Walt Sapronov Sapronov & Associates, P.C. 400 Northridge Road, Suite 515 Atlanta, Georgia 30350

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