Even as federal officials prepare to defend their net neutrality regulation in court, attention is shifting to a part of the new FCC rules that could give Internet providers a loophole, according to some analysts.
The rules, which were adopted by the Federal Communications Commission last month, seek to prevent Internet service providers from speeding up or slowing down some Web sites over others. But there is concern that Internet providers could mislabel some types of Internet content in order to avoid the strongest parts of the rules.
The issue in question deals with what are known as "specialized services" — a loosely defined category of Web applications that covers things like VoIP phone service, smart thermostats and real-time health monitoring. These services have been traditionally less regulated, and that won't change under the new net neutrality rules.
But some advocates fear that because the specialized services label comes with few restrictions it gives Internet providers the ability to bypass the FCC's rules that prevent Internet throttling, blocking and so-called fast lanes.
Ultimately, it is up to the FCC to call foul on broadband companies that try to circumvent the rules. But it isn't clear how the agency would do that in the case of specialized services. Although the FCC insists it will keep a close eye on the companies to be sure they're not abusing the loophole, senior officials have not laid out what, specifically, might trigger an investigation. And that has some net neutrality advocates worried.
"The way the FCC is defining [broadband Internet access service], it's going to be easy to evade the operation of these rules," said Harvard University scholar Susan Crawford. "Millions of Americans are paying attention to the wrong sets of questions."
Crawford and others fret that an Internet provider could claim that its own video streaming service — say, a rival to Netflix — was a specialized service, and then accelerate its traffic at Netflix's expense. This tactic would likely fall outside of the net neutrality rules.
Concerns about the specialized services exemption go back for years. FCC Commissioner Mignon Clyburn recently reminded the public that, in 2010, the agency's rules didn't do enough to close the loophole. Clyburn's office did not answer questions about whether the current rules sufficiently address her concerns about specialized services.
Speaking to reporters last month, a senior FCC official confirmed that the net neutrality regulations don't apply to specialized services. Nevertheless, the official said, the FCC would monitor them closely.
The agency does set out some warnings for Internet providers on this front. It requires providers to disclose how their specialized services are being offered and what their relationship is to ordinary broadband Internet access service.
"If the Commission determines that a particular service is … '[being] used to evade the protections set forth in these rules,' we will take appropriate enforcement action," the agency wrote in its new regulations. "Further, if the Commission determines that these types of service offerings are undermining investment, innovation, competition and end-user benefits, we will similarly take appropriate action."
These terms lay out broad guidelines that basically warn Internet providers against abusing the specialized services label, or else. But Jon Peha, a professor at Carnegie Mellon University who's written to the FCC previously on specialized services, said the agency's language is too broad, given what's at stake.
"The FCC has chosen to be vague about specialized services," said Peha. "Industry will need greater clarity about what is and is not allowed. The FCC should be very careful both to avoid prohibiting useful services and to avoid creating a giant loophole in the rules."
Others say the loophole could have additional unintended effects, such as giving Internet providers an incentive to enter markets that have nothing to do with providing Internet service, and then dominating those markets. One strategy could be to buy up companies with lucrative content, sparking more mega-mergers in the media and telecom industry as providers figure out that there's more money in selling content than access to dumb pipes, said Hal Singer, an economist who advocated for looser net neutrality rules.
Let me be first to predict Comcast Telemedicine & Comcast Gaming! Banning contracting w independents+special service loophole = integration.
— Hal Singer (@HalSinger) March 12, 2015
"If you can no longer contract [with third parties under net neutrality], then the only way you can contract with them is internally through integration," said Singer. "This order is going to perversely induce more vertical integration — which, in my mind, is the source of all potential harms."
Others say that no rules are perfect, and that in this case, it's better for the FCC to maintain some flexibility.
"The incentives to try to find loopholes are there," said Harold Feld, senior vice president of the consumer advocacy group Public Knowledge. "We can expect that no matter what set of rules the FCC adopts, there's going to be a certain amount of probing by companies to see what they can reasonably get away with."