Last week, two of the FCC’s five commissioners came to Sacramento for a public hearing on the future of net neutrality regulation. While most of the debate regarding the FCC’s proposed rules issued earlier this year centered on how and if the Commission should implement net neutrality rules, the Sacramento hearing—organized by California Congresswoman Doris Matsui, a vocal proponent of net neutrality rules—took a step back from arguments over Title II vs. Section 706 (the main legal debate surrounding net neutrality) to think about the broader policy goals that the FCC should focus on in deciding on rules to replace the now-vacated Open Internet Order, regardless of what regulatory mechanism they decide to use.
We praise Rep. Matsui and the commissioners who joined her. Considering how important net neutrality is to citizens and businesses throughout the country, it’s necessary that policymakers tasked with charting a path for the future of the open Internet take the time to discuss these issues with people outside of the Beltway who will be impacted by the FCC’s decision.
In her opening remarks, Commissioner Mignon Clyburn addressed a key net neutrality issue—one that has received short shrift in the debate thus far: the need for net neutrality regulations that apply to wireless Internet service. Under the 2010 Open Internet Order that was vacated in January by the D.C. Circuit Court, the FCC’s rules against ISP blocking and discrimination applied only to wired Internet service, leaving wireless Internet service outside the scope of the rules. While, as Commissioner Clyburn correctly noted, non-neutral wireless broadband presents significant problems for low-income Americans and communities of color (many of whom rely exclusively on wireless broadband for access to the Internet), the lack of any net neutrality rules impacting wireless threatens every community of Internet users, especially the startup community, much of which heavily relies on wireless to connect to new customers and users.
In 2010, when the FCC issued its Open Internet Order, the FCC decided not to apply to wireless carriers the full anti-discrimination and anti-blocking rules it created to regulate wired broadband. The FCC justified this action on the grounds that the mobile broadband industry was still rather young in 2010; there was more competition amongst mobile carriers than their wireline counterparts; and operational constraints on mobile networks necessitated a more lenient notion of “reasonable network management” practices. These arguments were weak in 2010, and as the mobile broadband marketplace has changed, the FCC’s logic for exempting mobile from its net neutrality rules makes even less sense today.
As Commissioner Clyburn noted, the mobile broadband market has grown significantly in recent years, with LTE deployed to more than 120 million subscribers today, up from just 200,000 when the Commission issued its 2010 order. Not surprisingly, this increased mobile access has spurred a tremendous boom in the mobile application market. The global market for mobile apps and advertising was worth $38 billion in 2013, up from about $6.8 billion in 2010.
Some may point to these encouraging figures and conclude that there is no need for net neutrality rules in the mobile space. But, part of the reason the application market has boomed so much is because mobile ISPs have not yet engaged in widespread discriminatory activity—a norm that is beginning to change. Recently, mobile carriers have been entering into deals with some edge providers whereby use of these edge providers’ services does not count against a consumer’s data caps. While this may look like a great deal to consumers who are finding themselves being pushed into capped data plans, it will have the same crippling effect on startups that the creation of fast and slow lanes on the Internet would. Upstart companies will find it difficult or impossible to compete with large incumbent applications that consumers can use without incurring data charges, discouraging entrepreneurs from entering the market and investors from funding new application startups. Consumers may initially like having low cost access to popular apps, but consumer popularity alone isn’t synonymous with sound policy. Consumers also probably like the low prices a monopolist can charge to undercut new entrants and stave off competition, but permitting monopolistic behavior will ultimately ruin markets and consumer choice, threatening—as President Obama said—“the next Google and the next Facebook.”
Whether the FCC goes forward with its currently proposed ill-advised “net neutrality” regulations or uses Title II to enact meaningful non-discrimination rules, it must apply such rules equally to wired and wireless service. Failure to enact rules governing mobile broadband carrier discrimination—including zero-rating schemes—will stifle the booming market for mobile applications and allow mobile carriers to serve as gatekeepers for the millions of Americans who rely on wireless Internet access.