USA - Needs clearer laws to regulate internet access

[the economist] ON APRIL 6th the District of Columbia court of appeals ruled that the Federal Communications Commission (FCC) has no authority to regulate how internet service providers manage traffic to their customers. The decision was narrow and appropriate, but it nevertheless leaves Americans without any kind of internet regulator. They need one.

In 2007 several of Comcast’s customers noticed that the company had slowed their access to “peer-to-peer” sites, which allow internet users to share large files directly with each other. This violated the internet principle of “net neutrality”, which says that all packets of digital information should be treated equally (and consequently requires that access to content providers, such as Google, should not be restricted by broadband providers). Several advocacy groups complained to the FCC, and Comcast stopped the practice. The FCC then ordered Comcast to disclose details of its change of heart. Comcast complied but then, in a fit of defiance, challenged the commission’s authority to issue the order at all. So the case went to court.

The FCC was a reluctant regulator to begin with. In the past decade, many European telecoms regulators forced unwilling incumbents to accept open-access policies: telecoms operators had to sell access to their network infrastructure to market entrants, to ensure healthy competition on speed and price. As America’s cable companies rolled out broadband access, they argued, curiously, that a connection to the internet was not a telecommunications service, but an information service, and thus (under America’s arcane telecoms rules) not subject to open-access regulation. In 2002 the FCC agreed, and in 2005 the Supreme Court upheld its authority to agree. Comcast, on that occasion, did not dispute the FCC’s authority.

The distinction between information and telecommunications is important. Comcast offers its customers a variety of bundled services: connection to the internet, cable television, telephony and video on demand. There’s no reason why it shouldn’t, but the FCC’s 2002 decision has left America with a patchwork of local cable monopolies and thus no market recourse for any customer who wants the pure telecommunications service of a simple connection. In its case against the FCC, Comcast argued that peer-to-peer file-sharing was hogging bandwidth. It was. But the most efficient way to allocate bandwidth among customers is to charge heavy users higher prices, which Comcast chose not to do. The real sin, then, was that the file-sharers wanted a service that Comcast did not care to provide. This is not a moral issue, but a market failure.

America needs competition among its high-speed internet providers. Open access has proved to be an effective way to do this elsewhere. Barring that, the FCC’s now-voided rules on net neutrality would have been a poor, but adequate substitute. But now America has neither. Since it is unclear whether the Supreme Court will take up the case, the FCC is left with two options. It could reconsider its stance on open access; sensing this possibility, in February a group of internet service providers (Comcast not among them) promised “years of litigation”. Or the FCC can turn to Congress for a clearer expression of authority. This would be the better course. Thomas Tauke, the head of public policy for Verizon, a telecoms operator, has compared existing regulation to a mystery house, full of empty rooms and dead-end stairwells. It is time to raze it.

America needs clearer laws to regulate internet access