Access to Broadband Networks: The Net
Neutrality Debate
Angele A. Gilroy
Specialist in Telecommunications Policy
May 6, 2010
Congressional Research Service
7-5700
www.crs.gov
R40616
CRS Report for Congress
P
repared for Members and Committees of Congress
Access to Broadband Networks: The Net Neutrality Debate
Summary
As congressional policymakers continue to debate telecommunications reform, a major point of
contention is the question of whether action is needed to ensure unfettered access to the Internet.
The move to place restrictions on the owners of the networks that compose and provide access to
the Internet, to ensure equal access and non-discriminatory treatment, is referred to as “net
neutrality.” There is no single accepted definition of “net neutrality.” However, most agree that
any such definition should include the general principles that owners of the networks that
compose and provide access to the Internet should not control how consumers lawfully use that
network, and they should not be able to discriminate against content provider access to that
network.
A major focus in the debate over telecommunications reform is concern over whether it is
necessary for policymakers to take steps to ensure access to the Internet for content, services, and
applications providers, as well as consumers, and if so, what these steps should be. Some
policymakers contend that more specific regulatory guidelines may be necessary to protect the
marketplace from potential abuses which could threaten the net neutrality concept. Others
contend that existing laws and Federal Communications Commission (FCC) policies are
sufficient to deal with potential anti-competitive behavior and that additional regulations would
have negative effects on the expansion and future development of the Internet. An April 2010
court ruling in FCC v. Comcast that vacated the FCC’s application of its Internet principles in an
order against Comcast has focused attention on the issue. Although most concede that networks
have and will always need some management, the use of prioritization tools, such as deep packet
inspection, as well as the initiation of metered/consumption-based billing practices have further
fueled the debate.
A consensus on this issue has not yet formed, but one stand-alone measure (H.R. 3458) that
comprehensively addresses the net neutrality debate has been introduced in the 111th Congress to
date. Two bills (S. 1836, H.R. 3924) to prohibit, with some exceptions, the FCC from proposing,
promulgating, or issuing any further regulations regarding the Internet or IP-enabled services,
were introduced in response to the adoption, by the FCC, of a notice of proposed rulemaking
(NPR) seeking comment on proposed rules to, among other things, codify and expand on rules to
“preserve the open Internet.” The net neutrality issue has also been narrowly addressed within the
context of the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). Provisions
require the National Telecommunications and Information Administration (NTIA), in consultation
with the FCC, to establish “nondiscrimination and network interconnection obligations” as a
requirement for grant participants in the Broadband Technology Opportunities Program (BTOP).
These obligations were released, July 1, 2009, in conjunction with the issuance of a notice of
funds availability soliciting applications. The ARRA also required the FCC to submit a report,
containing a national broadband plan, to both the House and Senate Commerce Committees; it
was released on March 16, 2010. Furthermore, legislation (H.R. 2902) authorizing the Federal
Trade Commission, in consultation with the FCC, to review volume usage service plans offered
by broadband providers was introduced June 16, 2009.
This report will be updated as events warrant.
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Access to Broadband Networks: The Net Neutrality Debate
Contents
Introduction ................................................................................................................................ 1
Federal Communications Commission Activity ........................................................................... 1
The Information Services Designation and Title I .................................................................. 1
The 2005 Internet Policy Statement ....................................................................................... 2
The FCC August 2008 Comcast Decision.............................................................................. 3
Comcast v. FCC .................................................................................................................... 3
Preserving the Open Internet, the FCC Notice of Proposed Rulemaking ................................ 5
The American Recovery and Reinvestment Act of 2009 ........................................................ 5
The FCC’s National Broadband Plan..................................................................................... 6
Additional Activity................................................................................................................ 6
Network Management ................................................................................................................. 7
Prioritization ......................................................................................................................... 7
Deep Packet Inspection ......................................................................................................... 8
Metered/Consumption-Based Billing..................................................................................... 9
The Policy Debate..................................................................................................................... 10
Congressional Activity in the 111th Congress ............................................................................. 11
Contacts
Author Contact Information ...................................................................................................... 13
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Access to Broadband Networks: The Net Neutrality Debate
Introduction
As congressional policymakers continue to debate telecommunications reform, a major point of
contention is the question of whether action is needed to ensure unfettered access to the Internet.
The move to place restrictions on the owners of the networks that compose and provide access to
the Internet, to ensure equal access and non-discriminatory treatment, is referred to as “net
neutrality.” There is no single accepted definition of “net neutrality.” However, most agree that
any such definition should include the general principles that owners of the networks that
compose and provide access to the Internet should not control how consumers lawfully use that
network, and they should not be able to discriminate against content provider access to that
network.
What, if any, action should be taken to ensure “net neutrality” has become a major focal point in
the debate over broadband regulation. As the marketplace for broadband continues to evolve,
some contend that no new regulations are needed, and if enacted will slow deployment of and
access to the Internet, as well as limit innovation. Others, however, contend that the consolidation
and diversification of broadband providers into content providers has the potential to lead to
discriminatory behaviors which conflict with net neutrality principles. The two potential
behaviors most often cited are the network providers’ ability to control access to and the pricing
of broadband facilities, and the incentive to favor network-owned content, thereby placing
unaffiliated content providers at a competitive disadvantage.1
Federal Communications Commission Activity
The Information Services Designation and Title I
In 2005 two major actions dramatically changed the regulatory landscape as it applied to
broadband services, further fueling the net neutrality debate. In both cases these actions led to the
classification of broadband Internet access services as Title I information services, thereby
subjecting them to a less rigorous regulatory framework than those services classified as
telecommunications services. In the first action, the U.S. Supreme Court, in a June 2005 decision
(National Cable & Telecommunications Association v. Brand X Internet Services), upheld the
Federal Communications Commission’s (FCC’s) 2002 ruling that the provision of cable modem
service (i.e., cable television broadband Internet) is an interstate information service and is
therefore subject to the less stringent regulatory regime under Title I of the Communications Act
of 1934.2 In a second action, the FCC, in an August 5, 2005, decision, extended the same
regulatory relief to telephone company Internet access services (i.e., wireline broadband Internet
access, or DSL), thereby also defining such services as information services subject to Title I
regulation.3 As a result neither telephone companies nor cable companies, when providing
1 The practice of charging of different rates to subscribers based on access speed is not the concern.
2 47 U.S.C. 151 et seq. For a full discussion of the Brand X decision see CRS Report RL32985, Defining Cable
Broadband Internet Access Service: Background and Analysis of the Supreme Court's Brand X Decision, by Angie A.
Welborn and Charles B. Goldfarb.
3 See http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-260433A2.pdf for a copy of former FCC Chairman
Martin’s statement. For a summary of the final rule see Appropriate Framework for Broadband Access to the Internet
(continued...)
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broadband services, are required to adhere to the more stringent regulatory regime for
telecommunications services found under Title II (common carrier) of the 1934 Act.4 However,
classification as an information service does not free the service from regulation. The FCC
continues to have regulatory authority over information services under its Title I, ancillary
jurisdiction.5 Similarly classification under Title II does not mean that an entity will be subject to
the full range of regulatory requirements as the FCC is given the authority, under Section 10 of
the Communications Act of 1934, to forbear from regulation.
The 2005 Internet Policy Statement
Simultaneous to the issuing of its August 2005 information services classification order, the FCC
also adopted a policy statement (Internet Policy Statement) outlining four principles to
“encourage broadband deployment and preserve and promote the open and interconnected nature
of [the] public Internet.” The four principles are (1) consumers are entitled to access the lawful
Internet content of their choice; (2) consumers are entitled to run applications and services of
their choice (subject to the needs of law enforcement); (3) consumers are entitled to connect their
choice of legal devices that do not harm the network; and (4) consumers are entitled to
competition among network providers, application and service providers, and content providers.
Then-FCC Chairman Martin did not call for their codification. However, he stated that they
would be incorporated into the policymaking activities of the Commission.6 For example, one of
the agreed upon conditions for the October 2005 approval of both the Verizon/MCI and the
SBC/AT&T mergers was an agreement made by the involved parties to commit, for two years, “to
conduct business in a way that comports with the Commission’s (2005) Internet policy
statement.”7 In a further action AT&T included in its concessions to gain FCC approval of its
merger to BellSouth to adhering, for two years, to significant net neutrality requirements. Under
terms of the merger agreement, which was approved on December 29, 2006, AT&T agreed to not
only uphold, for 30 months, the FCC’s Internet policy statement principles, but also committed,
for two years (expired December 2008), to stringent requirements to “maintain a neutral network
and neutral routing in its wireline broadband Internet access service.”8
FCC Chairman Genachowski announced, in a September 21, 2009, speech,9 a proposal to
consider the expansion and codification of the 2005 Internet Policy Statement and suggested that
(...continued)
Over Wireline Facilities. Federal Register, Vol. 70, No. 199, October 17, 2005, p. 60222.
4 For example, Title II regulations impose rigorous anti-discrimination, interconnection and access requirements. For a
further discussion of Title I versus Title II regulatory authority see CRS Report RL32985, cited above.
5 Title I of the 1934 Communications Act gives the FCC such authority if assertion of jurisdiction is “reasonably
ancillary to the effective performance of [its] various responsibilities.” The FCC in its order cites consumer protection,
network reliability, or national security obligations as examples of cases where such authority would apply (see
paragraph 36 of the final rule summarized in the Federal Register cite in footnote 3, above).
6 See http://www.fcc.gov/headlines2005.html. August 5, 2005. FCC Adopts Policy Statement on Broadband Internet
Access.
7 See http://hraunfoss.FCC.gov/edocs_public/attachmatch/DOC-261936A1.pdf. It should be noted that applicants
offered certain voluntary commitments, of which this was one.
8 See http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-269275A1.pdf.
9 “Preserving a Free and Open Internet: A Platform for Innovation, Opportunity, and Prosperity,” prepared remarks of
FCC Chairman Julius Genachowski, at the Brookings Institution, September 21, 2009. Available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-293568A1.pdf.
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this be accomplished through a notice of proposed rulemaking (NPR) process. Shortly thereafter
an NPR on preserving the open Internet and broadband industry practices was adopted by the
FCC in its October 22, 2009, meeting. (See “Preserving the Open Internet, the FCC Notice of
Proposed Rulemaking,” below.)
The FCC August 2008 Comcast Decision
In perhaps one of its most significant actions relating to its Internet Policy Statement to date, the
FCC, on August 1, 2008, ruled that Comcast Corp., a provider of Internet access over cable lines,
violated the FCC’s policy statement when it selectively blocked peer-to-peer connections in an
attempt to manage its traffic.10 This practice, the FCC concluded, “unduly interfered with Internet
users’ rights to access the lawful Internet content and to use the applications of their choice.”
Although no monetary penalties were imposed, Comcast was required to stop these practices by
the end of 2008. Comcast complied with the order, and developed a new system to manage
network congestion. Comcast no longer manages congestion by focusing on specific applications
(such as peer-to-peer), nor by focusing on online activities, or protocols, but identifies individual
users within congested neighborhoods that are using large amounts of bandwidth in real time and
slows them down, by placing them in a lower priority category, for short periods.11 This new
system complies with the FCC Internet principles in that it is application agnostic; that is, it does
not discriminate against or favor one application over another but manages congestion based on
the amount of a user’s real-time bandwidth usage. As a result of a April 6, 2010, court ruling the
FCC’s order was vacated. Comcast, however, has stated that it will continue to comply with the
Internet principles issued in the FCC’s August 2005 Internet policy statement.12 (See “Comcast v.
FCC,” below.)
Comcast v. FCC
Despite compliance, however, Comcast filed an appeal13 in the U.S. Court of Appeals for the
District of Columbia, claiming that the FCC did not have the authority to enforce its Internet
policy statement, therefore making the order invalid. The FCC argued that while it did not have
express statutory authority over such practices, it derived such authority based on its ancillary
authority contained in Title I of the 1934 Communications Act.14 The court, in a April 6, 2010,
decision, ruled (3-0) that the FCC did not have the authority to regulate an Internet service
provider’s (in this case Comcast’s) network management practices and vacated the FCC’s order.15
The court ruled that the exercise of ancillary authority must be linked to statutory authority and
that the FCC did not in its arguments prove that connection; it cannot exercise ancillary authority
based on policy alone. More specifically, the Court ruled that the FCC “failed to tie its assertion
10 See http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-183A1.pdf.
11 Comcast, Frequently Asked Questions and Network Management. Available at http://help.comcast.net/content/faq/
Frequently-Asked-Questions-about-Network-Management.
12 Comcast Statement on U.S. Court of Appeals Decision on Comcast v. FCC. Available at https://www.comcast.com/
About/Press Release/PressReleaseDetail.ashx?PRID=984.
13 Comcast Corporation v. FCC, No. 08-129 (D.C. Cir. Sept. 4, 2008).
14 For a legal discussion of the FCC’s regulatory authority in light of the Comcast decision see CRS Report R40234,
The FCC’s Authority to Regulate Net Neutrality after Comcast v. FCC , by Kathleen Ann Ruane.
15 Comcast Corporation v. FCC decided April 6, 2010. Available at http://pacer.cadc.uscourts.gov/common/opinions/
201004/08-1291-1238302.pdf.
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of ancillary authority over Comcast’s Internet service to any [“statutorily mandated
responsibility”].”16 Based on that conclusion the court granted the petition for review and vacated
the order.
The impact of this decision on the FCC’s ability to regulate broadband services and implement its
broadband policy goals remains unclear. The FCC has a number of options, which are not
mutually exclusive, that it may consider. Included among those are appealing the case; moving to
classify broadband Internet services as a Title II service and imposing regulations, to varying
degrees, by using its forbearance option; going to Congress to seek a law to clarify that the FCC
has authority over broadband Internet services; and continuing to work with stakeholders to
develop voluntary standards. Regardless of the path that is taken FCC Chairman Genachowski
has stated that the court decision “does not change our broadband policy goals, or the ultimate
authority of the FCC to act to achieve those goals.” He further stated that “[T]he court did not
question the FCC’s goals; it merely invalidated one, technical, legal mechanism for broadband
policy chosen by prior Commissions.”17
According to a May 6, 2010 statement18 made by Chairman Genachowski, and further elaborated
on by FCC General Counsel Austin Schlick,19 the FCC will be proceeding to address its role in
overseeing broadband services, in light of the Comcast v. FCC ruling, by taking a “narrow and
tailored” or “third way” approach. This consists of pursuing a bifurcated, or separate, regulatory
approach by applying the specific provisions of Title II to the transmission component of
broadband access service and subjecting the information component to, at most, whatever
ancillary jurisdiction may exist under Title I.20 More specifically, the Chairman has proposed the
following: “Recognize the transmission component of broadband access service—and only this
component—as a telecommunications service; Apply only a handful of provisions of Title II
(Sections 201, 202, 208, 222, 254, and 255) ...; Simultaneously renounce—that is forbear from—
application of the many sections of the Communications Act that are unnecessary and
inappropriate for broadband access service; and Put in place up-front forbearance and meaningful
boundaries to guard against regulatory overreach.”21
Prior to a final vote by the 5 FCC Commissioners on this approach, and additional policy issues,
the FCC Commissioners will vote on whether to issue a Notice of Inquiry (NOI) on the
reclassification issue which will then be open to public comment. After a review of the NOI
comments a declaratory ruling on reclassification, closely linked to a forbearance order, is
anticipated.
16 Comcast v. FCC decision, issued April 6, 2010, part V, p. 36.
17 FCC Announces Broadband Action Agenda, released April 8, 2010. Available at http://hraunfoss.fcc.gov/
edocs_public/attachmatch/DOC-297402A1.pdf.
18 The Third Way: A Narrowly Tailored Broadband Framework, FCC Chairman Julius Genachowski, May 6, 2010.
Available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-297944A1.pdf.
19 A Third-Way Legal Framework For Addressing The Comcast Dilemma, Austin Schlick, FCC General Counsel, May
6, 2010. Available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-297945A1.pdf.
20 Schlick, A Third-Way Legal Framework, Page 3.
21 Genachowski, The Third Way, page 5.
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Preserving the Open Internet, the FCC Notice of Proposed
Rulemaking
The FCC in its October 22, 2009, monthly open meeting adopted a notice of proposed rulemaking
(NPR) to seek comment on “the best means of preserving a free and open Internet.”22 The NPR
seeks comment on proposed rules to codify the four principles contained in the FCC’s 2005
Internet Policy statement, and codify two additional principles: one requiring a broadband
Internet access provider to treat lawful content, applications, and services in a nondiscriminatory
manner; and the other to require transparency concerning network management practices.
Principles would be subject to reasonable network management practices. The NPR affirms that
the six principles apply to all platforms (i.e., wired as well as non-wired) for broadband Internet
access, but seeks comment on how, under what time frame, and to what extent, the principles
should apply to non-wired forms of Internet access.23
The FCC also seeks comment on a category of “managed” or “specialized” services (e.g.,
telemedicine), how they should be defined, and to what extent, if any, rules or principles should
be applied to them. Comment on the enforcement procedures that should be used to ensure
compliance with the proposed principles is also sought.
The issuing of the NPR starts a process that includes a period for public comment (due January
14, 2010) and replies (due April 26, 2010), which after consideration could lead to possible
modification before a final vote by the five FCC commissioners. What impact the U.S. DC Court
of Appeals ruling in Comcast Corporation v. FCC will have on the outcome of this rulemaking is
unclear.
The American Recovery and Reinvestment Act of 2009
The FCC has also been called upon to address net neutrality principles within the context of the
implementation of the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5).
Provisions require the National Telecommunications and Information Administration (NTIA), in
consultation with the FCC, to establish “nondiscrimination and network interconnection
obligations” as a requirement for grant participants in the Broadband Technology Opportunities
Program (BTOP). These obligations were issued July 1, 2009, in conjunction with the release of
the notice of funds availability (NOFA) soliciting applications for the program.24 The NOFA
requires that recipients of both ARRA programs (the Rural Utilities Service Broadband Initiative
Program (BIP) as well as the mandated BTOP program) adhere to these requirements, and
expands requirements beyond those contained in the FCC’s 2005 Internet Policy Statement. More
specifically award recipients are required to adhere to the FCC’s 2005 Internet Policy Statement;
not favor any lawful Internet applications and content over others; display network management
policies on their web pages and provide notice to customers of changes to these policies; connect
22 In the Matter of Preserving the Open Internet/Broadband Industry Practices, General Docket No. 09-191 and WC
Docket No. 07-52. Available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-09-93A1.pdf.
23 The NPR defines wireless to include, but not be limited to, terrestrial mobile wireless, unlicensed wireless, licensed
fixed wireless, and satellite.
24 For additional details on the NOFA see Department of Agriculture, Rural Utilities Service, and Department of
Commerce, National Telecommunications and Information Administration, “Broadband Initiatives Program;
Broadband Technology Opportunities Program; Notice,” 74 Federal Register 33104 -33134, July 9, 2009.
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to the public Internet directly or indirectly (that is, the project can not be an entirely private closed
network); and “offer interconnection, where technically feasible without exceeding current or
reasonably anticipated capacity limitations, on reasonable rates and terms to be negotiated with
requesting parties.”
The FCC’s National Broadband Plan
The ARRA also required the FCC to submit a report, containing a national broadband plan, to
both the House and Senate Commerce Committees. The report, Connecting America: The
National Broadband Plan (NBP), was released on March 16, 2010.25 The NBP did not contain
specific recommendations regarding the debate over access to broadband networks, but Chapter 4
did discuss the value of an open Internet. The NBP referred to the FCC’s ongoing notice of
proposed rulemaking on Preserving the Open Internet (see “Preserving the Open Internet, the
FCC Notice of Proposed Rulemaking,” above) and stated that “broadband’s ability to derive the
many benefits discussed in this plan depend[s] on its continued openness.”26
One other issue relevant to the open access/net neutrality debate focuses on the regulatory
classification of broadband services. Chapter 17 of the NBP provides a discussion of the legal
framework for the plan’s implementation. While the discussion does not reach any conclusions
regarding the appropriate framework, it does outline the debate over whether broadband services
should retain its Title I classification as an information service, or should be classified as a
telecommunications service under Title II.27 (See “The Information Services Designation and
Title I,” above.) While the NBP does not reach a conclusion regarding classification, some feel it
does open up the door for discussion28 by concluding that “the FCC will consider these and
related questions as it moves forward to implement the plan.”29
Additional Activity
Separately, in an April 2007 action, the FCC released a notice of inquiry (WC Docket No. 07-52),
which is still pending, on broadband industry practices seeking comment on a wide range of
issues including whether the August 2005 Internet policy statement should be amended to
incorporate a new principle of nondiscrimination and if so, what form it should take.30 On January
25 Connecting America: The National Broadband Plan. Available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/
DOC-296935A1.pdf.
26 Connecting America: The National Broadband Plan, Chapter 4, Broadband Competition and Innovation Policy,
Section 4.4, Competition for Value Across the Ecosystem.
27 It should be noted that the FCC is given the authority, under section 10 of the 1934 Communications Act, to forbear
from regulation, therefore, if such a reclassification should occur, all requirements of a Title II classification would not
necessarily be imposed.
28 See, for example, Statement of FCC Commissioner Robert McDowell, before the Committee on Energy and
Commerce, Subcommittee on Communications, Technology, and the Internet, hearing on Oversight of the Federal
Communications Commission: The National Broadband Plan, March 25, 2010. available at http://hraunfoss.fcc.gov/
edocs_public/attachmatch/DOC-297139A1.pdf.
29 Connecting America: The National Broadband Plan, Chapter 17, Implementation and Benchmarks, Section 17.3,
The Legal Framework for the FCC’s Implementation of the Plan. The FCC released a “2010 Broadband Action
Agenda” on April 8, 2010, containing a timeframe for FCC proceedings to help implement the plan. A summary table
of proposed 2010 agenda items is available at http://www.broadband.gov/plan/chart-of-key-broadband-action-agenda-
items.pdf.
30 Broadband Industry Practices, WC Docket No. 07-52, Notice of Inquiry, 22 FCC Record 7894 (2007).
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14, 2008, the FCC issued three public notices seeking comment on issues related to network
management (including the now-completed Comcast ruling, discussed above) and held two
(February 25 and April 17, 2008) public hearings specific to broadband network management
practices.
Network Management
As consumers expand their use of the Internet and new multimedia and voice services become
more commonplace, control over network quality and pricing is an issue. The ability of data bits
to travel the network in a nondiscriminatory manner (subject to reasonable management
practices), as well as the pricing structure established by broadband service providers for
consumer access to that data, have become significant issues in the debate.
Prioritization
In the past, Internet traffic has been delivered on a “best efforts” basis. The quality of service
needed for the delivery of the most popular uses, such as e-mail or surfing the Web, is not as
dependent on guaranteed quality. However, as Internet use expands to include video, online
gaming, and voice service, the need for uninterrupted streams of data becomes important. As the
demand for such services continues to expand, network broadband operators are moving to
prioritize network traffic to ensure the quality of these services. Prioritization may benefit
consumers by ensuring faster delivery and quality of service and may be necessary to ensure the
proper functioning of expanded service options. However, the move on the part of network
operators to establish prioritized networks, although embraced by some, has led to a number of
policy concerns.
There is concern that the ability of network providers to prioritize traffic may give them too much
power over the operation of, and access to, the Internet. If a multi-tiered Internet develops where
content providers pay for different service levels, the potential to limit competition exists if
smaller, less financially secure content providers are unable to afford to pay for a higher level of
access. Also, if network providers have control over who is given priority access, the ability to
discriminate among who gets such access is also present. If such a scenario were to develop, the
potential benefits to consumers of a prioritized network would be lessened by a decrease in
consumer choice and/or increased costs, if the fees charged for premium access are passed on to
the consumer. The potential for these abuses, however, is significantly decreased in a marketplace
where multiple, competing broadband providers exist. If a network broadband provider blocks
access to content or charges unreasonable fees, in a competitive market, content providers and
consumers could obtain their access from other network providers. As consumers and content
providers migrate to these competitors, market share and profits of the offending network
provider will decrease, leading to corrective action or failure. However, this scenario assumes that
every market will have a number of equally competitive broadband options from which to
choose, and all competitors will have equal access to, if not identical, at least comparable content.
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Deep Packet Inspection
The use of one management tool, deep packet inspection (DPI), illustrates the complexity of the
net neutrality debate. DPI refers to a network management technique that enables network
operators to inspect, in real time, both the header and the data field of the packets.31 As a result
DPI can allow network operators to not only identify the origin and destination points of the data
packet, but also enables the network operator to determine the application used and content of
that packet. The information that DPI provides enables the network operator to differentiate, or
discriminate, among the packets travelling over its network. The ability to discriminate among
packets enables the network operator to treat packets differently. This ability itself is not
necessarily viewed in a negative light. Network managers use DPI to assist them in performing
various functions that are necessary for network management and that contribute to a positive
user experience. For example, DPI technology is used in filters and firewalls to detect and prevent
spam, viruses, worms, and malware. DPI is also used to gain information to help plan network
capacity and diagnostics, as well as to respond to law enforcement requests.32 However, the
ability to discriminate based on the information gained via DPI also has the potential to be
misused.33 It is the potential negative impact that DPI use can have on consumers and suppliers
that raises concern for policymakers. For example, the information gained could be used to
discriminate against a competing service causing harm to both the competitor and consumer
choice. This could be accomplished by routing a network operator’s own, or other preferred
content, along a faster priority path, or selectively slowing down competitor’s traffic. DPI also
has the potential to extract personal information about the data that it inspects, generating
concerns about consumer privacy.34
Therefore it is not the management tool itself that is under scrutiny, but how it is applied. The DPI
technology, in itself, is not what is of concern. It is the behavior that potentially may occur as a
result of the information that DPI provides. How to develop a policy that permits some types of
discrimination (i.e., “good” discrimination) that may be beneficial to network operation and
improve the user experience, while protecting against what would be considered “harmful” or
anticompetitive discrimination becomes the crux of the policy debate.
31 The header contains the processing information which includes the source and destination addresses, and the data
field includes the message content and the identity of the source application.
32 For a further discussion of the positive uses, by network operators, of DPI technologies see testimony of Kyle
McSlarrow, President and CEO National Cable and Telecommunications Association, hearings on “Communications
Networks and Consumer Privacy: Recent Developments,” House Committee on Energy and Commerce, Subcommittee
on Communications, Technology, and the Internet, April 23, 2009. Available at http://energycommercehouse.gov/
Press_111/20090423/testimony_mcslarrow.pdf.
33 For a further discussion of the potential abuses associated with DPI technology see testimony of Ben Scott, Policy
Director, Free Press, hearings on “Communications Networks and Consumer Privacy: Recent Developments,” House
Committee on Energy and Commerce, Subcommittee on Communications, Technology, and the Internet, April 23,
2009. Available at http://energycommercehouse.gov/Press_111/20090423/testimony_scott.pdf.
34 For example, concern that information can be gathered, without permission, based on consumer use of the Internet to
develop user profiles to provide targeted online advertising, also known as “behavioral advertising,” has raised privacy
issues. For an examination of this issue see testimony from hearings “Communications Networks and Consumer
Privacy: Recent Developments,” held April 23, 2009, by the House Energy and Commerce Subcommittee on
Communications, Technology, and the Internet. Available at http://energycommerce.house.gov/.
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Metered/Consumption-Based Billing
The move by some network broadband operators towards the use of metered or consumption-
based billing has caused considerable controversy. Under such a plan, users subscribe to a set
monthly bandwidth cap, for an established fee, and are charged additional fees if that usage level
is exceeded. Although still not the industry norm in the United States, the use of such billing
practices, on both a trial and permanent basis, is becoming more commonplace. For example, in
2008, Time Warner Cable established a usage trial in Beaumont, TX, that offers a range of service
tiers. Similarly, AT&T is currently conducting usage-based trials in Reno, NV, and Beaumont,
TX. The move by Time Warner Cable to expand these trials to four additional locations35 caused
considerable controversy and has since been deferred.36 Some network broadband providers, most
notably Time Warner Cable and AT&T, have stressed that these are not permanent pricing
structures, but trials established to gain more insight into how consumers use their Internet
services and subsequently how best to manage their networks. However, other providers,
particularly smaller more regional providers, have stated that such pricing models are already
being used and will be necessary in the future as the demand for high bandwidth applications
increases.37 For example, one provider, Sunflower Broadband, located in Kansas, has used such a
pricing model for four years. Sunflower offers a range of service levels with a $2 per Gigabyte
overcharge which is levied only after a second over usage.38 Supporters of such billing models
state that a small percentage of users consume a disproportionately high percentage of bandwidth
and that some form of usage-based pricing may benefit the majority of subscribers, particularly
those who are light users.39 Furthermore, they state that offering a range of service tiers at varying
prices offers consumers more choice and control over their usage and subsequent costs. The
major growth in bandwidth usage, they also claim, places financial pressure on existing networks
for both maintenance and expansion, and establishing a pricing system which charges high
bandwidth users is more equitable.
Opponents to such billing plans claim that such practices will stifle innovation in high bandwidth
applications and are likely to discourage the experimentation with and adoption of new
applications and services. Some concerns have also been expressed that a move to
metered/consumption-based pricing will help to protect the market share for video services,
offered in packaged bundles by network broadband service providers, that compete with new
applications. The move to usage-based pricing, they state, will unfairly disadvantage competing
35 Time Warner Cable announced, on April 9, 2009, plans to implement usage-based billing trials in Rochester, New
York and Greensboro, North Carolina, in August 2009, and Austin and San Antonio, Texas, in October, 2009. See
Statement from Landel Hobbs, Chief Operating Officer, Time Warner Cable Re: Consumption based billing trials,
April 9, 2009. Available at http://www.timewarnercable.com/corporate/announcements/cbb.html.
36 Citing “misunderstanding about our trials,” Time Warner Cable announced plans to defer implementation of usage-
based billing trials in Rochester, New York, Greensboro, North Carolina, and Austin and San Antonio, Texas, to enable
“consultation with our customers and other interested parties.” See Time Warner Cable Charts a New Course on
Consumption Based Billing Measurement Tools to be Made Available, April 16, 2009. Available at
http://www.timewarnercable.com/Corporate/announcements/cbb.html.
37 For example see ACA: Metered Bandwidth Pricing Is Coming, available at http://www.broadcastingcable.com/
article/print/210247-ACA_Metered_Bandwidth_Pricing_Is_Coming.php.
38 For additional information on Sunflower Broadband bandwidth management see
http://www.sunflowerbroadband.com/bandwidth.
39 For example, Time Warner states that the top 25% of its users consume 100 times more bandwidth than the bottom
25% and 30% of its high speed Internet service (i.e., Road Runner) customers use less than 1 GB (Gigabyte) per month.
See Consumption Based Billing FAQs. Available at http://www.timewarnercable.com/corporate/announcements/
cbb_faq.html.
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online video services and stifle a nascent market since video applications are more bandwidth-
intensive. Opponents have also questioned the specific usage limits and overage fees established
in specific trials, stating that the former seem to be “arbitrarily low” and the latter “arbitrarily
high.”40 Citing the generally falling costs of network equipment and the stability of profit
margins, they also question the claims of network broadband operators that increased revenues
streams are needed to supply the necessary capital to invest in new infrastructure to meet the
growing demand for high bandwidth applications.41
The Policy Debate
Despite the FCC’s ability to regulate broadband services under its Title I ancillary authority and
the issuing of its broadband principles, some policymakers feel that more specific regulatory
guidelines may be necessary to protect the marketplace from potential abuses; a consensus on
what these should specifically entail, however, has yet to form. Others feel that existing laws and
FCC policies regarding competitive behavior are sufficient to deal with potential anti-competitive
behavior and that no action is needed and, if enacted at this time, could result in harm.
The issue of net neutrality, and whether legislation is needed to ensure access to broadband
networks and services, has become a major focal point in the debate over telecommunications
reform.42 Those opposed to the enactment of legislation to impose specific Internet network
access or “net neutrality” mandates claim that such action goes against the long-standing policy to
keep the Internet as free as possible from regulation. They have claimed that the imposition of
such requirements is not only unnecessary, but would have negative consequences for the
deployment and advancement of broadband facilities. For example, further expansion of networks
by existing providers and the entrance of new network providers would be discouraged, they
claim, as investors would be less willing to finance networks that may be operating under
mandatory build-out and/or access requirements. Application innovation could also be
discouraged, they contend, if, for example, network providers are restricted in the way they
manage their networks or are limited in their ability to offer new service packages or formats.
Such legislation is not needed, they claim, as major Internet access providers have stated publicly
that they are committed to upholding the FCC’s four policy principles.43 Opponents also state that
advocates of regulation cannot point to any widespread behavior that justifies the need to
establish such regulations and note that competition between telephone and cable system
providers, as well as the growing presence of new technologies (e.g., satellite, wireless, and
power lines), will serve to counteract any potential anti-competitive behavior. Furthermore,
opponents claim, even if such a violation should occur, the FCC already has the needed authority
to pursue violators. They note that the FCC has successfully used its existing authority in the
August 1, 2008, Comcast decision (see above) as well as in a March 3, 2005, action against
40 See Free Press letter to House Energy and Commerce Committee, April 22, 2009. Available at
http://www.Freepress.net/files/FP_metering_letter.pdf.
41 As Costs Fall, Companies Push to Raise Internet Price, New York Times, April 20, 2009. Available at
htttp://www.nytimes.com/2009/04/20/business/20isp.html.
42 For a more lengthy discussion regarding proponents’ and opponents’ views see, for example, testimony from Senate
Commerce Committee hearings on Net Neutrality, February 7, 2006. Available at http://commerce.senate.gov/public/
index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=1708.
43 See testimony of Kyle McSlarrow, President and CEO of the National Cable and Telecommunications Association,
and Walter McCormick, President and CEO of the United States Telecom Association, hearing on Net Neutrality
before the Senate Commerce Committee, February 7, 2006, cited above.
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Madison River Communications. In the latter case, the FCC intervened and resolved, through a
consent decree, an alleged case of port blocking by Madison River Communications, a local
exchange (telephone) company.44 The full force of antitrust law is also available, they claim, in
cases of discriminatory behavior.
Proponents of net neutrality legislation, however, feel that absent some regulation, Internet access
providers will become gatekeepers and use their market power to the disadvantage of Internet
users and competing content and application providers. They cite concerns that the Internet could
develop into a two-tiered system favoring large, established businesses or those with ties to
broadband network providers. While market forces should be a deterrent to such anti-competitive
behavior, they point out that today’s market for residential broadband delivery is largely
dominated by only two providers, the telephone and cable television companies, and that, at a
minimum, a strong third player is needed to ensure that the benefits of competition will prevail.45
The need to formulate a national policy to clarify expectations and ensure the “openness” of the
Internet is important to protect the benefits and promote the further expansion of broadband, they
claim. The adoption of a single, coherent, regulatory framework to prevent discrimination,
supporters claim, would be a positive step for further development of the Internet, by providing
the marketplace stability needed to encourage investment and foster the growth of new services
and applications. Furthermore, relying on current laws and case-by-case anti-trust-like
enforcement, they claim, is too cumbersome, slow, and expensive, particularly for small start-up
enterprises.46
Congressional Activity in the 111th Congress
A consensus on this issue has not yet formed, but one stand-alone measure (H.R. 3458) that
comprehensively addresses the net neutrality debate has been introduced in the 111th Congress to
date. H.R. 3458, the “Internet Freedom Preservation Act of 2009,” introduced by Representative
Edward Markey, and also supported by House Energy and Commerce Committee Chairman
Waxman, seeks to establish a national policy of nondiscrimination and openness with respect to
Internet access offered to the public. The bill also requires the offering of unbundled, or stand-
alone, Internet access service as well as transparency for the consuming public with respect to
speed, nature, and limitations on service offerings and the public disclosure of network
management practices. The FCC is tasked with promulgating the rules relating to the enforcement
and implementation of the legislation. House Communications, Technology, and the Internet
Subcommittee Chairman Boucher has stated that he continues to work with broadband providers
44 The FCC entered into a consent decree with Madison River Communications to settle charges that the company had
deliberately blocked the ports on its network that were used by Vonage Corp. to provide voice over Internet protocol
(VoIP) service. Under terms of the decree Madison River agreed to pay a $15,000 fine and not block ports used for
VoIP applications. See http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-05-543A2.pdf. for a copy of the consent
decree.
45 Some point to the growth in mobile wireless subscribers with data plans for full Internet access as a potential third
provider. For FCC market share data for high-speed connections see High-Speed Services for Internet Access: Status as
of December 31, 2008, Federal Communications Commission, Industry Analysis and Technology Division, Wireline
Competition Bureau, released February 2010. View report at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-
296239A1.pdf.
46 For example, see testimony of Vint Cerf, VP Google, Earl Comstock, President and CEO of CompTel, and Jeffrey
Citron, Chairman and CEO Vonage, hearing on Net Neutrality, before the Senate Commerce Committee, February 7,
2006, cited above.
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and content providers to seek common ground on network management practices, and at this
time, is pursuing this approach.47
Two bills (S. 1836, H.R. 3924) were introduced in response to the adoption, by the FCC, of a
NPR on preserving the open Internet. (See “Preserving the Open Internet, the FCC Notice of
Proposed Rulemaking,” above.) S. 1836, introduced on October 22, 2009, by Senator McCain,
prohibits, with some exceptions, the FCC from proposing, promulgating, or issuing any further
regulations regarding the Internet or IP-enabled services. Exceptions include those relating to
national security, public safety, federal or state law enforcement, and Universal Service Fund
solvency.48 Additional provisions reaffirm that existing regulations, including those relating to
CALEA, remain in force and state as a general principle, that the Internet and all IP-enable
services are services affecting interstate commerce and are not subject to State or municipal
locality jurisdiction. H.R. 3924, introduced by Representative Blackburn on October 26, 2009, is
identical to S. 1836, except for title and the omission of the reference to the Universal Service
Fund.
The net neutrality issue has also been narrowly addressed within the context of the American
Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). The ARRA contains provisions that
require the National Telecommunications and Information Administration (NTIA), in consultation
with the FCC, to establish “nondiscrimination and network interconnection obligations” as a
requirement for grant participants in the Broadband Technology Opportunities Program (BTOP).
The law further directs that the FCC’s four broadband policy principles, issued in August 2005,
are the minimum obligations to be imposed.49 These obligations were issued July 1, 2009, in
conjunction with the release of the notice of funds availability (NOFA) soliciting applications for
the program. (See “The American Recovery and Reinvestment Act of 2009,” above, for details.)
The FCC’s National Broadband Plan (NBP), which was required to be written in compliance
with provisions contained in the ARRA, while making no recommendations, did contain
discussions regarding the open Internet and the classification of information services. (See “The
FCC’s National Broadband Plan,” above.) Hearings on the NBP were held on March 25, 2010, by
the House Subcommittee on Communications, Technology, and the Internet and on April 14,
2010, by the Senate Commerce, Science, and Transportation Committee.
Concern over the move by some broadband network providers to expand their implementation of
metered or consumption-based billing prompted the introduction of legislation (H.R. 2902) to
provide for oversight of volume usage service plans. H.R. 2902, the “Broadband Internet Fairness
Act,” introduced by former Representative Massa, requires, among its provisions, that any
broadband Internet service provider, serving 2 million or more subscribers, submit any volume
usage based service plan, which the provider is proposing or offering, to the Federal Trade
Commission (FTC) for approval. The FTC, in consultation with the FCC, is required to review
such plans “to ensure that such plans are fairly based on cost.” Such plans are subject to agency
review and public hearings. Plans determined by the FTC to impose “rates, terms, and conditions
that are unjust, unreasonable, or unreasonably discriminatory” will be declared unlawful.
47 Boucher Opts For Talks, Not Legislation, On Net Neutrality, National Journal, Congress Daily, February 26, 2009.
Boucher, Stakeholders Working On Network Management Issues, Telecommunications Reports, March 15, 2009, p.19.
48 For a discussion and analysis of issues regarding the Universal Service Fund see CRS Report RL33979, Universal
Service Fund: Background and Options for Reform, by Angele A. Gilroy.
49 For a further more detailed discussion of the broadband infrastructure programs contained in P.L. 111-5 see CRS
Report R40436, Broadband Infrastructure Programs in the American Recovery and Reinvestment Act, by Lennard G.
Kruger.
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Violators are subject to injunctive relief requiring the suspension, termination, or revision of such
plans and may be subject to a fine of not more than $1 million.
Author Contact Information
Angele A. Gilroy
Specialist in Telecommunications Policy
agilroy@crs.loc.gov, 7-7778
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