Forthcoming, Stanford Law Review, Volume 67, Issue 1 (2015)
Public Law and Legal Theory Working Paper Series
Research Paper No. 2459568
John M. Olin Program in Law and Economics Working Paper Series
Paper No. 462
In December 2010, the Federal Communications Commission (FCC) adopted the Open Internet Order, which enacted binding network neutrality rules for the first time. Network neutrality rules limit the ability of Internet service providers to interfere with the applications, content and services on their networks; they allow users to decide how they want to use the Internet without interference from Internet service providers. In January of this year, the Court of Appeals for the D.C. Circuit struck down the core provisions of the Open Internet Order – the rules against blocking and discrimination. The Court upheld the Open Internet Order’s disclosure rule, so Internet service providers still have to publicly disclose any blocking or discrimination that occurs. As a result of this ruling, Internet service providers like Verizon, AT&T or Cox Cable that connect users to the Internet are now free to block any content, service or application they want. They can slow down selected applications, speed up others, or ask application or content providers like Netflix or Spotify to pay fees to reach their users. These practices would fundamentally change how each of us experiences the Internet.
In the wake of the D.C. Circuit’s decision, US policy makers have to decide (again), which, if any, network neutrality rules the US should adopt. They essentially have three options: The FCC can take steps to preserve the Open Internet Rules; it can develop a different, narrower network neutrality regime under Section 706 of the Telecommunications Act within the boundaries established by the Court of Appeal’s decision; or Congress or the FCC can adopt a new network neutrality regime under Title II of the Telecommunications Act.
This paper helps policy makers think through the available options, focusing on the substantive merits of the different non-discrimination rules under consideration. In addition to rules that forbid network providers from blocking applications, content and services, rules that forbid discrimination are a key component of any network neutrality regime. Non-discrimination rules apply to any form of differential treatment that falls short of blocking. They determine, for example, whether network providers are allowed to provide low-delay service only to their own streaming video application, but not to competing video applications; whether network providers can count only traffic from unaffiliated video applications, but not their own Internet video applications, towards users’ monthly bandwidth cap; or whether network providers can charge different Internet access charges depending on the application used, independent of the amount of traffic created by the application.
The paper makes five contributions: First, it proposes a substantive framework that policy makers can use to evaluate alternative proposals for network neutrality rules and assess specific forms of discriminatory conduct. Second, the paper evaluates eight existing proposals for non-discrimination rules and the Open Internet Order’s non-discrimination rule against this framework and proposes a non-discrimination rule that policy makers should adopt around the world – a rule that the Open Internet Order adopted in part. Third, the paper highlights the differences between an antitrust framework and the broader theoretical framework on which most calls for network neutrality regulation are based and explains why an antitrust framework does not capture all instances of blocking or discrimination that concern network neutrality proponents. Fourth, the paper offers the first in-depth analysis of the relationship between network neutrality and new network-level services called Quality of Service. Finally, the paper provides the first detailed analysis of the Open Internet Order’s non-discrimination rule for fixed broadband Internet access.
The paper is relevant beyond the US: In Europe, the European Commission, the European Parliament and the member states are currently considering which approach to network neutrality they should take. The Brazilian Parliament is in the process of adopting network neutrality rules. In all of these debates, non-discrimination rules are a key point of contention. And no matter which network neutrality regime a country adopts, the question of which, if any, network-discriminations require a legal response will remain relevant for years to come.