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Washington Lawyer

Who Should Be Minding Online Traffic?

From Washington Lawyer, June 2011

By Joan Indiana Rigdon

computerNearly 20 years ago, when the general public was just starting to experiment with the possibilities of the Internet, it occurred to a lot of entrepreneurs and economists that the online world represented an unusual opportunity to level the playing field for businesses.

Throughout the 1990s corporate giants first ignored, and then belittled, the mom-and-pop storefronts that began popping up all over what was then known as “cyberland.” By the end of that decade, a few of those startups mushroomed into major threats to their slow–footed competitors—Netscape Communications Corp. being among the most famous, mostly for its initial public offering, which raised $2.2 billion on the first day of trading alone toward its war chest for its ultimately lost battle against Microsoft Corp.

There was a boom and then a bust, and that story has been told. But when that was over, major business assumptions had changed. It was now widely accepted that anyone with an idea and a modem connection could set up shop online and launch (whether successfully or not) niche products, songs, books, or ideas that could not have found shelf space in the offline world.

Today the Internet still offers a mostly open playing field, with a vast array of products and content. But there’s a twist: since at least 2005, it’s been possible for companies to get their Internet traffic into so–called “fast lanes” by paying a premium to the pipe owners. The pipe owners—cable companies like AT&T Inc., Comcast Corp., and Verizon Communications Inc.—point out that they have invested billions of dollars in building out their networks and, therefore, should be able to leverage their investments to offer any services they choose.

That practice has heated up the debate over net neutrality, the idea that all Internet traffic should be treated equally, whether the bytes exchanged represent major transactions between businesses, penny–ante trades between independents, or just bored desk jockeys pushing viral videos of laughing babies.

Senator Al Franken (D–Minn.) is calling net neutrality the biggest issue since freedom of religion. Without it, he says, today’s mostly open Internet will fall under the control of the biggest media companies, whose legal obligation is to protect their bottom line. The result: an Internet where the richest companies get the fastest loading times and best access to customers around the world, while smaller players with independent products or ideas are squeezed aside, just like they always have been in the offline world.

The Media Access Project, a Washington D.C.–based nonprofit public interest law firm that specializes in communications policy, says faster loading times for preferred customers can actually stymie innovation.

What “if someone comes up with a better way to do social media than Facebook and they can’t get off the ground because Facebook has an exclusive relationship with Comcast, and Comcast says [Facebook traffic] goes faster than other people’s social media?” posits Andrew J. Schwartzman, the group’s senior vice president and policy director. “Openness allows for innovation.”

Free market advocates, of course, want fewer rules for businesses. But in the debate over net neutrality, they also are arguing that if the federal government gets into the business of deciding how traffic should or should not move over the Internet, that’s a direct threat to free speech.

“I think we ultimately have more to fear from government censorship in the name of promoting fairness and discrimination” than the alternative, which is simply letting businesses decide for themselves how to use the Internet, says Randolph J. May, a former general counsel for the Federal Communications Commission (FCC) and now president of the Free State Foundation, a think tank based in Rockville, Maryland.

Republicans apparently agree. On March 9, 2011, the House Energy and Commerce Communications and Technology Subcommittee voted to overturn the FCC’s new Internet rules. The following month, the full House of Representatives voted to repeal the FCC’s net neutrality regulations, just a few days after President Barack Obama threated to veto any such repeal. Getting rid of the rules would “undermine a fundamental part of the nation’s Internet and innovation strategy,” the administration said in a statement.

Throttling Competition
Most Americans had no idea what net neutrality was until 2008, when the FCC sanctioned Comcast for violating the commission’s open Internet guidelines by throttling—or slowing—traffic for users of a bandwidth–hogging, peer–to–peer file–sharing network called BitTorrent. Today, BitTorrent describes itself as a free file–sharing service for those who want to distribute “very large” software and media files.

Comcast initially denied throttling BitTorrent traffic, but eventually admitted to the practice after the Associated Press, followed by the Electronic Frontier Foundation, produced test results showing throttling of not only BitTorrent, but also of another file sharing site called Gnutella, as well as Lotus Notes. BitTorrent, however, was by far the most popular.

“Whenever somebody tried to use BitTorrent, what [Comcast] would do was tell the site they were trying to reach to tell them to disconnect and try again later. So if you were a subscriber, it would look like the site is not working, and if you were [BitTorrent], it would look like Comcast is down,” says Harold Feld, the legal director of Public Knowledge, a District–based public interest group that supports net neutrality.

Amid the ensuing public drubbing, Comcast tried to explain the difference between delaying and blocking traffic, but net neutrality proponents worried: if Comcast could slow down traffic for BitTorrent customers, and in a way that was undetectable by most customers, then any cable provider could do, or might already be doing, the same thing for any other reason.

As part of the sanction, the FCC ordered Comcast to stop throttling, to file a statement explaining how the cable company had done it, and to basically “find a way to manage your congestion issues that doesn’t target a particular application,” as Feld summarizes. Comcast responded with bandwidth caps that were not related to specific applications.

That might have been the end of it, Feld says, but “Comcast was annoyed. By this time, [Comcast chair and chief executive officer] Brian Roberts and [then FCC chair] Kevin Martin, let us say, they had fully personalized the conflict between them.” At the 2007 FCC Chairman’s Dinner, Martin asked members of the cable industry to identify themselves, and then quipped, “I want to start out by apologizing that we had to remove the knives from your table.”

In March 2008, Comcast and BitTorrent announced that they working together on ways to manage file–sharing over Comcast’s network. Then, in September 2008, “for no reason that one could understand,” Feld recalls, Comcast challenged the FCC’s order in the U.S. Court of Appeals for the District of Columbia Circuit. Comcast said that while it would comply with the FCC’s order, it argued that the commission did not have any rules that served as the basis of its sanction.

“Now the FCC has a problem,” Feld says by way of explaining the situation at the time. “It could either figure out some way to justify exercise of ancillary authority that would respond to the D.C. Circuit decision, or it could reclassify broadband as a Title II service. Or give up.”

Ultimately, rather than reclassify broadband, Feld says the FCC “decided to go back to the drawing board on Title I and it came up with a different legal theory, on ancillary authority.”

FCC: Web Traffic Watchdog
The 1934 Communications Act came into being to ensure fair and open access to the nation’s then nascent telephone infrastructure. But the FCC regulations that cover telecoms do not cover cable companies. Instead, cable companies are considered “information services,” which fall under the FCC’s Title I rules. Telecoms are regulated under the much more stringent Title II rules, which were set up to prevent monopolies from taking over the nation’s telephone lines.[1]

While Title I does not give the FCC explicit authority to regulate the way cable companies manage their traffic, section 4(i), referred to as ancillary authority, does allow the commission to “perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this Act, as may be necessary in the execution of its functions.” When it sanctioned Comcast for throttling in 2008, the FCC cited these ancillary powers as the source of its authority.

The D.C. Circuit ultimately disagreed, and vacated the FCC order in its April 2010 decision.[2]

Drawing heavily from California Democratic Rep. Henry Waxman’s engineered compromise, FCC Chair Julius Genachowski responded in December 2010 to the appellate court’s decision by announcing new “rules of the road” for the Internet. The new rules give the FCC more power to regulate Internet providers, but not nearly as much power as net neutrality proponents had hoped.

“Now, for the first time, we’ll have enforceable, high–level rules of the road to preserve Internet freedom and openness,” Genachowski declared. Under the new rules, the FCC gave itself the authority to monitor the network management practices of companies who provide Internet access to homes via wires such as cable companies. Specifically, cable companies are not allowed to block any sites and practice “unreasonable discrimination” when deciding which traffic gets priority over their networks.

But that ban does not apply to companies that provide wireless access to the Internet, a distinction that many watchers find strange.

“In our opinion, you really shouldn’t” treat wired and wireless Internet providers differently, says Feld. “The reason the FCC did that is because they brokered a political compromise. It was purely a matter of politics.

“The official reason given in the order is that wireless is different. It operates pursuant to different logic. It’s a relatively newer service,” Feld adds. “But we believe strongly that there is only one Internet and that everybody should be able to access it” equally, no matter what kind of technology they use to do it.

First Amendment and New Media
Robert Corn–Revere, a Davis Wright Tremaine LLP partner who specializes in First Amendment, communications, and information technology law, questions whether the FCC should have any rule–making ability over the Internet at all.

“Keep in mind that the FCC is sort of an anomaly in our constitutional system. We have the First Amendment, based on the notion that freedom of expression abhors things like press licensing. Yet we have a major regulatory agency whose very existence sprang forth from a perceived need and desire to license broadcasters and the electronic press. There is, at the very least, an anomaly you have to address when you approach the concept of having government control of a major medium of communication,” Corn–Revere says.

“The way the courts have approached it historically is, ‘We’re going to treat different media differently under the First Amendment.’ We’re still working on parts of that, and the way the [U.S.] Supreme Court has dealt with that is simply to come up with a different view of the First Amendment based on” which technology is used to deliver content, he continues.

He cites film as an example. “When film was first introduced, the Supreme Court refused to protect it under the First Amendment. They said it wasn’t part of the press, it was just a business. That decision was in Mutual Film Corp. v. Industrial Commission of Ohio,[3] Corn–Revere says.

“And so, as of 1915, cinema was not considered to be something that fell under the First Amendment. Of course, in 1915 there were no decisions defining what the First Amendment [protected]. That really didn’t start until the 1930s, around the same time the FCC was created.

“When broadcasting was created during this time of First Amendment development, [the Supreme Court] said it has some First Amendment protection. But it’s just treated differently. The initial rationale was that the electromagnetic spectrum is limited and government has to ration it, and as a result of that peculiar physical characteristic, if government doesn’t set down the rules of the road, then overall [free speech] will come to be diminished,” he adds.

“The way it played out was that the Court then extended full protections to these media. In 1952 the Supreme Court reversed itself [in the Burstyn[4]] case and said film is fully protected by the First Amendment,” Corn–Revere says.

Decades later, the Supreme Court granted the same protection to cable operators after cable operators challenged section 505 of the Communications Decency Act, which Congress had passed in 1996. That rule required cable operators who offered primarily sexual programming to follow certain rules, including scrambling and blocking their signals and broadcasting only during “safe harbor” hours, from 10 p.m. to 6 a.m. The idea was to prevent “signal bleed” of the programming from appearing on the screens of nonsubscribers, especially children.

In United States v. Playboy Entertainment Group, Inc.,[5] the Supreme Court found that the rule violated the First Amendment because it is applied only to a certain type of content when another, less–restrictive method—in this case, allowing nonsubscribers to block certain channels—would serve the purpose of preventing accidental screening of sexual content to young children. (The Court’s ruling was delivered in 2000, three years after the Communications Decency Act itself was struck down. However, section 505 had lived on as part of the Telecommunications Act.)

The Supreme Court’s 1997 decision to strike down the Communications Decency Act, in Reno v. ACLU,[6] marked a shift in the Court’s treatment of First Amendment rights as they applied to speech made through different technologies. Two provisions of the Communications Decency Act sought to regulate the transmission of sexual content on the Internet. The Court ruled that those regulations were violations of the First Amendment.

“It was the first time that the Supreme Court had looked at new technology and said in its first decision that it is fully protected under the First Amendment. So the Court is moving away from treating different technologies differently under the First Amendment,” Corn–Revere says.

It will become harder to treat different technologies differently as they converge, he adds. Now, “you have a medium that can be a publisher and radio station and provide video. The ability to treat those technologies differently becomes a much bigger problem,” according to Corn–Revere.

The question facing lawmakers and policymakers today is, “Can we impose these older visions” of how to regulate bandwidth “onto this new technology that is innovating quickly and changing?” he says. In Corn–Revere’s view, “It becomes increasingly difficult to find a rationale to do that.”

Feld agrees to that extent: “Not every part of the Communications Act that we have thought of in the last 74 years is appropriate for broadband.” But that does not mean the act cannot be updated, he adds.

Tool for Offense or Defense?
What’s interesting about the debate over net neutrality is each side’s view of the First Amendment, starting with whether the Founders intended it for use as a defense or an offense.

“There’s a real divide here in terms of how you construe the First Amendment,” says the Media Access Project’s Schwartzman. “The way it was determined in the context of [the 1984 deregulation of AT&T] was that the government has an affirmative obligation to create a platform for speech to promote democratic discourse, that the goal of the First Amendment is to ensure democratic decision making” by an informed public.

Then there’s the question of who has the right to freedom of speech. “Some argue that anything that supports openness supports the First Amendment,” Schwartzman says. “But it’s one thing to treat big corporations [as entities] that have First Amendment rights. It’s another thing to say that a corporation’s First Amendment rights are superior to the rights of the public, to the rights of living, breathing citizens who vote.”

In Schwartzman’s view, it doesn’t make sense for Internet providers to say their free speech rights are being infringed upon when the government requires them to treat all Internet traffic equally.

Corporations “aren’t content creators,” according to Schwartzman. “To use the telephone analogy, [say] you and I are having a phone conversation, Verizon or whoever you’re connecting through has no right to censor this conversation. You and I can have a very intimate conversation and engage in heavy breathing and it’s none of the phone company’s business. They get paid for delivering bits from A to B. The Internet carriers are in much the same situation. The point of their existence is to carry bits. They’re not creating content. They’re carrying other people’s content.”

May of the Free State Foundation disagrees. “The FCC views the providers as having two functions. If you subscribe to Comcast, it’s clear that when I log on to Comcast, right there on the front page, that’s their own content. I think the FCC with regard to that would say, ‘We can’t censor that. But a large part of what Comcast does is really just transporting information, so for all practical purposes, we can just treat them as a common carrier.’ That’s what they would say,” May asserts.

“I just don’t think you can separate out, that the government can compel that separation and basically tell the Internet service provider with regard to content it has to allow competing content, even though it’s not its own content, that it has to allow” that content equal access, he says.

But Who Owns the Pipes?
May argues that companies that have invested billions of dollars in building and developing their own networks should be free to decide how to use those networks. “There are some who think the Internet is free. It’s required billions and billions [of dollars] of investment,” May says.

Schwartzman, however, questions some people’s assumptions that companies truly created their networks. First, “they didn’t invent the Internet. The government invented it,” he says, referring to ARPANET, an electronic military information network that was designed with many redundant connections so that it could continue to operate even if part of it was damaged.

“Second and more fundamentally, whether [companies] are using wireless connections over publicly owned airways, which are licensed to them, or whether they use wires through streets where they have franchises or municipal permissions, where they are the recipients of government privilege in order to build and construct their businesses … for them to say that [they] built it” is misleading, according to Schwartzman.

“They built it from benefits from government. It’s perfectly reasonable for government to say that a condition of you’re being able to use our streets is that you maintain an open network.”

Schwartzman adds, “We regulate utilities. With wireless, there’s increasingly greater competition and less need for traditional monopoly–type regulation, but wireless is using public spectrum, which they get out of a license. They don’t own the spectrum. The public owns the spectrum. They’re just given the right to use it for a number of years and they bid for it. They buy [the license] and they pay for it … as encumbered property. It’s like buying land with an easement.”

Regulating the Medium, Managing Public Opinion
Feld, the legal director of Public Knowledge, believes it is business control of Internet traffic that poses huge threats to the notion of free and open discourse. During protests, like recent ones in Tahrir Square in Cairo, Egypt, or in Madison, Wisconsin, “who should have the ability to control” Internet accounts of those events?

“Let’s pretend the Comcast workers are on strike. Do we really want to leave it to Comcast’s discretion [to control Internet traffic] when people are trying to use this common platform to find out about the issue and be engaged?” Feld asks.

“You don’t have to be explicit. You don’t actually have to block access to a site” to sway public debate, he continues. “It’s enough if you just make it harder for people. If Comcast workers are trying to form a union, for instance, Comcast can make it that much harder for subscribers to access pro–union sites, and that much easier to tell Comcast’s side of the story.”

“It’s easy to do. You don’t have to cut off all access. It depends on what level of blocking you want. First of all, if I am a network provider, I can read your traffic. I can see what traffic you’re downloading, what traffic you’re uploading. I can do keyword searches. I don’t have to be a total censor to make a difference. All I have to do is make that connection [to any particular Web site] suck. All I have to do is notice that a particular YouTube page is being circulated and pointed to and make it a little jittery. It takes very little in the network environment to persuade the casual user that it’s just not worth it” to load certain sites, Feld says.

There are also things that are time–sensitive. One example is After Downing Street (now known as War Is a Crime), an organization against the Iraq war. “They were trying to organize a particular event” using e–mail, but “Comcast stopped the e–mail because they thought the e–mail was spam. They simply prevented the e–mail from reaching their subscribers. It took After Downing Street a week to find out what was going on,” recalls Feld.

Davis Wright Tremaine’s Corn–Revere believes that giving the government the ability to regulate Internet traffic is a much bigger threat to a free national discourse. “You have to overcome fairly significant First Amendment questions whenever you are exerting government control over a medium of communication. You may argue that that is being done for all kinds of good reasons and reasons that are supposed to promote free speech values. You can argue the same thing about newspapers. You can say government ought to be able to regulate newspapers in the name of providing more free speech,” he contends.

Overall, he says “greater regulation of new media is on the wrong side of history.” Corn–Revere does not agree with the idea that FCC regulation of Internet providers is regulation of an information transportation system, as opposed to content. “If you pass a law that says no one can use these pipes to transmit speech about Republicans, you’re only regulating the pipes. But you would still have a First Amendment problem,” he argues.

Other attempts to regulate infrastructure have had the result of infringing on free speech, Corn–Revere says, citing Turkey’s ban on typewriters in 1901. “They said they led to too much uncontrollable speech. That was not a regulation of speech. You’re only regulating a device. But it clearly presents what in this country would be a First Amendment problem,” he adds.

Free Market Versus Government Control
Instead of reading the First Amendment as a mandate to enable discourse, Corn–Revere says “you have to flip that question and say government can’t impose regulations on media unless it comes up with a constitutionally sufficient” reason.

Although there has been dire talk about what can go wrong if companies are allowed the unfettered ability to decide how to use their networks, “The funny things is, if you really look at the FCC’s network neutrality order, there’s really very little in it that talks about why these rules became necessary,” he says.

“The vast majority of the argument for justification talks about how companies may have both the ability and the incentive to do bad things, so for that reason it’s imperative for government to regulate the Internet in the name of freedom? If we’re really going to justify these rules based on potential abuse, shouldn’t we also look for the potential for the government to abuse its authority over this medium?” Corn–Revere asks. “It bears recalling that the government’s entry into the realm of Internet regulation was to try and impose the same kind of broadcast indecency rules” it had already imposed on cable and on the Internet.

“If there’s abuse, then we might have a problem. The reason we have a free and open Internet really is because it was unanticipated by government. Sure, you can talk about its origins as military research project, but the open Internet that people celebrate for very good reasons evolved really when government wasn’t looking, and it’s free and open for that very reason. Can you even imagine what the Internet would look like if the FCC did the rule book on what it would be?” Corn–Revere quips.

“If you have to compare the track record of the companies that are behind the expansion of broadband access and the track record of the U.S. government in terms of promoting a free and open media, I think I’ll go with the people who are actually making” the network, he says.

May is also unsettled by the idea of government being in control of any aspect of the Internet. “I’m not equating the government of the United States with the Chinese government, or with [Muammar Gaddafi’s Libyan] government, or any other government. But you must note, in a lot of instances around the world today, including those countries and others, the real concern is with the government shutting down the Internet and what the government is going to ultimately do with the Internet,” he says.

That was, in fact, a major concern earlier this year, when the Egyptian government shut down Internet access amid escalating protests, which had been partly organized on Facebook.

May insists he’s not “attributing bad faith to our government, or ill motives.” Instead, his view “really is a recognition that men who as [James] Madison said are not saints” should not be able to make decisions about how traffic moves across the Internet. “I think we ultimately have more to fear from government censorship in the name of promoting fairness and discrimination” than from free market control of the Internet, he says.

“Let’s take a look at it from another level,” he continues. “A lot of these providers, like Comcast, provide spam filters. Most consumers want them. But when they do that, they’re making choices about content based on certain words—Viagra or whatever. They’re making judgments…. When they’re making a decision about what’s spam, they’re making a content decision. The question is, do you want them to make it? Or do you want the government to make it?

“I don’t want the government to make it because the government ultimately is the reason we have a First Amendment, because we ultimately don’t trust the government. The government has motives itself, sometimes including retaining power. That’s what Madison and the Framers were concerned about—the government playing favorites if it can censor speech,” May says.

New Life on the Fast Lane
While the debates over government versus business control of anything may continue indefinitely, one thing seems settled for now: pay–for–priority treatment on the Internet—also known as “fast lanes”—is not being challenged by the FCC. The commission’s new rules of the road do not specifically forbid them.

It’s been happening for a while. “This goes back to 2005, when the FCC deregulated DSL,” then the speediest wired way to access the Internet, says Feld. “The FCC started with the proposal that DSL was a telecom service. When cable began to offer cable modem, that went unclassified for a while, and then the FCC classified cable as Title I information service. That went all the way up to the Supreme Court in Brand X,[7] where it was affirmed that the FCC could classify cable modem as information service. Then the FCC turned around and reclassified DSL to be an information service.”

“After that, Ed Whitacre, then chairman of AT&T, talking about Google and Yahoo!, famously said something to the effect of, ‘They think they’re going to use my pipes for free. If they want to reach my customers, they’re going to have to pay,’ and that is where the paid prioritization kicked off,” Feld says.

Whitacre’s comments about then–upstart Google and others in a 2005 interview with Bloomberg Businessweek were actually far more flamboyant: “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?”

Whitacre further said, “The Internet can’t be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!”

“As one might imagine, this caused some considerable consternation,” Feld says. “People who were in telecom followed it. It was always a concern for those who were involved in this” that history would repeat the events of 1996, when the cable industry was deregulated.

After deregulation, “the cable industry required that if you were a programmer [content provider] and you wanted to get carriage in a cable system, you had to give them an equity interest,” Feld says. “So HBO in late ’70s and early ’80s offered to give to Time Inc. a share of ownership, and then AT&T [a Time Warner, Inc. partner after Time merged with Warner Communications] graciously agreed” to give HBO carriage.

The FCC forbade that practice, but if it does not have the power to regulate, say, wireless Internet providers who are largely exempt from Genachowski’s “new rules of the road,” then an AT&T could hypothetically require an Amazon to fork over an equity share in return for carriage.

Feld believes there’s a simple way to avoid this scenario: “We continue to be strong advocates for simply classifying all of these things as a Title II telecom service.”

However, since that is not politically viable, Feld supports Genachowski’s “third way”: “The FCC should say ‘Broadband is a Title II service, and we will take a few basic rules that make sense, like the nondiscrimination rule, the just and reasonable rules, and the interconnectivity rule’ … and apply those.”

There’s a lot at stake, Feld adds. “The Internet is the equivalent of the phone service of the 21st century. It’s the thing that everyone’s got to have in order to communicate and participate in society.”

Freelance writer Joan Indiana Rigdon wrote about the debate over the constitutionality of the national health care reform law’s individual mandate in the January 2011 issue of
Washington Lawyer.

Notes
[1] Title I of the Communications Act of 1934 spells out the FCC’s administration and powers, including “ancillary authority.” Title I also governs “information services” (i.e., DSL, cable). Title II of the act governs “telecom services” (i.e., telephone companies), with more stringent rules to prevent monopolies. Debates center on whether broadband/wireless Internet providers should be regulated under the more strict Title II rules.
[2] Comcast Corp. v. Federal Communications Commission, 600 F.3d 642 (D.C. Cir. 2010).
[3] 236 U.S. 230 (1915).
[4] Joseph Burstyn, Inc. v. Wilson, 343 U.S. 495 (1952).
[5] 529 U.S. 803 (2000).
[6] 521 U.S. 844 (1997).
[7] National Cable & Telecommunications Association v. Brand X Internet Services, 545 U.S. ___ 2005).