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Net Neutrality and the New Congress -- Meh

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After all the shouting has died down, after the House elects its Republican leaders and after the Senate sorts itself out, the reality is that policy in the telecom sector will likely remain where it has been for the past two years -- in state of suspended animation. That's a shame, because the people who can most benefit by some reasonable and common-sense changes may not have the opportunity to do so.

The two issues at the top of the list are Net Neutrality and the wonky-sounding "reclassification" of broadband services. Net Neutrality is the simple concept that those who control the telecommunications networks shouldn't be able to play favorites with the content that is transmitted over those networks. It's an old concept, as Prof. Tim Wu pointed out in his book, Master Switch: The Rise and Fall of Information Empires. The simple, fair idea is that everyone online should have the same ability to make his or her voice or service known to the rest of the world.

President Obama campaigned in part on restoring an Open Internet. Julius Genachowski, his chairman of the Federal Communications Commission (FCC) hasn't delivered, and probably won't. As his pattern of activity has developed, Genachowski has ducked the major issues to which the big telecommunications companies, aided by the congressional Democratic Blue Bells and by all congressional Republicans, have objected. He has the votes of the other two Democratic FCC commissioners, but that's not enough for him.

As a result, Genachowski has taken the pressure off of Congress to do anything to ensure an Open Internet, in which everyone, not simply the big phone and cable companies, can benefit. (The fact that 95 Democrats who signed a Net Neutrality pledge lost on Tuesday is irrelevant. They would have lost anyway in the GOP landslide.)

As with any issue when the battles are controlled by big companies, it's the small ones who get overlooked and/or crushed. In a recent blog post, Kevin Warhus, marketing manager for the Scottsdale, Ariz., digital marketing company StringCan Interactive, wrote about the link between a neutral Internet and what he sees as Web 3.0, which seeks to personalize the Web experience for consumers. Warhus is particularly concerned about telecom control over the mobile Web and the effect on small businesses his company helps to support. He wrote:

As we evolve into the age Web 3.0 in which our information, likes and dislikes, and online habits help create a personalized web experience, Net Neutrality stands as an important stepping stone to ensure the proper development of Internet interaction and the protections of our freedoms.

"Allowing a handful of powerful corporations to decide what websites and information we should be able to access defeats the purpose of this open source frontier. The Internet has always stood as an environment where anyone can make a website or blog and receive equal opportunities to be heard and to grow. By taking away those rights we are essentially handing over our freedoms and going against the foundational values that make The Internet what it is today and what it may or may not be tomorrow.

Congressional Self-Interest Should Be A Factor

But the larger issue, and the one in which the enlightened self-interest of all members of Congress should kick in, is the reclassification of broadband services. Again, the concept is fairly simple. Until 2005, the FCC had jurisdiction over the telecommunications connection that connected people to the Internet. The Bush-era FCC "reclassified" that service from one with explicit authority to gray areas -- without any outside huffing and puffing that it should be a congressional decision that such a thing be done.

Since then, the FCC has deregulated all but the most basic voice-line services and removed any requirements that may help consumers. This shaky structure survived until April 6 this year, when the U.S. Appeals Court for the District of Columbia ruled that the FCC did not have authority over broadband services in the way the agency claimed it did.

After typically dithering around for a couple of months, the Commission proposed a compromise that would allow some regulatory authority but not the full slate of regulations. Typically, the industry and their congressional allies overreacted, starting the meme that the FCC wanted to "regulate the Internet" and that Congress had given the Commission no such authority.

That argument is total nonsense. No one is regulating the Internet. The FCC wants its jurisdiction back over broadband access. Members of Congress, particularly from rural districts, should want the FCC to have that authority. By denying the Commission that jurisdiction, representatives, particularly those from rural areas, are working against the interest of their constituents.

The Universal Service Fund, which provides financial support to rural phone companies, only is directed to help plain old dial-up service. If those members of Congress want their constituents to have the benefit of support for broadband, and to allow their constituents to participate in the broadband economy, then the FCC has to be able to make some changes, switching the support to broadband services. It can't do that unless it has the authority and jurisdiction.

Big telecom and cable companies and their ideological allies oppose reclassification. Interestingly, however, the Communications Workers of America, which sided with the industry opposing Net Neutrality, signed a letter endorsing reclassification.

If we needed any more evidence of how important broadband is to rural areas, a new study by the Strategic Networks Group for the e-North Carolina authority (e-NC) has some fascinating new statistics that show how crucial broadband is to the economy in general and to job-generating small business in particular. Some of the study's findings:

• Nearly one in five (18%) of new jobs were created as a direct result of Broadband Internet. Small businesses (less than 20 employees) are especially dependent on Broadband Internet as 28 percent of new jobs in that sector are attributed to using the Internet.
• More than half of all businesses (54%) said that they would not be in business if they did not have broadband while two in five (41%) would have to relocate if broadband was not available in their community;
• The number of households either currently running (31%) or planning to run a business from their home in the next twelve months (14%) is nearly half (45%) of North Carolina's broadband households;
• Even more broadband households are either now using (41%) or planning to use (24%) broadband to sell items online. That's nearly two-thirds (65%) of broadband households using it to at least supplement their income;
• Most (85%) of home-based businesses said that broadband was essential to their business.

The study also went into some detail about the problem of pockets of areas generally served with broadband that don't have it; how areas served with inferior broadband are at a competitive disadvantage, and lots of broadband service is really very slow and unhelpful.

The Authority the FCC Should Cede

Over the past few months, Genachowski has shown a willingness to cede his agency's authority to Congress. He wouldn't act on Net Neutrality or reclassification, wishing instead that a last-ditch effort by current House Commerce Committee Chairman Henry Waxman (D-CA) to negotiate a Net Neutrality bill might come to fruition. It was a gallant effort, but the House Republicans killed it.

Genachowski sat out the blackouts of millions of TV viewers from favorite channels, including the most recent fight between Fox and Cablevision, which blacked out three million people in the New York City area and Philadelphia. He said the FCC doesn't have the tools to intervene. He declined to take any action on a petition for rulemaking filed by Public Knowledge and others to reform the retrans system, based on the part of the law that gives the FCC authority to "enact regulations as necessary" to carry out the law that gave broadcasters the right to exact payments from cable companies. Instead, he wants Congress to work out the problem.

So far, the one area in which Genachowski has not conceded congressional authority is the one he should -- universal service reform. Holding up USF reform until the agency's authority over broadband is clear will force those members of Congress who care more about their constituents' welfare than silly Tea Party talking points to take the Commission's authority seriously. If members of Congress don't give the FCC the authority it needs, the areas they represent suffer.

We shall wait for Congress to act (or for the FCC to act, for that matter) on these crucial issues as we wait for Godot.

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