JEFFREY BROWN: Now: a big court decision about the business and regulation of the Internet.
Are the companies that provide Internet service allowed to block certain sites or online services from their networks? Can they charge one site more than another for heavier use of the bandwidth that carries all the digital information?
Those are some of the questions at the heart of an ongoing debate over so-called Internet or net neutrality, a set of principles adopted by the Federal Communications Commission in 2005 that limits the ability of Internet providers to treat sites differently.
Yesterday, the issue gained urgency when a federal appeals court in Washington came down with a decision in favor of Comcast, a large Internet service provider, as well as cable company, and against the FCC.
The case began with actions by Comcast in 2007 to interfere with an online service called BitTorrent, a file-swapping site that allows consumers to swap movies and other material over the Internet, files that use a great deal of bandwidth. The FCC then told Comcast it could not block subscribers from using BitTorrent under the commission's net neutrality rules.
Comcast sued. And, yesterday, the court of appeals agreed that the FCC lacks the authority to force Internet service providers to keep their networks open equally to all.
And that raised a larger question over just how much the FCC can act as a watchdog of the Web. Just last month, the FCC announced a major new plan to expand broadband access, use and speed in the U.S.
At that time, I asked FCC Chairman Julius Genachowski about his power to act.
JEFFREY BROWN: But you feel you have the -- the power to enforce this kind of competitive environment, because there are some questions about the FCC's authority, legal authority, in this area as well, right?
JULIUS GENACHOWSKI, chairman, Federal Communications Commission: Yes, we -- we believe we do.
JULIUS GENACHOWSKI: We believe we have the authority to move forward on the policies in the plans.
JEFFREY BROWN: In a written statement responding to yesterday's court decision, the FCC said it remains "firmly committed to promoting an open Internet and to policies that will bring the enormous benefits of broadband to all Americans."
The commission will now have to decide if it wants to appeal the decision or go to Congress to seek explicit authority to regulate broadband Internet services.
Two views now of the decision and the fallout. Gigi Sohn is president and co-founder of Public Knowledge, a digital rights advocacy group that favors net neutrality regulations. Scott Cleland is chairman of NetCompetition.org, an online trade group financed by broadband Internet providers.
Welcome to both of you.
SCOTT CLELAND, chairman, NetCompetition.org: Thank you.
JEFFREY BROWN: We just tried to explain what is meant by net neutrality, but help us a little bit more here.
Gigi Sohn, you think this was a bad decision. Why? What are the stakes? What does it mean?
GIGI SOHN, co-founder, Public Knowledge: Well, net neutrality is the principle that prohibits a cable operator or telephone operator who provides broadband Internet access from picking winners and losers over the Internet.
It prohibits that broadband operator from degrading my traffic, from blocking certain traffic, like BitTorrent, and from picking favorites, so, favoring -- so, Comcast could favor certain content over others. And this particularly is important since they're trying to merge with NBC Universal.
So, we're concerned that the court has taken away the FCC's power to protect broadband consumers when they're subject to activities like Comcast engaged in.
JEFFREY BROWN: Do you see the definition that way? And why would the companies want the power to manage how they -- manage the traffic?
SCOTT CLELAND: First of all, broadband companies are in the business of allowing their consumers to get to whatever content or applications they want. That's what they're in business for. So, they're committed to allowing consumers to do that. What the real rub is, is whether they continue to do it on a voluntary basis.
And there's only been incidents in six years...
JEFFREY BROWN: Well, but -- excuse me -- but, before you get to that, the voluntary vs. the regulation, I mean, what -- what the charge here is that they may be in the business of allowing it, but the fear is that they might not allow it, or they might not allow everybody to do it equally.
SCOTT CLELAND: Managing broadband networks are very complicated. You know, Verizon mentioned that they get five billion incidents a day of security issues. So, you have spam. You have malware. You have all sorts of viruses.
And you also have different capacity in different places. And, so, in order to deliver quality of service to everybody that has paid for it, you also need to be able to manage. And because voice and video and data travel over the Internet in very different ways -- voice has to be immediate, and video has to be just right; otherwise, there is jitter -- you have to have some management.
And the only question here is, is, how much management? And, of course, the broadband companies say, of course we wouldn't do anything that is anti-competitive or that is going to prevent consumers from finding the content or applications of their choice.
JEFFREY BROWN: And that is the -- a lot of these sites take a lot of bandwidth. And it can clog the system. And, so, the companies say we need the ability to manage that.
GIGI SOHN: We don't have a problem with broadband Internet service providers reasonably managing their networks. It is when they pick favorites.
OK, the Comcast case is a perfect example. Peer-to-peer BitTorrent is a high-bandwidth application, without a doubt, but there are others bandwidth applications that Comcast chose not to block. It picked this one particular application because it is somewhat unpopular with some folks in Congress and some folks elsewhere.
So, we're saying you can manage your networks, but you can not discriminate against one application, one content, one service. You have to treat them all equally.
JEFFREY BROWN: Picking favorites.
JEFFREY BROWN: Go ahead, yes.
SCOTT CLELAND: And I think, to disagree with Gigi, she is implying motive here, in the sense that -- you know, Comcast was trying to manage its network because it had some consumers that were using an enormous amount of bandwidth.
Now, this case is a lot about the FCC saying, you should have read our mind. You should have known what type of management technique we would have liked.
There was no real guidance or understanding. Comcast, in good faith, was trying to provide quality of service. The FCC says we don't like that technique. The FCC -- and then Comcast complied.
JEFFREY BROWN: Well, that gets us to the FCC's authority...
GIGI SOHN: Right.
JEFFREY BROWN: ... which is what the court -- now, that's -- that's a separate argument: Should the FCC be able to tell these companies how to manage?
You say they should have some authority?
GIGI SOHN: Well, what I say is that there should be a broadband cop on the beat. OK? Somebody has got to be there for consumers if their Internet access provider is blocking or degrading their traffic or favoring other traffic.
Look, there is not a lot of competition in this space. Most of the country has a choice of either a cable operator or a telephone operator for their broadband Internet access service. Twenty percent of the country only has a choice of one, and 10 percent of the country has no broadband access.
So, who is going to protect consumers? Do we want to just say, well, I trust Comcast, I trust AT&T, I trust Verizon, they will take care of it for us, or do we need a backstop? I think we need a backstop, and the court takes that away.
JEFFREY BROWN: Well, I mean, that gets to the heart of it here. I mean, you talk about competition and ensuring competition, but how much competition is there, realistically, online?
SCOTT CLELAND: Well, there is a tremendous amount, more here than anywhere in the world.
Remember, we started out with a telephone and cable monopoly 15 years ago. And every one of your viewers has gotten TV ads, radio ads, all sorts of things telling them what type of broadband they can get. There is competition out there.
And the proof is in the pudding. Have there been problems like Gigi is alleging? We have had two in the last six years, out of literally quadrillions of communications. So, it would be like saying, because there are two grains of sand on the beach that are a problem, we need to shut down the beach.
Let's put this in perspective. There are 2,000 providers, two incidents in six years the FCC has had a problem with. So, therefore, we have to change everything and regulate everything? That is way overreaching.
JEFFREY BROWN: Well, so now we move to the next step, which I showed in the setup piece, which is how this affects other issues. One would be the broadband plan that the FCC put forward. You heard what Julius Genachowski said to me. He thinks we have -- they have the legal authority.
Is he right, or does this put that whole thing in question?
GIGI SOHN: Well, this is what the court case does. It throws into question their ability to implement most of the national broadband plan.
What the court said is, FCC, you can roll the dice, and you can try to make the case that you have an authority for every single issue under the broadband plan, and we will decide whether, you know, you can carry through or not.
And I say, that is ridiculous. Consumers can't be at the mercy of a court deciding, yes, you have authority for, let's say, universal service, no, you don't for a subsidy that would help poor people get broadband. The FCC has to put itself on firmer legal ground. And that's what we're advocating for.
JEFFREY BROWN: Do you think that this, first of all, throws all of the FCC into -- no?
SCOTT CLELAND: No. No, it doesn't.
JEFFREY BROWN: You don't think future regulation is in question now?
SCOTT CLELAND: I mean, this is an arcane issue that is over -- the companies and consumer groups care about very much.
But consumers are protected. The companies are fully committed to looking to the FCC as a cop and complying with the net neutrality policy principles. They have for the last four years. That hasn't changed.
Really, what this is a debate in is, is whether or not the current voluntary, functioning system that has worked exceptionally well will continue, because there hasn't been a problem, or whether we will completely change everything, saying there might be a problem in the future, so we need to put a cage around all this.
That is totally unnecessary and totally unwarranted.
JEFFREY BROWN: Well, so what are the -- in our last moment here, minute here, what are the options for the FCC? Now, I mentioned they could go to Congress. They could appeal. There's other things they could do on their own.
GIGI SOHN: Yes.
And that's where we think they should go, because it is going to take years, if ever, for Congress to pass legislation. We know how hard that is. They're not going to win on appeal. That is highly unlikely. So, the best option is for the FCC to reverse its 2002 decision that deregulated broadband Internet access.
If they reverse that decision, they say, look, we were wrong in 2002 -- the predictive assumptions we made were wrong. The market has changed. We're going to now regulate broadband access again. And that will give them the firm legal footing. It will be challenged by the cable and phone companies. There is not a doubt.
But all the FCC needs to do, under the law, is make a reasoned decision. They can change their mind. But it has been eight years since that decision, and, in Internet time, that is forever.
JEFFREY BROWN: And we have time for a response. If they're doing it voluntarily anyway, why not something like that?
SCOTT CLELAND: It would be a horrible thing, because, basically, it would be pulling the rug out of everything that has been done.
You have literally years and multibillion dollars worth of investment and businesses and systems that have been set up, assuming the system would be one way. And, if they reversed it mid-game, it's like a game where you change the rules mid-game, you move the goalposts mid-game. It's not fair and it is very destructive.
JEFFREY BROWN: All right, this debate will continue.
Scott Cleland and Gigi Sohn, thank you very much.
SCOTT CLELAND: Thank you.
GIGI SOHN: Thank you.