Net Neutrality: The FCC Muddies the Waters

Based on statements it made yesterday, the FCC’s Net Neutrality decision (FCC 10-201), leaves current and future U.S. UC customers and suppliers in no clearer or more certain circumstances than before.  Uncertainty often inhibits investment in innovation, which is the exact opposite of the FCC’s stated intentions.  Some examples:

1.       The FCC’s logic clearly relies on its authority to regulate telecommunications, and thus it implicitly re-classifies Broadband Access and Internet Services as Telecommunications Services.  Up to this time, both have been explicitly treated as Information Services, and thus largely exempt from either FCC or legislative oversight.  This decision is so divisive that two current FCC Commissioners believe the justification used by the three other FCC Commissioners is illegal.  Thus it’s a virtual certainty the decision will be challenged by Congress, which warned the FCC earlier to not attempt to exceed its rulemaking authority.  Several facilities-based providers, most notably, Verizon, are rumored to be evaluating lawsuits to overturn at least some of these rules.

2.       While not everything in the FCC’s decision is controversial, here are some highlights that effectively create greater uncertainty (or uneven-ness in the broadband playing field):

a.       The decision attempts to regulate both wired and wireless Broadband access.  As seen just last April in the Comcast vs. FCC decision, federal courts have already made it clear the FCC lacks this type of rulemaking authority over cable companies (this was established decades ago by an Act of Congress).  Thus by default, “wired” refers to access provided by telecom carriers.  Also, this is the first time the FCC is explicitly attempting to regulate wireless access as Broadband.  However, its language in yesterday’s press release is quite vague (as of this time, the decision itself is not available on the FCC’s website).  It’s also a complete reversal from the FCC’s preliminary findings in the Net Neutrality NPRM it published in June (see

b.      Assures unfettered access to content.  Whether fixed or mobile, the FCC’s decision seeks to assure unimpeded access to “lawful” content so that Broadband providers can’t favor their own services or applications over those supplied by third parties.  This makes it unclear if and how 3G/4G providers will be able to continue with their existing relationships with select applications providers. 

c.       Seeks greater authority over a broad swath of IP networks.  In this decision, the FCC intends to extend its rulemaking and enforcement authority not only to Internet services and Broadband, but to any and all current/future substitute technologies that may be used in their place.  The FCC expressed concern about the investments Internet facilities-based providers may make in other technologies at the expense of their investments in the Internet.  It’s not clear if the FCC plans to follow up this decision with explicit guidelines on what constitutes acceptable future investments in IP networks—something to which all facilities-based providers would strenuously object.   While they were not explicitly named, this kind of dark cloud could inhibit the pace of carrier’s investments building out enterprise WANs built on MPLS and Ethernet services.  That could in turn a chilling effect on the adoption of many types of business applications, including the use of enterprise-grade WANs to support UC and related collboration technologies on a multi-site basis.

d.      Prohibits third parties like content providers from paying facilities-based providers to treat their applications on a favorable basis.  This is an outgrowth of spats like the recent one between Comcast and Level 3 on the delivery of Netflix content (see  If it holds, this decision could affect all over-the-top providers.  If the full decision fails to prohibit consumers or other customers (like businesses) from paying for the preferential treatment of certain applications (via techniques like CoS or DPI), then it will in effect have approved it.

As mentioned, the above findings represent my preliminary conclusions.  Once the full FCC decision is available on its website (typically in a matter of a few days), I’ll be able to provide UC Strategies readers with a more thorough analysis.

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