The Federal Communications Commission will propose new Open Internet rules supposedly meant to protect consumers and internet businesses later this month. They will do nothing of the kind, giving big broadband companies exactly the kind of anti-net neutrality power they've wanted for years, at a time when the concept of net neutrality desperately needs enforcement.

The FCC lost its ability to enforce a regulatory structure created in 2010 called the "Open Internet" rules earlier this year, when a federal appeals court sided with Verizon and said that the FCC never correctly classified broadband companies as "common carriers," like public utilities that are regulated by the government. However, the court empowered the FCC to readjust its Open Internet policy, which previously required ISPs to be transparent about their network governing policies, outlawed ISPs from banning any legal content, and, importantly, forbade ISPs from discriminating against or favoring any lawful network traffic over others.

These 2010 rules roughly enforced "net neutrality," a term coined by Columbia media law professor Tim Wu to describe the principle that all internet traffic should be treated equally.

New Rules: Same as the Old, But One Little Change that Destroys Net Neutrality

The FCC, and its chairman Tom Wheeler, promised to resurrect Open Internet, the proposed refresh of which will be released and open to public comment May 15. But anonymous FCC officials leaked some important details of the new rules to The Wall Street Journal and Washington Post last week, and the Open Internet refresh looks less like a resurrection of net neutrality than the destruction of it.

If reports are correct (and they at least appear to be somewhat on the money, since Wheeler has since defended them), the FCC's new version of net neutrality will still disallow blocking of legal content and require ISP transparency, but it will destroy the concept of "all internet traffic should be treated equally," by allowing some traffic to get a "fast lane" if they pay for it.

Specifically, the anonymous FCC official said, "Broadband providers would be required to offer a baseline level of service to their subscribers, along with the ability to enter into individual negotiations with content providers," in leaking the FCC's new Open Internet rules. "In all instances, broadband providers would need to act in a commercially reasonable manner subject to review on a case-by-case basis."

Defending the Internet Fast Lane: Innovation, Investment

As mentioned, Wheeler has defended the new proposal on several points. First, he mentioned in a blog post that the court decision tied the FCC's hands to stop ISPs favoring services by saying those practices had to be labeled as not "commercially reasonable." He promised that the FCC would set a "high bar" for what's reasonable. He also mentioned that favoring traffic from an "affiliated entity" wouldn't be allowed.

Wheeler also defended the new Open Internet rules by saying it would encourage innovation: "Put another way, the focus of this proposal ... is on maintaining a broadly available, fast and robust Internet as a platform for economic growth, innovation, competition, free expression, and broadband investment and deployment. Our goal is rules that will encourage broadband providers to continually upgrade service to all." Basically, Wheeler said that incentivizing faster service with one-on-one delivery deals would encourage continual development in faster internet for everyone.

Retired FCC head Michael Powell was more candid in making this point to APM's MarketPlace. "What you call the 'fast lane' sometimes is just quality of service," said Powell. "So take Netflix, for example: they use 60 percent of all internet broadband at prime time. By the way, they can't afford to have jittery or interrupted bits."

"Your email can," Powell then suggested. "You want to watch a two-hour movie uninterrupted, so making sure the network can handle that level of quality sometimes is what the buyer wants." Powell then defended ISPs against the charge that they might slow down content, saying, "I don't think any broadband provider should have -- or has any incentive that I'm aware of -- to actually slow down or degrade anybody's experience."

Powell then gave a hypothetical case where an internet fast lane would be appropriate. "The question is, you have plenty of bandwidth -- high speed, high quality -- and the Mayo Clinic comes to you and says, 'I have a heart monitoring service, but it cannot ever miss a beat... can I buy quality of service products that makes sure when my bits are coming through, they're not being intermingled with cat videos." Powell said that society would increasingly have an interest in those types of services in the future, playing on the same beat as Wheeler's defending the new rules as encouraging innovation and investment.

The Fast Lane: Guaranteed to Degrade Service and Will Discourage Investment

The arguments put forth by current and former FCC chairs sound good, but they're missing the bigger picture.

Currently, broadband is relatively scarce, especially if you can't afford to buy top tier, bundled-with-TV internet service from whatever cable or fiber-optic company that dominates your area (usually without much competition). And, given that that's the situation for a huge portion of Americans, allowing ISPs to favor some services -- no matter how "commercially reasonable" the deals may be -- will degrade the transmission of others that don't make the same kind of deal, whether because they can't afford to or because they just won't.

This is a matter of simple physics and common sense: if you have a pipe with only so much capacity, and the people that run the pipe use more of it for some services, the others will get backed up. Or as Tim Wu put it himself in his own criticism of the FCC's new rules, "With broadband, there is no such thing as accelerating some traffic without degrading other traffic."

Ironically, one of the reasons why broadband is still relatively "scarce" and unaffordable for many has nothing to do with technological limitations or resources. As we previously argued, it's a problem resulting from little competition in most areas, where one cable company dominates, and therefore lack of incentives to invest in faster service. And this problem has the potential to get much worse if the nation's largest cable provider, Comcast, is actually allowed to merge with the nation's second largest cable provider, Time Warner Cable.

When you do invest in broadband, and maybe even (gasp!) treat it like a utility, you get super-fast internet for everything coming through the pipe; It's why hamlets like Ephrata, Washington and Chattanooga, Tennessee have 10 times faster internet speeds than the national average, obviating the need for fast lanes. Creating a fast lane, or whatever the FCC calls it, doesn't necessarily encourage innovation and investment. The FCC has it backwards: encouraging innovation and investment makes all broadband the fast lane.

Meanwhile, the Wheeler's idea that fast lanes will incentivize more investment in better broadband has a flip side. It could give powerful ISPs a perverse incentive to make the slow lane slower, or simply not invest in upgrading it, in order to push internet sites and services to pay for the better, faster option. Nothing in the FCC's high bar of "commercially reasonable" applies to ISPs' own investment (or lack thereof) in their internet service; It just means companies couldn't act in an anti-competitive manner when deciding who gets the fast lane and at what price. And that's a pointless caveat for Wheeler to make: Anti-trust laws are already on the books.

As for Powell's argument that customers want more reliable bandwidth for Netflix than email, who's he talking about? Surely, most people like Netflix, but what if a customer needs faster, reliable email service and doesn't care about Netflix? What if there's a startup video streaming service that a small portion of an ISP's customers want?

Why does the ISP and the market get to decide which streaming service they get with uninterrupted quality, rather than each customer? That sounds "unreasonably uncompetitive" by its very nature. And as for his internet-connected health services argument, let's put a "life or death" clause in the Open Internet rules in place of the "commercially unreasonable" proviso, a high bar though it may be.

Perhaps the most damning, and technically knowledgeable, summary of why the proposed new Open Internet rules wouldn't encourage innovation, investment, and would inherently be "commercially unreasonable" is this:

"[I]f permitted to ... charge edge providers [internet sites and services] for prioritized access to end users [you], broadband providers may have incentives to allow congestion rather than invest in expanding network capacity.

Broadband providers would be expected to set inefficiently high fees to edge providers because they receive the benefits of those fees but are unlikely to fully account for the detrimental impact on edge providers' ability and incentive to innovate and invest, including the possibility that some edge providers might exit or decline to enter the market ... Moreover, fees for access or prioritized access could trigger an 'arms race' within a given edge market segment. If one edge provider pays for access or prioritized access to end users, subscribers may tend to favor that provider's services, and competing edge providers may feel that they must respond by paying, too."

That expert critic of the FCC's new proposed Open Internet rules was... the FCC, in 2010, quoted from the old Open Internet rules.

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