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There is a shakedown going on that may change the way you use the Internet, as well as how—and how much—you'll pay.

The FCC's net neutrality rules leave the future of the Internet unclear 

One of the best things about the Internet is its indifference to how you use it. Call your mom on Skype, watch some Simpsons on Hulu, settle an argument by consulting Wikipedia, update your blog. Whatever you do, you're seconds away from doing the next thing.

Behind the scenes, there is a shakedown going on that may change the way you use the Internet, as well as how—and how much—you'll pay.

Last month, the Federal Communications Commission approved rules that regulate network neutrality, or net neutrality for short. While the concept has many definitions, the guiding principle is that everything on the Internet, be it content, applications or services, should be treated equally, and that Internet service providers should not be allowed to serve as gatekeepers of what you can access online.

The three commissioners who voted in favor of the rules were Democrats; the two opponents, Republicans. A major component of the net neutrality debate is the philosophical difference between those who fear government regulation and those who fear its absence. Maintaining the open Internet is a complex task, a mashup of legal issues, engineering challenges and economic forces.

In his announcement of the rules, FCC Chairman Julius Genachowski said they were designed to achieve the commission's many objectives: to protect consumers, to spur innovation, to encourage investment in broadband and technology and to deliver on President Barack Obama's pledge to "keep the Internet as it should be—open and free."

Yet the rules, as written, seem to please almost no one. Opponents of regulation believe there is too much of it. Net neutrality advocates believe the rules are too weak.

Two main issues are at stake: The first is whether Internet service providers may block consumers' access to websites and other content, which in its most pernicious form would censor speech. The other is pricing—whether ISPs can charge content providers a fee to reach consumers or charge consumers different prices for different speeds.

The rules, available at www.openinternet.gov, don't settle the issue. Analysts generally agree that blocking is prohibited unless it's necessary to reduce "congestion" on the network. Charging content providers for access may or may not be allowed. However, charging consumers for higher speeds—"usage-based pricing," as Genachowski puts it—seems to be OK. The fear among consumer advocacy groups like Free Press is that, instead of the monthly subscriber fees we're used to, consumers will be nickel-and-dimed in a way that will make the airlines look reasonable by comparison.

Most significantly, the rules enshrine a distinction between the wired web of cable, DSL and fiber and the wireless web we access on smart phones. It's unclear whether the above rules apply to the mobile web at all.

Columbia Law Professor Tim Wu, credited with coining the term "network neutrality," wrote recently in TechCrunch that, "It is a remarkable feat to write a rule that actually creates more uncertainty than no rule, but by golly, the agency has done it."

Wu predicts "an Internet experience ever more divided by whether you pick up your laptop or your phone."

For the past several years, the telephone and cable companies that provide most of us with Internet services have been rolling out "triple-play" voice, phone and Internet packages to increase their revenue. But if you can watch TV and make phone calls for free online, why pay for cable or phone service? From the point of view of those phone and cable companies, the YouTubes of the world are getting a free ride. Telecoms would like to be able to charge extra to YouTube, Hulu and Skype to reach subscribers on a "fast lane." "Fast lane," of course, implies a slow lane.

A recent conflict between a telecom company and a content provider demonstrates what's at stake.

In November, the company that streams movies for Netflix, Level 3 Communications, reported that Comcast had threatened to shut off access to its network's customers unless Level 3 paid a hefty toll to use the network. Comcast is the largest cable operator in the country, and with 6.7 million high-speed Internet subscribers—and its own streaming video service—it vies with AT&T for the title of largest home ISP in the U.S. According to a study cited by The New York Times, at peak times, Netflix streaming video accounts for 20 percent of all Internet download traffic in the United States.

The FCC's new rules allow for "reasonable" network management on the condition of transparency, with accurate information that allows consumers to make informed choices (set aside for a moment whether the consumer has a choice). The rules prohibit providers from blocking any "lawful content, applications, services, or non-harmful devices, subject to reasonable network management," and from "unreasonable discrimination."

But it's unclear whether the fast-lane practices telecom companies are eager to roll out are legal. In a news release, the FCC stated that "pay for priority" arrangements between a broadband provider and a third party to favor its traffic would "raise significant cause for concern," and be "unlikely to satisfy the 'no unreasonable discrimination rule,'" because those arrangements would hurt consumers and raise barriers to entry for would-be competitors.

Eric Hobbs, president of the Cary-based ISP PortBridge, doesn't buy that argument. PortBridge is independently owned but, like many ISPs, purchases connectivity wholesale from much larger companies while trying to compete with them. "What the regulation is doing is handcuffing the provider from providing the best service they can," he said. "From my perspective, they are completely within their rights to enforce whatever limitations or restrictions they want over their own network—they built it, they maintain it. The reason providers are offering extended services is that bandwidth has become a commodity—you can't make any money providing bandwidth alone. If you want complete net neutrality, who pays for that?"

Whether the network is made of wires or cell towers, it's expensive to build and maintain, which is why telecommunications is so prone to monopoly. But the argument that net neutrality might keep barriers to competition low "doesn't ring true" to Hobbs. "That's right, it's expensive, and knowing that, how do you tell them they can't make money off of it? You can't have both sides of that argument."

Yet the notion that private companies "own" the Internet doesn't hold water. Those wires in the ground run through public right-of-way. Wireless towers transmit signals over public airwaves. The development of the Internet itself constitutes a massive government subsidy.

The future of net neutrality, as principle and policy, remains uncertain, as do the implications of the mobile/ wired web distinction. The only certain thing is that the new rules will be challenged in court.

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