AT&T’s fascinating third-way proposal on net neutrality

Randall Stephenson is chief executive of AT&T Inc. (Andrew Harrer/Bloomberg)

Imagine an Internet with fast lanes that you -- not your cable company -- controlled.

That's what AT&T is proposing to the Federal Communications Commission in an attempt to bridge the gap between regulation-wary industry groups and net neutrality advocates who want strong government protections for the open Internet.

Net neutrality — the idea that Internet service providers (ISPs) shouldn't speed up, slow down or manipulate consumers' Web traffic — has been the subject of intense lobbying from both sides in recent weeks as we've raced toward a final deadline for public comments at the FCC. Last week, grass-roots groups sent hundreds of thousands of new comments to the agency, with many advocating that chairman Tom Wheeler begin regulating ISPs like telephone companies in an attempt to ban them from charging content companies a special toll to access consumers. (Net neutrality advocates worry that such a system would tilt the Internet economy against startups and small businesses that couldn't afford to pay, and put more money in the hands of large Internet providers.)

The path forward for AT&T's idea — which has been discussed before — is uncertain. Still, it's attracted some cautious approval from consumer groups, in a sign that some are still interested in a compromise amid what's become a major ideological fight in Washington over the future of the Internet.

Here's what AT&T's proposal looks like: In a recent meeting with FCC officials, AT&T's senior vice president for regulatory policy laid out a plan that would allow individual consumers to ask that some applications, such as Netflix, receive priority treatment over other services, such as e-mail or online video games. That's different from the FCC's current proposal, which tacitly allows Internet providers to charge content companies for priority access to consumers but doesn't give the consumers a choice in the matter.

"Such an approach would preserve the ability of Internet service providers to engage in individualized negotiations with [content companies] for a host of services, while prohibiting the precise practice that has raised 'fast lane' concerns," said AT&T in its filing.

AT&T's idea would still allow for commercial deals between companies. But they would have to be arranged as the result of one or more subscriber requests; the ISPs couldn't offer fee-based prioritization just because they wanted to.

Some net neutrality advocates say they're heartened by the proposal.

"I am encouraged that people are coming up with creative solutions and not going to the extreme yes-no position," said Nuala O'Connor, president and chief executive of the Center for Democracy and Technology.

But it's unclear how the proposal would actually be implemented. Would Internet companies pay broadband providers on a per-subscriber basis depending on who asked for priority access? Or would companies such as Netflix pay one single rate for all users on a company's network?

Also ambiguous is whether AT&T's proposal, if adopted, would stand up to a court challenge from opponents. Some believe the idea may be too clever by half. When the FCC's original net neutrality rules were struck down by a three-judge panel in January, the court's opinion said that there would be no way for the FCC to completely ban Internet fast lanes while still regulating Internet providers under Title I of the Communications Act. (Reclassifying ISPs under Title II of the FCC's congressional charter would, according to some advocates, give the FCC the power to ban paid prioritization. Whether that's the case is a whole other debate.)

What AT&T is suggesting is that Wheeler could ban fee-based prioritization of Internet traffic under certain conditions — namely, in cases where customers hadn't asked for it. Presumably under the AT&T proposal, ISPs would advertise heavily to consumers encouraging them to ask for paid prioritization of certain services.

According to Matt Wood, policy director for the consumer advocacy group Free Press, this approach would be promising if it actually prevented what net neutrality advocates fear most — an unequal playing field that favored the largest Internet companies and broadband providers. But Wood is skeptical that the proposal will pass legal muster.

"It's kind of a nice try by AT&T," said Wood, "and we agree with the first premise that if it were user-directed without paid prioritization, that could be okay." But, he added, "it's a complicated word game they're playing."

A close read of the D.C. Circuit court's opinion on net neutrality suggests Wood could have a point. Even if the FCC says that users can tell ISPs to favor some traffic over others, that might still amount to the FCC overstepping its authority to regulate ISPs under Title I.

"A limited exception permitting end users to direct broadband providers to block certain traffic by no means detracts from the common carrier nature of the obligations imposed on broadband providers," the court opinion reads.

In plain English, the FCC isn't allowed to impose "common carrier" obligations on ISPs because they're regulated differently from phone companies. So AT&T's proposal might face some trouble there. But it's a fascinating one, nonetheless.