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Published:January 29th, 2014 17:05 EST
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What Do You Mean Net Neutrality is Dead?

By William Giorgio

The death of Internet neutrality, no doubt you have heard about it all over the major news stations.  On January 14, 2014, the court decided that the net neutrality laws set up by the Federal Communications Committee were unconstitutional and could not be enforced.  For those who have heard about this issue, but don`t know specifically what it`s about, here is some basic information.

In 2010, the Federal Communications Committee put into effect the Open Internet Order when it was revealed that Comcast had been preventing their customers from using "certain peer-to-peer networking applications."  The Order lays down three basic guidelines for providers, with all but the third guideline applying to both fixed and mobile providers.  One is transparency, which requires providers to release any information regarding, "network management practices,
performance, and commercial terms of [their] broadband Internet access services" to the public. 

 The second is anti-blocking, which essentially means that fixed network providers cannot block any legally sound, "content, applications, services, or non-harmful devices," and mobile providers cannot block any services that compete with their phone services  on both an audio and visual level, lest they be "subject to reasonable network management."  The third guideline states that providers are not allowed to discriminate against any consumers that use their services to access legal content online.  The FCC stated that these rules were valid under Section 706 of the Telecommunications Act of 1996 because they were encouraging  the development of edge providers by preventing broadband providers from doing anything that could prevent users from reaching edge providers or allowing them to choose which edge provider to access.

The Open Internet Order was challenged by Verizon.  Verizon claimed that the order granted the FCC more power than it could constitutionally have, the reasoning behind its conception was vague at best, and that the rules treated broadband providers as common carriers, when the FCC had established in the Cable Broadband Order that they made up "a single, integrated information service."  Telecommunication services (common carriers) and information providers are monitored under different sets of guidelines, with telecommunication services having to adhere to the guidelines set by Title II of the Communications Act of 1934, and information services being exempt from Title II regulation.     

In the end, Verizon won the case on the grounds that the FCC had essentially no evidence that what they were doing was stopping any prohibition of development, and that they did not have any legal authority to enforce these rules.  After the case was decided, Randal Milch, General Counsel and Executive Vice President of Verizon, assured that the final result of the case would create a broader internet where users have more choices and more innovations can be made. 

The decision to strike down these rules have left many wary about the future of the Internet, and whether or not the potential performance and financial adaptations that could be made will preserve its free, innovative nature.

As CNN reported, this means that "companies like Verizon [...] would be able to pick and choose who gets the best access."  The FCC tried to fight so that all users could get the same benefits from using ISPs, but without the rules in place, having those benefits could be considered a privilege rather than a right.  Companies could control speeds differently for each user, and they could possibly require users to meet certain requirements in order to get faster connections, such as pay a higher subscription cost.

One company that has been thrown into the spotlight since the decision is Netflix.  Because of its subscription-based service and its popularity as a source for movies and shows (as of now, it is the 23rd most frequented site in America), many became concerned about how or if it would change its business model to adjust to the new laws.  On the stock market, Netflix was in a bind, having its stock price go down from $359.57 on January 6 to $344.10 on January 7, and staying below $359.57 ever since. 

In a January 22nd live blog posted on MarketWatch, CEO Reed Hastings said that, "there`s some draconian scenarios where some ISPs block Netflix.  But we think that is very unlikely.  And the most likely scenario at least in the near-term, there is no real change."  It
should be noted that he also said that he refused to add advertisements to Netflix since Netflix "really stands for that commercial-free experience that we have where the consumer`s in control of the experience."  The day after these comments were made, the stock price skyrocketed from $333.73 to $381.02, and has been within that general range since then.

Some people have been fighting back against this recent change in the form of a petition posted on the White House website.  The petition states that the new rules will actually stifle innovation because of the increased number of monetary barriers one has to get through to get certain services and that the government should consider reclassifying broadband connections as common carriers so that the FCC can enforce the Open Internet Order legally.  It needs 100,000 signatures by February 14 to be effective, and at the time of writing this, it has 53,522 signatures.

As we approach the third week of a non-neutral Internet, many have their doubts and speculations.  However, since this is still a rather recent decision, only time can tell
how it will play out in the long run.

(Sources: http://www.cadc.uscourts.gov/internet/opinions.nsf/3AF8B4D938CDEEA685257C6000532062/$file/11-1355-1474943.pdf,

http://www.cnn.com/2014/01/15/tech/web/net-neutrality-explained/,
http://publicpolicy.verizon.com/blog/entry/verizon-reiterates-its-commitment-to-the-open-internet,

http://blogs.marketwatch.com/thetell/2014/01/22/live-blog-netflix-earnings-call-2/,
https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1390424400000&chddm=7820&chls=IntervalBasedLine&q=NASDAQ%3ANFLX&&ei=jdHlUvCiBOGgiALHqQE,
https://petitions.whitehouse.gov/petition/restore-net-neutrality-directing-fcc-classify-internet-providers-common-carriers/5CWS1M4P)