Net Neutrality: FCC Opens Pandora’s Box

By now, the telecom industry is more than familiar with the FCC’s new net neutrality push, highlighted by the Oct. 22 release of a 107-page notice of proposed rulemaking (NPRM) to codify open Internet access as law.

Two of the most contentious parts of the rules up for comment affect wireless and managed services. They were added, according to the FCC, because the Internet now extends beyond wireline networks and mere page-viewing. IPTV, telemedicine and the smart grid, for example, promise to consume unprecedented amounts of bandwidth and the FCC wants to know how to balance consumer protections with operators’ need to guarantee quality-of-service and potentially prioritize managed services traffic.

Both of these developments – the inclusion of wireless networks and managed services in net neutrality oversight – are significant, analysts said, although not surprising. They come as a result of a Democratic administration, and as mobile broadband grows more popular and useful. To that point, the wireless provision has the likes of AT&T Inc. (T) and Verizon Communications Inc. (VZ) in a tizzy; they’ve said the clause will keep them from investing in their networks.

Such a reaction is expected, but it does seem exaggerated and probably intended, in part, as a fear-mongering rhetorical weapon as the battle over net neutrality regulation takes off. In fact, as analysts for investment bank Stifel Nicolaus pointed out, the NPRM includes some protections that wireless providers should find reassuring.

“FCC officials suggested they were considering a longer phase-in period for applying net neutrality principles to wireless, while emphasizing that they recognize the unique technical aspects of managing a wireless network, and that what is reasonable network management will likely differ by platform," David Kaut and Rebecca Arbogast wrote in an Oct. 22 research note.

FCC Chairman Julius Genachowski

Such assurances would mesh with FCC Chairman Julius Genachowski’s statements that the last thing he wants is to discourage broadband competition and expansion. Au contraire, he said on Thursday, “our rules can and must promote investment and innovation throughout the Internet ecosystem.”

“The full potential of the Internet cannot be unleashed without robust and healthy broadband networks, and broadband providers need room to experiment with new technologies and business models in order to earn a return on their investment and deploy high-speed broadband to all Americans,” Genachowski said.

But, at the same time, he added, the view that “anything goes” – one most-espoused by incumbents and cablecos – is not serious rationale.