Legal brain opposes net-neutrality legislation at FTC workshop

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The Federal Trade Commission on Feb. 14 hosted the "Broadband Connectivity Competition Policy" public workshop in Washington, with panel speakers addressing various telecom issues. Christopher Wolf, an attorney with Proskauer Rose LLP, Washington, and co-chair of public policy advocacy group Hands Off the Internet, spoke on the net-neutrality panel about the dangers of regulating the Internet. His speech was titled "What Framework Best Promotes Competition and Consumer Welfare?"

Following are Mr. Wolf's prepared remarks opposing net-neutrality legislation, which essentially seeks to bar telecom and cable companies from charging Internet firms tiered rates for faster online delivery speed.

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Good afternoon. My name is Christopher Wolf. I chair the Internet law practice group at the law firm of Proskauer Rose LLP and I co-chair the public policy advocacy group Hands Off the Internet. Hands Off the Internet is a nationwide coalition of Internet users and companies united in the belief that a regulatory hands-off policy has allowed the

Internet to flourish thus far. We also believe that unnecessary regulation in the future will adversely affect the build-out of the Internet infrastructure that is vital to the coming demands for broadband capacity.

So, our answer to the question of today's session, "What Framework Best Promotes Competition and Consumer Welfare?," is that the existing framework, the one that encourages and promotes innovation and progress, is the best one for the future of the Internet and for consumers using the Internet.

In particular, the members of my coalition believe that adoption of so-called net neutrality regulation will have adverse consequences for innovation and competition in the market for broadband access by, among other things, making it more difficult for ISPs and other network operators to recoup their investments in broadband networks. There is zero evidence of harm to consumers or competition to warrant such regulation. Moreover, competitive conditions in the market for broadband access will protect consumers from the hypothetical harm theorized by net neutrality proponents. Beyond that, the current laws, as well as current regulatory oversight, are sufficient to address any harms (sic) that may arise.

As much as we might disagree over the need for new regulation, we agree completely with those on the other side of the regulatory question that no legal Web site or content should be blocked by a broadband provider. And we also share the belief that it is and should remain improper for service to be intentionally degraded. In addition, we fully support the use of existing law to pursue anti-competitive conduct if and when it occurs. The FCC, FTC, Department of Justice and state attorneys general, as well as the private bar, all have tools at their disposal that may be used if anti-competitive or unfair tactics are engaged in by broadband providers. Existing law provides sufficient oversight, in our view, especially in light of the adverse unanticipated consequences of proposed new regulation.

We especially part company with those calling for net neutrality mandates where they seek to have all traffic travel at the same speed, and thus prevent management of Internet traffic and block "smart" network technology. Smart network technology will allow traffic to be managed so that time-sensitive data does not get stuck in traffic jams, and large data files don't crowd out other traffic flowing over the network. Removing network management means that only "dumb" networks can be built for the future. That is just one of the adverse unintended consequences of net neutrality.

The calls for new regulation also unfairly shift business costs to consumers by barring network operators from offering premium services to those content providers placing large amounts of traffic on the network. This would have the full cost of the network upgrade be covered by consumers' monthly Internet access fees.

Lost in the debate over net neutrality are some fundamentals, which are useful to point out here. The first fundamental is this: The public Internet is a series of inter-connected networks. The Internet works because of private investment. Competition, innovation, and investment make the Internet what it is. Second, the Internet is experiencing an unprecedented surge in traffic that will strain the capacity of the current infrastructure. Some, like The Wall Street Journal, have referred to this as the Exaflood, a term that references a coming Internet onslaught of many times the largest measurement of data -- the exabyte.

A recent summary of a study prepared by Deloitte & Touche put it this way:

"One of the key possibilities for 2007 is that the Internet could be approaching its capacity. The twin trends causing this are an explosion in demand, largely fueled by the growth in video traffic and the lack of investment in new, functioning capacity. Bottlenecks are likely to become apparent in some of the Internet's backbones, the terabit-capable pipes exchanging traffic between continents. Investment, either in laying new cable or lighting existing fiber, may be stifled by continuing falls in wholesale capacity prices.

"Similar capacity constraints may well appear in the ISP and telecommunications networks that provide broadband connectivity to consumers. The impact may be most noticeable in the form of falling quality of service. Surfers are most likely to be annoyed by the slowdown in service. And it may only take an unexpected upsurge in video usage to turn the inconvenience caused by a drop in access speeds into full-scale consumer dissatisfaction."

Against this backdrop, it is obvious that the capacity of the Internet will have to increase exponentially and rapidly to handle the coming exponential increase in traffic generated by Internet video alone. The last thing that is needed is new regulation whose red tape will slow down the Internet.

Broad regulation will mean, for the first time, we will have the government and private litigators setting the rules on caching, collocation, packet prioritization and reassembly and other aspects of managing Internet traffic. Even peer-to-peer agreements would be subject to review and litigation. These are incredibly complex technical decisions made in managing networks that industry heretofore always has performed -- and performed well -- without government interference. An added regulatory regime will only cost broadband developers time and resources that could be focused on improving services.

As proponents of legislation use the term "net neutrality," it refers to a rigid regulatory regime that ultimately could allow the federal government (and self-interested litigation parties) to get in the way of new technologies and new services on the Internet. Current proposals could prevent broadband providers from offering enhanced levels of service for specialized applications such a telemedicine, or to offer their own branded or co-branded products or services -- arrangements that will help pay for the build-out of the next generation of Internet "pipes." This is especially the case in the area of "network neutrality" where it is impossible to draft legislation dealing with such a technologically complex medium with specificity and without having adverse unintended effects.

There is no current demonstrated need for the proposed legislation. The asserted fears that networks someday may be degraded or that there will be discrimination against content on the Internet are hypothetical at best. Consumers will be best served if the proven existing legal framework is continued to be used to protect consumers. The Internet should be allowed to grow and thrive based on the very principles under which this significant medium has developed up until now. Those principles are network diversity, not network neutrality.

Thank you.

Christopher Wolf is chair of the Internet law practice at Proskauer Rose LLP, a law firm in Washington. He is also co-chair of Hands Off the Internet, a public policy advocacy group.

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