Net neutrality is happening whether broadband providers like it or not

  • The FCC is reclassifying broadband service providers as Title II carriers under the Communications Act

  • The FCC says net neutrality will absolutely not impose any rate regulation

  • There were several questions on today’s press call, asking if the new net neutrality rules will apply to mobile network slicing

The FCC plans to publish its final proposed order for net neutrality tomorrow. And then, the full FCC will vote on the order at its meeting on April 25, where it’s expected to pass on a 3-2 partisan vote. Today, the FCC held a press call, explaining why it wants oversight of broadband providers.

For their part, broadband providers have been keenly following the latest net neutrality saga, and their response has been predictable: they don’t like it.

Aside from operators and tech journalists, the rest of the word has responded with a collective yawn.

What will the net neutrality rules mean?

At a high level, net neutrality means that the FCC is reclassifying broadband service providers as Title II carriers under the Communications Act. This will subject them to the same rules as telcos. Most controversially, the rules say that broadband providers cannot selectively block or throttle internet traffic or sell unreasonable paid prioritization.

In a call with journalists today, a senior FCC official laid out a few of the reasons why FCC Chairwoman Jessica Rosenworcel wants net neutrality reinstated. He said that currently, the FCC has no oversight when it comes to broadband outages. So, when consumers reach out to the FCC for help with outages, the agency is powerless to help them or investigate the outages with broadband providers.

The FCC official also noted that in the time since the previous FCC stepped back from net neutrality, 12 states have stepped up. And now there’s a hodge-podge of broadband rules at the state level. This FCC thinks it’s better to have a consistent national standard.

The FCC also says that by classifying broadband providers under Title II, it can better protect national security. Specifically, it can direct foreign-owned companies deemed to be national security threats to discontinue broadband services under Sec. 214. And it says net neutrality will give the FCC authority to protect consumer data and privacy.

Before any journalists could even ask about rate regulation, the FCC official said there was no way, no how that net neutrality would implement any rate regulations on broadband services.

Network slicing

There were several questions on today’s press call asking if the new net neutrality rules will apply to mobile network slicing. This new technology holds a lot of promise for wireless carriers who’ve invested big bucks in 5G and now hope to monetize those investments through network slicing.

On its face, it would seem that network slicing is the very definition of paid preemption. It allows a network operator to sell a dedicated virtual “slice” of the network to a specific customer.

But the FCC official indicated that network slicing is not specifically addressed in the new rules. He said the technology will be considered like any other new technology. If network slicing is providing a bias (favoring one user or application over another to the detriment of others) it might be a problem. If it’s not providing a bias, it won’t be a problem.

In fact, the FCC official indicated that the agency is enthused about network slicing for enterprise use.

Edge providers

Roger Entner, principal analyst with Recon Analytics, suggested that net neutrality will just help the big hyperscalers like Google and Facebook because now broadband providers won’t ever have the option to charge them more for their outsized network usage.

This issue has been raised by European telecom operators who have asked hyperscalers to pay more.

RELATED: ‘It’s not fair’ cry Orange, DT, Telefonica, Vodafone about hyperscaler traffic

The FCC official said that the agency doesn’t necessarily agree with the “fair use” argument made by some European telcos. He said net neutrality rules are the best way to promote the free flow of information. And while net neutrality is important for Google and Facebook today, it’s even more important for the creation of similar groundbreaking companies in the future.

Telco industry response

When the Commission first announced last fall that it was reintroducing net neutrality, the telecom industry immediately dusted off all its old arguments against it. And today, immediately after the FCC press call, the same old comments started flowing into our inboxes.

AT&T CEO John Stankey best summed up the industry’s argument on AT&T's third quarter 2023 earnings call. He said there are “no indications that in the ISP segment, there's any discrimination going on. We have an industry in aggregate that supports no blocking, no paid prioritization, no throttling… no customers are complaining about what's going on in that front. So why we would use taxpayer money and resources and political capital to chase a problem that doesn't exist?”

Stankey does have a point. The FCC has repeatedly looked at net neutrality ever since 2015, instituting it and then reversing it. It’s looked at it so many times that New Street Research analyst Blair Levin is referring to this iteration as Network Neutrality take 7 (NN7).

Levin recently wrote that he’ll have to evaluate the impact of NN7 once he sees the final proposed order tomorrow. But he doesn’t think it will generate significant changes in how the ISPs operate, nor material changes in their revenues, margins or opportunities.

Even though service providers have been arguing that net neutrality would hold back private investments, the FCC official said that argument doesn’t hold water. He said there’s been no direct correlation between broadband investments and net neutrality rules in the past.

He also noted that the federal government has made massive investments to close the digital divide and is continuing to do so. Think BEAD.