Mysteries and Loopholes in the Open Internet Order
Last time, I asked a question about the value of rulemaking authority on the part of a regulator that isn’t able to articulate clear rules in its Open Internet Order:
The argument that the FTC can’t regulate ISP behavior because it lacks rule-making authority is hollow. The FCC’s 2015 Open Internet Order tried to formulate bright-line rules against blocking, throttling, and “paid prioritization”, but each is riddled with so many exceptions and presumptions as to require adjudication.
On three very important questions – non-Internet data services, peering, and free data – the FCC was not even able to formulate rules because of similar complexities. In these cases, the FCC vowed to examine the issues case-by-case to make a “balance of the equities” determination.
So what good is it for the regulator to have rule-making authority if it can’t figure out how to formulate rules? Maybe the “expert agency” isn’t quite as expert as it thinks.
I’d like to unpack this passage and examine the claims one by one.
The Three Loopholes
The no-blocking rule is the simplest part of the Open Internet Order but it has three caveats:
A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not block lawful content, applications, services, or non-harmful devices, subject to reasonable network management.
The no-throttling rule has exactly the same loopholes.
The lawful content and services exception is certainly reasonable, but there are circumstances in which it will need to be adjudicated. The most common source of friction would involve the transfer of unlicensed, copyrighted material when the blocked party makes a “fair use” defense.
ISPs Have Generally Been Unwilling to Block and Throttle
ISPs who participated in the defunct Copyright Alert System were supposed to throttle or cut off access after five or six violations, but they rarely did. In practice, the ISPs demonstrated a lack of willingness to limit Internet access by their customers even when allowed to do so by law.
Hence, the basis of the no-blocking and no-throttling rules is dubious. The FCC has argued that ISPs have incentives to block and throttle in order to protect their TV services, but the counter-incentives to keep customers happy have prevailed.
We have only seen potentially troublesome throttling on the part of providers managing overload conditions by singling out high volume users for de-prioritization. But this sort of thing falls under another exception.
The Reasonable Network Management Exception
The reasonable network management exception is an even larger loophole because network management is so broad. Management can be done for defensive purposes such as stopping attacks. This is straightforward.
But management encompasses traffic shaping, essentially re-ordering information flows to optimize the quality of user experience. BITAG wrote an entire report on this subject because it’s so subtle. Explaining this subject to a court isn’t easy.
In the case of network congestion, ISPs generally deal with the problem short term with a system akin to Comcast’s “Fair Share” system. This system temporarily de-prioritizes heavy users until they lighten their loads or the congestion clears.
Wireless carriers have imposed similar throttling on heavy users with unlimited data plans. This behavior is allowable as long as it’s fully disclosed.
The Paid Prioritization Rule
The order bans prioritization for a fee:
(a) A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not engage in paid prioritization.
(b) “Paid prioritization” refers to the management of a broadband provider’s network to directly or indirectly favor some traffic over other traffic, including through use of techniques such as traffic shaping, prioritization, resource reservation, or other forms of preferential traffic management, either (a) in exchange for consideration (monetary or otherwise) from a third party, or (b) to benefit an affiliated entity.
(c) The Commission may waive the ban on paid prioritization only if the petitioner demonstrates that the practice would provide some significant public interest benefit and would not harm the open nature of the Internet.
This rule can collide with the network management exception to the no-throttling rule. Most carriers throttle heavy users during periods of congestion, as mentioned. But it’s often possible to buy more expensive service plans that immunize the user from throttling during congestion.
The rule simply stipulates that the ISP’s end user is the only party who may pay for the privilege of heavy usage without de-prioritization during periods of congestion. The exception requires the ISP to convince the FCC that such a sale serves the public interest and doesn’t make the Internet “less open.”
These terms are so broad as to render the rule little more than a beauty contest. The ISP simply has to make its proposed service look good to the media for it to be allowed. The same condition applies to in the case of free data, the only concrete manifestation of something like paid prioritization.
Hence, the three bright-line bans are considerable less than bright in real conditions.
The Four Mysteries
The four undefined issues in the Open Internet Order are non-Internet data services, peering, free data, and general conduct. The order asserts priority in these areas, but is unable to define the conditions in which the authority will be used.
General Conduct Reporting for Duty
In addition to the FCC’s three hard rules, the order includes a fourth catch-all rule, commonly known as the general conduct standard:
…we adopt a rule setting forth a no-unreasonable interference/disadvantage standard, under which the Commission can prohibit, on a case-by-case basis, practices that unreasonably interfere with or unreasonably disadvantage the ability of consumers to reach the Internet content, services, and applications of their choosing or of edge providers to access consumers using the Internet.
This “rule” allows the FCC to determine any ISP practice unlawful on the basis of any analysis it wishes to make. This is not a regulation as much as a grant of authority to itself.
The general conduct rule requires no exceptions because it will not be written until it is imposed. Barbara Esbin and Adam Marcus predicted secret FCC rules in their 2010 article “The Law is Whatever the Nobles Do”: Undue Process at the FCC. General conduct is the secret rule.
Not the Internet
Non-BIAS Data Services are data transmission services provided by ISPs (“BIAS providers” according to the order) that don’t connect users with Internet-based services. The Order says:
First, these services are not used to reach large parts of the Internet. Second, these services are not a generic platform—but rather a specific “application level” service. And third, these services use some form of network management to isolate the capacity used by these services from that used by broadband Internet access services.
These services can’t be better defined without pushing many of the sites we think of as Internet-based – such as Netflix, Amazon, and YouTube – outside of the FCC’s protection.
This is because the Internet is no longer structured the way it was when the idea of net neutrality was invented. The classical Internet is on the left side of the graphic, and the real Internet is on the right. Most of the blogs and media sites you read are hosted by CDNs such as Akamai as per circle 2 in the graphic.
If the FCC were to try and enforce the OIO, the affected ISP coould argue they’re providing a non-BIAS data service and the FCC will be forced to define terms it avoided in the drafting of the order.
Internet Traffic Exchange
Paid Peering is a specialized form of Internet interconnection with long standing but narrow use. It generally connects a small network to a large one without an intermediary. It can also connect two large networks in such a way that the network that does most of the sending pays the other network for meeting a specified quality standard.
It’s very difficult in practice to distinguish paid peering from paid prioritization. But the FCC was urged by supporters of the order to take some sort of action to protect service companies from potential pricing abuses by ISPs.
Oddly, it was also urged by other supporters not to make too many restrictions on paid peering agreements because flexibility has been one of the keys to the Internet’s success. So the order does little more than assert authority over interconnection without specifying any particular obligations:
The definition for broadband Internet access service includes the exchange of Internet traffic by an edge provider or an intermediary with the broadband provider’s network. We note that anticompetitive and discriminatory practices in this portion of broadband Internet access service can have a deleterious effect on the open Internet, and therefore retain targeted authority to protect against such practices through sections 201, 202, and 208 of the Act (and related enforcement provisions), but will forbear from a majority of the other provisions of the Act. Thus, we conclude that, at this time, application of the no-unreasonable interference/disadvantage standard and the prohibitions on blocking, throttling, and paid prioritization to the Internet traffic exchange arrangements is not warranted.
The irony of this non-rule is that a heinous ISP out to block, throttle, or prioritize Internet data streams can do so just as easily at the point that the data enters the ISP’s network as at the point where the data leaves the network. Hence, the order is actually an open invitation for ISPs to manipulate data streams in any way they choose as long as they do it early. The absence of interconnection rules makes the other rules effectively moot.
Free Data, Sponsored Data, and Zero-Rating are all names for the practice of allowing a non-ISP service provider to pay data costs on behalf of users. This practice can only be distinguished from paid prioritization by a very precise and nuanced analysis.
It’s a lovely practice because it forces net neutrality advocates to champion higher prices for consumers after claiming to be looking after their pocketbooks.
Zero-rating is the practice that Bell South CTO Bill Smith had in mind back in 2006 when he mused about the benefits of such a practice in getting startups off the ground. A decade later the FCC still has no idea how to regulate the practice beyond looking at it until it feels something.
The argument against free data is the same as the argument for it: this is a means for new entrants to gather the attention of consumers for new services that may require consumers to purchase more expensive broadband plans. That’s either good or bad depending on your point of view.
We Still Don’t Have Net Neutrality Regulations
Contrary to popular opinion, the United States still doesn’t have enforceable net neutrality regulations. We only have an assertion of authority by a regulator who promised to review complaints case-by-case against the filter of a body of proto-law too riddled with exceptions, loopholes, and vague definitions to provide meaningful guidance to service providers.
The Internet is working well despite the ethereal nature of the our regulations. So maybe there’s something other than regulation at work in the Internet today.
It’s quite likely that the ISPs, the edge service providers, and the transit networks are all working together in an acceptable way because it’s actually in their interests to cooperate. If that’s the case, the status of the FCC’s Open Internet Order is unimportant.
In any case, the claim that Internet regulation can only be carried out by an agency with rulemaking power remains to be proved because no enforcement agency has yet articulated clear and concrete rules.
Related Posts From High Tech Forum