The variability of competitiveness in the market for upstream and downstream Internet access has motivated some stakeholders to claim that national regulatory authorities, such as the Federal Communications Commission (“FCC”), should intervene to remedy market failures and existing or potential anticompetitive practices. The so-called Network Neutrality debate has focused largely on the retail, ISP-to-end user link with advocates claiming that ISPs have the ability and incentive to favor affiliates in the delivery of traffic to subscribers.

The Network Neutrality debate occasionally addresses upstream routing discrimination, but the likelihood of anticompetitive practices are tempered by the fact that consumers and retail ISPs have access to a competitive marketplace for long haul carriage of Internet traffic. Notwithstanding such upstream competition, content eventually routes through a single retail ISP to end users. Advocates for regulatory intervention have expressed new concerns that the process used to secure upstream access to content, may suffer from the same sort of discrimination or anticompetitive practices as allegedly has occurred at the retail level.

Recently a long haul ISP, Level Three, sought FCC intervention to resolve a traffic dispute with Comcast. Level Three had contracted with Netflix to serve as a primary Content Delivery Network (“CDN”) distributor of online movies thereby substantially increasing the volume of traffic that Level Three needs retail ISPs like Comcast to deliver to its subscribers. In response to the increase in terminating traffic generated by Level Three, Comcast imposed a surcharge. Level Three objected to it being singled out for a surcharge asserting that Comcast had installed an Internet toll booth for only certain traffic that happens to compete with Comcast’s pay per view cable television service.

Under ordinary circumstances when the volume of traffic between Internet peers changes and becomes unbalanced, the carrier generating more traffic than it receives bears the financial obligation to compensate the terminating carrier. However peering ISPs typically seek to balance out the traffic if possible in lieu of resorting to a monetary settlement. For CDNs that concentrate on the downstream delivery of content, an offsetting upstream flow of traffic may not be available to forestall a surcharge. However in the dispute between Level Three and Comcast, Level Three operates a large transcontinental network that could handle more upstream traffic from Comcast had Comcast elected to offset the Netflix downstream traffic volume.

This article will examine the terms and conditions under which Internet carriers switch and route traffic for each of several links between a source of content, e.g., Netflix, and the delivery of that content to consumers via a retail ISP. The article concludes that for each networking element commercial terms and conditions apply and that the FCC may lack direct statutory authority to intervene based on its determination that the largely unregulated information service classification applies to much of what constitutes Internet access. Additionally the FCC may appropriately forebear from regulating disputes regarding long haul telecommunications capacity, like that offered by carriers such as Level Three, because sufficient competition favors industry self-regulation. Similarly for peering disputes upstream from a retail ISP the marketplace appears sufficiently competitive for ISPs to pursue remedies free of regulatory intervention.

Despite substantial reasons not to intervene, the FCC nevertheless might have to clarify its understanding of what subscribers of retail ISP services can expect to receive. Under truth in billing and other consumer safeguards the Commission might require ISPs to explain what a subscription guarantees not only in terms of transmission speed and downloading capacity, but also what subscribers can expect their ISPs to do when receiving content requiring downstream termination. The article concludes that both Netflix customers and retail ISP subscribers expect their service providers to guarantee delivery of movies and all sorts of Internet traffic respectively. For physical delivery of DVDs Netflix must pay the U.S. Postal Service and for delivery of streaming bits Netflix must pay that Level Three. But for Internet traffic involving two or more ISPs, the article examines whether other retail ISPs providing last mile delivery of content violate their service commitments to subscribers by demanding additional payment from upstream carriers.

Rather than promote competition, the FCC has exacerbated the trend toward concentration of ownership generated by technological innovations that promote bundling of previously stand alone services. Ventures diversify and expand to accrue scale economies and to exploit new opportunities to serve adjacent markets. Rather than make sure that this trend does not lead to oligopolistic behavior, the FCC have removed increasingly essential regulatory safeguards designed to curb market power without robbing ventures of opportunities to operate efficiently. Intentionally or not the FCC contributes to market concentration even as it abandons lawful techniques and policies to monitor and remedy marketplace abuses.

The FCC’s deregulatory decisions operate in one direction—the elimination of regulatory safeguards—without any option or vehicle for reasserting safeguards should assumptions prove wrong, or circumstances change in ways necessitating public interest safeguards. For example, the Commission’s decision to classify Internet access technologies as information services appears to eliminate entirely the ability to respond to anticompetitive practices of Internet Service Providers. So when Comcast or other carriers deliberately disrupt subscribers’ traffic in the absence of legitimate network management needs, the FCC has no statutory authority to impose safeguards. Worse yet the decision to treat basic bit transmission as an information service severely restricts the Commission’s ability to impose safeguards on services that combine Internet access with software, to provide the functional equivalent of a telecommunications service, e.g., Voice over the Internet Protocol (“VoIP”). The FCC decision to apply the information service classification to all Internet access technologies means that the Commission has abandoned any direct statutory authority and must resort to questionable ancillary jurisdiction to impose even light-handed regulatory safeguards.

Other instances of unintended consequences from overly optimistic findings and assumptions about marketplace competition include removal of caps on the total spectrum a single wireless carrier can control, premature abandonment of local loop unbundling requirements and conclusions that incumbent carriers have no duty to deal with market entrants even when the incumbent opts to offer retail rates below the so-called market-driven wholesale rate charged competitors. For each of these decisions the FCC compounded its initial mistakes by foreclosing the option of making necessary and lawful future modifications.

This paper will examine the consequences of the FCC’s wishful thinking about the viability of current competition and the sustainability of competition going forward. The paper concludes that flawed fact finding and market projections have adverse initial consequences, but even worst future impact. In response to vigorous lobbying by incumbents, impatient law makers and jurists and deregulatory bias the FCC has contributed to the development of a telecommunications industry structure that appears less competitive, innovative and responsive than what occurs in many other countries.

The variability of competitiveness in the market for upstream and downstream Internet access has motivated some stakeholders to claim that federal government agencies, such as the Federal Communications Commission (“FCC”), should intervene to remedy market failures and existing or potential anticompetitive practices. The so-called network neutrality debate has focused largely on the retail, ISP-to-end user link with advocates claiming that ISPs have the ability and incentive to favor affiliates in the delivery of traffic to subscribers.

The network neutrality debate occasionally addresses upstream routing discrimination, but the likelihood of anticompetitive practices are tempered by the fact that consumers and retail ISPs have access to a competitive marketplace for long haul carriage of Internet traffic. Notwithstanding such upstream competition, content eventually routes through a single retail ISP to end users. Advocates for regulatory intervention have expressed new concerns that the process used to secure upstream access to content, may suffer from the same sort of discrimination or anticompetitive practices as allegedly has occurred at the retail level.

Recently a long haul ISP, Level Three, sought FCC intervention to resolve a traffic dispute with Comcast. Level Three had contracted with Netflix to serve as a primary Content Delivery Network (“CDN”) distributor of online movies thereby substantially increasing the volume of traffic that Level Three needs retail ISPs like Comcast to deliver to its subscribers. In response to the increase in terminating traffic generated by Level Three, Comcast imposed a surcharge. Level Three objected to it being singled out for a surcharge asserting that Comcast had installed an Internet toll booth for only certain traffic that happens to compete with Comcast’s pay per view cable television service.

Under ordinary circumstances when the volume of traffic between Internet peers changes and becomes unbalanced, the carrier generating more traffic than it receives bears the financial obligation to compensate the terminating carrier. However peering ISPs typically seek to balance out the traffic if possible in lieu of resorting to a monetary settlement. For CDNs that concentrate on the downstream delivery of content, an offsetting upstream flow of traffic may not be available to forestall a surcharge. However in the dispute between Level Three and Comcast, Level Three operates a large transcontinental network that could handle more upstream traffic from Comcast had Comcast elected to offset the Netflix downstream traffic volume.

Level Three appears to want the FCC to resolve the traffic dispute by prohibiting Comcast from imposing a surcharge, on top of the Internet access charges Comcast’s subscribers pay. Comcast frames the issue narrowly as a peering matter between an upstream ISP and the ISP providing last mile termination.

This paper will examine the terms and conditions under which Internet carriers switch and route traffic for each of several links between a source of content, e.g., Netflix, and the delivery of that content to consumers via a retail ISP. The paper concludes that for each networking element commercial terms and conditions apply and that the FCC may lack direct statutory authority to intervene based on its determination that the largely unregulated information service classification applies to much of what constitutes Internet access. Additionally the FCC may appropriately forebear from regulating disputes regarding long haul telecommunications capacity, like that offered by carriers such as Level Three, because sufficient competition favors industry self-regulation. Similarly for peering disputes upstream from a retail ISP the marketplace appears sufficiently competitive for ISPs to pursue remedies free of regulatory intervention.

Despite substantial reasons not to intervene, the FCC nevertheless might have to clarify its understanding of what subscribers of retail ISP services can expect to receive. Under truth in billing and other consumer safeguards the Commission might require ISPs to explain what a subscription guarantees not only in terms of transmission speed and downloading capacity, but also what subscribers can expect their ISPs to do when receiving content requiring downstream termination. The paper concludes that both Netflix customers and retail ISP subscribers expect their service providers to guarantee delivery of movies and all sorts of Internet traffic respectively. For physical delivery of DVDs Netflix must pay the U.S. Postal Service and for delivery of streaming bits Netflix must pay that Level Three. But for Internet traffic involving two or more ISPs, the paper examines whether other retail ISPs providing last mile delivery of content violate their service commitments to subscribers by demanding additional payment from upstream carriers.

The variability of competitiveness in the market for upstream and downstream Internet access has motivated some stakeholders to claim that federal government agencies, such as the Federal Communications Commission (“FCC”), should intervene to remedy market failures and existing or potential anticompetitive practices. The so-called network neutrality debate has focused largely on the retail, ISP-to-end user link with advocates claiming that ISPs have the ability and incentive to favor affiliates in the delivery of traffic to subscribers.

The network neutrality debate occasionally addresses upstream routing discrimination, but the likelihood of anticompetitive practices are tempered by the fact that consumers and retail ISPs have access to a competitive marketplace for long haul carriage of Internet traffic. Notwithstanding such upstream competition, content eventually routes through a single retail ISP to end users. Advocates for regulatory intervention have expressed new concerns that the process used to secure upstream access to content, may suffer from the same sort of discrimination or anticompetitive practices as allegedly has occurred at the retail level.

Recently a long haul ISP, Level Three, sought FCC intervention to resolve a traffic dispute with Comcast. Level Three had contracted with Netflix to serve as a primary Content Delivery Network (“CDN”) distributor of online movies thereby substantially increasing the volume of traffic that Level Three needs retail ISPs like Comcast to deliver to its subscribers. In response to the increase in terminating traffic generated by Level Three, Comcast imposed a surcharge. Level Three objected to it being singled out for a surcharge asserting that Comcast had installed an Internet toll booth for only certain traffic that happens to compete with Comcast’s pay per view cable television service.

Under ordinary circumstances when the volume of traffic between Internet peers changes and becomes unbalanced, the carrier generating more traffic than it receives bears the financial obligation to compensate the terminating carrier. However peering ISPs typically seek to balance out the traffic if possible in lieu of resorting to a monetary settlement. For CDNs that concentrate on the downstream delivery of content, an offsetting upstream flow of traffic may not be available to forestall a surcharge. However in the dispute between Level Three and Comcast, Level Three operates a large transcontinental network that could handle more upstream traffic from Comcast had Comcast elected to offset the Netflix downstream traffic volume.

Level Three appears to want the FCC to resolve the traffic dispute by prohibiting Comcast from imposing a surcharge, on top of the Internet access charges Comcast’s subscribers pay. Comcast frames the issue narrowly as a peering matter between an upstream ISP and the ISP providing last mile termination.

This paper will examine the terms and conditions under which Internet carriers switch and route traffic for each of several links between a source of content, e.g., Netflix, and the delivery of that content to consumers via a retail ISP. The paper concludes that for each networking element commercial terms and conditions apply and that the FCC may lack direct statutory authority to intervene based on its determination that the largely unregulated information service classification applies to much of what constitutes Internet access. Additionally the FCC may appropriately forebear from regulating disputes regarding long haul telecommunications capacity, like that offered by carriers such as Level Three, because sufficient competition favors industry self-regulation. Similarly for peering disputes upstream from a retail ISP the marketplace appears sufficiently competitive for ISPs to pursue remedies free of regulatory intervention.

Despite substantial reasons not to intervene, the FCC nevertheless might have to clarify its understanding of what subscribers of retail ISP services can expect to receive. Under truth in billing and other consumer safeguards the Commission might require ISPs to explain what a subscription guarantees not only in terms of transmission speed and downloading capacity, but also what subscribers can expect their ISPs to do when receiving content requiring downstream termination. The paper concludes that both Netflix customers and retail ISP subscribers expect their service providers to guarantee delivery of movies and all sorts of Internet traffic respectively. For physical delivery of DVDs Netflix must pay the U.S. Postal Service and for delivery of streaming bits Netflix must pay that Level Three. But for Internet traffic involving two or more ISPs, the paper examines whether other retail ISPs providing last mile delivery of content violate their service commitments to subscribers by demanding additional payment from upstream carriers.

The Network Neutrality debate occasionally addresses upstream routing discrimination, but the likelihood of anticompetitive practices are tempered by the fact that consumers and retail ISPs have access to a competitive marketplace for long haul carriage of Internet traffic. Notwithstanding such upstream competition, content eventually routes through a single retail ISP to end users. Advocates for regulatory intervention have expressed new concerns that the process used to secure upstream access to content, may suffer from the same sort of discrimination or anticompetitive practices as allegedly has occurred at the retail level.

Recently a long haul ISP, Level Three, sought FCC intervention to resolve a traffic dispute with Comcast. Level Three had contracted with Netflix to serve as a primary Content Delivery Network (“CDN”) distributor of online movies thereby substantially increasing the volume of traffic that Level Three needs retail ISPs like Comcast to deliver to its subscribers. In response to the increase in terminating traffic generated by Level Three, Comcast imposed a surcharge. Level Three objected to it being singled out for a surcharge asserting that Comcast had installed an Internet toll booth for only certain traffic that happens to compete with Comcast’s pay per view cable television service.

Under ordinary circumstances when the volume of traffic between Internet peers changes and becomes unbalanced, the carrier generating more traffic than it receives bears the financial obligation to compensate the terminating carrier. However peering ISPs typically seek to balance out the traffic if possible in lieu of resorting to a monetary settlement. For CDNs that concentrate on the downstream delivery of content, an offsetting upstream flow of traffic may not be available to forestall a surcharge. However in the dispute between Level Three and Comcast, Level Three operates a large transcontinental network that could handle more upstream traffic from Comcast had Comcast elected to offset the Netflix downstream traffic volume.

Level Three appears to want the FCC to resolve the traffic dispute by prohibiting Comcast from imposing a surcharge, on top of the Internet access charges Comcast’s subscribers pay. Comcast frames the issue narrowly as a peering matter between an upstream ISP and the ISP providing last mile termination.

This paper will examine the terms and conditions under which Internet carriers switch and route traffic for each of several links between a source of content, e.g., Netflix, and the delivery of that content to consumers via a retail ISP. The paper concludes that for each networking element commercial terms and conditions apply and that the FCC may lack direct statutory authority to intervene based on its determination that the largely unregulated information service classification applies to much of what constitutes Internet access. Additionally the FCC may appropriately forebear from regulating disputes regarding long haul telecommunications capacity, like that offered by carriers such as Level Three, because sufficient competition favors industry self-regulation. Similarly for peering disputes upstream from a retail ISP the marketplace appears sufficiently competitive for ISPs to pursue remedies free of regulatory intervention.

Despite substantial reasons not to intervene, the FCC nevertheless might have to clarify its understanding of what subscribers of retail ISP services can expect to receive. Under truth in billing and other consumer safeguards the Commission might require ISPs to explain what a subscription guarantees not only in terms of transmission speed and downloading capacity, but also what subscribers can expect their ISPs to do when receiving content requiring downstream termination. The paper concludes that both Netflix customers and retail ISP subscribers expect their service providers to guarantee delivery of movies and all sorts of Internet traffic respectively. For physical delivery of DVDs Netflix must pay the U.S. Postal Service and for delivery of streaming bits Netflix must pay that Level Three. But for Internet traffic involving two or more ISPs, the paper examines whether other retail ISPs providing last mile delivery of content violate their service commitments to subscribers by demanding additional payment from upstream carriers.

The FCC’s deregulatory decisions operate in one direction—the elimination of regulatory safeguards—without any option or vehicle for reasserting safeguards should assumptions prove wrong, or circumstances change in ways necessitating public interest safeguards. For example, the Commission’s decision to classify Internet access technologies as information services appears to eliminate entirely the ability to respond to anticompetitive practices of Internet Service Providers. So when Comcast or other carriers deliberately disrupt subscribers’ traffic in the absence of legitimate network management needs, the FCC has no statutory authority to impose safeguards. Worse yet the decision to treat basic bit transmission as an information service severely restricts the Commission’s ability to impose safeguards on services that combine Internet access with software, to provide the functional equivalent of a telecommunications service, e.g., Voice over the Internet Protocol (“VoIP”). The FCC decision to apply the information service classification to all Internet access technologies means that the Commission has abandoned any direct statutory authority and must resort to questionable ancillary jurisdiction to impose even light-handed regulatory safeguards.

Other instances of unintended consequences from overly optimistic findings and assumptions about marketplace competition include removal of caps on the total spectrum a single wireless carrier can control, premature abandonment of local loop unbundling requirements and conclusions that incumbent carriers have no duty to deal with market entrants even when the incumbent opts to offer retail rates below the so-called market-driven wholesale rate charged competitors. For each of these decisions the FCC compounded its initial mistakes by foreclosing the option of making necessary and lawful future modifications.

This paper will examine the consequences of the FCC’s wishful thinking about the viability of current competition and the sustainability of competition going forward. The paper concludes that flawed fact finding and market projections have adverse initial consequences, but even worst future impact. In response to vigorous lobbying by incumbents, impatient law makers and jurists and deregulatory bias the FCC has contributed to the development of a telecommunications industry structure that appears less competitive, innovative and responsive than what occurs in many other countries.

Diversification by ventures typically results in a single company providing services that fit within more than one regulatory classification. This frustrates the FCC’s desire to apply a single regulatory classification to services and service providers, a process the Commission could achieve when ventures concentrated on one function, e.g., operating a conduit for content created by others, and offered one readily identifiable service, e.g., telephony. Diversification also obscures the specific reach of the FCC’s regulatory wingspan, both in terms of what regulatory classification applies to which services and what regulatory safeguards the Commission can lawfully apply. For example, an appellate court recently reversed the FCC’s attempt to subject Internet Service Providers (“ISPs”) to regulatory safeguards identified in Title II of the Communications Act, as amended, but which the Commission wanted to apply using the concept of “ancillary jurisdiction” based on Title I of the Act. The D.C. Circuit Court of Appeals rejected the FCC’s attempt to apply such safeguards on ventures classified as information service providers, a status that qualifies for a largely unregulated “safe harbor.”

In light of an appellate court reversal, the FCC must rethink how it can serve the public interest and safeguard consumers, despite having broadly applied the information service classification to all Internet services and ISPs. Already the FCC has had to find ways to impose Title II-type regulatory safeguards on providers of Voice over the Internet Protocol (“VoIP”) service. Additionally the Commission has avoided making necessary regulatory classifications as to which category new services such as VoIP and Internet Protocol Television fit.

Absent a legislative remedy the FCC must find a way that will pass muster with reviewing court, but also provide necessary safeguards. FCC Chairman Julius Genachowski has proposed to reclassify Internet access as Title II regulated service subject to extensive forbearance from applying many regulatory safeguards he considers unnecessary. Such a re-classification, coming on the heels of court reversal, appears as after the fact scrambling to re-arrange the wingspan of Title II jurisdiction without statutory authority.

This paper will explain how the FCC has backed itself into a corner in light of its predisposition to apply the information service classification indiscriminately and its perceived duty to make either/or determinations about services, i.e., to apply either the telecommunications service classification singularly, or the information service singularly to a convergent service that combines both elements. The paper also will provide recommendations on how the Commission might recognize that convergent services, such as Internet access, combine both components in much the same way as wireless cellular telephone companies offer both regulated common carrier telecommunications services, subject to forbearance, and unregulated information services via the same conduit. The paper recommends that in light of the ascending importance of Internet access and the lack of sustainable competition that would favor self-regulation, Congress should amend the Communications Act to authorize the FCC to apply limited elements of Title II safeguards as already exists for wireless telephony. In light of the failure of Congress to reach consensus, the paper suggests that the FCC safeguard consumers when information service providers cause harm as the Commission did when a DSL service provider blocked access to competing VoIP services.

In the worst case scenario, incumbent carriers secure unwarranted and premature deregulation, despite an ongoing need for governments to guard against anticompetitive practices and to promote sustainable competition. Governments also risk providing direct financial subsidies, or creating a regulatory mechanism for indirect subsidies, to stimulate infrastructure investment when no such catalyst is necessary in light of competitive necessity. Once a subsidy mechanism is in place, government may not easily “wean” carriers off such artificial compensation. In rare instances government may find some key carriers unwilling to accept subsidies and in turn disinclined to pursue expedited NGN development, as is currently occurring in the U.S., because incumbent carriers do not want to provide interconnection and access to competitors, a legal duty these carriers must bear when operating as common carrier providers of telecommunications networks, but which does not apply when these carriers offer information services which include broadband.

This paper will examine how incumbent carriers in the United States have gamed the incentive creation process for maximum market distortion and competitive advantage. The paper suggests that the U.S. government has rewarded incumbents with artificially lower risk, insulation from competition, and partial underwriting of technology projects that these carriers would have to undertake unilaterally. The paper also examines the FCC’s recently released National Broadband Plan with an eye toward assessing whether the Commission has properly balanced incentive creation with competitive necessity. The paper provides recommendations on how governments can calibrate the incentive creation process for maximum consumer benefit instead of individual carrier gain.

openness principles be applied to Internet content and application providers. This article strongly opposes AT&T’s imitative as both unlawful and unwise. The FCC’s appropriate concern about end user access to the Internet via IAPs does not justify an extension of regulatory oversight to include those entities providing content and applications. Regulating the vibrant application and content markets would constitute a departure from current policy and would threaten the open Internet.

The article provides an extensive analysis of what regulatory wingspan the FCC has to establish federal Internet policy. While the Commission does have some statutory authority to oversee operators of wire and radio, including IAPs, the Commission cannot extend its direct or ancillary jurisdiction to regulate providers of content and software applications. The article also explains how the FCC has long-recognized competitive and operational distinctions between facilities-based network providers and services that depend on those networks to reach end-users. The article concludes that factors supporting enforceable openness rules for IAPs do not exist for extending any such rules to Internet content and applications that run “over-the-top” of IAPs’ networks.

openness principles be applied to Internet content and application providers. This paper strongly opposes AT&T’s imitative as both unlawful and unwise. The FCC’s appropriate concern about end user access to the Internet via IAPs does not justify an extension of regulatory oversight to include those entities providing content and applications. Regulating the vibrant application and content markets would constitute a departure from current policy and would threaten the open Internet.

The paper provides an extensive analysis of what regulatory wingspan the FCC has to establish federal Internet policy. While the Commission does have some statutory authority to oversee operators of wire and radio, including IAPs, the Commission cannot extend its direct or ancillary jurisdiction to regulate providers of content and software applications. The paper also explains how the FCC has long-recognized competitive and operational distinctions between facilities-based network providers and services that depend on those networks to reach end-users. The paper concludes that factors supporting enforceable openness rules for IAPs do not exist for extending any such rules to Internet content and applications that run “over-the-top” of IAPs’ networks.

Without assessing the necessity to do so legislators, regulators and judges have accepted the premise that government must create incentives for NGN investment. Incumbent carriers in particular have seized upon the concept of uncertainty as a justification for refraining from making necessary infrastructure investments, despite the onset of declining revenues and market shares in core services.

This paper will examine how incumbent carriers in the United States have gamed the incentive creation process for maximum market distortion and competitive advantage. The paper suggests that the U.S. government has rewarded incumbents with artificially lower risk, insulation from competition, and partial underwriting of technology projects that these carriers would have to undertake unilaterally. The paper provides recommendations on how governments can calibrate the incentive creation process for maximum consumer benefit instead of individual carrier gain.

In far too few instances, normal governmental checks and balances do not detect and reverse instances where the FCC has deliberately or inadvertently failed to compile a credible record. Many reviewing courts gladly defer to the FCC’s “expertise” rather than appear to second guess, or to legislate from the bench in highly technical matters. One court accepted the FCC’s arguments that data about commercial ventures’ decisions not to provide broadband service in specific localities constituted a business trade secret qualifying from protection from public disclosure instead of identifying areas of market failure requiring heightened scrutiny in view of the legislative goal of achieving universal access to basic and advanced telecommunications services.

Too often, the FCC reaches policy conclusions based on statistical interpretations that do not make sense, and do not have corroboration through peer review. For example, the FCC first concluded that per channel, “ala carte” access to cable television programming would not save consumers’ money as an alternative to having to acquire a bundle of channels. However, the Commission quickly subsequently reversed itself with limited explanation for its change in findings. The Commission also erected a media diversity index to support relaxation of a cap on media ownership that a reviewing court rejected based on its lack of supporting evidence. Only after a stinging judicial rebuke did the FCC think to subject its statistical analysis and modeling to external review from unaffiliated experts, rather than simply rely on the research and findings sponsored by stakeholders with a financial interest in the outcome of the Commission’s decision.

This paper will identify several instances where the FCC could have used empirical research and peer review to achieve a true sense of the marketplace. The paper will suggest ways the Commission could have avoided judicial reversal and public ridicule if it had embraced accepted social scientific practices, including peer review.

In far too few instances, normal governmental checks and balances do not detect and reverse instances where the FCC has deliberately or inadvertently failed to compile a credible record. Many reviewing courts gladly defer to the FCC’s “expertise” rather than appear to second guess, or to legislate from the bench in highly technical matters. One court accepted the FCC’s arguments that data about commercial ventures’ decisions not to provide broadband service in specific localities constituted a business trade secret qualifying from protection from public disclosure instead of identifying areas of market failure requiring heightened scrutiny in view of the legislative goal of achieving universal access to basic and advanced telecommunications services.

Too often, the FCC reaches policy conclusions based on statistical interpretations that do not make sense, and do not have corroboration through peer review. For example, the FCC first concluded that per channel, “ala carte” access to cable television programming would not save consumers’ money as an alternative to having to acquire a bundle of channels. However, the Commission quickly subsequently reversed itself with limited explanation for its change in findings. The Commission also erected a media diversity index to support relaxation of a cap on media ownership that a reviewing court rejected based on its lack of supporting evidence. Only after a stinging judicial rebuke did the FCC think to subject its statistical analysis and modeling to external review from unaffiliated experts, rather than simply rely on the research and findings sponsored by stakeholders with a financial interest in the outcome of the Commission’s decision.

This paper will identify several instances where the FCC could have used empirical research and peer review to achieve a true sense of the marketplace. The paper will suggest ways the Commission could have avoided judicial reversal and public ridicule if it had embraced accepted social scientific practices, including peer review.

In far too few instances, normal governmental checks and balances do not detect and reverse instances where the FCC has deliberately or inadvertently failed to compile a credible record. Many reviewing courts gladly defer to the FCC’s “expertise” rather than appear to second guess, or to legislate from the bench in highly technical matters. One court accepted the FCC’s arguments that data about commercial ventures’ decisions not to provide broadband service in specific localities constituted a business trade secret qualifying from protection from public disclosure instead of identifying areas of market failure requiring heightened scrutiny in view of the legislative goal of achieving universal access to basic and advanced telecommunications services.

Too often, the FCC reaches policy conclusions based on statistical interpretations that do not make sense, and do not have corroboration through peer review. For example, the FCC first concluded that per channel, “ala carte” access to cable television programming would not save consumers’ money as an alternative to having to acquire a bundle of channels. However, the Commission quickly subsequently reversed itself with limited explanation for its change in findings. The Commission also erected a media diversity index to support relaxation of a cap on media ownership that a reviewing court rejected based on its lack of supporting evidence. Only after a stinging judicial rebuke did the FCC think to subject its statistical analysis and modeling to external review from unaffiliated experts, rather than simply rely on the research and findings sponsored by stakeholders with a financial interest in the outcome of the Commission’s decision.

This paper will identify several instances where the FCC could have used empirical research and peer review to achieve a true sense of the marketplace. The paper will suggest ways the Commission could have avoided judicial reversal and public ridicule if it had embraced accepted social scientific practices, including peer review.

The public policy debate primarily considers micro-level issues, without much consideration of broader concerns such as First Amendment values. While professing to support marketplace resource allocation and a regulation-free Internet, the FCC has selectively imposed compulsory duties on ISPs who qualify for classification as largely unregulated information service providers. Such regulation can tilt the competitive playing field, possibly favoring some First Amendment speakers to the detriment of others. Yet the FCC has summarily dismissed any concerns that the Commission’s regulatory regime inhibits First Amendment protected expression.

For their part, ISPs have evidenced inconsistency in how seriously they value and exercise their First Amendment speaker rights. Such reticence stems, in part, from the fact that ISPs combine the provision of conduits, using telecommunications transmission capacity, with content. While not operating as regulated common carriers, the traditional classification of conduit-only providers, ISPs can avoid tort and copyright liability when they refrain from operating as speakers and editors of content. In other instances, the same enterprise becomes an aggressive advocate for First Amendment speaker rights when selecting content, packaging it into a easily accessible and user friendly “walled garden,” and employing increasingly sophisticated information processing techniques to filter, prioritize and inspect digital packets.

Technological and marketplace convergence creates the ability and incentive for ISPs to operate as publishers, editors, content aggregators, and non-neutral conduit providers. No single First Amendment media model (print, broadcast, cable television and telephone), or legislative definition of service (telecommunications, telecommunications service and information service) cover every ISP activity. Despite the lack of single applicable model and the fact that ISPs provide different services, the FCC continues to apply a single, least regulated classification. The inclination to classify everything that an ISPs does into one category promotes administrative convenience, but ignores the complex nature of ISP services and the potential for to harm individuals, groups and First Amendment values absent government oversight. For example, the information service classification enables ISPs to engage in price and quality of service discrimination that network neutrality advocates worry will distort a free marketplace of ideas.

This article will examine the different First Amendment rights and responsibilities borne by ISPs when they claim to operate solely as conduits and when they combine conduit and content. The article will show that ISPs face conflicting motivations with light FCC regulation favoring diversification into content management services, like that provided by editors and cable television operators, but with legislatively conferred exemptions from liability available when ISPs avoid managing content. The article concludes that current media models provide inconsistent and incomplete direction on how to consider ISPs’ joint provision of conduit and content. The article provides insights on how a hybrid model can address media convergence, and promote First Amendment values while imposing reasonable nondiscrimination responsibilities on ISPs.

While professing to support marketplace resource allocation and a regulation-free Internet, the FCC has selectively imposed compulsory duties on ISPs who qualify for classification as largely unregulated information service providers. Such regulation can tilt the competitive playing field, possibly favoring some First Amendment speakers to the detriment of others. Yet the FCC has summarily dismissed any concerns that the Commission’s regulatory regime inhibits First Amendment protected expression.

For their part, ISPs have evidenced inconsistency in how seriously they value and exercise their First Amendment speaker rights. Such reticence stems, in part, from the fact that ISPs combine the provision of conduits, using telecommunications transmission capacity, with content. While not operating as regulated common carriers, the traditional classification of conduit-only providers, ISPs can avoid tort and copyright liability when they refrain from operating as speakers and editors of content. In other instances, the same enterprise becomes an aggressive advocate for First Amendment speaker rights when selecting content, packaging it into a easily accessible and user friendly “walled garden,” and employing increasingly sophisticated information processing techniques to filter, prioritize and inspect digital packets.

Technological and marketplace convergence creates the ability and incentive for ISPs to operate as publishers, editors, content aggregators, and non-neutral conduit providers. No single First Amendment media model (print, broadcast, cable television and telephone), or legislative definition of service (telecommunications, telecommunications service and information service) cover every ISP activity. Despite the lack of single applicable model and the fact that ISPs provide different services, the FCC continues to apply a single, least regulated classification. The inclination to classify everything that an ISPs does into one category promotes administrative convenience, but ignores the complex nature of ISP services and the potential for to harm individuals, groups and First Amendment values absent government oversight. For example, the information service classification enables ISPs to engage in price and quality of service discrimination that network neutrality advocates worry will distort a free marketplace of ideas.

This paper will examine the different First Amendment rights and responsibilities borne by ISPs when they claim to operate solely as conduits and when they combine conduit and content. The paper will show that ISPs face conflicting motivations with light FCC regulation favoring diversification into content management services, like that provided by editors and cable television operators, but with legislatively conferred exemptions from liability available when ISPs avoid managing content. The paper concludes that current media models provide inconsistent and incomplete direction on how to consider ISPs’ joint provision of conduit and content. The paper provides insights on how a hybrid model can address media convergence, and promote First Amendment values while imposing reasonable nondiscrimination responsibilities on ISPs.

Many existing and emerging services do not easily fit into one or the other regulatory classification, nor can the Federal Communications Commission determine the appropriate classification by extrapolating from the regulatory model applied to existing or discontinued services. By failing to specify what model applies to services appearing on cellphone screens, the FCC has failed to remove regulatory uncertainty. Cellular telephone service providers may infer from the Commission’s inaction that any convergent service eventually will qualify for the unregulated information service “safe harbor” despite plausible arguments that government oversight remains essential to achieve consumer protection, national security, fair trade practice, and other safeguards.

This essay will examine the regulatory status of wireless carrier-delivered video content with an eye toward determining the necessary scope and nature of government oversight. The essay reports on instances where the FCC deemed it necessary to promote video programming competition and subscriber access to wired cable television content, and concludes that wireless subscribers deserve similar efforts in light of wireless carriers’ incentives and abilities to blunt competition. The essay concludes that NRAs must balance the carriers’ interests in finding new revenue centers to pay for next generation network upgrades with subscribers’ interests in maximizing their freedom to use handsets they own.

On the other hand, other statistical compilations and interpretations show the U.S. behind in terms of market penetration and price, even trailing some nations that have similarly unfavorable geographical and demographic characteristics. In the light of the extraordinary global success achieved by domestic ventures in information and communications technology (“ICT”), it would appear counterintuitive for some current broadband statistics to show the United States lagging other nations in terms of favorable access to next generation networks.

The FCC has used evidence of robust market penetration and competition in broadband markets to support an aggressive deregulatory campaign. Advocates for even more deregulation regularly cite the Commission’s statistics as evidence that the unfettered marketplace can achieve broadband access and affordability goals. Both the Commission and many stakeholders assume the frequently cited statistics present a true picture of the marketplace. A recent NTIA document concludes that the United States has achieved the goal of “universal, affordable access for broadband technology by the year 2007” articulated by President Bush in 2004.

This paper will examine the United States broadband penetration and pricing statistics with a critical eye, in light of other contradictory compilations by credible organizations including the International Telecommunication Union and the Organization for Economic Cooperation and Development. Additionally the paper will compare and contrast the FCC’s identification of broadband options in the author’s home zip code with what actual options the author could identify.

The paper concludes that the FCC and NTIA have overstated broadband penetration and affordability by using an overly generous and unrealistic definition of what qualifies as broadband service, by using zip codes as the primary geographic unit of measure and by misinterpreting available statistics. Additionally the FCC includes as competition services lacking any true cross-elasticity with other services based on substantial price differences.

The paper concludes that credible calculations, using better calibrated measures, show a mixed outcome based on different geographical focus. Some U.S. residents, particularly in urban locales, enjoy comparatively excellent broadband service, while rural residents may have ample access options, albeit at comparatively high prices in light of limited price competition. The paper concludes that the absence of robust price competition among many facilities-based broadband operators in many areas of the nation challenges many of the assumptions built into recent FCC policy initiatives that seek to abandon consumer safeguards. The paper also concludes that a statutory mandate to promote universal access to advanced telecommunications capability requires the FCC to collect and disseminate credible statistics on next generation network deployment.

Limitations on the use of wireless handsets juxtaposes with the Carterfone policy established by the Federal Communications Commission (“FCC”) forty years ago that requires all telephone companies to allow subscribers to attach any technically compatible device. Consumers take for granted the right to attach any device to a network that is “privately beneficial without being publicly harmful.” Only recently have some wireless subscribers come to understand the costs in not having complete freedom to use their handsets. Technically sophisticated users have resorted to “self help” strategies to override carrier locks at the risk of permanently disabling (“bricking”) the handset.

As wireless networking increasingly serves as a key medium for accessing a broad array of information, communications and entertainment services, the consequences of locked and restricted access becomes more significant. Despite offering common carrier regulated, voice telecommunications, wireless carriers emphasize “next generation” information services, including Internet access, and they seek to operate free of any significant FCC oversight including the duty to comply with the Carterfone policy and to provide a neutral conduit for accessing content.

This paper will examine whether wireless carriers have a legal obligation to comply with the Carterfone policy and more broadly what costs and benefits result from government-imposed rules requiring wireless carriers to operate neutral networks. The paper demonstrates that the FCC has applied the Carterfone device freedom and network access policies in a number of instances where the Commission identified the need to prevent network operators from requiring equipment upgrades or replacements that subscribers do not need, because less expensive options exist. The paper concludes that the rising importance of wireless networking and growing consumer disenchantment with carrier-imposed restrictions on handset versatility and wireless network access will trigger closer regulatory scrutiny of the public interest benefits accruing from implementation of a wireless Carterfone policy.