New Net Neutrality Rules Won’t Cover Peering, Interconnection Issues

Netflix CEO Reed Hastings asked the FCC last month (CD March 24 p1) to consider mandating “no-fee” interconnection agreements as it takes on a rewrite of the net neutrality rules post Verizon v. FCC. At Monday’s commissioner meeting, Wheeler said that while the government has a role to play in overseeing how networks connect to each other, peering and interconnection are “not a net neutrality issue.” A spokesman elaborated: Peering was never part of the open Internet rules, and Wheeler doesn’t intend to change the scope of those rules. Wheeler just plans to restore those rules through use of the court’s guidance, the spokesman said. The FCC is keeping an eye on interconnection in “other contexts,” he said, but wouldn’t elaborate on which that might be.

It’s just another way of phrasing what Wheeler has been saying for months, industry and agency officials said. An AT&T spokesman pointed to Wheeler’s comments at January’s State of the Net conference, in which he said that peering and interconnection were a “cousin” of net neutrality that the agency intends to stay on top of (CD Jan 29 p1). The open Internet order didn’t deal with peering or interconnection, an FCC official told us. When people talk about net neutrality, it’s been about how the data flows over the ISP’s network, not how it gets to the ISP’s network, the official said.

Netflix calls for a “strong net neutrality” seem like an attempt to redefine what net neutrality is, the FCC official said. Based on Wheeler’s statements, it seems his office doesn’t want to go in that direction, the official said, speculating that the upcoming net neutrality NPRM likely won’t get into issues of peering and interconnection.

"Level 3 has heard Chairman Wheeler say in the past that he views network neutrality and interconnection as closely related, and with good reason,” said General Counsel Michael Mooney. “You cannot effectively address net neutrality concerns without also addressing the interconnection with last mile bottleneck ISPs. Whether ISPs are trying to extract tolls from edge providers directly or from backbone providers -- who then pass those tolls on to edge providers -- the harm to the open Internet is the same.” ISPs discriminating against competing voice or video services can do so “just as easily by targeting the transit providers those competing services use as they can by targeting the competing services directly,” Mooney said. “That’s exactly what’s occurring right now.” Level 3 “can and will continue to advocate that those discriminatory harms be addressed by the FCC,” he said. “It doesn’t matter whether you call it ‘net neutrality’ or the ‘open Internet’ -- it’s a problem the FCC needs to address now."

Under Section 706 of the Communications Act, the agency “certainly could have expanded net neutrality to interconnection,” said TechFreedom President Berin Szoka. It has seemed like the FCC has been interested in becoming more active in this area, he said. “On the other hand, I'm not surprised here at all because there simply is no demonstrated problem -- just a lot of clever political posturing by Netflix and handwringing by bloggers who don’t understand interconnection,” Szoka said. “There’s no need for new regulation on top of the antitrust laws, as the FCC itself rightly noted when it decided not to include interconnection in the Open Internet order.” But just because the FCC isn’t including interconnection in this rulemaking doesn’t mean that a future rulemaking might not cover it, he said. Wheeler could also regulate interconnection “informally on a case-by-case- basis,” Szoka said. “Section 706 as interpreted by the DC Circuit doesn’t seem to require that the FCC actually formally regulate, although the FCC might have a strong incentive to do so, so it can claim Chevron deference."

"It shows impressive restraint, and is consistent with what is emerging as Wheeler’s generally ‘adult’ approach,” said Geoffrey Manne, executive director of the International Center for Law & Economics. “As a practical matter, the court’s confirming of the FCC’s broad authority under [Section] 706 would permit, it seems to me, a much-further-reaching approach. So the idea of using the opportunity only to ‘restore’ -- but not go beyond -- the Open Internet Order strikes me as appropriate and restrained,” said Manne by email.

Interconnection and peering are “exactly what the open Internet proceedings should consider,” said Marvin Ammori, New America Foundation fellow and longtime net neutrality proponent. He pointed to filings by Level 3 and Cogent saying that the ISPs are letting the pipes congest and requiring companies like Netflix to get direct connection and charging them per megabit far beyond the cost of interconnection. “It makes sense to do it within the open Internet docket,” given that the net neutrality rules were an outgrowth of an earlier FCC policy statement stating users have the right to access an open and free Internet, he said. Letting the pipes congest until they can get payment is just another way for ISPs to block or discriminate against services, Ammori said. He expects there will be comments on interconnection and peering regardless of how the FCC tries to limit it in the NPRM. Once the agency understands the “urgency” of the potential interconnection problems, “I think they could be persuaded otherwise,” Ammori said.

"I hope that it’s true that the FCC intends to show some regulatory restraint in this regard, despite the pleas of Netflix for the commission to lend it a helping hand,” said Free State Foundation President Randolph May. “I'd be happy to be proven wrong, but as long as the FCC continues to consider net neutrality rules, in one forum or another, I'd be surprised if the peering issue is really dead.”