Internet service providers advocate charging bandwidth-intensive internet companies and content providers.
Unquestionably, net neutrality stirs up emotions. The origin of the concept dates to 1860, when the regulations governing communications between the Atlantic and Pacific states of the United States of America required that messages be transmitted with absolute impartiality observing the “first come, first served” method. The reality–in strict internet terms–is that it was not until the year 2000 when L. Lessig and T. Wu published their studies that the term went mainstream and the controversy stirred up.
What is the controversy? Telecommunication networks face a rise in the audiovisual content capable of collapsing them. They have evolved from transmitting solely voice and data to predominantly transmitting audiovisual data. All this requires transmitting millions of bits of information per second. As a result, more broadband connection megabytes are necessary. The only solution is to constantly expand the capacity of the networks which, however, requires financing. Therefore, internet service providers have proposed to prioritize certain contents over others and charge higher rates to those using up more data.
In contrast, other internet companies and the so-called Over the Top (OTT), or streaming content providers–whose essential feature is that their services are provided through the internet without requiring infrastructure or spectrum and who are not subject to the regulatory framework of network operators–are opposed to traffic discrimination and differential pricing; they claim payments by users for access already compensates the entirety of the operators’ costs.
Regulating the Internet is a minefield. In 2005, the Federal Communications Commission (FCC) of the United States adopted its Internet Policy Statement. Based on this policy, the FCC sanctioned Comcast for interfering with the communications of its subscribers when they set up their own peer-to-peer network (P2P). Nevertheless, the Court ruled that the FCC did not have the required authority to regulate network management practices.
At the end of 2010, the FCC adopted a set of rules known as the Preserving the Open Internet Broadband Industry Practices. Nevertheless, in 2014, following an appeal filed by Verizon, the United States Court of Appeals for the District of Columbia once again ruled that the FCC had no mandate to regulate the activities of broadband providers, considering that these are information services and not basic services.
Consequently, in 2015, the FCC proceeded to redefine “the broadband access service” as a “telecommunications service” and “mobile broadband” as a “commercial mobile service”, which empowered the FCC to regulate both access and service. In addition, the FCC was also allowed to ban internet providers from blocking contents, applications and services, as well as order them not to harm or throttle traffic, or to prioritize or favor their subscribers’ traffic and services.
What did the FCC do? Given that the legal problem has always revolved around whether network access is a regulated telecommunications service or a deregulated information service, the new structure of the FCC contradicted its own 2015 criterion to consider now broadband access as the latter. Therefore, the FCC is now prevented from requiring internet services providers to apply net neutrality policies.
Can lunch ever be free? Of unknown origin but popularized by Milton Friedman, the phrase “there is no such thing as a free lunch” means that, with resource scarcity, any benefit received always has an associated cost, even if it is others who pay for it.
Naturally, operators, knowing that there is no such thing as free internet, advocate charging those internet companies and OTTs for the intensive traffic they generate and from which they obtain significant revenues.
The increase in traffic creates the need to expand the networks. Should user fees fail to cover the expansion costs, it thus seems fair that companies benefitting directly compensate network operators. Otherwise, we would all end up paying the cost overrun.
Networks cannot be treated as the pastures in the “Tragedy of the Commons”, which we all know ended with the animals perishing due to the overexploitation of the land.
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Luis Ortiz, BLP Partner.
Luis has over 15 years of experience in the legal profession. He specializes in Public Law, Public Procurement & Regulation. He also stands out for his experience Dispute Resolution, such as in litigation and arbitration. He has been largely recognized for several years in a row as an outstanding lawyer in his practice areas by prestigious publications, such as Latin Lawyer and Chambers & Partners. This last magazine has ranked Luis at the top positions in the Public Law practice for his extensive accomplishments, along with being mentioned in the Project area as one of the best lawyers for his leadership skills.