A Neutral Corner

Morgan O'Rourke


June 1, 2010

Three years ago, it was discovered that cable and internet service provider Comcast, in an apparent effort to stem rampant online piracy and perhaps curry favor with lawsuit-prone media groups like the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA), had been quietly employing a simple strategy to prevent the illegal distribution of copyrighted files. It would slow customer access to BitTorrent, a popular, file-sharing service that allows users to trade large video and audio files-many of which are pirated-over the internet.

It was a smart risk management move for two reasons. First, it ingratiated them with RIAA, which had already become notorious for suing its own customers for distributing pirated files and was now looking for ways to stop piracy before it started. And second, for a company like Comcast that likely already had designs on becoming a content provider (as evidenced by its merger with NBC two years later), it was a good idea to start protecting its own interests without having to worry about fighting copyright infringement lawsuits down the road. The problem was that the FCC said that Comcast's method of network traffic management, known as "throttling," violated regulations. Comcast was ordered to stop the practice or face possible fines and injunctions.

Not surprisingly, Comcast disagreed with the ruling and took the battle to court. And in April of this year, the U.S. Court of Appeals for the District of Columbia ruled that the FCC did not have the authority to stop Comcast from blocking user access. This was because broadband had been classified as "information services" under the Communications Act and therefore was not subject to the same obligations as "telecommunications services" providers like phone companies. The FCC responded by saying that it would seek to reclassify broadband in what promises to be a fight that could drag on for years.

At the heart of the controversy is the concept of "network neutrality," a principle that states that once an internet user pays for access, the service provider should not be allowed to restrict that access in any way, or if it does, all restrictions should be imposed equally to all users without discrimination. On one side of the debate are consumer groups, software developers and companies like Google and Yahoo! that advocate for the freedom of information. On the other side, cable and telecommunications providers believe that since they are the ones investing in their networks and providing the infrastructure, they should be able to run their businesses the way they see fit.

Given the necessity of the internet, however, allowing companies to restrict access based on their narrow interests could actually be detrimental to society. The telephone presented a similar concern in the 1930s, prompting the aforementioned Communications Act of 1934, which not only created the FCC, but established the telephone as a "common carrier." This meant that in order to ensure that this promising new technology would be able to serve the greatest number of Americans, phone companies had to provide equal service for an equal price to all consumers.

This condition allowed the early dial-up-based internet to flourish since providers couldn't restrict access or give preferential treatment to established Fortune 500 companies over start-ups like Amazon or Netflix. But as access became a digital process, internet service providers successfully lobbied for reclassification in an effort to capture more internet revenue. Now considered "information services," ISPs can, if they choose, charge customers more for access to "premium" sites (much like they already do for premium cable television packages) or prevent access to competitors' websites altogether.

Essentially, the district court's ruling places a greater priority on the interests of the technology providers that make the internet accessible than it does the content creators that make the internet worthwhile. It's a shortsighted view that forgets that without compelling content there is no reason to use the technology in the first place.
More importantly, however, the history of the internet has shown that access breeds innovation. The future of business is online, but without net neutrality ensuring equal access for all users, future innovators will never get the opportunity to prove it.

Morgan O’Rourke is editor in chief of Risk Management and director of publications for the Risk & Insurance Management Society, Inc. (RIMS)