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Setback For Net Neutrality

A recent ruling by the U.S. Court of Appeals for the District of Columbia established that the Federal Communications Commission cannot prohibit Internet service providers from blocking or slowing some Web sites. Unless Congress acts, the decision is likely to be bad news for many Internet users.

The ruling puts a damper on FCC Chairman Julius Genachowski’s push for “net neutrality,” the idea that service providers should treat all content equally. Last fall, I wrote about Genachowski’s plan to convert the agency’s existing guidelines on net neutrality into mandatory regulations. The “guiding principles,” which have been in place since 2005 but which do not carry the force of law, include the idea that customers are entitled to “competition among network providers, application and service providers, and content providers.”

That competition is endangered when service providers are permitted to slow down and speed up specific sites as they see fit, potentially making affiliated sites run faster and slowing the sites of competitors to a crawl. At my house in Vermont, I get Internet service from Comcast, but, instead of paying Comcast for premium cable television service, I use a Slingbox located in my Florida home. The Slingbox lets me watch my Florida TV remotely so that I can get all my favorite shows in Vermont or anywhere else where I can access the Internet.

But, in order to reach me in Vermont, those shows must travel through my Comcast Internet connection. Without net neutrality rules, Comcast could conceivably slow down the transmission of my shows to force me to purchase cable television service from them instead. The same thing could happen if I decide to set up a Vonage Voice over Internet (VoIP) phone in my Vermont house. Comcast offers its own VoIP service, and, if it made the Vonage service too slow to operate, I’d have to switch to Comcast.

Advocates of net neutrality also worry that different speeds for different content could stifle creativity and innovation. If service providers may vary speeds, they could also potentially charge content providers for faster delivery. While large sites might reluctantly pay up, newer start-ups would not, prompting customers to stick with faster tried-and-true sites rather than exploring new content. Gigi B. Sohn, president of Public Knowledge, which advocates for consumer rights on digital issues, told The New York Times, “You can’t have innovation if all the big companies get the fast lane. Look at Google, eBay, Yahoo — none of those companies would have survived if 15 years ago we had a fast lane and a slow lane on the Internet.”

The recent case arose when the FCC attempted to fine Comcast for its decision to slow down customers’ access to the file-sharing service BitTorrent. The appeals court ruled that the FCC does not have the legal authority to impose either its neutrality rules or the fine.

Comcast has since changed the policy and no other service providers currently have, or have announced plans to implement, similar policies. Nevertheless, the ruling will have important implications for how the FCC will continue to pursue its vision of net neutrality.

The best answer is for Congress to write legislation that would deem it an uncompetitive or unfair business practice for an Internet service provider to discriminate among traffic based on the identity of the parties involved. Under such an approach, your service provider could give priority to streaming video, which requires the most rapid transmission, over email, which does not. But it could not give priority to its own video streams over those that originate from a competitor.

This does not satisfy everybody’s definition of net neutrality, but it would satisfy me. It would allow Internet companies to create fast lanes and slow lanes on the data highway, and to charge whatever it chooses for various levels of service, as long as that service is open to everyone on non-discriminatory terms. The absence of that sort of management is no management at all, and that is not a good way to operate a network. Companies that spent billions of dollars to build their networks should be able to run them as they see fit — as long as they do not use their control over the network to force us to buy unrelated products or to undermine competitors.

In the meantime, however, “Internet users now have no cop on the beat,” as Ben Scott, policy director for Free Press, a nonprofit organization that supported the FCC in the recent case, put it. Considering how much I like my Slingbox, that is not a comforting fact.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book Looking Ahead: Life, Family, Wealth and Business After 55.

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