Newsletter - Volume 53, June 2010

FCC Proposes Rules That Support Net Neutrality

On September 21, the Federal Communications Commission (FCC) proposed new rules that would require internet service providers to treat all content equally in terms of transmission speed. More recently, an announcement came that the rules may have proponents in Congress— Sen. Byron L. Dorgan (D- North Dakota) and Sen. Olympia J. Snowe (R-Maine) have both announced a possible proposal for new legislation in line with the new rules proposed by the FCC.

The principle of net neutrality is ensuring that consumers have unhindered access to all legal content, regardless of actual subject matter, its source, or the amount of bandwidth it requires. The intent is to ensure that network operators allow access to all content equally, regardless of whether it is bandwidth-heavy (e.g., music or video streamed from YouTube), or , like an SMS text message, only requires minimal amounts of network resources to transmit. The proposed rules attempt to codify principles of openness, beyond the current regulations, which many find problematic because although these regulations require network service providers to enable access to all legal content, they do not mandate that a network operator could not impede certain traffic because of its heavy bandwidth usage.

The issue prominently came to light when Comcast was accused of slowing some peer-to-peer traffic, asserting that it monopolized a disproportionate amount of bandwidth. Comcast maintained that it was not violating any laws and was merely managing its network resources, but nonetheless did change its practice. The proposed rules aim to officially make such action impermissible, whether the access is being hampered on the basis of content or on the basis of bandwidth usage. Another aim is to prevent a network operator from blocking content provided by a competitor. For example, AT&T and Apple have attempted to prevent iPhone users from accessing competitor's VoIP services, blocking access to the internet phone service Skype, maintaining that its use only clogs the network for other users. If proposed rules pass, AT&T may be forced to open up access.

The proposed rules would not only be applicable to ISPs, but also to mobile phone service providers, affecting access to content using mobile phones and other wireless devices. Such new rules would be a boon to content providers like Google, who owns YouTube, but would come under strong objections from network providers, like AT&T and Comcast, who view the proposed rules as a hindrance. Network providers are concerned that new rules may interfere with tiered pricing structures for faster connections and argue that there is no need for interference into how they manage their networks.

Wireless phone carriers are perhaps amongst the strongest objectors, as it often benefits them to slow or block data-heavy sites, so that their networks are not clogged or slowed when users are accessing sites that require a disproportionate amount of bandwidth, as compared to users accessing mobile-specific sites or receiving text messages. For example, many iPhone users in areas with a significant concentration of iPhones are finding that their service is slowing, as the increased use of such devices drains the network resources. AT&T has attempted to approach this issue by blocking access to some bandwidth-heavy applications.

It remains to be seen whether these rules will be adopted. In the meantime, content providers and network operators will continue to debate how to balance unimpeded access against smooth network operation and the need to manage network traffic so as to avoid bottlenecks and slowdowns across the board.




Disclaimer: The contents of this newsletter are presented for information purpose only, and as such are not intended to constitute legal advice and should not be construed as such or acted upon without seeking advice of legal counsel. This information is not intended to and shall not create an attorney-client relationship of any kind or nature with IpHorgan Ltd. Please contact the firm with queries, concerns or for further details regarding the information presented herein. The entire contents are current only as of the date of the newsletter and are not to be interpreted as the opinions of our clients past, present, pending or future. (c)2010, IpHorgan Ltd. All Rights Reserved.