Chapter 17: Network Neutrality: What Is It? Will it Survive? And the Consequences of Its Demise for the Music Business
A Brief Overview
Network neutrality is the principle that Internet service providers (“ISPs”) should treat all content on the Internet equally. Just as phone companies can’t selectively degrade the service of certain callers or block their service altogether, everyone providing content to the Internet should start on the same footing: ISPs shouldn’t slow down certain services, block legal content, or offer to let companies pay to get their content to customers faster than a competitor.
But in January 2014 a federal circuit court in Washington DC, which has jurisdiction over the Federal Communications Commission, dealt a major blow to network neutrality. The federal appeals court threw out FCC’s rules that required the ISPs to give all traffic equal access through their networks. The decision could pave the way for Internet service providers like Verizon, AT&T or Comcast to charge content companies — for instance, ESPN, Netflix, Facebook—or music services such as Spotify or iTunes — to deliver their content to consumers at a faster speed. This would leave small content companies or start-ups on a “slower track” than their wealthy competitors, or an ISP could block a content provider entirely for any reason.
The FCC tried to prevent those deals by issuing a set of rules in 2010 known as the ”Open Internet Order.” But the court found that those rules were invalid. So these deals may be coming soon. In challenging the 2010 regulations at issue in the case, Verizon told the court that if not for the FCC rules “we would be exploring those commercial arrangements.”
Dangers of Eliminating Network Neutrality
Notwithstanding its ruling, the three judge panel pointed out the dangers of eliminating the Net Neutrality:
Proponents of net neutrality—or, to use the Commission’s preferred term,“Internet openness”—worry about the relationship between broadband providers and edge providers. They fear that broadband providers might prevent their end-user subscribers from accessing certain edge providers altogether, or might degrade the quality of their end-user subscribers’ access to certain edge providers, either as a means of favoring their own competing content or services or to enable them to collect fees from certain edge providers. Thus, for example, a broadband provider like Comcast might limit its end-user subscribers’ ability to access the New York Times website if it wanted to spike traffic to its own news website, or it might degrade the quality of the connection to a search website like Bing if a competitor like Google paid for prioritized access
But circuit judge Tatel, writing on behalf of the court, concluded that it’s hands were tied because of a prior determination by the FCC itself.
FCC’s Classification of ISPs
The court found that the FCC’s network neutrality rules could not be applied to ISPs because the FCC itself had, in 2002, decided not to classify them as “common carriers.” At that time, and under the Republican administration of George W. Bush, Chairman Michael Powell (Collin Powell’s son) deemed ISPs to be subject to Title II of the Telecommunications Act of 1996. Title I of the Act of the Act, on the other hand, provides rules for common carriers such as telephone companies. Title I services are subject to much tighter regulation. Under Title I, for instance, telephone companies cannot discriminate against various users by charging more than others. The rational is that telephone companies are public “utilities” that are crucial to the general public similar to electricity. Bur chairman Powell decided not to classify ISPs in the same category as telephone companies. One reason for his original decision, Mr. Powell said in an interview, was that in 2002 the Internet needed enormous capital investment, which would have been deterred by tighter regulations.
The Right, But Not The Will To Re-classify
The circuit court said the FCC has the authority to change the classification of ISPs from title “information” providers to Title I common carriers. Moreover, the current Chairman of the FCC, Tom Wheeler, has expressed his strong support for basic fairness on the Internet:
As a result of the importance of our broadband networks, our society has the right to demand highly responsible performance from those who operate those networks.
But the Chairman has also made it clear that he has no intent to re-classify the ISPs as common carriers. The reason is probably political. Although Barach Obama has expressed support for network neutrality (In 2007, in response to a question at a town-hall meeting sponsored by MTV, Mr. Obama said he was “a strong supporter of net neutrality”), and progressive commentators such as NY Times have called for reclassification, such a move may create a huge storm among Republicans in congress who are strong supporters of free enterprise and “innovation” on the Internet. The backlash could be proposed legislation permanently banning network neutrality or any other rules restraining the ISPs from discriminating between users.
Therefore instead of re-classifying the ISPs, the FCC has decided to use a bit of “wiggle room” in Judge Tatel’s decision. Although the court found that the regulations preventing discriminatory deals were invalid, it said that the commission did have some basic authority “to promulgate rules governing broadband providers’ treatment of Internet traffic.” It also upheld agency rules requiring broadband companies to disclose how they manage their networks.
Current Controversy: The New Proposed Rules
Using this opening, Wheeler announced that he intended to promulgate new rules that would make the ISP’s subject to “commercially reasonableness.” On Thursday May 15, 2014, the FCC proposed these new rules and for public debate. According to Chairman Wheeler, the new rules would “preserve and open Internet” by preventing ISP from slowing the transmission of content. However, the rules, if adopted, would allow content providers to pay for a guaranteed fast lane of service. Opponents of the plan argue that allowing some content to be sent along a so-called “fast lane” of service would discriminate against other content. One commentator wrote:
Many other countries provide much greater bandwidth at a much lower price. In these countries all of the data is already in the fast lane. In order to charge for the fast lane the internet service providers must maintain the slow lane. The proposed rules would seem to give the ISPs a financial incentive to create fast lane for those who can afford the “tolls” thereby making it more difficult for indie or start-up content providers, including music services, to succeed.
On the other hand, FCC also specifically requested public comments on whether and by how much the commission should tighten regulation of Internet service providers. For example, the commission asks whether it should reclassify high-speed Internet service as a utility like application, subject to stricter regulatory controls than now apply, and if it should ban certain practices that might impede consumers from getting equal access to all legal online content through their chosen Internet service provider. President Obama, who campaigned in 2008 promising to enact net neutrality, said through a spokesman that the administration “will be watching closely as the process moves forward in hopes that the final rule stays true to the spirit of net neutrality.” The public had until Sept. 10 to file comments replying to the initial discussions. The new rules became a lightning rod for criticism. More than 3.7 million comments about the policy have flowed to the commission. Many of them argued that Mr. Wheeler’s plan does not go far enough to protect an open Internet.
On October 9th, President Obama said that he was “unequivocally committed” to net neutrality and firmly opposed to any proposal that would let companies buy an Internet fast lane to deliver their content more quickly to consumers. The statements, at a town-hall meeting in Santa Monica, Calif.ornia were designed to give a strong signal to Mr. Obama’s Democratic appointees on the Federal Communications Commission, including Mr. Wheeler, that he wants them to heed the overwhelming public sentiment to protect net neutrality.
Impact On The Music Business
The most obvious impact on the music business if network neutrality does not survive, is that entrenched players and well heeled players in the music space such as Apple, with billions of dollars of cash in reserves, will be able to buy a fast lane. Of course paying for bandwidth is basically how online enterprise works, including music services. If a music service has operates a site, it will cost a certain amount of money to apportion bandwidth to do the site wants to do, and they pay for that, similar to paying for a domain name and server host. What they would not have to about, if Net Neutrality applied, is that an ISP is going to charge them more money to deliver content to the user who chooses to access it, beyond what they have already paid in bandwidth. Established services such as Pandora or services owned by financially powerful companies such as Beats Music and iRadio, both owned by Apple, or Google Play could afford to pay for a “fast lane” but start-ups such as the simulcast streamed by Small’s jazz club probably could not. (See Chapter 27, “How a Jazz Club Is Using the Internet to Reach a Worldwide Audience and Create a New Income Stream for Artists Who Play There”).
Net Neutrality and Mobile
Even when the FCC’s Open Internet Rules were spelled out in 2010, it was very careful to carve out broad exceptions for wireless in order to encourage further innovation. In June 2014 T-Mobil took advantage of those exceptions to launch a new initiative it’s calling Music Freedom. Under this program a handful of music services will be blessed by the carrier so that they don’t hit subscribers monthly data allowances. (T-Mobile doesn’t charge overage fees, but throttles data speeds once users reached prescribed limits.) The list of Music Freedom-compatible services currently includes Pandora, Rhapsody, iHeartRadio, iTunes Radio, Slacker, Spotify, Samsung’s Milk, and the forthcoming streaming service from electronic music destination Beatport. It’ll also be taking votes from customers through its website and on Twitter for other services to add to the list of exemptions. According to one commentator:
It sounds wonderful—and right in line with the “uncarrier” image that firebrand CEO John Legere has worked so hard to cultivate—but it’s a terribly slippery slope: T-Mobile has decided, arbitrarily, that some of the data traveling over its pipes should count against a cap, while other data should not. What’s to stop it from using data cap exemptions as a punitive measure against content providers that aren’t on good terms with T-Mobile (or its parent company Deutsche Telekom)?
But T-Mobile points out that all that it’s doing is letting its users listen to music without charging them for data and that it is not charging music services for the privilege of being exempt from the caps. On the other hand, without neutrality rules, it could if it wanted. In addition there is nothing to prevent T-Mobile from excluding any other music service from “Music Freedom.” Earlier in the year, AT&T announced a new “Sponsored Data” program that lets developers and brands pay to deliver content to your mobile device outside of your data caps. This good be good for AT&T users—they may receive more content without paying data overcharges. But it creates an unlevel playing field for content providers who can afford to pay AT&T.
The following compilation of expert opinions about network neutrality, is re-printed with permission from Creative Intelligentsia,a music business blog published by Janie Ross Coulter, Editor-in-Chief. This collection of opinions was compiled at the beginning of 2014 just a short time after the decision in Verizon vs. FCC and before the new rules were announced. Each opinion provides insights about issues surrounding network neutrality, including what’s at stake. The rest of this chapter is reprinted from Creative Intelligentsia.
Intelligentsia Round-Up—Net Neutrality: Should ISPs like Verizon and ATT be able to command price-tiering of online services, as well as other types of discriminatory and blocking behavior? Would the results be helpful or hopeless for the creative community? A Federal Court very recently struck down the FCC’s “Open Internet Order,” paving the way for renewed debate about the highly controversial issue of Net Neutrality. Complexity reigns, propaganda abounds, but who are the real winners and losers, if this ruling remains intact? Below, you will find some insightful, layered, and quite disparate opinions:
Dennis Dreith (Music Composer, Orchestrator, Advocate)
Lloyd Kaufman (President of Troma Entertainment, Inc. and Creator of The Toxic Avenger)
David Leibowitz (Managing Partner, CH Potomac) former General Counsel, RIAA
Casey Rae (Executive Director, Future of Music Coalition)
Ted Sabety (Intellectual Property Attorney)
Charles J. Sanders (Outside Counsel, Songwriters Guild Of America, Inc.), and
Scott Cleland (President of Precursor LLC and Publisher of www.GoogleMonitor)
For many independent audio and audiovisual artists, independent filmmakers, and other creators of independent content the internet has long held the promise of a level playing field and a place where they could disseminate the results of their creative efforts absent corporate control, unreasonable censorship, or a need to fit into a preconceived mainstream “commercial” mold. For many of these individuals the recent decision by the D.C. Circuit Court of Appeals decision negating the FCC s “Open Internet” regulation is a tremendous blow to an open and free internet. Make no mistake; the internet is far from a paradise for these individuals, and has truly wielded a double-edged sword where the same freedom of expression has also led to a hot bed of illegal downloads and piracy, robbing many of these same artists of fair and equitable compensation for the use of their works. Preserving a free and open internet while protecting the rights of its content providers is no simple task. But, regardless of the difficulty or complexity, it is one that must be accomplished if creative artists and the entities that support them are to survive.
The recent decision by the D.C. Circuit Court of Appeals—touted as the panacea to provide the media giants with the ability to control unauthorized dissemination of content—however, will do far more harm to this cause that any good that may come about in terms of perceived protections. Ironically many of these same media giants who are praising this decision, were the same organizations who just a few short months ago were on a rampage against SOPA (Stop Online Piracy Act), claiming that it would result in total censorship and threaten our First Amendment Rights. There is no doubt that SOPA was a flawed piece of legislation, but its goal was clearly curbing rogue internet sites who are actively promoting piracy. While this may not have been the perfect vehicle to solve that problem, it was a step in the right direction. Perhaps what is needed is a better piece of legislation that will do more elegantly what SOPA was intended to do. What is not an appropriate solution is to dismantle Net Neutrality to the detriment of a free and open internet.
While some may claim that this ruling will allow internet service providers to block and/or control rogue internet sites that promote illegal downloads and piracy, what it really means is that media giants such as Comcast, Google, Clear Channel, etc. will have a much greater disproportionate say over what content is allowed to air. It appears that the giant media conglomerates are only opposed to censorship when they are the ones who don’t get to be the censor. Where large corporate interests are in control of the airwaves, independent creative content providers (musicians, filmmakers, writers, etc.) rarely get equitable exposure. Ask yourself how many indie bands are heard on terrestrial AM and FM radio. How many indie filmmakers are represented on Network Television programming, how many major motion picture companies distribute “truly” indie films, and on and on. These are the areas that are controlled by large corporate interests and giant media conglomerates. These are the very same entities that will be advantaged by this decision. These media giants want the very same for the internet as they enjoy for traditional broadcast vehicles.
The law of the land may protect our right to freedom of expression, but if programming decisions rest in the hands of a few large corporate entities, how valuable will free expression be if it never sees the light of day?
In addition to his career as an active film, television and jingle composer (The Punisher, Mobsters, The Shadow, Columbo), Dennis Dreith has orchestrated and /or conducted scores for such pictures as Misery, Addams Family, Heart and Souls and A League of Their Own. Mr. Dreith is currently the Chief Executive Officer of the Film Musicians Secondary Markets Fund as well as the Independent Administrator of the AFM and SAG-AFTRA Intellectual Property Rights Distribution Fund.www.raroyalties.org, www.dennisdreith.com
Innovation and Our Better Future depend on Preserving Net Neutrality. Troma Entertainment (www.troma.com) would never have reached it’s 40th year as arguably the world’s longest running independent movie studio if Net Neutrality or the Open Internet did not exist. I know, I know, some might say, “That would be a good thing.” Haha! But without Net Neutrality, we probably would not have visionary innovations like Crowdfunding, Macklemore, Huffington Post, YouTube, Justin Bieber and maybe even Music Intelligentsia. Net Neutrality is essential to free speech and allows for a free and diverse Internet of equal opportunity. The Internet as our last democratic medium is severely threatened as I write this. The American Courts have decided to nullify Net Neutrality and the major media conglomerates are down in Washington, D.C. 24/7 spending kabillions of dollars to lobby against our beloved Open Internet.
The mega cartel that controls world media has their ass in a tub of butter. They control or own the cinemas, newspapers, T.V. stations, radio and even Broadway “legitimate” theaters. The only competition they face is on the Internet because the playing field is level. Troma can compete with Disney if Troma has art or “content” that is interesting or compelling. The mediocre “suits” who control media do not want to get up in the morning and have to think. It’s much easier to have an oligopoly club where they control the marketplace 100%. It’s a club of smugness that promotes cheap-to-make walking feces like the Kardashians or brainless blockbuster movies with non-stop explosions. The “news” we get in The New York Times or on T.V. is pre-digested baby food. Because of this mainstream disgrace, so many of us go right to the Internet for our news, art and commerce.
Net Neutrality is defined as the principle that Internet Service Providers (ISPs) should enable access to all content and applications regardless of the source, and without favoring or blocking particular products or websites, but it’s more than that—it’s our freedom of speech! Free speech- not just giving it, but also free speech in the form of our right to receive diverse news, art, commerce or simply some fat, sweaty teenager blogging about Robin’s nipples in “Batman & Robin.”
The giant devil worshipping international media conglomerates want to create a super highway with expensive prohibitive tolls with faster and better Internet for themselves. This will make it impossible for independent artists or innovators because they simply can’t compete. The result will be similar to U.S. television, where the biggest companies own the networks and cable systems etc. and air constant iterations and reruns of their own content. It will become harder to get anything independent into the consciousness of the public. The Internet will become an NBC- ABC-CBS kind of world unless we the people take action.
In 2010, the Federal Communications Commission (www.fcc.gov) created the Open Internet Order which set anti-blocking and anti-discrimination Network Neutrality rules. While the FCC claimed the rules would protect Open Internet, many of us Net Neutrality advocates felt the proposed rules had many loopholes and were made with the purpose of winning support from the cable lobbyists. Of course, we were right. The FCC stated that the rules would make it illegal for ISPs such as Verizon to block services or charge content providers like Netflix for faster Internet highways to their customers. Now, just a few weeks ago- the rules were invalidated by the US Court of Appeals for the District of Columbia because the FCC chose to classify broadband providers in a manner that exempts them from treatment as common carriers and therefore has no right to regulate them.
If the court ruling stands, then ISPs can hike prices and charge content providers to deliver Internet traffic faster while also eliminating content providers that cannot pay the fees. As consumers, we need to be aware of our standing and that ISPs will now have more control over regulating the content sites we may want to see. If certain sites are faster while others are slow because they can’t pay the tolls, we will get pushed into using only the sites that are quick to load. Those of us who can’t pay the tolls on the super highway will be relegated to the bumpy, slow buffering dirt road. Troma and 1000’s of potential innovators will disappear. I predict Netflix and the like will make sweet-heart deals with the ISP/Conglomerate club in order to close the door on competitive future innovators.
We will see the same thing happen with the Internet as we have with the car, telephone, food industry, and with television. People will be kept in the dark and given an illusion of variety, the sharing of information will be controlled by a few big conglomerates and change-the-world innovation like Kickstarter, Anonymous, Bitcoin, Troma and yes, 2 girls 1 cup will all be practically inaccessible. The biggest problem is how these 1st Amendment issues are intentionally being kept from the public. Beware of elected officials and T.V. talking heads who decry Net Neutrality as “purveyor of piracy and pornography.” This same bogus argument has been used by The Big (White) Boys and the MPAA since the time of VHS. The elite always throw a monkey wrench into new technology to delay it so they can and then take it over. They did it with VHS and they are now trying to do it with the World Wide Web.
We defeated SOPA (Stop Online Piracy Act) which had nothing to do with stopping piracy. It had to do with stopping competition on the Internet. Senator Al Franken and other elected officials were surprised at the magnitude of the number of voters who protested against SOPA and who want to preserve Net Neutrality and the Open Internet! Senator Franken reportedly changed his position as a result. We must all make our voices heard and let our elected representatives know that if Net Neutrality and Open Internet go away, they too will go away.
Lloyd Kaufman is President of Troma Entertainment, Inc. and Creator of The Toxic Avenger,with Regina Katz.www.lloydkaufman.com and www.troma.com
Broadband delivery of content, particularly video, is a bandwidth hog. For example, Netflix alone uses about one-third of all US bandwidth during peak hours; and just adding You Tube raises that total to one-half. Thus, it should come as no surprise that broadband providers, services, potential new entrants, and consumers all have interests in how broadband availability and use will be determined.
Through its “Open Internet” rules, the FCC crafted a regime premised on anti-blocking and anti-discrimination. Though the D.C. Circuit overturned these rules, they did confirm the Commission’s authority to act, albeit under Title II of the Communications Act that governs “common carrier services.”
But the broadband delivery of video, music, and other content and information is in a highly fluid state, not only because of the DC Circuit’s opinion, but also because of the dramatic business and technology changes now taking place. One need only look at the recent announcements by AT&T of their “Sponsored Data” program (which allows services to cover the data costs that would otherwise be passed on to their subscribers), and Verizon’s planned acquisition of Intel Media (which has been developing an Internet TV service named On Cue) to see how market changes and disruptions are occurring at a rapid pace, and how they can impact broadband provider behavior and potential government oversight going forward.
The creative and start-up communities, along with other innovators and public interest groups, have valid concerns about potential harms that could result in the absence of an “Open Internet”—such as denial or reduced access as well as increased costs imposed on services and consumers—and should continue to vigorously voice their concerns, so that they remain top of mind by providers, services, regulators and the public. After all, an ecosystem that allows broadband providers to give preferential treatment to their own services, as well as those of other well-financed incumbents, could necessarily impact on the ability of new innovative services to compete in the market.
But with that being said, for the following reasons, I do not see any near term actions from broadband providers that will threaten continued open access to the Internet regardless of the Circuit Court’s opinion which, by the way, I do not see being overturned. First and foremost, for a variety of reasons, broadband providers do not want to be regulated as common carriers and are not likely to take actions that would encourage either the FCC or Congress to impose common carrier status onto them.
Congress is considering a major overhaul of the Communications Act which, among of things, could set the stage for revisiting Open Internet rules. Yet another reason for broadband providers to act cautiously.New FCC Chairman Tom Wheeler has vowed to “ensure that these networks continue to provide a free and open platform for innovation and expression.” A Verizon spokesperson has declared that they “remain committed to the open Internet which provides consumers with competitive choices and unblocked access to lawful websites and content, when, where and how they want.” And other major broadband providers have made similar declarations. Verizon will require regulatory approval to acquire Intel Media. Not only will they be unlikely to engage in anti-competitive behavior during this period, there may well be “Open Internet” type rules imposed upon them as a condition of receiving the approval. The same also could apply should Charter or Comcast succeed in efforts to acquire Time Warner Cable
Perhaps Netflix CEO Reed Hastings summed it up best during his recent Q4 2013 Earnings Call: “The most likely case…is that ISPs will avoid this consumer-unfriendly path of discrimination. ISPs are generally aware of the broad public support for net neutrality and don’t want to galvanize government action.”
In closing, while near term prospects for access to an open Internet remain safe, potential discriminatory threats in the absence of mandated Open Internet rules in the long term remain uncertain. It will therefore be incumbent upon creators, innovators and public interest groups to not only continue to press their case, but also to remain vigilant in assuring that the Internet continues to serve as an essential communication medium for all.
David Leibowitz is Managing Partner of CH Potomac, Co-founder and Chairman of Sir Groovy, Chairman of Moonrider, and Senior Advisor to Gibson Brands. Earlier in his career, David also Co-Founded and Chaired Verance, served as Executive Vice President and General Counsel of RIAA, was a partner at Wiley & Rein, and Policy Planning Advisor to the Register of Copyrights.
Last week— January 14, 1978—a federal appeals court in Washington, DC struck down rules put in place by the Federal Communications Commission keeping the Internet accessible to everyone. By overturning the FCC’s 2010 Open Internet Order, the court struck a serious blow to creative expression and entrepreneurship online. The ability to compete on a level playing field is the core principle behind “net neutrality”—a term that’s come to define the policy debates about what kind of Internet we all get to experience.
One thing to make clear up front: the FCC’s Order applies only to lawful content. The rules explicitly allow rightsholders and Internet companies to take action against illegal content, including music distributed or accessed without permission.
The idea of net neutrality is actually pretty simple. Most folks understand that when you pick up a telephone to make a call, the carrier doesn’t put you on hold so the rich people can talk first. When you finish band practice and go to order a pizza from the local joint, the operator doesn’t prioritize the calls to Domino’s. We expect the Internet to work that way, too. But without basic rules laying out what your service provider is allowed to do, things could change really quickly.
In America, there are just a few companies offering Internet service, and they want to make more money by charging content providers—anyone with a website, service or application—a extra money for the privilege of reaching end users. Makes sense for ISPs, but you can see how that would be bad for users—they won’t know why their favorite site or app loads slow or is altogether unavailable. For musicians and other creators, it’s even worse. It means our offerings may be disadvantaged at a time when we need every advantage we can get.
Maybe you’re one of those artists who thinks Spotify is a bum deal. Perhaps you like the flexibility afforded by a smaller—but no less innovative—site like Bandcamp. What happens when an ISP decides that Spotify can pay more and blocks or otherwise interferes with your music getting to fans on your preferred platform? What if an ISP charges overages for data on your favorite apps, but exempts traffic from their corporate buddies? Musicians have been down this road before. We saw what happened when Clear Channel and their ilk were allowed to gobble up the mom and pop radio stations around the country. It would be devastating if this happened to the web.
Independents remember the old days when they couldn’t compete with the majors for shelf space. Vertically integrated entertainment conglomerates can probably afford to pay for prioritization, but what about an indie label that just wants to build a business and do right by its artists? Keep in mind that some of these Internet service providers already own major content companies. Do we really trust them to keep the lanes open to competitors?
This problem is of the FCC’s own making. Back in the early 2000s, the Commission chose to reclassify broadband Internet as an “information service” rather than a “telecommunications service” like the phone lines. This put them in a regulatory bind that they’ve been trying to wiggle out of ever since. The most straightforward solution would be to simply reclassify, which the Supreme Court says they have the right to do, provided they offer sufficient justification. Even the court that just threw out the existing rules seems to agree that this is the clearest way for the FCC to preserve a level playing field. What remains to be seen is whether there’s the political will. That’s why all Internet users—including musicians—need to keep the pressure on.
Congress could always step up to the plate and write laws to clarify the FCC’s authority, but we all know how difficult it is to get the legislative branch to do much of anything these days. But if we let them know what’s at stake, they just might. Musicians and other artists depend on the ability to reach potential audiences. That’s why thousands of musicians and independent labels have already gone on record in supporting an open Internet via Future of Music Coalition’s Rock the Net campaign. It’s time to reengage.
Casey Rae is a musician, recording engineer, educator, journalist and media pundit. Casey regularly speaks on issues such as new business models for artists, telecommunications policy and intellectual property at conferences, universities and in the media. He routinely works alongside leaders in the music, arts and performance sectors to bolster understanding of and engagement in key policy and technology issues, and has written dozens of articles on the impact of technology on the creative community. Casey is an adjunct professor at Georgetown University, and also serves on the Board of Directors of the Media & Democracy Coalition and the National Alliance for Media Arts and Culture. He currently records and publishes under the moniker The Contrarian and is the Grand Poobah of Lux Eterna Records.
The reality is that 8 years after the Telecommunications Act of 1996 was passed, most people would expect that data network services, whether delivered by a telephone wire, cell phone signal or cable television service, are a common carrier functionality that everyone expects to have access to, sort of like telephone service, electricity, water and sewage. So right off the bat, the question is whether this issue requires re-visiting certain exemptions from regulation called out in the Act. But that would require an act of Congress.
Many content providers, especially in the music business, oppose net-neutrality because it makes digital piracy cheap to operate or consume. In other words, without net neutrality, the music business can force the broadband service providers to block websites promoting or servicing piracy, or force them to pay royalties, a cost that they can pass on to the piracy websites, thereby killing them off.
Be careful what you wish for: without regulation, Verizon could charge the music business a fee for that protection. In other words, Verizon, in some ways exempt from policing content under copyright law by virtue of being a “DSP” under the DMCA, may be in the position of being able to throw the “off” switch on a piracy website for a fee charged to the copyright owner. A corollary result is a worse outcome for the music business. The same regulatory-free environment may permit Verizon to charge one music label more to distribute its videos or sound recordings than another. In some sense, a lack of net-neutrality may breed modern payola. So opposing net-neutrality regulation is not necessarily in the interest of creative artists.
It is unlikely that a regulation will issue half-way anyway, whereby Verizon can block or discriminate against edge services that service piracy, but cannot charge for copyright protection services or discriminate between legitimate music websites. Companies like Verizon have resisted for years the notion that they have to police what travels over their wires, and I expect will not do so in an unregulated environment unless it is profitable.
In any case, decision of the DC Circuit Court of Appeals looks to the un-trained eye like a rejection of net neutrality, but frankly, it is anything but. The court remanded the case back to the commission, while at the same time upholding the notion that the FCC had the authority to act to promote net neutrality. All the court found with was the scope and detail of the FCC regulations ran afoul of the telecommunications statute.
First, the court approved the commission’s conclusion that net neutrality, would promote innovations in the field of the “edge services,” e.g. content providers like Netflix, YouTube, Facebook, etc.., and would not burden the DSP’s like Verizon, even pointing out that “Verizon has given us no persuasive reason to question that judgment.”
Second, the court found that the FCC had statutory authority to issue regulations over broadband service providers under the Act of 1996 that promote the development of “advanced telecommunications,” contrary to Verizon’s contentions.
At a philosophical level, the net neutrality people seem to have won. The problem the court was faced with is that the Telecom Act of 1996 exempts certain advanced telecommunications services from treatment as a “common carrier,” like telephone service, electricity, water and sewage. The court concluded that the regulations were stiff enough to treat the broadband service providers as common carriers in their delivery of data networking services. As a result, the court struck down the regulations themselves, except for the requirement of a broadband service provider like Verizon to disclose to its customers how it handles its data traffic.
The court is clearly inviting the FCC to try again at crafting regulations in this area and even Congress to reconsider whether data traffic warrants common carrier treatment as a matter of statutory law. Stay tuned for Act II.
Ted Sabety is principal of Sabety +associates, a law firm in New York City that advises technology and electronic media clients on a range of intellectual property issues. Ted has advised various music industry clients in the area of digital music distribution and worked on the plaintiff side of the Napster case back in the day. Find out more at www.sabety.net.
Charles J. Sanders
It’s time to brand the so-called “net neutrality” movement as what it mainly is: pure agitprop, generated by those who have sought for two decades to derive commercial benefits from the Internet on the backs of others, without concerning themselves with fair payments to creators or the rights of private companies to control their own networks.
Most informed music creators, led on this issue by songwriter and SGA president Rick Carnes, have long considered the term “net neutrality” as synonymous with the concept of blocking the ability of a broadband network to protect itself –through reasonable network management initiatives– from devolving into a copyright thieves’ paradise. Such unfair constraints on filtering and other management tools result in huge expenses to the company and devastating damage to creators, but provide massive benefits to search engine proprietors, criminals and free-loaders.
The DC Circuit Court of Appeals recently made quick work of the US Government’s attempt to mollify the many “right to piracy” advocates supporting broadened FCC regulation of the Internet, by pointing out the ludicrous nature of the Commission’s attempted regulatory actions in light of its own precedents. “Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the commission from nonetheless regulating them as such,” Judge David Tatel wrote for the court. FCC Chair Tom Wheeler responded that the FCC would now seek in more unobtrusive ways to ensure that broadband networks simply “operate in the public interest.”
Let’s hope that the Chairman is true to his word. An array of antitrust and pro-competition laws already address the marketplace pricing issues frequently raised by net neutrality proponents as core concerns. Members of Congress and the Department of Justice are actively monitoring the system for abuses in this regard, and will undoubtedly continue to do so. There is no need for unnecessary governmental interference by the FCC.
Perhaps we can now finally get on to the business of creators and companies working together to make the Internet a safe place to conduct commerce in the arts. Perhaps ISPs and other digital communication providers can now finally oversee their networks in ways that avoid them having to pay for the pushing of massive amounts of stolen copyrighted material through their virtual pipes by thieves running illegal and hugely profitable enterprises, thereby freeing up money for R&D and investment in actual service improvements.
And perhaps now the public will finally realize that those same good folks who led the fight to kill legislation that would have helped shut down illegal copyright theft sites around the world –because governmental intervention was anathema to the “spirit of freedom” and would “break the Internet”– are the very ones behind the movement to get government to interfere with the Internet through the FCC. The hypocrisy of these self-interested free lunchers, perpetually hiding behind bogus free speech claims to protect their supposed First Amendment right to loot, knows no bounds.
As a freedom of speech and information activist for over three decades (I co-founded the James Madison Project for Freedom of Information in the 1990s), I am absolutely, personally convinced that no private company that intends to compete in the marketplace is going to engage in content-based regulation other than the filtering of child pornography and massive copyright infringements. If one does, the reaction of the marketplace to that service provider will undoubtedly be swift, and decidedly negative. If the case is otherwise and requires additional attention, there are mechanisms in place to deal with that then. For now, however, it is enough to recognize the “net neutrality” issue for the propagandistic, self-serving nonsense that it is, and move forward toward establishing a freer, fairer system that serves the public interest by benefiting creators and consumers both.
Charles J. Sanders has served as outside general counsel to the Songwriters Guild of America, Inc. since 2005. He previously served as in-house counsel to the National Music Publishers’ Association, Inc for two decades, and has been an adjunct professor at New York University since 1993. He is also a member of the bars of New York, California, and Washington, DC, and co-founder of and counsel to the freedom of information organization known as The James Madison Project, Inc. The opinions above are solely those of the author, separate and apart from any organization or company with whom the author may be affiliated.
This Court delivered an unusual win-win outcome in Verizon v. FCC that enabled each party to win on their re spective and different must-win issues: the FCC had its core “general authority to regulate” broadband affirmed and Verizon avoided common carrier regulation of broadband.
Specifically, the Appeals Court handed the FCC a big win in ruling that the FCC the does have the “general authority to regulate,” broadband and “promulgate rules governing broadband providers’ treatment of Internet traffic,” in order to “preserve and facilitate the “virtuous circle” of innovation that has driven the explosive growth of the Internet.
Specifically, the Court also handed Verizon and the broadband industry a big win on its top concern in ruling that the FCC does not have the authority to impose common-carrier-like regulation on broadband providers.
If the parties do not appeal, and the FCC also works on new broadband information service traffic-rules-of-the-road that comport with this decision, this effectively could settle into a de facto net neutrality peace given that the FCC’s “general authority to regulate” broadband would be unchallenged and the broadband industry’s biggest fear, common carrier regulation of broadband, would be off the table.
Practically, there should be little real change as a result of the court decision because before and after the decision the broadband industry was, and continues to be, committed to net neutrality, meaning that Internet users do have the freedom to access the legal content and applications of their choice.
The FCC has said that it will revisit its net neutrality rules to comport with the Appeals Court decision legal boundaries. And the broadband industry remains committed to working with the FCC to ensure that users continue to enjoy the freedoms of an Open Internet in accessing the legal content and applications that they want, need and expect.
Lastly, this decision also underscores the need to modernize seriously obsolescing 1934 communications law for the 21st Century.
Scott Cleland is Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests and President of Precursor LLC, a research consultancy for Fortune 500 companies. Cleland served as Deputy U.S. Coordinator for International Communications and Information Policy in the George H. W. Bush Administration.
 NY Times, May 16, 2014, Michael G. Kaplin
 Although they officially never admitted doing it, it was well documented that Comcast slowed speeds (also referred to “throttling”) for BitTorrent traffic on their network in 2007. Some commentators saw this violation of net neutrality as helping the record business by reducing bandwidth costs by slowing bandwidth speeds of those who may have been using the BitTorrent protocol to avoid paying for permanent copies of recorded music as well as movies and TV shows. See the commentary of attorney Chris Castle’s in Intelligentsia Round-Up—Net Neutrality,” Creative Intelligentsia,1/27/14. http://www.creativeintelligentsia.com/?s=net+neutrality. But others point out that if Comcast could start tampering with traffic of one kind of stream they could do it with any others they didn’t like for any reason such as those with whom they were not doing business.
 Statement Of Chairman Julius Genachowski, Re: Preserving the Open Internet, GN Docket No. 09-191, Broadband Industry Practices, WC Docket No. 07-52
 “T-Mobile’s ‘Music Freedom’ is a great feature—and a huge problem by Chris Ziegler The Verge 6/18/14
 AT&T’s Sponsored Data is bad for the internet, the economy, and you” By Nilay Patel, The Verge 1/6/14
 Intelligentsia Round-Up—Net Neutrality,” Creative Intelligentsia,1/27/14