You asked for a brief discussion of the issues surrounding the “net neutrality” debate. The Congressional Research Service has published a background memo on net neutrality, which is available at www. fas. org/sgp/crs/misc/RS22444. pdf.

SUMMARY

The Federal Communications Commission (FCC) has proposed regulations that would (1) prohibit Internet access providers from discriminating among lawful content, applications, or services accessed by their subscribers and (2) require the access providers to make available relevant information regarding their network management practices to FCC, consumers, and content, application, and service providers. The proposed regulations would also codify four existing FCC Internet neutrality principles. Both the existing and new principles would apply to wireless as well as wireline access providers. Legislation has been introduced in Congress that would block FCC from implementing the regulations.

The proposed regulations have engendered an extensive debate involving access providers such as AT&T and content and service providers such as Google and Amazon. com, as well as advocacy groups, unions, and public officials. Among the key issues are whether the proposed regulations are needed and appropriate, whether they should apply to wireless networks, and how they should balance legitimate needs of access providers to manage their networks while preventing these providers from discouraging competition.

BACKGROUND

In September 2005, FCC adopted policy principles that entitle consumers to (1) to access the lawful Internet content of their choice; (2) run applications and use services of their choice, subject to the needs of law enforcement; (3) connect their choice of legal devices that do not harm the network; and (4) competition among network providers, application and service providers, and content providers. These principles currently apply to wireline companies that provide access to the Internet, but not to wireless broadband services offered by carriers such as Verizon Wireless and T-Mobile.

In October 2009, FCC issued a notice of proposed rulemaking, seeking public input on draft regulations that would codify the four existing Internet policy principles and add two principles on nondiscrimination and transparency. The nondiscrimination principle would prohibit Internet access providers from favoring or disfavoring lawful content, applications, or services accessed by their subscribers. In practice, the principle would prohibit access providers such as cable and telephone companies from blocking or slowing access to services from Google, Netflix, or others that can impose a drain on their networks or could compete with services provided by the access providers. The transparency principle would require access providers to make available relevant information regarding network management practices to FCC, their customers, and content, application, and service providers.

Both the existing and new principles would apply to all forms of broadband Internet access, including wireline and wireless. They would be subject to reasonable network management and the needs of law enforcement, public safety, and homeland and national security. FCC also acknowledges that Internet providers must be able to develop and deploy new technologies and business models, including offering managed or specialized services that are distinct from traditional Internet access service.

The development of the proposed rules involved extensive public hearings and requests for written comment, which generated over 100,000 pages of input in approximately 40,000 filings from interested companies, organizations, and individuals. Among the participants in this process have been telecommunications companies such as AT&T, Sprint, and Comcast and firms that provide content and services over the internet, such as Amazon. com, Google, and Skype. FCC will take comments on the proposed rules until January 14 and reply comment until March 5.

ISSUES

Need for Regulation

The threshold issue in this debate is whether further regulation of the Internet is needed or appropriate. Proponents of net neutrality argue that without regulation, access providers will become gatekeepers and use their market power to disadvantage Internet users and competing content and application providers. They believe that the Internet could develop into a two-tiered system favoring large, established businesses or those with ties to access providers. Rep. Anna Eshoo has argued that in the absence of net neutrality rules, Internet content and services would become tied to the underlying access service. Rather than the diversity and user choice that currently characterizes the Internet, it would become more like cable television, where the access provider largely determines what content and services are made available to their subscribers. The advocacy group Save the Internet argues that without net neutrality, innovation would be stifled, competition limited, and access to information restricted. The group's members include organizations ranging from the American Library Association to the Teamsters.

On the other hand, some telecommunications companies, such as AT&T, have argued that more regulation limits the ability of the industry to recover its costs for building and upgrading Internet infrastructure. The Communications Workers of America and the International Brotherhood of Electrical Workers have asserted that discouraging investments in this infrastructure could reduce employment opportunities. Similarly, the attorneys general of Arkansas, Oklahoma, South Carolina, and Washington have expressed concern that new net neutrality regulations could harm the telecommunications industry's willingness to continue to invest and thereby hinder the future growth of the Internet. The advocacy group the CATO Institute has argued that new regulations inevitably come with unintended consequences and could inhibit new firms from entering the Internet market.

Applicability of Regulations to Wireless Technologies

Another issue is whether the net neutrality rules should apply to wireless as well as wireline providers. Steve Largent, president of CTIA, the wireless industry trade association, argues that net neutrality would be unnecessary prescriptive regulation for his industry. He argues that wireless is different than other telecommunications technologies such digital subscriber line (DSL) or cable. He notes that unlike the other technologies, wireless is subject to competitive pressure that benefits consumers and that wireless carriers are limited by the capabilities of the broadcast spectrum.

On the other hand, Richard Whitt, Google's senior lobbyist in Washington, while acknowledging that wireless providers have less bandwidth and spectrum available than other Internet technologies and should be given the flexibility to manage traffic over their network, they should not be allowed to use that as a rationale for prioritizing or degrading certain traffic or content purely for commercial purposes.

Reasonable Network Management

There is also a debate as to what constitutes reasonable network management. As the Internet has expanded to include video, online gaming, and voice services, telecommunications companies have moved to prioritize network traffic to ensure the quality of these services. This prioritization may benefit consumers by ensuring faster delivery and quality of service and may be necessary to ensure the proper functioning of expanded service options. But there is concern the network providers' ability to prioritize traffic may give them too much power over the operation of and access to the Internet. If content providers were charged different rates for different levels of access service, this could limit competition among content providers, pushing out those who cannot afford to pay for a higher level of access. Also, if network providers can control who is given priority access, they could discriminate in favor of content providers who are affiliated with the network provider.

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