On Net Neutrality, Verizon Leads Push for ‘Fast Lanes’

The company wants to charge websites for faster access to customers.

A Verizon store is seen April 21, 2011 in Santa Monica, California. Verizon announced today that it activated 2.2 million iPhones during the first quarter, helping the company more than triple its profit from a year ago. The company reported earnings of $1.4 billion on revenue of $27 billion for the quarter. Profit grew more than three-fold from the $443 million the telecom company earned during the same period last year.  
National Journal
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Brendan Sasso
July 18, 2014, 9:47 a.m.

Ve­r­i­zon is par­tic­u­larly ex­cited about the chance to charge web­sites for faster ser­vice.

In a fil­ing to the Fed­er­al Com­mu­nic­a­tions Com­mis­sion this week, Ve­r­i­zon em­phas­ized its sup­port for a “ro­bust and open In­ter­net” but said the agency should al­low “flex­ib­il­ity” for pro­viders to charge web­sites for vary­ing speeds.

“Such flex­ib­il­ity to ex­per­i­ment with al­tern­at­ive ar­range­ments not only can re­duce costs to end users while al­low­ing them to ac­cess the con­tent they de­mand, but also be­ne­fit [Web ser­vices] and spur con­tin­ued in­vest­ment in broad­band in­fra­struc­ture,” the com­pany wrote.

Oth­er broad­band pro­viders like Com­cast and AT&T have been less en­thu­si­ast­ic about the be­ne­fits of spe­cial In­ter­net “fast lanes” in their form­al com­ments on the FCC’s net-neut­ral­ity pro­pos­al.

The FCC first en­acted net-neut­ral­ity reg­u­la­tions in 2010 that barred broad­band pro­viders from block­ing ac­cess to any web­sites or “un­reas­on­ably” dis­crim­in­at­ing against any traffic. Con­sumer-ad­vocacy groups had hoped for stronger rules, and most of the cable and tele­com pro­viders felt the rules were an ac­cept­able com­prom­ise.

But Ve­r­i­zon sued, say­ing the FCC had over­stepped its leg­al au­thor­ity. Dur­ing the or­al ar­gu­ment in the case, the fed­er­al judges ques­tioned wheth­er Ve­r­i­zon ac­tu­ally in­ten­ded to cre­ate a “two-sided mar­ket”—char­ging both its sub­scribers and the com­pan­ies who wanted to reach them.

“I’m au­thor­ized to state by my cli­ent today that but for these rules, we would be ex­plor­ing those types of ar­range­ments,” Ve­r­i­zon’s at­tor­ney, Helgi Walk­er, said at the time.

Four months later, the D.C. Cir­cuit Court of Ap­peals sided with Ve­r­i­zon and struck the rules down.

FCC Chair­man Tom Wheel­er is now try­ing to re­work the net-neut­ral­ity rules in a way that can sur­vive fu­ture court chal­lenges. His pro­pos­al has sparked a massive pub­lic back­lash be­cause it would al­low In­ter­net pro­viders to charge web­sites for faster ac­cess as long as the agree­ments are “com­mer­cially reas­on­able.”

The agency has re­ceived more than 1 mil­lion com­ments—most of them out­raged, and many of them laced with pro­fan­ity.

Per­haps re­cog­niz­ing the polit­ic­al con­tro­versy over the is­sue, Ve­r­i­zon’s com­pet­it­ors are tak­ing a softer ap­proach to the pos­sib­il­ity of char­ging web­sites.

AT&T sup­por­ted the old reg­u­la­tions, and in its fil­ing this week on the new pro­pos­al, the tele­com gi­ant said it wouldn’t op­pose “reas­on­able rules” that totally banned paid pri­or­it­iz­a­tion of In­ter­net traffic.

Com­cast said it would ac­cept an FCC “pre­sump­tion” against all fast-lane deals. The bur­den of proof would be on broad­band pro­viders to show that a par­tic­u­lar deal would be good for con­sumers un­der Com­cast’s plan. Un­like every oth­er pro­vider, Com­cast is bound to fol­low the old rules un­til 2018 be­cause of a reg­u­lat­ory con­di­tion on its pur­chase of NBC-Uni­ver­sal.

The Na­tion­al Cable and Tele­com­mu­nic­a­tions As­so­ci­ation, the lob­by­ing group that rep­res­ents the cable in­dustry, said the FCC shouldn’t ban fast lanes. But the group also dis­missed the im­port­ance of the is­sue, say­ing it’s un­likely that any fast-lane deal would “gain trac­tion in the mar­ket­place.”

In its com­ment, Ve­r­i­zon did say it has “no plans” to charge web­sites for faster ser­vice. But the com­pany ar­gued that such deals could be good for Web com­pan­ies be­cause it could al­low them to “ad­apt their ser­vices quickly in a com­pet­it­ive mar­ket­place.”

“Giv­en the po­ten­tial be­ne­fits all around, such ar­range­ments should be per­miss­ible and should be tested in light of con­sumer de­mand rather than re­solved through reg­u­lat­ory wrangling,” the com­pany wrote.

Google, Amazon, Face­book, Net­flix, and oth­er ma­jor Web com­pan­ies have all ar­gued that al­low­ing broad­band pro­viders to cre­ate spe­cial tiers of ser­vice rep­res­ents a “grave threat” to the In­ter­net.

Har­old Feld, the seni­or vice pres­id­ent of con­sumer ad­vocacy group Pub­lic Know­ledge, wondered wheth­er Ve­r­i­zon has a spe­cif­ic plan in mind for traffic dis­crim­in­a­tion—con­trary to the com­pany’s claims to the FCC.

The tele­com gi­ant’s po­s­i­tion may throw a wrench in­to a po­ten­tial com­prom­ise for Wheel­er. Feld pre­dicted that the oth­er car­ri­ers would agree to reg­u­la­tions that banned paid pri­or­it­iz­a­tion, but that Ve­r­i­zon would prob­ably just sue again.

“As long as Ve­r­i­zon is go­ing to be the odd man out, there can’t be a com­prom­ise along those lines,” Feld said.

He ar­gued that Wheel­er should learn the les­son from the 2010 fight and in­stead ground the rules in a stronger leg­al found­a­tion.

If the FCC re­clas­si­fies broad­band In­ter­net as a “tele­com­mu­nic­a­tions ser­vice,” it would im­me­di­ately gain sweep­ing new powers to im­pose util­ity-style reg­u­la­tions.

Con­sumer ad­voc­ates like Feld as well as a num­ber of Demo­crat­ic law­makers ar­gue that chan­ging the leg­al clas­si­fic­a­tion of the In­ter­net is the only way to achieve sus­tain­able net-neut­ral­ity rules.

But in their com­ments, the tele­com and cable pro­viders were united in warn­ing that util­ity-style reg­u­la­tion of the In­ter­net would dev­ast­ate their in­dustry.

Ve­r­i­zon might not have many in­dustry friends left if its hard line on paid pri­or­it­iz­a­tion forces the FCC to ad­opt a power­ful new reg­u­lat­ory re­gime.

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