An examination of the recent decision in the United States on net neutrality, and potential consequences, especially for the Caribbean.
On Tuesday, 14 January, the United States (US) Court of Appeals of the District of Colombia struck down the rules established by the Federal Communications Commission (FCC) to safeguard Internet neutrality. The decision has reignited debate on the issue, and the FCC has stated that it is carefully considering whether to file an appeal. As discussed in one of our earliest articles, Net neutrality – both sides of the divide, there are camps that felt vindicated by this recent outcome. However, what might be some of the consequences generally, and specifically for the Caribbean, should this judgement not be successfully overturned?
The FCC’s Open Internet rules in a nutshell
The “Open Internet” principle established by the FCC, which is another term for Internet, network or “net” neutrality, aimed to preserve the equality of Internet use by maintaining a level playing field across all consumers. The FCC’s position has been captured in three basic rules:
1. Transparency. Fixed and mobile broadband providers must disclose the network management practices, performance characteristics, and terms and conditions of their broadband services;
2. No blocking. Fixed broadband providers may not block lawful content, applications, services, or non-harmful devices; mobile broadband providers may not block lawful websites, or block applications that compete with their voice or video telephony services; and
3. No unreasonable discrimination. Fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic.
(Source: FCC)
In adopting such as posture, the FCC hoped to preserve the Internet as a platform for “innovation, investment, job creation, economic growth, competition, and free expression”, which would also support the US’ National Broadband Plan (Source: FCC).
Summary of the latest US decision on net neutrality
In its ruling for the case, Verizon Communications Inc. versus the FCC, the Court of Appeals of the District of Colombia circuit sided with the appellant. The crux of the decision centred on the classification systems used in the United States for different types for licensees or service providers and consequently the extent to which the FCC had the authority to regulate certain behaviour.
As observed in the excerpt above from the FCC’s Report and Order on Open Internet, the rules are geared primarily towards broadband providers. However, according to the Court of Appeals, the FCC is empowered to regulate ISPs and broadband providers (as “common carriers”), but it had not properly established or justified its authority in its Report and Order:
That said, even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates. Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the Commission from nonetheless regulating them as such. Because the Commission has failed to establish that the anti-discrimination and anti-blocking rules do not impose per se common carrier obligations, we vacate those portions of the Open Internet Order.
(Source: United States Court of Appeals)
As a result, the court struck down the FCC’s no blocking and non-discrimination rules that would be directed at ISPs and broadband providers, whilst maintaining the rule on transparency.
Possible consequences of an equal Internet world
The principle behind net neutrality is that ISPs, broadband providers and governments should treat all data on the Internet equally. Further, they should not discriminate or charge differentially based on the user, content, site, platform, application, type of attached equipment, and modes of communication (Source: Wikipedia). In the US Court of Appeals rejecting the application of the FCC’s Open Internet rules to ISPs and broadband providers, essentially, it sets the stage for providers to introduce systems that discriminate and/or block Internet traffic based on self-imposed conditions.
Should those discriminatory systems come into effect, first, one of the key concerns would the introduction of different tiers of service. High speed and bandwidth services might be available only to those who are prepared to pay for them, whilst the average consumer may be relegated to much slower speeds and considerably poorer quality of service.
In that new paradigm, one of the likely focal points for tiered systems would be video content providers, such as YouTube, Netflix, TV stations, and perhaps even Skype. Those providers might be “penalised” for the Internet resources they consume. However, end users might also be required to pay a premium to their local providers to access that content with sufficient bandwidth in order to have a reasonable viewing experience.
Second, and without a doubt, the Internet as managed (i.e. with net neutrality enforced), has created a level playing field, where in the age of Web 2.0, it is possible for an individual to have as much impact or mindshare online as a moneyed organisation. This environment has not only fostered innovation and competitiveness, it has also accelerated the growth and value of the Internet across all sectors, organisations and users.
In the Caribbean, the reasonable connectivity to Internet that our Small Island Developing States in particular have enjoyed, have allowed our micro, small and medium enterprises to “punch above their weight”, and to present their offerings to a global market. It has also allowed us to access services and resources that are not readily available in the region. Hence, although currently we might complain about Internet speeds and pricing in the Caribbean, and to varying degrees, lobby local providers to upgrade their networks, a shift to a “less equal Internet” might result in our telcos adopting a more laidback stance on the issue.
Finally, the Caribbean’s policy on net neutrality appears to be unclear. The latest publicly available document on Internet Governance makes no mention of that principle. However and perhaps more importantly, there may not be any established systems through which net neutrality can be maintained in the region. Having said this, individual countries, through their governments or regulators might be able to engage their local telcos on the matter. However, local service providers could experience the knock-on effect of tiered pricing systems, should they be introduced in the US, and thus might need to adjust their business models accordingly.
In summary, as our closest neighbour and major link to the Internet, decisions in the US are likely to have an effect on the Caribbean. Although, at the time of writing, the FCC had not decided whether to appeal the decision, debate on net neutrality has been protracted and is likely to continue into the foreseeable future, regardless of the final outcome. In light of the latest development, it would be prudent for the Caribbean to (re)examine the issue carefully, and roll out a plan that would ensure that we are prepared for any eventuality.
Image credit: Gabriel Pollard (flickr)
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Interesting article and I agree that the Caribbean should have its say so that we can prepare for changes that might come it is true that the decisions in the US will have an impact on us.
As I said before elsewhere this is a repeat of the Benchmark Order 1997 where the US courts allowed US carriers to dictate pricing on international voice termination to stop the disparate variance in outpayments leaving the US each year (approx 12bn).
Now net neutrality is granted to allow superior service to come from US ISPs re web hosting and online services, over that of foreign ISPs. The tiering now allowed by removing net neutrality is a competitive advantage one will now be able to acquire from US ISPs, thereby attracting more of these businesses to US markets..
FCC will likely forbear on this to see how the markets adjust and whether US supremacy does not distort the markets too much, before they react by reverting to net neutrality – through the door the court has left open for and accessible to them.(i.e reclassifying ISPs as common carriers). Verizon, hey! we caught you smiling, again
John,
Insightful thoughts as per usual. However, I am concerned that if the FCC forbears on this issue, they might have even more of a fight on their hands should they want to introduce more controls in the future.
This will bring back the significance of routing factors to traffic transmission i don’t see how the tiered system would work without specific routing now being allocated to different tiers of internet traffic. So you’l probably see emerging, levels of carrier grade transmission sympathetic to the type of account your Caribbean ISP holds for internet-ing your applications or content via the US super carriers. Removing net neutrality sort of de-commoditizes the super carrier pipes and transforms them to value-added products. This is what they’ve been hoping for all along as a response to the network shifting into the hands of applications and content programmers and away from infrastructure owner market power. Lets brace ourselves to see what it pans out to be in terms of costs and pricing.
We have to be very careful, as a Caribbean. My opinion is that whatever happens to internet governance and or architecture, routing will become a very important aspect of network interaction and delivery in the not too distant future. Generally we pay little or no attention to this aspect of the network, but it has the potential to be a political hot potato.
Too true, RD, espcially when countries and their citizens want to continue to capitalise on the broad range of opportunities that the Internet offers, and have been lobbying for faster Internet speeds and more affordable prices.
Agreed.
Should net neutrality be removed, change is inevitable. Further, I am concerned that the Caribbean, other developing countries and Small Island Developing Stastes (SIDS) might not have adequate bargaining power to counterbalance or lessen those changes…