Inslee Says Congress is Prepared to Impose Net Neutrality Rules if FCC Won’t

If the FCC doesn’t impose net neutrality rules, Congress will step in, Rep. Jay Inslee, D-Wash., told an agency field hearing in Seattle Wednesday. Sen. Maria Cantwell, a Democrat from the state, encouraged the regulator to approve rules proposed by FCC Chairman Julius Genachowski in October. Genachowski welcomed comments from both and said the commission will move forward on the net neutrality proceeding despite the Comcast decision. All three spoke in taped remarks played at the beginning of the forum.

Genachowski noted Seattle is only a few hours north by car of Hillsboro, Ore., where Comcast’s “secret blocking of lawful Internet traffic” was uncovered. That led to the Comcast-BitTorent order, later overturned by the U.S. Court of Appeals for the D.C. Circuit. “That experience and others made clear that an Internet in the dark runs too great of risk of becoming a closed Internet,” Genachowski said. Comcast was “of course an unfortunate development, but it has done nothing to weaken my unwavering commitment to ensuring that the free and open Internet is preserved and protected."

"We encourage the FCC to use all the means at its disposal” to move forward on net neutrality rules, Inslee said. “If the FCC is unable to do that we have a bill ready willing and able to stand in the breach and solve this in a statutory way. Congress needs to be willing to do that. I am."

Inslee said he sees a real threat to an open Internet from ISPs if they are not held in check by net neutrality rules. “It’s under threat because these Internet service providers that control the pipes of information delivering content to your home could have a motivation to close the Internet,” he said. “If they control the pipes they'd be able to control the content traveling through those pipes.” An open Internet should “treat all data the same, allow consumers to choose their own content, foster diversity of voices, give the little guy the same opportunity to compete against a big guy,” Inslee said. Without an open Internet companies like Amazon, YouTube, Facebook or Twitter would not exist today, he said. “I think we need to think about what the Internet will look like a few years ago rather than what it is right now.”

Cantwell said the FCC erred in deciding that broadband should be classified as a lightly regulated Title I service and it should approve the net neutrality rules proposed by Genachowski in October. “When I say open, I mean an open architecture that allows innovation at the edge of the network,” she said. “It means that the success of the new online business does not hinge on the blessing of broadband network operators. It means that success does not hinge on having to give operators a percentage of the revenues.” The FCC should override the objections of carriers opposed to net neutrality rules, Cantwell said. “It’s hard to put the genie back into the bottle, but there are a number of important vested economic interests who are opposed to any nondiscrimination provisions for the Internet."

Seattle Chief Technology Officer Bill Schrier said the city put together a task force to examine the future of broadband in the city. It found the Seattle market had little competition, he said. “Like most of the nation it’s a duopoly,” he said. “We have a cable company, I am actually the city’s cable regulator, and we have the phone company.” Columbia Telecommunications Corp. studied competition in the city and found that its Herfindahl-Hirschman Index, a common measure of competition, was 4,089. “Anything above 1,800 is essentially a market failure,” Schrier said. “With that limited competition, I as the city’s chief cable regulator can regulate cable. The Washington Utilities and Transportation Commission can regulate phone, but who regulates the Internet? Only the FCC. If the FCC doesn’t implement the rules that are proposed for today there will be no regulation at all of the Internet."

The economy depends on net neutrality, Schrier said, citing a list of locally headquartered companies. “Microsoft, Amazon, Starbucks, are all users of the Internet … plus we have Google,” he said. “We also have neighborhood and home businesses. The Internet is going to be increasingly vital to a local butcher and baker and neighborhood business. They're going to get on the Internet and they're going to increasingly serve their customers this way.” New neutrality rules are critical, he said. “They'll be much more important in the future as new applications demand higher and higher bandwidth.”

Terry Davis, technical fellow at Boeing, said an open Internet is critical to big companies. “Increasingly as we virtualize our data centers, our infrastructure, the boundaries of one ISP to another disappear,” Davis said. “There are probably very few ISPs in the U.S. that do not have Boeing employees or contractors in their infrastructure, I don’t care how small they think they are. We depend on an open Internet for our employee, customers, suppliers, all of our daily work."

"This is an incredibly appropriate place to have this hearing because … there are so many companies and millions of people here who benefit from an open Internet,” said Public Knowledge President Gigi Sohn. “Few would disagree that connection to the high-speed broadband Internet is critical for full participation not only in American society but in our global society.” The open Internet is at risk as “the cable, telephone and wireless companies that provide the onramps to the Internet seek to insert themselves in the middle, picking winners and losers in the process,” she said.

Sohn said the FCC’s proposed net neutrality rules are a good first step, but the commission needs to do more by reclassifying broadband under Title II so Internet providers are subject to Sections 201 and 202 of the Communications Act. “These provisions say that carriers can’t do anything that is unjust or unreasonable,” she said. “It says that they can’t unfairly discriminate. It says they can’t give undue preference to some kind of speakers. It says they have to make their services available to everyone.” The two sections of the Act give the FCC clear legal footing for protecting the open Internet, she said. “It allows the commission to draw on existing enforcement mechanisms and years of precedent and offers a clearer basis for authority."

Preston McAfee, vice president at Yahoo Research, said the threat of regulation alone has likely kept carriers from charging companies like Google and Yahoo to access customers. “Right now there’s a fair amount of ambiguity,” he said. “If the major ISPs engaged in a lot of holdup and started charging Google access fees the likelihood of bringing regulation down would be quite high. … If we clarify and say that access fees are okay then in fact we're likely to see much more holdup.” McAfee said he agrees with arguments that competition would resolve many of the problems cited by proponents of net neutrality rules. “I also think that the ISP market is not competitive,” he said. “A really sure piece of evidence that the ISP market is not competitive is the fact that they bundle so heavily.”

Proponents of net neutrality rules have yet to demonstrate that new rules are necessary, countered Carl Gipson, director for small business, technology and telecommunications at the Washington Policy Center. “The FCC has to show a true necessity for more stringent regulations,” he said. “This should be accomplished with more than just a cursory cost-benefit analysis. The commission should do its best to ascertain both the benefits of further regulation of the Internet and the associated costs, including opportunity costs that will be placed upon ISPs, end-users, content providers and application developers. The FCC should not rely on speculation about what may happen as a reason to move forward with new regulation."

T-Mobile CTO Cole Brodman questioned the need for net neutrality rules. “It is very clear to me that the wireless industry is really meeting the challenge of embracing an open Internet and trying to drive affordability and access for consumers,” he said. “The mobile Web is the Web. Five years ago I don’t think that was true. The mobile Web was a walled garden.” The wireless industry, in a lightly regulated world, has continued to expand services, Brodman said. “3G is getting faster and in more places across the country,” he said. “Smartphones are clearly getting more powerful and cheaper for consumers. The market is moving rapidly and strongly toward more openness.”