“NET” NEUTRALITY Presentation for Kennesaw State University Michael J. Coles College of Business November 7, 2010

1. “NET” NEUTRALITYPresentation forKennesaw State University Michael J. Coles College of Business November 7, 2010 Walt Sapronov Sapronov & Associates, P.C. 400 Northridge Road, Suite 515 Atlanta, Georgia 30350 Telephone: 770-399-9100 Facsimile: 770-395-0505 Email: wsapronov@wstelecomlaw.com

2. Contents • Overview • Net Neutrality Basics • FCC Authority • Origins of the Comcast Decision • D.C. Circuit Court Reversal • FCC “Third Way” Proposal • Net Neutrality By Other Means • Future Developments • Final Thoughts

3. Overview Historically: • Federal Communications Commission (FCC) • Has asserted jurisdiction over: • Telecommunications • Wireless • Cable • BUT NOT OVER: • Information Services • What about Internet?

4. Overview • Internet Content (the “Cloud”) • Clearly an unregulated information service • Internet Access (the “Pipes”) • Classification not so clear • Cable, DSL, Wireless • Are all regulated services? • Provided by regulated cable and telcos • But when combined with Internet Content? • They Create an Information Service • (U.S. Supreme Court “Brand X” Decision)

5. Current Internet Regulation (Title I) Portal Cloud Computer processing Access component Pipe Title I “Information Service” Unregulated 5

6. Overview 6

7. Net Neutrality Basics • Neutral and open public network (the “Internet”) • No restrictions on equipment or modes of communication • Principles do not permit discrimination, either in pricing or access, of the type, quantity, content, sites, or applications

8. Net Neutrality Basics Fundamental Principles • Consumers are entitled to: • Access the lawful Internet content of their choice; • Run applications and services of their choice subject to the needs of law enforcement; • Connect to their choice of legal devices that do not harm the network; and • Enjoy positive externalities of competition among providers (network, application, service, and content)

9. Net Neutrality Basics Fundamental Principles (con’t) • Other Proposed Principles • Balance customer’s need for unfettered access to content/applications with Internet Service Provider’s (ISP’s) network management needs • Ensure transparency of ISP’s network management practices • BUT • Does FCC have statutory authority to enforce Net Neutrality principles?

10. FCC Authority • Federal Communications Act • Title I (Ancillary Jurisdiction) • Title II (Common Carrier) • Telecommunications Carriers • Rate, Entry, Complaint Procedures • Title III (Wireless) • Broadcast • Commercial Mobile Service • Title VI • Cable Companies

11. FCC Authority • Ancillary Jurisdiction • General FCC Policy Making Authority under Title I • Used by FCC to Deregulate Enhanced Services • Computer Inquiry II, III • Basic (Regulated – Title II) v. Enhanced (Unregulated -- Title I) • 96 Act: • Telecommunications Service/Information Service • (Same as Basic/Enhanced) • FCC now has Forbearance Authority • May forbear from regulating under certain conditions

12. Origins of the Comcast Decision Background • Comcast customers complained -- difficult to use “P2P” applications (e.g. BitTorrent) • FCC investigation -- Comcast monitored customer’s content, not destination • Result: Comcast blocked Internet traffic and limited customers’ Internet use

13. Origins of the Comcast Decision The FCC required Comcast to: Disclose its network management practice details; Submit a compliance plan by end of year (2008); and Present new, non-discriminatory network management practices to customers and the Commission 13

14. Origins of the Comcast Decision Enforcing an “Open” Internet -- Concerns • Bypassing open Internet protections • Specialized services offered in bundles? • Specialized services -- circumventing the rules • Network capacity not expanded as intended • Anti-competitive conduct among broadband providers • The FCC labeled Comcast’s failure to disclose their practices as “anticompetitive”

15. D.C. Circuit Court Reversal Comcast argued that the FCC: • Asserted its authority based on provisions of the Communications Act which do not apply to Comcast • Did not abide by notice and comment procedures in adopting rules applied against Comcast

16. D.C. Circuit Court Reversal • D.C. Circuit Court Holding: • FCC Has No Jurisdiction Over Comcast Network Management Practices • Ancillary Jurisdiction Must Be “Ancillary” to Other FCC Statutory Authority • e.g. to Title II (Telecom), or Title VI (Cable) • Not a Standalone Grant of Authority • Reversed and Vacated FCC Comcast Decision • Did not reach other issues • e.g., whether FCC may enforce a policy and not just its own rules

17. FCC “Third Way” Proposal • FCC Response to D.C. Circuit Reversal • “Third Way” Approach to Internet Access Regulation • Proposed by FCC Chairman - Public Notice • Regulate Broadband Internet Access by: • Transmission Component (“Pipes”) • Regulate as Title II “telecommunications service” (currently unregulated under Title I) • Forbearance • Piecemeal application of Title II (USF, consumer protection) • Network Processing (“Cloud”) • Leave unregulated

18. FCC “Third Way” Proposed Regulation Portal Cloud Still “info” service (Title I) Pipe Regulate as “Telecommunications Service” (Title II) - Forbearance - USF

19. FCC “Third Way” Proposal • Practical Application and Questions • Does the FCC have statutory authority to make this change or do they need Congressional approval? • Internet and Title II • Legal and practical implications? 19

20. Net Neutrality By Other Means Policy Enforcement: • FCC Proposal - Case by case basis • Citations • Forfeiture penalties • FCC policy making authority (“Third Way”)? • FCC released “Framework for Broadband Internet Service” NOI on June 17, 2010. 20

21. Net Neutrality By Other Means National Broadband Plan (NBP) • Part of the 2009 American Reinvestment and Recovery Act (“Broadband Stimulus Bill”) • $7.2 billion allocated for national broadband deployment • Will the Internet be subject to USF assessment? • NBP contemplates USF, access and intercarrier compensation schemes should be reformed together • Implications for 21st century communications -- wireless applications (Google voice) 21

22. Net Neutrality By Other Means • Meanwhile “Third Way” NOI -- Awaiting Public Comments • FCC spectrum management – a “back door” approach to net neutrality? • A Republican controlled Congress will likely chill Net Neutrality legislative initiatives • Sept. 2010 -- Open Internet Act of 2010 failed to make it out of the House Commerce Committee 22

23. Final Thoughts FCC agenda will emerge in the future – but meanwhile: • Clear emphasis on broadband deployment (especially wireless) • Belief in merits of net neutrality • Agency’s focus for now is on data gathering and broadband stimulus funding • USF enforcement will almost certainly be a priority

24. Final Thoughts All of this is very complicated – and a bit fuzzy… BUT… DO REMEMBER: WHEN IN DOUBT – ASK YOUR LAWYER! Sapronov & Associates, P.C. 400 Northridge Rd., Suite 515 Atlanta, Georgia 30350 Telephone: 770-399-9100 Facsimile: 770-395-0505 Email: info@wstelecomlaw.com Website: www.wstelecomlaw.com