The Internet is vital to life in 2014, just as dial-up phone service was in years past.
That’s what is disconcerting about last week’s decision by the U.S. Court of Appeals for the District of Columbia Circuit striking down Federal Communications Commission regulations that sought to guarantee Internet neutrality.
The FCC needs to revise its regulations to ensure that Comcast, AT&T, Verizon and other major Internet providers cannot play favorites among content providers and consumers.
The issue is basic: Do legitimate sources of information – Netflix, YouTube, news sites, Facebook, online college courses – have equal access to your homes over Internet lines, or can the telecommunication and cable giants that provide the service impede certain sources and favor others?
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In 2010, the FCC, controlled by Democrats, issued a split decision barring cable and telecommunication companies from favoring some content providers over others, and from charging different rates to different providers.
In a split decision, the appellate court, led by two appointees of President Bill Clinton, held that the FCC overstepped its authority by imposing rules that had barred Internet service providers from giving preferential treatment to some content over others.
An appeal is almost a certainty.
Major economic forces are at work. Cable and telecom giants are pitted against major information providers, many of them based in California, such as Google, Apple and Netflix.
Netflix was founded when many of today’s high school seniors were not yet born. It now lays claim to being the world’s leading Internet television network with more than 33 million customers watching more than a billion hours of programming per month.
Netflix bases its business model on ready access to consumers’ homes. As Netflix said in its 2013 annual report to the Securities and Exchange Commission: “We rely upon the ability of consumers to access our service through the Internet.
“To the extent that network operators implement usage based pricing, including meaningful bandwidth caps, or otherwise try to monetize access to their networks by data providers, we could incur greater operating expenses and our subscriber acquisition and retention could be negatively impacted.”
Verizon, the lead plaintiff in the suit over the FCC regulations, has a financial stake in Redbox, a competitor of Netflix. Verizon has little incentive to allow Netflix to continue to stream video into homes at the expense of Redbox.
In its annual statement last year, Verizon said: “The regulation of broadband activities and any related court decisions could restrict our ability to compete in the marketplace and limit the return we can expect to achieve on past and future investments in our broadband networks.”
Netflix might have sufficient capital to battle cable giants to maintain access, and, undoubtedly, pass the costs along to its customers. But if cable providers can play favorites, the next version of Netflix could be frozen out.
As attorney and former Obama administration official Susan Crawford wrote in an op-ed published in The Bee last week, the problem dates to 2002 when the FCC, then controlled by Republicans, exempted high-speed Internet access from the same common carrier regulations that apply to phone service.
If that decision made sense in 2002, it doesn’t in 2014. Twelve years is an eternity in the Internet age. The appellate court invited the FCC to revisit the 2002 decision. That needs to happen.