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““NET” NEUTRALITYNET” NEUTRALITY

Presentation forPresentation for

Kennesaw State University Kennesaw State University Michael J. Coles College of BusinessMichael J. Coles College of Business

November 7, 2010 November 7, 2010

Walt SapronovWalt SapronovSapronov & Associates, P.C.Sapronov & Associates, P.C.400 Northridge Road, Suite 515400 Northridge Road, Suite 515Atlanta, Georgia 30350Atlanta, Georgia 30350Telephone: 770-399-9100Telephone: 770-399-9100Facsimile: 770-395-0505Facsimile: 770-395-0505Email: wsapronov@wstelecomlaw.comEmail: wsapronov@wstelecomlaw.com

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ContentsContents

I. Overview

II. Net Neutrality Basics

III. FCC Authority

IV. Origins of the Comcast Decision

V. D.C. Circuit Court Reversal

VI. FCC “Third Way” Proposal

VII. Net Neutrality By Other Means

VIII. Future Developments

IX. Final Thoughts

OverviewOverview

Historically: Federal Communications Commission (FCC)

Has asserted jurisdiction over: Telecommunications Wireless Cable

BUT NOT OVER: Information Services

What about Internet?

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OverviewOverview

Internet Content (the “Cloud”) Clearly an unregulated information service

Internet Access (the “Pipes”) Classification not so clear Cable, DSL, Wireless

Are all regulated services? Provided by regulated cable and telcos But when combined with Internet Content?

They Create an Information Service (U.S. Supreme Court “Brand X” Decision)

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Current Internet Regulation (Title I)Current Internet Regulation (Title I)

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Computer processingAccess component

Title I

“Information Service”

Unregulated

Cloud

Pipe

Portal

OverviewOverview

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Net Neutrality BasicsNet Neutrality Basics

Neutral and open public network (the “Internet”) No restrictions on equipment or modes of

communication Principles do not permit discrimination, either in pricing

or access, of the type, quantity, content, sites, or applications

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Net Neutrality BasicsNet Neutrality Basics

Fundamental Principles Consumers are entitled to:

Access the lawful Internet content of their choice; Run applications and services of their choice subject

to the needs of law enforcement; Connect to their choice of legal devices that do not

harm the network; and Enjoy positive externalities of competition among

providers (network, application, service, and content)

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Net Neutrality BasicsNet Neutrality Basics

Fundamental Principles (con’t) Other Proposed Principles

Balance customer’s need for unfettered access to content/applications with Internet Service Provider’s (ISP’s) network management needs

Ensure transparency of ISP’s network management practices

BUT Does FCC have statutory authority to enforce Net

Neutrality principles?

FCC AuthorityFCC Authority

Federal Communications Act Title I (Ancillary Jurisdiction) Title II (Common Carrier)

Telecommunications Carriers Rate, Entry, Complaint Procedures

Title III (Wireless) Broadcast Commercial Mobile Service

Title VI Cable Companies

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FCC AuthorityFCC Authority

Ancillary Jurisdiction General FCC Policy Making Authority under Title I Used by FCC to Deregulate Enhanced Services

Computer Inquiry II, III Basic (Regulated – Title II) v. Enhanced

(Unregulated -- Title I) 96 Act:

Telecommunications Service/Information Service (Same as Basic/Enhanced)

FCC now has Forbearance Authority May forbear from regulating under certain conditions

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Origins of the Comcast Decision

Background Comcast customers complained -- difficult to use “P2P”

applications (e.g. BitTorrent) FCC investigation -- Comcast monitored customer’s

content, not destination Result: Comcast blocked Internet traffic and limited

customers’ Internet use

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Origins of the Comcast DecisionOrigins of the Comcast Decision

The FCC required Comcast to: Disclose its network management practice details; Submit a compliance plan by end of year (2008); and Present new, non-discriminatory network management

practices to customers and the Commission

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Origins of the Comcast DecisionOrigins of the Comcast Decision

Enforcing an “Open” Internet -- Concerns Bypassing open Internet protections

Specialized services offered in bundles? Specialized services -- circumventing the rules

Network capacity not expanded as intended Anti-competitive conduct among broadband

providers The FCC labeled Comcast’s failure to disclose their

practices as “anticompetitive”

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Comcast argued that the FCC: Asserted its authority based on provisions of the

Communications Act which do not apply to Comcast Did not abide by notice and comment procedures in

adopting rules applied against Comcast

D.C. Circuit Court ReversalD.C. Circuit Court Reversal

D.C. Circuit Court ReversalD.C. Circuit Court Reversal

D.C. Circuit Court Holding: FCC Has No Jurisdiction Over Comcast Network

Management Practices Ancillary Jurisdiction Must Be “Ancillary” to Other

FCC Statutory Authority e.g. to Title II (Telecom), or Title VI (Cable) Not a Standalone Grant of Authority

Reversed and Vacated FCC Comcast Decision Did not reach other issues

e.g., whether FCC may enforce a policy and not just its own rules

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FCC “Third Way” ProposalFCC “Third Way” Proposal

FCC Response to D.C. Circuit Reversal “Third Way” Approach to Internet Access Regulation

Proposed by FCC Chairman - Public Notice Regulate Broadband Internet Access by:

Transmission Component (“Pipes”) Regulate as Title II “telecommunications service” (currently

unregulated under Title I) Forbearance

Piecemeal application of Title II (USF, consumer protection) Network Processing (“Cloud”)

Leave unregulated

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FCC “Third Way” Proposed RegulationFCC “Third Way” Proposed Regulation

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Cloud

Still “info” service(Title I)

Portal

Regulate as “Telecommunications

Service” (Title II)- Forbearance

- USF

Pipe

FCC “Third Way” ProposalFCC “Third Way” Proposal

Practical Application and Questions Does the FCC have statutory authority to make this

change or do they need Congressional approval? Internet and Title II

Legal and practical implications?

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Net Neutrality By Other Means Net Neutrality By Other Means

Policy Enforcement: FCC Proposal - Case by case basis

Citations Forfeiture penalties

FCC policy making authority (“Third Way”)? FCC released “Framework for Broadband Internet

Service” NOI on June 17, 2010.

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Net Neutrality By Other MeansNet Neutrality By Other Means

National Broadband Plan (NBP) Part of the 2009 American Reinvestment and

Recovery Act (“Broadband Stimulus Bill”) $7.2 billion allocated for national broadband

deployment Will the Internet be subject to USF assessment?

NBP contemplates USF, access and intercarrier compensation schemes should be reformed together

Implications for 21st century communications -- wireless applications (Google voice)

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Net Neutrality By Other MeansNet Neutrality By Other Means

Meanwhile “Third Way” NOI -- Awaiting Public Comments

FCC spectrum management – a “back door” approach to net neutrality?

A Republican controlled Congress will likely chill Net Neutrality legislative initiatives Sept. 2010 -- Open Internet Act of 2010 failed to make

it out of the House Commerce Committee

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Final ThoughtsFinal Thoughts

FCC agenda will emerge in the future – but meanwhile:

Clear emphasis on broadband deployment (especially wireless)

Belief in merits of net neutrality Agency’s focus for now is on data gathering and

broadband stimulus funding USF enforcement will almost certainly be a priority

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Final ThoughtsFinal Thoughts

All of this is very complicated – and a bit fuzzy…All of this is very complicated – and a bit fuzzy…

BUT… DO REMEMBER:BUT… DO REMEMBER:

WHEN IN DOUBT – ASK YOUR LAWYER!WHEN IN DOUBT – ASK YOUR LAWYER!

Sapronov & Associates, P.C.

400 Northridge Rd., Suite 515

Atlanta, Georgia 30350

Telephone: 770-399-9100

Facsimile: 770-395-0505

Email: info@wstelecomlaw.com

Website: www.wstelecomlaw.com