What journalists need to know about the FCC chairman’s net neutrality recommendation

Wired.com landed one heck of a guest opinion today, and journalists need to understand what the opinion means.

Federal Communications Commission Chairman Tom Wheeler wrote that “the time to settle the Net Neutrality question has arrived.” He went on to outline what he will recommend to his fellow commissioners when they meet later this month.

Wheeler’s main points:

• The commission has to step in and stop broadband network operators (mostly cable companies) from allowing big data users to have a fast-lane to deliver their data.
• The FCC should consider the Internet as a utility and, as Wheeler writes, “use its Title II authority to implement and enforce open internet protections.”
• The rules that apply to wired networks’ data delivery should apply to mobile too. No blocking or prioritizing data delivery there either.
• And (this is big) Wheeler recommends, “To preserve incentives for broadband operators to invest in their networks, my proposal will modernize Title II, tailoring it for the 21st century, in order to provide returns necessary to construct competitive networks. For example, there will be no rate regulation, no tariffs, no last-mile unbundling.”

What do all of those terms mean?

• “Net neutrality”: This was a phrase invented by Columbia University professor Tim Wu to describe the idea that all data should move at the same speed. Netflix, for example, which is a huge data user, should not be able to pay extra and move its data before a TV station trying to stream video or a newspaper trying to post a news story. The main idea is that the networks would be neutral and favor nobody’s data over another. The broadband operators said if they can’t charge more to big users, the smaller users are subsidizing the big guys, but that message has never caught on.
• “Title II”: This is the crux of the change that will now likely come. Title II would assert the same authority over broadband providers that the government holds over utility companies. But Wheeler carefully crafted his suggestion to “modernize” Title II.
  
  Title II is short for Title II of the Communications Act of 1934. So yes, don’t be surprised if some say “you mean the Internet will be governed by a law passed in 1934?” Well, yes. When it was written, it regulated wires and radio. But the act was updated in 1996, and Wheeler suggests more changes to bring it into the Internet age.
  
  Title II requires those it governs to act “in the public interest.” It also says utilities must not “make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services.”  (see SEC. 202. [47 U.S.C. 202]).
  
  That would seem to satisfy everyone who wants providers not to have a say about the content they deliver.
• “Tariffs and taxes”: This is significant. Chairman Wheeler suggests that even though the ISPs would be treated as utilities, governments cannot add taxes and tariffs on the service as they do on other utilities. Cable companies have said if the FCC placed data delivery under Title II, it would place consumers on the hook “for an astonishing $11 billion in new fees.”
  
  This speaks to what ISPs feared most, that the government would start messing with rates as they do with phone and cable rates. Wheeler’s plan is to keep hands off rates and let the marketplace set the price you and data providers pay.
  
  Without this “modernization” as Wheeler calls it, Internet service providers would be treated just like phone companies are now, heavily regulated and taxed. You should note that phone services, both cell and hardline, are already covered under Title II as “common carrier” utilities. But Internet services on cell phones are not. Internet services currently are considered to be “information service providers.” That different in classification is what could allow the ISPs to manage data delivery and charge for fast-track service.
• “Unbundling the last mile”: Chairman Wheeler threw the telcos a bone by saying he did not favor “last-mile unbundling,” also known as “local-loop unbundling.” Unbundling the last mile is the idea that an ISP must allow competitors access to their delivery lines (think of it as the lines from the cable company to your home or office) at a wholesale price. So Verizon, for example, would have to allow a direct competitor to have access to Verizon’s delivery infrastructure without having to build their own. The idea is being tried in some EU countries where the ISPs are national monopolies. The notion, still unproven, is that by allowing startups to avoid big infrastructure costs, it encourages competition.
  
  But the National Cable Television Association says far from encouraging innovation, allowing the “last mile” provision discourages it.

Reaction to Wheeler’s op-ed:

• The Washington Post:
  

  It all adds up to the most significant intervention ever undertaken by federal regulators to make sure the Web remains a level playing field. It is, depending on your ideology, either an unprecedented example of government overreach that will ruin the republic or the most egalitarian, pro-competitive thing the FCC may do in the 21st century.

• Chris Lewis, vice president of government affairs for Public Knowledge (a pro-net neutrality group):
  

  This is a historic announcement by Chairman Wheeler, and a decision that consumers have been demanding for some time. Americans have waited over a year for the FCC to restore the Open Internet protections that were vacated by the DC Circuit Court.
  
  Chairman Wheeler’s proposal appears to not only restore these protections, but also place them under the strongest legal authority at his disposal by reclassifying broadband as a Title II service under the Communications Act. The Wheeler proposal is designed to prohibit blocking and paid prioritization, ensuring that no innovator or internet user will have to ask their ISP for permission to reach all parts of the internet or offer new services.

• Sen. Patrick Leahy, (D-Vt.):
  

  “This is a victory for the Internet.”

• Sen. Ben Sasse (R-Neb.) in an email to conservatives today, not speaking directly to Wheeler’s op-ed but to the concept of regulating the ISPs:
  

  “This is truly a slippery slope.”

• On Wall Street:
  Comcast up 2.9%
  Time Warner up 2.18%
  Charter Communications up 3.73%

What’s next?

• On Feb. 26, the FCC is expected to vote in favor of some version of Wheeler’s idea.
• AT&T will sue. The company already said it would. This is how sure the company is that the FCC will vote to move Internet control under Title II. Verizon has shown it is willing to go to court over these questions in the past. Wheeler has said for months he expects a lawsuit.