Wednesday, December 1, 2010

Taxing Internet Usage: Comcast Holds The Cards

In 2008, the F.C.C. issued a finding that Comcast had violated federal Internet policy when it secretly blocked or slowed down the transmission by its customers of information via BitTorrent, a so-called peer-to-peer service that allows users to share large files. Comcast challenged the F.C.C.’s order, claiming that the commission lacked the authority to regulate how it managed its Internet service because doing so was not ancillary to any legal authority given to the commission by Congress.

In April, the United States Court of Appeals for the District of Columbia Circuit ruled in Comcast’s favor, saying that the F.C.C. lacked the authority to enforce nondiscrimination principles over an information service. Since that ruling, the commission’s authority to regulate broadband service has been uncertain and hotly debated.

In a speech he plans to give Wednesday in Washington, Julius Genachowski, the F.C.C. chairman, will outline a framework for broadband Internet service that forbids both wired and wireless Internet service providers from blocking lawful content. But the proposal would allow broadband providers to charge consumers different rates for different levels of service, according to a text of the speech provided to The New York Times.

Mr. Genachowski has decided not to use the commission’s telephone regulatory powers to govern broadband Internet service, a move that he proposed in May that would potentially open Internet service to heavier government regulation.
His proposal would also allow broadband providers to manage their networks to limit congestion or harmful traffic.
The framework will form the basis for a proposed order scheduled to be voted on during the F.C.C.’s Dec. 21 meeting.

Mr. Genachowski says he believes he has the legal authority to act because he argues that his plan would help spread broadband service more widely across the country, a priority that Congress has established as one of the F.C.C.’s mandates. It is not clear whether the latest proposal will garner the support of the majority of the five-person commission.
While he has a fair chance of securing the votes of the two other Democrats, he faces a potential fight with one of those commissioners, Michael J. Copps, who has been public in his support for stricter regulation of broadband Internet service.
Mr. Genachowski will also face significant opposition from Republicans in the House of Representatives, who last month warned against attempts to regulate broadband service and the Internet. The chairman intends to say that he believes the proposal is necessary to guarantee that the Internet continues to provide an incubator for innovation by start-up companies. “Broadband providers have natural business incentives to leverage their position as gatekeepers to the Internet,” the text of the speech says. “The record in the proceeding we’ve run over the past year, as well as history, shows that there are real risks to the Internet’s continued freedom and openness.”

The proposal will allow broadband companies to impose usage-based pricing, charging customers higher prices if they make heavy use of data-rich applications like streaming movies. Users who use the Internet only to check e-mail, for example, could be charged lower prices for using less data.

The F.C.C. also will allow companies to experiment with the offering of so-called specialized services, providing separate highways outside the public Internet for specific uses like medical services or home security.
But companies will be required to justify why those services will not be provided over the open Internet and to demonstrate that their implementation does not detract from a company’s investment in the more widely used open Internet infrastructure.
As for broadband service delivered over wires, providers to homes or offices will be prohibited from blocking lawful content, applications, services and the connection of nonharmful devices to the network. The companies also will be subject to transparency requirements as to how their networks are managed

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