Today’s Net Neutrality Ruling Could Throw a Wrench in Amazon’s Gadget Plans

An appealsfcc-logo court in the District of Columbia ruled today that the FCC's net neutrality rules, which prevent ISPs from favoring one source of internet traffic over others (example: Youtube vs Amazon), are invalid. The ruling is 81 pages long, and has big implications for content providers, consumers and the future of the internet.

The ruling was handed down by a 3-judge panel, with one judge dissenting in part. The tl;dr version of the ruling is that the FCC cannot impose and enforce net neutrality rules on ISPs because broadband isn't classified as a "common-carrier" service. The ruling does note that the FCC has the general authority to regulate ISPs, and it let certain parts of the rules imposed by the FCC stand. For example the FCC can still require ISPs to disclose how they are regulating traffic.

Today's ruling comes as the latest stage in a decade long debate on whether traffic on the internet should be treated as a single class or (as some ISPs would like) whether different types of internet traffic should be given a priority, thus enabling ISPs to possibly  charge for premium service and degrade the service of any type of traffic which they don't approve.

The issues with not having a net neutrality rule were made most clear in 2007 and 2008 when Comcast (as well as other ISPs like Canada's Cogeco and Rogers) was repeatedly caught blocking BitTorrent traffic.

As a result of that incident and the ongoing failure of Congress to pass a law in support of net neutrality, the FCC declared in 2009 that Verizon, AT&T, and other ISPs could no longer even think about favoring one source of traffic over another. These net neutrality rules, which were modified a couple times before taking their final form in 2010, were in part struck down today.

This ruling will affect streaming services like Youtube and Netflix, but it will most especially affect Amazon.

More than any other gadget maker, Amazon depends on content in order to subsidize the cost of their hardware. And thanks to Amazon's thin margins they are probably going to be the first to feel the pressure from ISPs that trying to double dip by charging Amazon to deliver the content that customers are already paying to receive. That means that Amazon's rumored set-top box has a cloud hanging over it, and so do the Kindle Fire tablets and the rumored smartphone.

This will also negatively affect the 4k video streaming service that Amazon announced last week. "4k" refers to a display resolution of 3850×2160 or higher. That's over 3 times the resolution of a 1080p video, so as I'm sure you can imagine a streaming video with a 4k resolution is going to be something of a bandwidth hog.

But I wouldn't worry too much just yet that an ISP might throttle the 4k streaming porn service you just subscribed to; the ruling also included a few clues as to how the FCC could regulate ISPs:

That said, even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates. Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the Commission from nonetheless regulating them as such. Because the Commission has failed to establish that the anti-discrimination and anti-blocking rules do not impose per se common carrier obligations, we vacate those portions of the Open Internet Order.

Basically the FCC needs to wave a magic wand and declare ISPs as common carriers.  And if that doesn't settle the issue, it is entirely within the purview of Congress to give the FCC new regulatory authority. And of course there is the possibility that this case might be appealed to the US Supreme Court, but I don't see why that body would overrule the appeals court ruling.

Thanks, Ray!

3 thoughts on “Today’s Net Neutrality Ruling Could Throw a Wrench in Amazon’s Gadget Plans

  1. That’s just sooo bad.

    Mobile carriers banning/degrading VOIP traffic.
    ISPs favoring some content providers over other.
    etc etc

  2. Appreciate the gracious shout-out, Nate.

    “..This ruling will affect streaming services like Youtube and Netflix, but it will most especially affect Amazon…”

    Insofar the video streaming part, Amazon is reported to accont for a surprising mere 1.6% of downstream internet traffic (compared to 32% for Netflix and 19% for YouTube). http://allthingsd.com/20131111/netflix-youtube-half-your-broadband-diet/.
    So, for now the impact might be inconsequential. But it is another story as regards the impact on its speculated aggressive video plans like set-top and 4k.

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