First Amendment Issues Triggered by a Non-First Amendment Issues Triggered by a Non-Neutral and Tiered WebNeutral and Tiered Web

Rob Frieden, Pioneers Chair and Professor of Telecommunications and LawPenn State University

email: rmf5@psu.edu; web site: http://www.personal.psu.edu/faculty/r/m/rmf5blog site: http://telefrieden.blogspot.com/

A Presentation at theA Presentation at theUniversity of North Carolina University of North Carolina

College of LawCollege of Law February 20, 2009February 20, 2009

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Explaining the Concepts—Explaining the Concepts—Network NeutralityNetwork Neutrality

As the Internet evolves, Internet Service Providers (“ISPs”) want to As the Internet evolves, Internet Service Providers (“ISPs”) want to diversify and engage in price and quality of service discrimination.diversify and engage in price and quality of service discrimination.

Advocates for network neutrality want a non-discrimination mandate, but Advocates for network neutrality want a non-discrimination mandate, but the Communications Act limits explicit common carrier regulation for the Communications Act limits explicit common carrier regulation for telecommunications services and not the Internet.telecommunications services and not the Internet.

Advocates for net neutrality claim ISPs have the incentive and ability to Advocates for net neutrality claim ISPs have the incentive and ability to block, delay, or otherwise thwart the delivery of specific content. block, delay, or otherwise thwart the delivery of specific content.

How this debate plays out will have a major impact on the scope of lawful How this debate plays out will have a major impact on the scope of lawful Internet regulation as well as the accessibility and affordability of Internet-Internet regulation as well as the accessibility and affordability of Internet-delivered content.delivered content.

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Stakes and MistakesStakes and Mistakes

The debate shows great polarization about how to respond to technological The debate shows great polarization about how to respond to technological and market convergence, and to what extent competition and self-and market convergence, and to what extent competition and self-regulation can work.regulation can work.

Congress and the FCC cannot compartmentalize technology, yet mutually Congress and the FCC cannot compartmentalize technology, yet mutually exclusive definitions trigger different regulatory treatment.exclusive definitions trigger different regulatory treatment.

The FCC seems unable to apply more than one model to a single venture The FCC seems unable to apply more than one model to a single venture even when convergence supports multi-faceted devices and services, e.g., even when convergence supports multi-faceted devices and services, e.g., the “third screen” wireless handset.the “third screen” wireless handset.

Everyone seems to support the concept of an unregulated Internet Everyone seems to support the concept of an unregulated Internet “marketplace of ideas,” but the FCC has intervened on several occasions.“marketplace of ideas,” but the FCC has intervened on several occasions.

The FCC stretches its Title I jurisdiction, and The FCC stretches its Title I jurisdiction, and Chevron Chevron policy deference by courts.

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First Amendment ImplicationsFirst Amendment Implications

Internet Service Providers (“ISPs”) combine conduit and content.Internet Service Providers (“ISPs”) combine conduit and content.

ISPs have speaker rights, but the First Amendment does not cleave solely between ISPs and their ISPs have speaker rights, but the First Amendment does not cleave solely between ISPs and their subscribers. ISPs may gladly abandon editorial control to qualify for “safe harbor” exemption from subscribers. ISPs may gladly abandon editorial control to qualify for “safe harbor” exemption from tort and copyright infringement liability, but they might also use such control to create “walled tort and copyright infringement liability, but they might also use such control to create “walled gardens” of content.gardens” of content.

Current media models, such as newspaper, cable television and telephony, do not fully work for the Current media models, such as newspaper, cable television and telephony, do not fully work for the Internet. Internet.

As providers of largely unregulated information services, ISPs qualify for significant First As providers of largely unregulated information services, ISPs qualify for significant First Amendment protection as offset by a compelling governmental interest in promoting access.Amendment protection as offset by a compelling governmental interest in promoting access.

Unlike the Unlike the TurnerTurner cable television “must carry” cases, the governmental interest extends beyond the cable television “must carry” cases, the governmental interest extends beyond the economic stakes in carriage of one type of content—broadcast television.economic stakes in carriage of one type of content—broadcast television.

The FCC may have jurisdiction to impose content neutral regulations, subject to intermediate The FCC may have jurisdiction to impose content neutral regulations, subject to intermediate scrutiny, based on the extrapolation of ancillary jurisdiction, cable/video regulation, and a general scrutiny, based on the extrapolation of ancillary jurisdiction, cable/video regulation, and a general mandate in the Communications Act to promote ubiquitous access to “advanced telecommunications mandate in the Communications Act to promote ubiquitous access to “advanced telecommunications capability.” capability.”

However, absent explicit statutory authority, the FCC may overstep as it may have done However, absent explicit statutory authority, the FCC may overstep as it may have done procedurally and substantively, in identifying sanctions for Comcast’s non-compliance with aspects procedurally and substantively, in identifying sanctions for Comcast’s non-compliance with aspects of a 2005 Policy Statement on Internet “freedoms.”of a 2005 Policy Statement on Internet “freedoms.”

How does this threat to Internet freedom affect you? Small businesses—The little guy will be left in the "slow lane" with inferior Internet service, unable to compete. Innovators with the next big idea—Startups and entrepreneurs will be muscled out of the marketplace by big corporations that pay Internet providers for the top spots on the Web. Bloggers—Costs will skyrocket to post and share video and audio clips—silencing citizen journalists and putting more power in the hands of a few corporate-owned media outlets. Google users—Another search engine could pay dominant Internet providers like AT&T to guarantee another search engine opens faster than Google on your computer. Ipod listeners—A company like Comcast could slow access to iTunes, steering you to a higher-priced music service it owns. Online shoppers—Companies could pay Internet providers to guarantee their online sales process faster than competitors with lower prices—distorting your choices as a consumer. Telecommuters—When Internet companies like AT&T favor their own services, you won't be able to choose more affordable providers for online video, teleconferencing, Internet phone calls, and software that connects your home computer to your office. Parents and retirees—Your choices as a consumer could be controlled by your Internet provider, steering you to their preferred services for online banking, health care information, sending photos, planning vacations, etc. Political groups—Political organizing could be slowed by a handful of dominant Internet providers who ask advocacy groups to pay "protection money" for their Web sites and online features to work correctly. Nonprofits—A charity's website could open at snail-like speeds, and online contributions could grind to a halt if nonprofits don't pay Internet providers for access to "the fast lane."

What They've Got Planned

The threat to an open internet isn't just speculation -- we've seen what happens when the Internet's gatekeepers get too much control. These companies, even, have said as much about their plans to discriminate online.

Ed Whitacre of AT&T told BusinessWeek in late 2005:

Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?

It's Already Happening

Such corporate control of the Web would reduce your choices and stifle the spread of innovative and independent ideas that we've come to expect online. It would throw the digital revolution into reverse. Internet gatekeepers are already discriminating against Web sites and services they don't like:

In 2004, North Carolina ISP Madison River blocked their DSL customers from using any rival Web-based phone service. In 2005, Canada's telephone giant Telus blocked customers from visiting a Web site sympathetic to the Telecommunications Workers Union during a

contentious labor dispute. Shaw, a major Canadian cable, internet, and telephone service company, intentionally downgrades the "quality and reliability" of competing Internet-phone

services that their customers might choose -- driving customers to their own phone services not through better services, but by rigging the marketplace. In April, Time Warner's AOL blocked all emails that mentioned www.dearaol.com -- an advocacy campaign opposing the company's pay-to-send e-mail scheme.

This is just the beginning. Cable and telco giants want to eliminate the Internet's open road in favor of a tollway that protects their status quo while stifling new ideas and innovation. If they get their way, they'll shut down the free flow of information and dictate how you use the Internet.

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The FCC’s Four The FCC’s Four Network Freedoms Network Freedoms

In a 2005 Policy Statement The FCC articulated four Internet “principles”:In a 2005 Policy Statement The FCC articulated four Internet “principles”:

(1) consumers are entitled to access the lawful Internet content of their (1) consumers are entitled to access the lawful Internet content of their choice; choice;

(2) consumers are entitled to run applications and services of their choice, (2) consumers are entitled to run applications and services of their choice, subject to the needs of law enforcement; subject to the needs of law enforcement;

(3) consumers are entitled to connect their choice of legal devices that do (3) consumers are entitled to connect their choice of legal devices that do not harm the network; and not harm the network; and

(4) consumers are entitled to competition among network providers, (4) consumers are entitled to competition among network providers, application and service providers, and content providers. application and service providers, and content providers.

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Can the FCC Regulate Internet Service? Can the FCC Regulate Internet Service?

The FCC must apply service definitions that create a dichotomy regulated The FCC must apply service definitions that create a dichotomy regulated telephone services and largely unregulated information services.telephone services and largely unregulated information services.

Despite a regulatory safe harbor for information services, the FCC has invoked Despite a regulatory safe harbor for information services, the FCC has invoked “ancillary jurisdiction” to impose burdens on ISPs.“ancillary jurisdiction” to impose burdens on ISPs.

For example, providers of Internet-delivered telephone calls must contribute to For example, providers of Internet-delivered telephone calls must contribute to universal service funding and comply with several telephone company regulations.universal service funding and comply with several telephone company regulations.

The FCC recently rejected Comcast’s claim of a right to thwart, delay and degrade The FCC recently rejected Comcast’s claim of a right to thwart, delay and degrade service as legitimate “network management” even when congestion did not exist. service as legitimate “network management” even when congestion did not exist. The Commission invoked its The Commission invoked its 2005 Internet Policy Statement2005 Internet Policy Statement, ancillary jurisdiction , ancillary jurisdiction under Title I of the Communications Act as well as several specific sections under Title I of the Communications Act as well as several specific sections specified as applying to telecommunications, or cable service providers.specified as applying to telecommunications, or cable service providers.

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Can the FCC Mandate Network Neutrality?Can the FCC Mandate Network Neutrality?

The FCC will have to explain how any network neutrality requirement fits within The FCC will have to explain how any network neutrality requirement fits within the lawful scope of information service regulation.the lawful scope of information service regulation.

The Commission will try to claim it has engaged in rational decision making based The Commission will try to claim it has engaged in rational decision making based on the clear meaning of several statutory sections, or alternatively reasonable on the clear meaning of several statutory sections, or alternatively reasonable statutory interpretations worthy of deference on statutory interpretations worthy of deference on Chevron Chevron grounds.grounds.

Claims of explicit authority: Claims of explicit authority: Congressional delegation to establish national Internet Congressional delegation to establish national Internet policy as endorsed by the Supreme Court in the policy as endorsed by the Supreme Court in the Brand XBrand X decision. decision.

Claims of ancillary authority: Claims of ancillary authority: the Communications Act authorizes the FCC to the Communications Act authorizes the FCC to promote rapid and efficient communications, especially advanced promote rapid and efficient communications, especially advanced telecommunications capabilities, which arguably includes Internet access.telecommunications capabilities, which arguably includes Internet access.

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Impact of Net Neutrality on Content ProvidersImpact of Net Neutrality on Content Providers

Positive ImpactPositive ImpactA nondiscrimination requirement attempts to maintain a level competitive playing field in the marketplace A nondiscrimination requirement attempts to maintain a level competitive playing field in the marketplace for content against the incentive and ability of ISPs to favor affiliates.for content against the incentive and ability of ISPs to favor affiliates.

If Enron employees could create artificial bottlenecks and congestion in the switching and routing of If Enron employees could create artificial bottlenecks and congestion in the switching and routing of electrons, then ISPs can achieve similar outcomes for Internet packets. Net neutrality could prevent “dirty electrons, then ISPs can achieve similar outcomes for Internet packets. Net neutrality could prevent “dirty tricks.”tricks.”

““Walled Gardens” of easy access content not likely to support struggling new artists.Walled Gardens” of easy access content not likely to support struggling new artists.

Negative ImpactNegative Impact

Both users and content providers might want (and be willing to pay for) “better than best efforts” routing, e.g., March Madness basketball games delivered to computer desktop monitors; faster delivery of “mission critical” bits.

Likely to trigger regulatory uncertainty and litigation.

Exclusive access arrangements serve lawful promotion and marketing goals, e.g., DirecTV’s NFL Ticket.

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Net Bias Versus Reasonable Price and Service Net Bias Versus Reasonable Price and Service DiscriminationDiscrimination

Impermissible Net BiasImpermissible Net Bias

Deliberate Packet LossDeliberate Packet Loss

Creating Artificial CongestionCreating Artificial Congestion

Targeting Large Volume ContentTargeting Large Volume ContentGenerators for Punishment or ExtortionGenerators for Punishment or Extortion

Most Types of Port Blocking (but not to control Most Types of Port Blocking (but not to control spam and denial of service attacks)spam and denial of service attacks)

Unilaterally Imposing Upstream and Downstream Unilaterally Imposing Upstream and Downstream Rules That Violate Existing Service Level Rules That Violate Existing Service Level AgreementsAgreements

Affiliate Favoritism That Violates SLAs, Fair Affiliate Favoritism That Violates SLAs, Fair Trade and Antitrust Laws Trade and Antitrust Laws

Fees for Overriding Firewalls and FiltersFees for Overriding Firewalls and Filters

Permissible Network BiasPermissible Network Bias

Variable Bandwidth and ThroughputVariable Bandwidth and Throughput

Bandwidth PartitioningBandwidth Partitioning

Metered ServiceMetered Service

Better Than Best Efforts RoutingBetter Than Best Efforts Routing

Akamai-type Enhanced Traffic Routing and Akamai-type Enhanced Traffic Routing and ManagementManagement

Special or Exclusive Content DealsSpecial or Exclusive Content Deals

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Conclusions and Recommendations Conclusions and Recommendations

The next generation Internet will not offer a plain vanilla, one size fits all “network The next generation Internet will not offer a plain vanilla, one size fits all “network of networks.” Flexibility in pricing, service provisioning and quality of service of networks.” Flexibility in pricing, service provisioning and quality of service options can make economic sense.options can make economic sense.

However deliberate blocking or degrading traffic does not. However deliberate blocking or degrading traffic does not.

Better than best efforts is not a contradiction, but existing interconnection and Better than best efforts is not a contradiction, but existing interconnection and SLAs may restrict this option as might competition laws and commitments made to SLAs may restrict this option as might competition laws and commitments made to secure merger approval (AT&T-BellSouth).secure merger approval (AT&T-BellSouth).

ISPs should fully disclose terms and conditions as well as report on network usage. ISPs should fully disclose terms and conditions as well as report on network usage. Requiring transparency does not foreclose net flexibility, but it can prevent Enron-Requiring transparency does not foreclose net flexibility, but it can prevent Enron-type gaming and induced congestion. type gaming and induced congestion.

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Additional Research QuestionsAdditional Research Questions

Is Net Neutrality a solution in search of a problem? What potential exists for Is Net Neutrality a solution in search of a problem? What potential exists for anticompetitive practices in switching and routing content? Does a bottleneck exist anticompetitive practices in switching and routing content? Does a bottleneck exist in first or last mile access to the Internet?in first or last mile access to the Internet?

Would Google have any problems finding alternative ISPs to carry its traffic if Would Google have any problems finding alternative ISPs to carry its traffic if AT&T refused? Would start-up ventures have the same opportunities? Do end users AT&T refused? Would start-up ventures have the same opportunities? Do end users have sufficient broadband access alternatives ?have sufficient broadband access alternatives ?

Would net neutrality rules create disincentives for investment in next generation Would net neutrality rules create disincentives for investment in next generation networks?networks?

Can non-sector specific regulators, e.g., FTC and Justice Department, and the courts Can non-sector specific regulators, e.g., FTC and Justice Department, and the courts remedy any actual abuses in lieu of the FCC?remedy any actual abuses in lieu of the FCC?

What is the scope of Title I responsibilities the FCC can impose on ISPs?What is the scope of Title I responsibilities the FCC can impose on ISPs?