The Open Internet and the Digital Divide

At a May 20 House oversight hearing, FCC Chairman Tom Wheeler emphatically defended the Commission’s latest open Internet proposal saying, “There is one Internet. Everybody ought to have open, equal access to the capacity delivered by the Internet."

But what is the impact of open Internet policies on the digital divide? Since May 15, Washington has been abuzz with addressing a fundamental question posed by the Federal Communications Commission: “What is the right public policy to ensure that the Internet remains open?” At the Benton Foundation, we’ve been particularly interested in how the FCC made it a point to highlight that its Notice of Proposed Rulemaking (NPRM) seeks comment on questions designed to consider the impact of the open Internet on ensuring broadband access for all communities. In particular, the FCC highlights, the NPRM: 1) asks whether any parts of the nation are being left behind in the deployment of new broadband networks, including rural America and parts of urban America; and 2) considers the impact of the proposals on groups who disproportionately use mobile broadband service.

Open Internet and Broadband Deployment
In the May 15 NPRM, the FCC notes a growing digital divide that threatens to undo the work of the open Internet policies. As certain cities get connected with fiber or other technologies capable of providing broadband speeds of 25 Mbps up to 1 Gigabit, rural America and even some parts of urban America are falling farther and farther behind. Recent data suggest that a majority of Americans living in urban areas (64 percent) have access to at least 25 Mbps/10 Mbps service, while only a substantial minority of Americans residing in rural areas (only 21 percent) have access to that same 25 Mbps/10 Mbps service. The FCC is similarly concerned as to whether advanced networks are being deployed to all Americans in urban areas, as the construction of new networks, especially competitive networks, is an outcome that must be encouraged. Essentially, the Court upheld the FCC’s judgment that:

1. Section 706 of the Telecommunications Act of 1996 grants substantive power to the FCC to take actions, including removing barriers to infrastructure investment and promoting competition in telecommunications markets, that will promote the deployment of broadband networks;
2. The FCC was within its authority to conclude that the “virtuous circle” can be adversely impacted by broadband network practices that, over the long term, depress end-user demand, which then threatens broadband deployment; and
3. Threats to the open Internet, such as limitations on users to access the content of their choice or speak their views freely, are therefore within the authority of the FCC to curb.

In 2010, when the FCC last adopted Open Internet rules, the Commission specifically found that the Internet’s openness enabled a “virtuous circle of innovation in which new uses of the network -- including new content, applications, services, and devices -- lead to increased end-user demand for broadband, which drives network improvements, which in turn lead to further innovative network uses.” And although the United States Court of Appeals for the District of Columbia Circuit invalidated some of the FCC’s open Internet rules, the court held that “the Commission [had] more than adequately supported and explained its conclusion that edge provider innovation leads to the expansion and improvement of broadband infrastructure.”

The Commission explained that innovative streaming video applications and independent sources of video content have spurred end-user demand, which, in turn, has led to network investments and increased broadband deployment. The FCC said, “We expect that open Internet protections will help close the digital divide by maintaining relatively low barriers to entry for underrepresented groups and allowing for the development of diverse content, applications, and services.” The FCC noted that the Internet’s openness -- and the low costs of online entry -- enables businesses to launch without having to gain approval from traditional media gatekeepers. The FCC pointed to the example of Jonathan Moore, who founded Rowdy Orbit IPTV, an online platform featuring original programming for minority audiences, because he was frustrated by the lack of representation of people of color in traditional media. By contrast, the FCC reasoned, “[r]estricting edge providers’ ability to reach end users, and limiting end users’ ability to choose which edge providers to patronize, would reduce the rate of innovation at the edge and, in turn, the likely rate of improvements to network infrastructure.”

The FCC also believes that the ability of citizens and content providers to use this open platform to communicate with one another and express their views to a wide audience at very low costs drives further Internet use, consumer demand, and broadband investment and deployment.

But despite the advantages of the virtuous circle, broadband providers have short-term incentives to limit openness, generating harm to edge providers and users, among others. Thus, the risk of broadband provider practices that may reward them in the short term, but over the long run erode Internet openness, threatens to slow or even break the virtuous circle -- chilling entry and innovation by edge providers, impeding competition in many sectors, dampening consumer demand, and deterring broadband deployment -- in ways that may be irreversible or very costly to undo. Also, innovation that does not occur due to lack of Internet openness may be hard to detect.

Defining “deployment” broadly to include the extension of networks as well as the extension of the capabilities and capacities of those networks, the FCC tentatively concludes that:

• It should enhance the transparency rule that was upheld by the DC Circuit Court so that the public and the Commission have the benefit of sunlight on broadband provider actions and to ensure that consumers and edge providers -- indeed, the Internet community at large -- have the information they need to understand the services they are receiving and to monitor practices that could undermine the open Internet. Access to this information “encourages the competition, innovation, and high-quality services that drive consumer demand and broadband investment and deployment.” The FCC seeks comment on the extent to which the existing transparency rule fully reflects the “virtuous circle” that, in the long term, unites the interests of end-users, edge providers, the broader Internet community, and the Commission. The FCC asks: Are there ways to enhance the transparency rule to further facilitate the virtuous circle? What other disclosures might encourage and improve the deployment of broadband in the United States?
• It should adopt the text of the no-blocking rule from the 2010 order with a revised rationale, in order to ensure that all end-users and edge providers can enjoy the use of robust, fast and dynamic Internet access. The FCC believes the revived no-blocking rule should be interpreted as requiring broadband providers to furnish edge providers with a minimum level of access to their end-user subscribers. The FCC asks, “Should we define the minimum level of access from the perspective of end-users, edge providers, or both? Should the minimum level of access be dynamic, evolving over time, and if so, how can that flexibility be incorporated into the rule?”

An Open, Mobile Internet?
Is there one Internet for people who rely on fixed access and another Internet for mobile users? Relying on 2011 Pew Research Internet Project data, the FCC notes that Blacks and Latinos were more than twice as likely as whites to rely on their smartphones as their exclusive source of Internet access (38% of Black/Latino smartphone users versus 17% of white non-Hispanic smartphone users), and those with incomes of less than $30,000 were more than twice as likely as those with incomes of $50,000 or more to do so (40% versus 17%).

In 2010, the FCC’s no-blocking rule applied differently to mobile broadband providers than to fixed, and the May 15 NPRM would maintain that approach. Mobile broadband providers would be prohibited from blocking lawful web content as well as applications that compete with the mobile broadband providers’ own voice or video telephony services, subject to reasonable network management.

But the FCC also asks if it would serve the public interest to expand the rule’s scope to include reasonable access to all applications that compete with the mobile broadband Internet access provider’s other services, not just those that compete with voice or video telephony services, subject to reasonable network management practices. So the FCC asks:

• If the application of the no-blocking rule to mobile broadband providers should turn on whether mobile service was marketed to consumers as a substitute for a fixed telecommunications service previously offered by the provider or its affiliate?
• How would treating mobile broadband differently from fixed broadband affect consumers in different demographic groups, including those who rely solely on mobile broadband for Internet access?
• How should the Commission consider applying a no-blocking rule to facilities-based mobile providers versus resellers?
• How should the Commission define a minimum level of access in the context of the proposed no-blocking rule for mobile broadband, or otherwise clarify what constitutes “blocking,” and whether that definition should be different for mobile broadband than for fixed?

A Process that Works for Individuals and Small Businesses
The FCC recognizes that to be effective in protecting and promoting Internet openness, the process for enforcing open Internet rules must be accessible to a diverse array of affected parties. Individuals and small businesses may not have the same legal resources and effective access to the FCC as broadband providers, so the Commission is proposing to create an ombudsperson whose duty will be to act as a watchdog to protect and promote the interests of edge providers, especially smaller entities. The FCC asks if initial pleading or procedural requirements should be adopted that make access to Commission processes by individuals or small businesses less cumbersome?

Priority Services
Thomas Lee, a business editor and columnist for The San Francisco Chronicle, writes “there is simply too much money at stake for the FCC not to update its antiquated rules” and allow edge providers -- like Netflix and Hulu -- to pay Internet service providers fees to stream their content faster. “Too bad that comes at the expense of poorer minority communities who still lag in access to broadband technologies.”

"Anytime we don't have a level playing field, there is a huge risk for people who have the least," said Dr. Bill Baker, director of the Bernard L. Schwartz Center for Media, Education and Public Policy at Fordham University in New York. Major content companies will "gobble up lots of bandwidth, and the have-nots who don't have $4,000 high-definition televisions will get the short stick." The big streaming companies will pay Internet service providers for smoother and more reliable streaming of content. Only industry giants will be able to afford the tolls -- leaving YouTube cat videos in the dust. And the streaming companies will pass their costs on to consumers. In a country where many can't afford Internet access or a smartphone, any additional fees will wind up being a further barrier for entry.

But this is more important than streaming TV and Facebook status updates. In education, health care and business, the Internet has become so ingrained in our daily lives that some groups call universal broadband access the defining civil rights issue of our time. “Unless the [FCC] includes provisions to require that companies guarantee consistent streaming speeds to poorer communities, the so-called digital divide will become a digital chasm,” Lee concludes.

The FCC is accepting public comment on its proposed open Internet rules through September 10, so we’ll be seeing much more about what the proposal means and its impact on various communities and stakeholders. Follow the debate with us; and we’ll see you in the Headlines.