Net Neutrality Dealt Death Blow in Appeals Court; ISPs Attempt to Reassure Consumers

[dgstorm]

Late yesterday one of the big news items that we didn't quite get to was that Net Neutrality (and especially the FCC) was dealt a serious blow by a U.S. Appeals Court. Originally, the FCC ruled that wireline ISPs ”shall not block lawful content, applications, services or non-harmful devices, subject to reasonable network management” while also mandating that ISPs “shall not unreasonably discriminate in transmitting lawful traffic over a consumer’s broadband Internet access service.”

Of course, the ISPs, telecoms and cable companies were not happy with this, so many of them, including leaders like Comcast and Verizon, took this fight to the U.S. Court system. Yesterday, the United States Court of Appeals for the District of Columbia ruled against the FCC. Their ruling may have effectively killed Net Neutrality completely. Here's a quote with the details of the U.S. Appeals Court decision,

In its ruling against the FCC’s rules, the court said that such restrictions are not needed in part because consumers have a choice in which ISP they use.

“Without broadband provider market power, consumers, of course, have options,” writes Judge Laurence Silberman, one of the judges on the panel, in his opinion in part agreeing and in part dissenting from the court’s decision. “They can go to another broadband provider if they want to reach particular edge providers or if their connections to particular edge providers have been degraded.”

For anyone who lives in a market with limited competition for home broadband services, Silberman does acknowledge that you might have some “difficulty” in finding another provider but says that it’s still not reason enough to restrict what an ISP can do when it comes to managing its own traffic.

“To be sure, some difficulty switching broadband providers is certainly a factor that might contribute to a firm’s having market power, but that itself is not market power,” he asserts. “There are many industries in which switching between competitors is not instantly achieved, but those industries may still be heavily disciplined by competitive forces because consumers will switch unless there are real barriers.”

In fact, Silberman actually argues that the United States is overflowing with competitive options in the home broadband market and cites Google Fiber — which is currently available in only three markets — as evidence that competition is robust.

“But there is no evidence in the record suggesting that broadband providers are carving up territory or avoiding head-to-head competition,” he writes. “At least anecdotally, the opposite seems to be true. Google has now entered the broadband market as a direct competitor.”

This basically means that any ISP will now have the power to selectively limit the content you receive across your internet connection. For example, an ISP can now reduce your bandwidth if you use a lot of Netflix, or alternatively, they might go to Hulu and demand an extra charge for services across their network. Even worse than this, they could start playing favorites with different companies and limit access to selective services. A prime example which is ripe for abuse is that Verizon now has a deal with RedBox Streaming. If they wanted to, they could effectively cut off access to Netflix for any customer on their wired internet service to favor their RedBox deal.

Please be clear, we aren't saying that they would or plan to do this, only that they now have the power to do so. In fact, many of the big ISPs are acutely aware that consumers might be concerned about this ruling. Because of this, several of them just shared public statements designed to alleviate any fears consumers might have regarding these issues. Of course, there are now no regulations in place to hold them to these statements, and many of them are vague to begin with. Ultimately, it's up to you to decide if their words are hollow or ring true. Here's a few quotes from ISPs below:

From Comcast executive vice president David Cohen:

Comcast has consistently supported the Commission’s Open Internet Order as an appropriate balance of protection of consumer interests while not interfering with companies’ network management and engineering decisions. As a result, we agreed in the NBCUniversal Transaction Order to abide by the Open Internet rules for seven years even if the rules were modified by the courts. We remain comfortable with that commitment because we have not – and will not – block our customers’ ability to access lawful Internet content, applications, or services. Comcast’s customers want an open and vibrant Internet, and we are absolutely committed to deliver that experience.

We are committed to work with Chairman Wheeler and the Commission to play a constructive role in finding an appropriate regulatory balance going forward that will continue to allow the Internet to flourish. Given the DC Circuit Court of Appeals holding that the FCC has jurisdiction in the broadband arena to preserve and facilitate the innovation that has driven the Internet, we are optimistic that the Commission can accomplish this result while avoiding inappropriate common carrier regulation.

From Verizon, which posted a statement on its public policy blog:

Today’s decision will not change consumers’ ability to access and use the Internet as they do now. The court’s decision will allow more room for innovation, and consumers will have more choices to determine for themselves how they access and experience the Internet. Verizon has been and remains committed to the open Internet that provides consumers with competitive choices and unblocked access to lawful websites and content when, where, and how they want. This will not change in light of the court’s decision.

We look forward to working with the FCC and Congress to keep the Internet a hub of innovation without the need for unnecessary new regulations that seek to manage the explosive dynamism of the Internet.

From Time Warner Cable, which also issued a statement:

Since pioneering the development of high-speed broadband service in the late 1990s, Time Warner Cable has been committed to providing its customers the best service possible, including unfettered access to the web content and services of their choice. This commitment, which long precedes the FCC rules, will not be affected by today’s court decision.

From AT&T’s senior executive vice president of external and legislative affairs Jim Cicconi, as posted on AT&T’s public policy blog:

AT&T has been committed to the open Internet since our endorsement of the FCC’s statement of Internet freedoms in 2004. We worked constructively to help craft the FCC’s net neutrality rule, and testified in support of it in the Congress. As the FCC assesses the impact of today’s court decision, AT&T can assure all of our customers and stakeholders that our commitment to protect and maintain an open Internet will not change.

Share your perspective on this complex topic.

Source: BGR (1) & (2)

 

[leeshor]

No amount of reassurance is going to make me feel any better. It's just a matter of time.

 

[cereal killer]

The fundamental change has begun......very sad

 

[Droid-Xer]

:sad face:

 

[MotoXGirl]

I am having a hard time understanding all of this... From what I do understand it's not good.

 

[dgstorm]

I am having a hard time understanding all of this... From what I do understand it's not good.

You got that right... not good at all...

 

[jspradling7]

So Verizon "could" decide to not allow streaming video from Netflix, Amazon, and Red Box, unless they paid a fee. Netflix would pay and in turn raise your streaming bill from 8 bucks to 10 bucks to pay the fee. We lose, Verizon wins, everybody gets mad at Netflix for raising their prices. Peachy.

 

[wagman67]

Okay, so All of the big ISPs are jumping up and shouting...."Don't worry, we were the leader in making sure Net Neutrality happened, and made sure it did......but, we also had to lobby to make sure it did not happen. So, just sit back and get comfortable. Nothing is going to change....until you dose off...that's when we make the changes."

Mighty nice of them.

Not to be overly pessimistic, because a couple of them might have actually done both so they weren't mandated to not restrict traffic....but if their competition does, then they can market that until the cows come home.

Wow, I guess I am a bit pessimistic about it all.

 

[trabical]

We recently "cut the cord" and switched to exclusively stream Hulu and Netflix to our internet ready TV and Roku. I still pay Comcast for internet but not cable TV. If I understand this correctly. Comcast could up the cost or limit me to stream Netflix or Hulu so that in the end I wouldn't save any money by cutting the cord at all... They would make their money one way or the other...

 

[RETG]

It might not be over; yet. This was a decision by a three court panel of the DC court, so the FCC has a few options:
Appeal the three court panel to a full panel in the DC court of appeals
Appeal directly to SCOTUS
Or, get busy and rewrite the regulations to satisfy the court.

So, give it a few weeks before everyone starts crying in their beers.

 

[nickster1]

We recently "cut the cord" and switched to exclusively stream Hulu and Netflix to our internet ready TV and Roku. I still pay Comcast for internet but not cable TV. If I understand this correctly. Comcast could up the cost or limit me to stream Netflix or Hulu so that in the end I wouldn't save any money by cutting the cord at all... They would make their money one way or the other...

Comcast can't do anything until 2018. That was the agreement under their purchase of NBC Universal

 

[kodiak799]

Just another weapon in the tool box with more and more people cutting the cord....you didn't think the cable companies were just going to sit back and watch all that revenue get siphoned off by Netflx, Hulu, etc..?

 

[cobravnm13]

They go to court to have the power to limit what you use, but reassure us that they won't use that power? Why go to court in the first place?


I smell a giant outhouse around here.

 

[Hugh Jass]

It's the cable providers who were just handed a gatlin gun. As soon as they were finally challenged by the likes of Netflix with original award winning programing A la carte style, it's all been reversed. Instead here we are, screwed as customers. If I were a Netflix exec I'd double or triple the subscription price starting today in order to incite the kind of outrage that SHOULD be happening right now. They're heading there anyway, if not more than triple. May as well be up front about it and show customers WHY this is happening, not 3 years from now when they'll not understand why they're getting ripped.

The only bright side to any of this is that Google Fiber finally has it's calling. And we need it NOW, ubiquitously. Screw self driving cars, you want my money, give me a reason to destroy Comcast and the like, and I'd gladly pay a premium to destroy their greedy ways.

 

[kodiak799]

Content costs what content is going to cost.

This is an argument about distribution costs/profit. If you have less customers, then your per subscriber distribution costs are going to increase. Unless competition or technology reduces those distribution costs, one way or another they are going to have to get their money. It's neither evil nor greedy to raise the distribution costs for companies that piggy-back off your distribution to siphon away your profits.

A far simper solution is simply to raise the prices of home broadband services. Or more likely we'll see data tiers in addition to the already prevalent speed tiers. So long as they control the pipes, they're going to get an return on their investment. One could argue charging Netflix more or throttling/capping that stream actually benefits more consumers than it harms - if you want to cut the cord and use Netflix or Hulu instead, then your costs should go up, not mine.