American Enterprise Institute

[Commentary] Much of the controversy surrounding the Federal Communications Commission’s network neutrality proceeding involves the issue of paid prioritization: whether an Internet content or application provider can pay for priority delivery or minimum guaranteed speed over last-mile broadband networks.

Title II Section 202 prohibits telecommunications providers from engaging in “unreasonable discrimination.” But there’s an important limitation on the scope of Section 202. It does not require that the telecommunications provider offer only a single class of service to all people. Rather, it only prohibits discrimination among “like” services -- services that a customer may view as “functionally equivalent.”

In other words, we need to separate differentiation (offering different products at different prices) from discrimination (offering the same product at different prices).

[Lyons is an associate professor at Boston College Law School]

[Commentary] As soon as Netflix reached a transit agreement with Comcast, Netflix piggybacked on the network neutrality debate and announced that transit should be free for content providers.

It argued that all traffic should be treated the same, regardless of the costs it imposes on networks. Netflix wants to ensure that someone else pays for the high-definition video infrastructure it needs to realize its business, even though its traffic is the leading source of the congestion.

Not wanting its own customers to be adversely impacted, Netflix calls for the socialization of upgrade costs to all the users in the network, even if they don’t subscribe to Netflix.

[Layton is a PhD fellow at the Center for Communication, Media, and Information Studies at Aalborg University in Denmark]

[Commentary] Many activists would like to treat Internet service as a utility, to be regulated the way the power and water systems are. In those industries, a government board sets rates and can authorize or reject proposed capital investments.

The Federal Communications Commission’s Open Internet Order requires ISPs to provide detailed data about their internal routing policies and performance metrics. Does it make sense to view ISPs as utilities? Internet pipes are very different from water pipes. An ISP doesn’t just deliver data packets -- it delivers particular data packets to particular destinations.

[Rabkin is a professional software engineer]

[Commentary] Around the world there are different definitions of network neutrality and the so-called “open Internet.” A survey of national net neutrality rules shows that the concept is an empty vessel used to capture concerns ranging from vertical foreclosure to privacy to parental controls.

As each country’s telecommunications market is different, “each telecom authority must develop its own solution.” The lack of clarity offers governments a Trojan horse. On the ruse of protecting consumers, governments can legitimize increased control of the Internet -- and its users.

[Layton is studies Internet economics at the Center for Communication, Media, and Information Technologies at Aalborg University in Copenhagen]

[Commentary] Recently, news broke that Aereo has reframed its legal strategy to embrace just this argument, now arguing that it is a cable system and that it can avail itself of the Section 111 compulsory license to gain access to broadcast television content. The key question: Is Aereo a cable system?

At the end of the day, we should be thankful for Aereo’s willingness to put these issues front and center. Unlike their previous legal theory, where they tried to drive a freight train of copyright violations through the eye of the Cablevision needle, they are now forcing our attention to the key legal and policy issues. There are good arguments on both sides of the Aereo-as-cable question.

In either event, judicial resolution of the issue would increase certainty within the industry in a way that the Supreme Court’s Aereo decision did not. Even more important, a decision -- whichever way it goes -- would helpfully frame the issue for ultimate resolution by Congress.

If there’s one thing that the Aereo saga makes clear, it’s that current video regulations are a poor fit for the Internet age; Aereo’s continuing efforts can only help get the much-needed involvement of Congress in updating these out-of-date regulations.

[Hurwitz is an assistant professor at the University of Nebraska College of Law]

[Commentary] Even though it reaches the correct outcome, the Supreme Court’s Aereo opinion is staggeringly, and confusingly, bad. The court’s “looks like cable” analysis fails to address the difficult questions about the meaning of the Copyright Act; rather, it has added to existing confusion.

The most perplexing and problematic aspect of the Supreme Court’s opinion is that it never uses the term “primary transmission.” A primary transmission is a signal broadcast to the public that is later retransmitted by another service (a secondary transmission). Section 111(f) of the Copyright Act defines this term, and notes expressly that any streams broadcast by a broadcast television station are primary transmissions. The Act then defines “secondary transmission” as the “further transmitting of a primary transmission simultaneously with the primary transmission.”

This is precisely what Aereo was doing: it made a secondary transmission of a primary transmission. The implication -- supported by one of the most basic principles of statutory construction -- is that any secondary transmission is in fact a copyright violation unless it falls into one of the listed exceptions. In their briefs, the parties argue, obliquely, over whether Aereo is making a secondary transmission.

Regardless of their purpose, the parties’ briefs would have made the Justices sufficiently aware of Section 111’s framework to find answers to their questions there.

[Hurwitz is an assistant professor at the University of Nebraska College of Law]

[Commentary] On July 1st, the American Enterprise Institute’s panel discussion, Copyrights and Innovation: Understanding the Debate, provided a good overview of the differing perspectives of copyright skeptics and supporters.

However, one set of closing remarks made a critical mistake worth correcting. It was argued that US copyrights are mere “privileges,” because they are protected only by a federal statute -- not by the state common-law claims (and statutes) that protect other private property rights. It was thus argued that if Congress repealed the federal copyright act, then the “privilege” of copyrights would cease to be legally protected by US laws.

But this copyright-is-just-a-federal-privilege argument suffers from at least two fatal defects.

First, it just got US copyright law dead wrong. Some copyright skeptics make this error because the Supreme Court, in Wheaton v. Peters, rejected the idea of federal common-law copyrights.

Second, the idea of abolishing the private copyrights of authors is not really some innovative, liberating, thought-experiment recently concocted by copyright-skeptical academes.

Developed representative democracies like the United States now usually rely on four cultural systems to produce expressive works: (1) an academic system; (2) a philanthropic system; (3) direct government funding of particular works; and (4) a commercial-production system. Copyright laws can interact with all four systems, but they are indispensable only to the fourth -- the commercial-production system.

[Sydnor is a visiting fellow with AEI’s Center for Internet, Communications, and Technology Policy]

[Commentary] By a strange and convoluted process, a pending legal case about payments to terror victims may end up clarifying several open questions about Internet law.

The US Congress has authorized lawsuits against sovereign governments for terrorism that has harmed Americans. Plaintiffs in several cases have successfully convinced US courts that the government of Iran is responsible for funding terrorism against American citizens.

Getting the money is not so easy, since Iran has been almost totally cut off from the US banking system. However, Iran has not been cut off from the Internet, and it turns out that by virtue of being on the Internet, Iran has financial ties to American entities after all.

On June 24, the US District Court for DC authorized preliminary steps towards seizing Iranian payments to ICANN in several ongoing cases. The court authorized subpoenas against ICANN for information on its negotiations with Iran, and issued writs of attachment against any Iranian payments.

[Rabkin is currently a postdoctoral researcher at Princeton University]

[Commentary] The Federal Communications Commission announced that it had begun reviewing the recent interconnection agreements that Netflix signed with Internet service providers Comcast and Verizon.

The Commission’s growing interest in the heretofore unregulated interconnection market has prompted some commentators to renew their calls for all interconnection agreements to be filed with the Commission and made publicly available. Greater transparency, they argue, would provide consumers a better understanding of the economics of the Internet ecosystem beyond last-mile broadband networks, and would help the public police potential anticompetitive risks.

While transparency is often a laudatory goal, a mandatory public disclosure requirement in this case may ultimately harm the very competition that proponents seek to protect. Even absent any actual anticompetitive effects, the increased antitrust scrutiny invited by price transparency will impose additional costs on the industry, which will ultimately be passed along to consumers in the form of higher prices.

[Lyons is an associate professor at Boston College Law School]

[Commentary] Network neutrality is a global debate. A number of countries have implemented laws or are in the process of doing so. Each country defines the issue differently and thus creates laws with different provisions.

This creates a problem of international harmonization for the Internet, which is inherently global. Net neutrality rules are a difficult compromise between consumer protection and increased governmental control of the Internet, but the multi-stakeholder model strikes a balance.

Norway’s model for net neutrality, established in February 2009, is the longest running regime of that type in the world. No violations of net neutrality have been documented under the model. Swedish regulators observed at a recent event that the model is working, and ISPs are actually becoming more transparent.

The Nordic model preserves a role for the regulator to frame the discussion while at the same time encouraging participation by operators, content/application providers, and consumers. In this way, the regulator is less of a warden and more of a mediator.

Nordic regulators have agreed to cooperate on net neutrality. Should an EU law come to pass, it would supersede the enlightened approach taken by the Nordic countries. The better outcome would be to build on the efforts of the Nordic regulators, and make their model the global standard.

[Layton studies Internet economics at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen]