Everybody thinks they want the Internet to be "neutral". Nobody wants the local cable or telephone company to tell them what web sites they can visit, what applications they can use, or what they can download or watch. The FCC tried to do a quick fix for this a few years ago, writing "principles", not rules, for ISP behavior. And they tried to fine Comcast for not obeying them. Comcast recently won an important court victory, though, where the DC Circuit Court of Appeals threw out the FCC's own Order on ground that it didn't follow the law.
Does that mean that the FCC can't promote network neutrality? Of course not. The Court was actually pretty clear about that, as I wrote in my diary Net neutrality may have been saved by the DC court. Well, clear enough to some, but not to the FCC, which is rumored to plan on retrying the same, rejected, approach. No matter how they go about it, though, it is simply not easy to have a "neutral" Internet via legislation.
It's not just a legal issue. The Internet is simply not a stable system.
The Internet is very different from the old telephone network. It has technical, administrative, and financial differences. So the rules have to be different. One thing to keep in mind is that in the telephone world, a call's a call, and it's possible to predict and engineer sufficient capacity so that calls don't get blocked. The Internet is flexible: Applications seize as much capacity as they can get. It's all about rationing, and tweaking the capacity and equipment here and there to make it all look as good as it can.
The Internet grew up after the FCC paved the way, years ago, via a couple of very important rulings. One 1970s rule, called "sharing and resale", allowed leased lines to be run between two different companies, without one of them being a licensed common carrier. The phone companies didn't like that! The first "value-added networks" (VANs) had to get FCC licenses in order to buy circuits from the monopoly telephone companies to their customers. After sharing and resale, anyone could pay the local phone company for a line from their site to their customer's. The line itself was regulated common carriage, covered by a tariff. What you did with the line was usually Your Own Business, unless you were reselling long distance phone service, which has always been subject to weird taxation and wholesale tariffs.
While Sharing and Resale made it possible to create VANs without Ma Bell's permission, actually competing with Ma required a second ruling, Computer II, in 1980. Among other things, that ruling said that if a local telephone company provided an "enhanced" service (that would include Internet), then the underlying "basic" service would have to be made available to all competitors on the same terms and conditions by which the phone company's own "enhanced" affiliate bought it. Fast forward to the late 1990s: Cable companies were going great guns with cable modems, so the Bells rolled out DSL. But that had both a "basic" component, the raw DSL bit-level transport, and the "enhanced" component, the ISP. Verizon Online thus bought raw DSL from the local Verizon Telephone Company, and you could too, albeit not at the same volume discount level.
These "raw DSL" services, like leased lines and plain old dial-up telephone calls, were all covered by common carriage rules. Common carriage is the old principle that carriers (of freight, passengers, or information) can't muck with the contents of the package, and can't discriminate between customers. So UPS will ship a case of Coke for the same price as a case of Pepsi or for that matter a like-weight case of Dom Perignon.
The FCC is governed by Title 47 of the US Code (the Communications Act and Telecommunications Act). Its Rules add detail to the broad guidelines of the actual laws. The courts grant them plenty of deference to interpret the law, but they have to stay within the scope of the law. And they have to follow the Administrative Procedures Act in writing their rules. (Or at least do a decent kabuki of pretending.) In that law, Title I refers to basic organizational matters of the FCC. Title II covers common carriers. So if something is governed by Title II, then it is a common carrier.
What the FCC tried to do, and was overturned doing, was regulating the Internet via "Title I ancillary jurisdiction". Title I meant that they were not calling it common carriage or any other regulated category (Title VI covers cable, for instance). Ancillary meant that it was not explicitly covered by law, but was consistent with, and ancillary to, their other powers. The DC Circuit told the FCC that the Comcast Order was not ancillary to any real power, because the FCC failed to cite any Title II or Title VI authority. They also included a reminder that Computer II itself was approved by the court as a valid ancillary rule, because separating regulated from unregulated activities was a valid tool in controlling the price of regulated activities.
The reason this matters is that in 2005, the FCC overturned Computer II, and ruled that the Bells could treat the entire wire as unregulated "information service" (almost the same as the older "enhanced service"). No basic service had to be offered. So other ISPs could no longer demand their right to use common carrier wire. This ruling alone is what broke the Internet. It broke the clear distinction between content and carriage, and ended the open competition for ISPs. The Court's recent ruling reminds the FCC that their 2005 decision may not have been the correct one. It was only that decision that created "network neutrality" as an issue. It can be overturned via FCC rulemaking, if the three Democrats on the Commission so rule.
The Internet didn't get created by the FCC or the phone companies, who have fought it all the way; it evolved over time. The original Internet was a government network. The Pentagon's research network, ARPANET, split off the administration of its armed-services MILNET, so there were now two interconnected networks, and the term Internet became common. More networks joined in, such as NSFnet (Al Gore's baby) and CSnet. But commercial use didn't really begin until the early 1990s. At that point in time, there were several "on-line service providers" such as CompuServe, Prodigy, Delphi, and AOL. Once "the Internet thing" began to happen, the online crowd started adding limited Internet access, such as email first and web browsing later, and only after a few years of transition did the Internet finally swamp their whole model out of existence. These were essentially computer time-sharing companies that joined the Internet. The commoditized ISP is what evolved, given the protection of Computer II. "Broadband" evolved from that, from cable modems and DSL.
Regulating ISPs to enforce "network neutrality" is really a form of Broadband Stockholm Syndrome. Forgetting that the whole Internet has been kidnapped by the duopoly, and made fundamentally uncompetitive, people are asking to regulate all ISPs instead. But it doesn't work.
A retail ISP’s job, whether it’s run by an independent dial-up, wireless, or broadband provider, a cable company, or a telephone company, is to connect large numbers of subscribers to the Internet backbone, and provide them with certain vertical services such as email, web hosting, and DNS. And it’s their job to try to block spam, viruses, and the like. Their "information service" standing comes from their once being computer time-sharing companies, and not promising to carry all bits. Do we want to regulate computing? Can we? (That's rhetorical.) On the other hand, the local bit-transport portions of the facilities-based service providers can, perhaps, with some effort, be isolated out. That's not "Internet"; it's the wire beneath it.
But "neutrality" isn't determined in the wire. Not being neutral a function of computers. Telling people (such as ISPs) that they can't do computing is a tough sell. But telling wire owners (but not ISPs who lease the wire) that they must make the wire available as common carriage to ISPs is a lot easier to conceptualize. It's just not what the big phone companies want, and the FCC is afraid of them.
Internet backbone bandwidth isn’t free; retail ISPs generally have to pay or it. (Top backbone ISPs, on the other hand, just “peer” with each other, but they have to have an expensive network in order to be allowed to play at that table.) Retail broadband subscribers use, on average, a tiny fraction of their theoretical monthly carrying capacity, and ISPs are therefore able to “oversubscribe” their backbone links by at least double-digit, if not higher, ratios. So 100 "10-megabit" subscribers might share one 45-megabit uplink. Happily, most of the time.
Internet local bandwidth isn't free either. It's pretty darn cheap for a telephone company, and not too too expensive for a cable company -- downstream -- but once you get into rural areas, things change. Under current American pricing policies, telephone monopolies charge astonishingly high rates for "middle mile" circuits. The idea is to encourage competition, which works in Manhattan and some other areas, but rural ISPs can end up paying a phone company upwards of $2000/month for a measly 1.5 megabits, or upwards of $20,000 for 45 megabits. And the "last mile", the hardest part of all, has limited, shared capacity when it's wireless. Your basic wireless ISP is juggling a few megabits of useful capacity among a bunch of subscribers. There's no easy fix here. You can understand why they might not want you to upload videos to people who could get them elsewhere. One size fits all policies based on Comcast or AT&T in an NFL city don't work everywhere. They'd just put little guys out of business, making the duopoly (monopoly in rural areas, if that) control even tighter.
Thus it’s a real concern if Internet users start watching high-definition television by means of Internet streaming. It’s especially a concern to the smaller, surviving ISPs who don’t own the nationwide backbones that the mega-Bells have now acquired. Big streams can displace potentially data applications that have nowhere else to turn to. It’s even reasonable to suggest that companies that own wires should be allowed to charge for dedicated bandwidth, if that’s what’s needed for some applications. Rules or laws that require all ISPs to carry everything they're asked to, on a nondiscriminatory basis, are thus dangerous and indeed risk making the Internet itself nearly unusable. Indeed, their major beneficiaries are likely to be spammers, adware operators, and others who inhabit the gray area, undesirable but not clearly illegal.
The Internet is simply not "stable" by itself. What keeps it going is the ability of ISPs to shoot first, ask questions later. A user's computer might be infected by a botnet, sending spam. ZAP! Off-net until fixed. A web hosting company might be suspected of selling web sites for spam-response sites (selling spamvertised fake pharmaceuticals, for instance). Not technically illegal, but ZAP! Not allowed, and blocked, to discourage spam. And even legit customers of the same hosting companies are zapped too, but that's how the Internet discourages people from dealing with spammers.
Not only that, but the Internet's dynamic flow management standard -- the way every computer controls the rate at which it sends data -- is based on packet loss. A little loss is thus a good thing. And if everyone follows the same rules, it's pretty fair; as the network gets busy, everyone slows down. But streaming usually doesn't slow down, so video streams can literally block data (which does slow down). And what if somebody cheats on the flow management rules? Like, say, BitTorrent? Is it fair to slow them down a little, or is it more fair to let them grab more than their fair share?
That's not a decision that the FCC should be making. It's a decision that customers should. ISPs (acting as such) should be treated like publishers; phone company wires should be treated like the roads. If your ISP wants to deliver the best service to gamers, it should be able to limit streamers. If it prefers to support torrenters, fine. Pick your ISP. But that requires a choice of ISPs, not a "one size fits all" so-called "neutral" rule for ISPs. Because if there is an actual, formal ISP neutrality Rule put in place, one that takes the Administrative Procedures Act (and years of FCC dithering) to change, then the spammers and script kiddies, who can drive a billion spams through the eye of a needle, will have won. And the freedom to really innovate, to create the next Internet, the next use of the common carrier wires that isn't what we call Internet today, will have been lost.