We’re About to Lose Net Neutrality — bye bye internet....

Game of Loopholes and Rules
How did we get here?

The CEO of AT&T told an interviewer back in 2005 that he wanted to introduce a new business model to the internet: charging companies like Google and Yahoo! to reliably reach internet users on the AT&T network. Keep in mind that users already pay to access the internet and that Google and Yahoo! already pay other telecom companies — often called backbone providers — to connect to these internet users. [Disclosure: I have done legal work for several companies supporting network neutrality, including Google.]

But AT&T wanted to add an additional toll, beyond what it already made from the internet. Shortly after that, a Verizon executive voiced agreement, hoping to end what he called tech companies’ “free lunch”. It turns out that around the same time, Comcast had begun secretly trialing services to block some of the web’s most popular applications that could pose a competitive threat to Comcast, such as BitTorrent.

Yet the phone and cable companies tried to dress up their plans as a false compromise. Counterintuitively, they supported telecommunications legislation in 2006 that would authorize the FCC to stop phone and cable companies from blocking websites.

There was a catch, however. The bills included an exception that swallowed the rule: the FCC would be unable to stop cable and phone companies from taxing innovators or providing worse service to some sites and better service to others. Since we know internet users tend to quit using a website or application if it loads even just a few seconds slower than a competitor’s version, this no-blocking rule would essentially have enabled the phone and cable companies to discriminate by picking website/app/platform winners and losers. (Congress would merely enact the loophole. Think of it as a safe harbor for discriminating online.)

Luckily, consumer groups, technology companies, political leaders, and American citizens saw through the nonsense and rallied around a principle to preserve the internet’s openness. They advocated for one simple, necessary rule — a nondiscrimination principle that became known as “network neutrality”. This principle would forbid phone and cable companies not only from blocking — but also from discriminating between or entering in special business deals to the benefit of — some sites over others.

Unfortunately, the FCC decision that included the nondiscrimination rule still had major loopholes — especially when it came to mobile networks.
Both sides battled out the issues before Congress, federal agencies, and in several senate and presidential campaigns over the next five years. These fights culminated in the 2010 FCC decision that included the nondiscrimination rule.

Unfortunately, the rule still had major loopholes — especially when it came to mobile networks. It also was built, to some extent, on a shaky political foundation because the then-FCC chairman repeatedly folded when facing pressure. Still, the adopted rule was better than nothing, and it was a major advance over AT&T’s opening bid in 2005 of a no-blocking rule.

As a result, Verizon took the FCC to court to void the 2010 FCC rule. Verizon went to court to attack the part of the rule forbidding them from discriminating among websites and applications; from setting up — on what we once called the information superhighway — the equivalents of tollbooths, fast lanes, and dirt roads.

There and Back Again
So that’s where we are today — waiting for the most powerful court in the nation, the DC Circuit, to rule in Verizon’s case. During the case’s oral argument, back in early September, corporate lobbyists, lawyers, financial analysts, and consumer advocates packed into the courtroom: some sitting, some standing, some relegated to an overflow room.

Since then, everyone interested in internet freedom has been waiting for an opinion — including everyday folks who search the web or share their thoughts in 140 characters; and including me, who argued the first (losing) network neutrality case before the DC Circuit in 2010.

Web and mobile companies will live or die not on the merits of their technology, but on the deals they can strike with AT&T, Verizon, Comcast, and others.
But, in their questions and statements during oral argument, the judges have made clear how they planned to rule — for the phone and cable companies, not for those who use the internet. While the FCC has the power to impose the toothless “no-blocking” rule (originally proposed by AT&T above), it does not (the court will say) have the power to impose the essential “nondiscrimination” rule.

It looks like we’ll end up where AT&T initially began: a false compromise.

The implications of such a decision would be profound. Web and mobile companies will live or die not on the merits of their technology and design, but on the deals they can strike with AT&T, Verizon, Comcast, and others. This means large phone and cable companies will be able to “shakedown” startups and established companies in every sector, requiring payment for reliable service. In fact, during the oral argument in the current case, Verizon’s lawyer said, “I’m authorized to state from my client today that but for these [FCC] rules we would be exploring those types of arrangements.”

Wait, it gets even worse. Pricing isn’t even a necessary forcing factor. Once the court voids the nondiscrimination rule, AT&T, Verizon, and Comcast will be able to deliver some sites and services more quickly and reliably than others for any reason. Whim. Envy. Ignorance. Competition. Vengeance. Whatever. Or, no reason at all.

So what if you’ve got a great new company, an amazing group of founders, a seat in a reputable accelerator program, great investors and mentors. With the permission-based innovation over “our pipes” desired from the likes of Comcast, Verizon and AT&T… there’s no meritocracy here.

Of course, despite everything the judges suggested during the two-hour argument, it’s possible that they offer net neutrality a reprieve. Given how sticky this morass is, there’s one simple way for you to judge the opinion: If the court throws out the non-discrimination rule, permission-less innovation on the internet as we know it is done. If the nondiscrimination rule miraculously survives, then, for now at least, so too will freedom on the internet.

Is Al Gore pulling the plug on us?