IP Transition and Net Neutrality:Why Local Governments Should Care

Telecommunications Law
IP Transition and Net Neutrality:
Why Local Governments Should Care
PRESENTED BY
Joseph Van Eaton, Partner
Best Best & Krieger LLP
IMLA MID-YEAR SEMINAR
Anchorage, AK

Background – the Public Switched
Telephone Network: 1913
First Meeting of the Alaska Legislature – and the Year of the Kingsbury Commitment

The Network Compact
• Universal Service
• Competition & Interconnection
• Consumer Protection
• Network Reliability
• Public Safety

IP Transition: What Is It?
• Replacement of traditional public switched telephone
network (PSTN) with a network based around the IP
protocol – a packet-switched v. circuit switched
network
• “We stand today at the precipice of a very different
technology transition -- the turning off of the legacy
suite of services that has served our nation well.”
 In re Tech. Transitions; AT&T Petition; Connect Am. Fund
et al., 29 FCC Rcd 1433, 1436 (F.C.C. 2014)

IP Transition:
What Is It?

IP Transition: What Is It?
Source: http://www.highteck.net/EN/Basic/Internetworking.html

IP Transition
• Potentially much more efficient network
 carriers claim duplicative systems now being maintained
• Multi-purpose network – not designed for voice
• Not wireless or wireline – could be a combination of
the many different networks
• Does NOT mean Internet everywhere

IP Transition
• BUT – the network also may not function the way you
assume it will function
 Verizon Voice Link
 May not be as reliable in power outages
 Some functions may not work (9-1-1; Life Alert; Faxes;
Credit Card Machines) or require substantially more
expensive services
• AND transition creates significant questions as
to what regulatory rights and obligations are…

IP Transition – Legal Issues
• FCC has not resolved legal issues, and merely
recognizes that the legal issues are significant:
 Interconnection – will there be interconnection obligations?
 How will the services be classified? And how will that
affect universal service obligations, and obligations to
provide services
 Will states be in a position to protect consumers –
and will they have any role in regulation of IP-
enabled services?
• 27 states have passed ALEC-sponsored deregulatory
legislation, including legislation prohibiting regulation of
IP systems

IP Transition
• Will rural areas be cut off from new IP networks?
• Will networks be less reliable in the event of
emergency?
• Will networks provide basic services at a
reasonable quality and price?
• Will the network be secure?

What FCC Is Doing
• In January, issued Order seeking proposals for test of
shift from legacy to IP networks (meaning, in some
specific geographic areas, network services will be
shifted to IP).
• Order is designed to determine real-world impacts,
with goal of preserving Network Compact: “as
networks transition, public safety is assured, access is
universal, competition is promoted, consumers are
protected, and the nation remains well-served by its
critical communications infrastructure…”

Why You Should Be Concerned
• The transition is occurring and will occur. You
are affected operationally and budgetarily
 As the front line for public safety
 As the agency closest to the public, and most
responsible for ensuring your community has
infrastructure necessary for economic development
 As a key customer for reliable services

Why You Should Be Concerned
• Will the compact under which providers
obtained access to city property be maintained?
And if not, what are your rights?
• Will your tax codes, franchise fee provisions
and other fee provisions reach the services as
they may be redefined – or are they technology
or location dependent?

Net Neutrality- Background
• In the Matter of Protecting and Promoting the Open Internet,
GN Docket No. 14-28, NOTICE OF PROPOSED
RULEMAKING (Adopted: May 15, 2014)
• Comment Date: July 15, 2014
• Reply Comment Date: September 10, 2014
• http://www.fcc.gov/document/protecting-and-promoting-open-
internet-nprm
• http://www.fcc.gov/document/fact-sheet-protecting-and-
promoting-open-internet
• 2014 FCC LEXIS 1689
• Workshop On The Future Of Broadband Regulation At FCC May 29-30,
2014

Net Neutrality - Background
• Refers to treatment of traffic once on an Internet Service
Provider’s network
• Internet Operation – Traditionally
 Internet service was treated as a common carrier service
 Provider sold service to end user
 End user could access any lawful site
 While end user could buy different levels of service, basically, all similar
traffic was treated identically, and “edge provider” was NOT charged
• Beginning in 2002, FCC issued decisions classifying Internet
service as an “information service,” not subject to common
carrier regulation

Net Neutrality - Background
• FCC also adopted a series of “openness” principles designed to
prevent ISPs (including cable operators and telephone
companies) from blocking certain Internet traffic
• In Preserving the Open Internet, GN Docket No. 09-191, WC
Docket No. 07-52, Report and Order, 25 FCC Rcd 17905,
17910, para. 13 (2010) (Open Internet Order or Order), FCC
adopted open Internet rules:
 Transparency
 No blocking
 No discrimination
• Decision aff'd in part, vacated and remanded in part sub nom.
Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014).

Net Neutrality – Why It Matters
• Broadband providers have ability and incentive to block, and to
discriminate against certain services – a “real threat, not merely
a hypothetical concern”
• “[T]he Internet's open architecture allows innovators and
consumers at the edges of the network "to create and determine
the success or failure of content, applications, services and
devices," without requiring permission from the broadband
provider…[a]s an open platform, it fosters diversity and it
enables people to build communities.” Order, para. 1
• An open Internet fosters innovation, which leads to economic
growth, provides new opportunities for civic
engagement/providing new educational opportunities

Net Neutrality – Why It Matters
• App economy responsible for 752,000 jobs, from zero in 2007
• 87% of Americans use the Internet, compared to 14 per cent in
1995
• E-commerce marketplace of $263.3 billion
• $250 billion in private capital invested as part of virtual cycle:
innovations leads to demand, demand leads to investment,
investment leads to network improvements, improvements
allow new innovations
• Tablet use growing from zero in 2010 to 160 million users by
2016
• Key question “what is the right public policy to ensure the
Internet remains open?” Order, para 2.

Net Neutrality - Options
• No regulation – allow the market place to
control
• Move back to common carrier regulation
[issue: is common carrier regulation too
burdensome]
• Adopt a new approach that allows creation of
“fast lanes” on the Internet
• Something else?

Net Neutrality – Life in the Fast Lane
• Enhanced transparency rules – so consumers and edge
providers understand network practices (and can choose or
place pressure on providers to change practices)
• Re-adoption of “no blocking rule,” with clarification that
broadband providers can negotiate individualized arrangements
with “edge providers” so long as they do not “degrade lawful
content or services to below a minimum level of access”
• Broadband providers required to use “commercially
reasonable” practices in provision of broadband service.
• Commercial reasonableness based on totality of circumstances
– anything that threatens to harm Internet openness in
prohibited
• Case by Case determination

Net Neutrality – Particular Issues for
Local Gov’t
• The open Internet serves as a critical platform for speech and
civic engagement….[T]he ability of citizens and content
providers to use this open platform…at very low costs drives
further Internet use, consumer demand, and broadband
investment and deployment. We therefore propose to adopt a
factor or factors in applying the commercially reasonable
standard that assess the impact of broadband provider practices
on free exercise of speech and civic engagement.
• “We… seek comment on the role that the open Internet has for
public institutions, such as public and school libraries, research
libraries, and colleges and universities…”

Net Neutrality – How Would It Work
Wheeler:
• “If the network operator slowed the speed below that which the
consumer bought (for reasons other than reasonable network
management), it would be… commercially unreasonable…”
• If operator blocked access to lawful content, it would violate
“no blocking rule and be commercially unreasonable…”
• “When content provided by a firm such as Netflix reaches the
consumer's network provider it would be commercially
unreasonable to charge the content provider to use the
bandwidth for which the consumer had already paid…”
• “When a consumer buys specified capacity from a network
provider he or she is buying open capacity, not capacity the
network can prioritize for its own profit purposes.”

Net Neutrality – Concern
• “Minimum service” levels will be locked in at current levels
• Providers who need additional speed, capabilities, or to avoid
data caps will be required to negotiate agreements with Internet
service providers
• Significant concern for development of high-capacity
applications related to e-health, e-planning and permitting, or
that require significant capacity up and downstream
• Money will flow to creation of the “fast lane” and away from
development of the public Internet
• What would be the effect on your community if Internet
capabilities had been frozen to 2007 levels? Or you had to pay
to reach your residents with higher-quality services?

Telecommunications Law 26
QUESTIONS?
Joseph Van Eaton
Best Best & Krieger LLP
2000 Pennsylvania Avenue N.W.
Suite 4300
Washington, DC 20006
(202) 370-5309
Joseph.VanEaton@bbklaw.com
26

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