Neutrality is a foundational idea in telecommunications regulation. At the core of this concept is the expectation that regulators don’t take sides — not among competing firms, and not among complementary services in technological ecosystems such as the Internet. The 10th Anniversary Telecommunications Regulation Handbook, published by the international business incubator infoDev, describes how the idea of neutrality should be applied. According to the handbook, the goal of the regulator is to ensure that market participants have an opportunity to compete based on the merits of their services. Based on its recent behavior, however, it seems the Federal Communications Commission (FCC) is selective in its application of neutrality. A review of some of the agency’s recent decisions regarding municipal broadband, the Open Internet, privacy, and set-top box rulemaking provide plenty of evidence for this idea.

Municipal broadband

It is difficult to square the use of taxpayer money to fund government-provided (and often fiber) broadband with the notion of technological neutrality. A government provider has inherent and substantial advantages that cripple private competitors. Not only has the FCC endorsed the idea that taxpayer money should be directed toward costly government broadband projects, it has even preempted states that have passed laws against this form of regulatory capture.

The Open Internet

The regulatory handbook describes net neutrality as a “battle of corporate titans.” Such a description maps to the recent battle between cable/telecom companies and content providers such as Netflix over the Open Internet here in the US. As the handbook observes, it is
important to prevent any perception (or reality) of corruption influencing public policy toward the industry. The fast changing nature of ICT technology and markets also suggests that regulators should avoid, to the extent possible, trying to dictate which specific technical platforms or architectures should be deployed, and allowing the greatest possible flexibility for industry innovation and evolution.
But in crafting 300 pages of Open Internet rules and subsequent declarations, it is obvious that the FCC has taken sides. It has designated parties to be regulated (broadband or "BIAS" providers) and those who get free rein (“edge providers”). The order even posits the FCC’s self-invented notion that its utility regulations are needed so that edge providers can innovate. Never mind that network innovations are just as important as innovations at the edge.

Privacy

Another way the FCC picks winners is in its selective application of privacy enforcement. The FCC Enforcement Bureau has said in no uncertain terms that it would not enforce its rules on edge providers, even if they were breaking the law. As a consequence, the agency has wrested the enforcement of online privacy away from the Federal Trade Commission — the nation’s most experienced privacy regulator. Interestingly, a crop of whitepapers and letters encouraging FCC privacy regulations suddenly appeared from the same groups who wanted the FCC to impose net neutrality rules on broadband. Regulating online privacy is just another way the FCC can put the thumb on the scale in the favor of edge providers, effectively ensuring that only they can earn advertising revenue.

Set-top box regulations

As Babette Boliek noted at a recent AEI event, the FCC has dispensed with the pretense that it’s an independent agency. The most egregious example recently came from FCC Special Counsel Gigi Sohn. Earlier this month, Sohn was scheduled to host a Twitter town hall with Alex Nogales, president and CEO of the National Hispanic Media Coalition — an advocacy group that supported the FCC’s Open Internet regulations, among other policies. The purported objective of the town hall was "to answer your questions about how the [FCC’s] proposal [for set-top box regulations] aims to unlock the content currently chained to pay-TV devices and apps so consumers can have new options for accessing the programming they pay for.” The event was canceled five minutes before it was scheduled to go on because organizers realized it violated FCC sunshine laws. Technological neutrality also applies to audio visual content regardless of medium, but the FCC has taken sides here too, again prioritizing the needs of Netflix and other over-the-top services over other stakeholders in the ecosystem.

Room for optimism: LTE-U

The emergence of LTE-U is perhaps one instance in which the FCC has demonstrated technological neutrality. Last year, Wi-Fi supporters expressed dismay that LTE-U would somehow crowd out their “territory,” even though Wi-Fi is supposed to be an open commons for everyone. Wi-Fi providers don’t pay a fee for the spectrum they use, so they have no more right to use the spectrum than anyone else. The good news is that LTE-U promises to use the spectrum 60 percent better than Wi-Fi, actually leaving more room for the latter technology. In any event, the FCC did the right thing by not taking sides and instead encouraging tests to determine what actually happens when the two technologies are deployed together. As FCC Office of Engineering & Technology Chief Julius Knapp noted, “the success of the unlicensed bands as laboratories of innovation is largely the result of industry-driven coordination and, while significant steps remain before LTE-U can be considered for commercial deployment, we believe that this development is an encouraging step in continuing that success.” New wireless technologies have emerged before, and companies have worked it out. Adaptation is a natural part of technological evolution that improves the ecosystem. Allowing this innovative process delivers the best value for end users. Clearly, technological neutrality is the right principle to follow. The question remains why the FCC doesn’t adhere to it all the time.