broadband Plan, which requires regulatory jurisdiction in order for the FCC to be able to implement many of its components. I will discuss the reclassification debate in my next post. I’ll be at a very interesting event in DC tomorrow morning on the subject, titled The FCC’s Authority Over Broadband Access. For a preview of some of what will be discussed there, I recommend FCC General Counsel’s presentation from yesterday (starting at 30 minutes in), and Jon Neuchterlein’s comments at this year’s Silicon Flatirons conference. I am told that the event tomorrow will not be streamed live, but that the video will be posted online shortly thereafter. I’ll update this post when that happens. You can also follow tweets at #bbauth. [Update: the video and transcripts for Panel 1 and Panel 2 are now posted]

A New Communications Act?

In parallel, there has been growing attention to a revision of the Communications Act itself. The theory here is that the old structure just simply doesn’t speak sufficiently to the current telecommunications landscape. I’ll do a follow-up post on this topic as well, mapping out the poles of opinion on what such a revised Act should look like.

Bonus: If you just can’t get enough history and contemporary context on the structure of communications regulation, I did an audio interview with David Weinberger back in January 2009.

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Does Your House Need a Tail?

Thus far, the debate over broadband deployment has generally been between those who believe that private telecom incumbents should be in charge of planning, financing and building next-generation broadband infrastructure, and those who advocate a larger role for government in the deployment of broadband infrastructure. These proposals include municipal-owned networks and a variety of subsidies and mandates at the federal level for incumbents to deploy faster broadband.

Tim Wu and Derek Slater have a great new paper out that approaches the problem from a different perspective: that broadband deployments could be planned and financed not by government or private industry, but by consumers themselves. That might sound like a crazy idea at first blush, but Wu and Slater do a great job of explaining how it might work. The key idea is “condominium fiber,” an arrangement in which a number of neighboring households pool their resources to install fiber to all the homes in their neighborhoods. Once constructed, each home would own its own fiber strand, while the shared costs of maintaining the “trunk” cable from the individual homes to a central switching location would be managed in the same way that condominium and homeowners’ associations currently manage the shared areas of condos and gated communities. Indeed, in many cases the developer of a new condominium tower or planned community could lay fiber along with water and power lines, and the fiber would be just one of the shared resources that would be managed collectively by the homeowners.

If that sounds strange, it’s important to remember that there are plenty of examples where things that were formerly rented became owned. For example, fifty years ago in the United States no one owned a telephone. The phone was owned by Ma Bell and if yours broke they’d come and install a new one. But that changed, and now people own their phones and the wiring inside their homes, with your phone company owning the cable outside the home. One way to think about Slater and Wu’s “homes with tails” concept is that it’s just shifting that line of demarcation again. Under their proposal, you’d own the wiring inside your home and the line from you to your broadband provider.

Why would someone want to do such a thing? The biggest advantage, from my perspective, is that it could solve the thorny problem of limited competition in the “last mile” of broadband deployment. Right now, most customers have two options for high-speed Internet access. Getting more options using the traditional, centralized investment model is going to be extremely difficult because it costs a lot to deploy new infrastructure all the way to customers’ homes. But if customers “brought their own” fiber, then the barrier to entry would be much lower. New providers would simply need to bring a single strand of fiber to a neighborhood’s centralized point of presence in order to offer service to all customers in that neighborhood. So it would be much easier to imagine a world in which customers had numerous options to choose from.

The challenge is solving the chicken-and-egg problem: customer owned fiber won’t be attractive until there are several providers to choose from, but it doesn’t make sense for new firms to enter this market until there are a significant number of neighborhoods with customer-owned fiber. Wu and Slater suggest several ways this chicken-and-egg problem might be overcome, but I think it will remain a formidable challenge. My guess is that at least at the outset, the customer-owned model will work best in new residential construction projects, where the costs of deploying fiber will be very low (because they’ll already be digging trenches for power and water).

But the beauty of their model is that unlike a lot of other plans to encourage broadband deployment, this isn’t an all-or-nothing choice. We don’t have to convince an entire nation, state, or even city to sign onto a concept like this. All you need is a neighborhood with a few dozen early-adopting consumers and an ISP willing to serve them. Virtually every cutting-edge technology is taken up by a small number of early adopters (who pay high prices for the privilege of being the first with a new technology) before it spreads to the general public, and the same model is likely to apply to customer-owned fiber. If the concept is viable, someone will figure out how to make it work, and their example will be duplicated elsewhere. So I don’t know if customer-owned fiber is the wave of the future, but I do hope that people start experimenting with it.

You can check out their paper here. You can also check out an article I wrote for Ars Technica this summer that is based on conversations with Slater, Wu, and other pioneers in this area.