This post was researched and assembled by FMC policy, legal and communications interns Alexandra Wood, Gloria Ho and Rachel Smith.

On Monday, August 9, 2010, Verizon and Google released a joint proposal for a legislative framework for broadband internet service. Although the proposal has no legal effect on its own, it is important to understand because it could serve as a model for future legislation or FCC rulemaking. We weighed in yesterday via a short media statement, which you can read here.

Over the past 24 hours, we realized there was a need to go through the proposal point-by-point and examine how the agreement might impact independent musicians and other creators, were it to be adopted as public policy.

Now, that’s a big if. Although Verizon and Google ostensibly drafted this proposal as model legislation, there’s no  evidence that it will be embraced by a broader group of stakeholders. Not to mention the fact that the FCC already has an open proceeding to determine the best way to preserve the open internet and expand broadband service to more Americans. What the Commission will ultimately do is, for the moment, a mystery. We don’t want to get into all the drama and intrigue, so we’ll just say there’s a lot still to be settled. In the meantime, if you want to better understand why this stuff is so important to musicians, check out our Rock the Net campaign.

The following is an overview of the provisions of the joint Verizon-Google proposal, as well as an analysis of what it could mean for independent artists. If it were to become law, that is. Say it with us: if.

For ease of reference, the nine headings below correspond to those in the proposal.

Consumer Protections: An internet service provider (ISP) cannot prevent its users from using the lawful content, applications, services, and devices of their choice on the network. But note this applies only to so-called “wireline” broadband service and not mobile. This is interesting, as most observers say that the future of the web is wireless. We are inclined to agree: music fans are already getting used to the idea of accessing tunes via apps on the iPad, iPhone and Google’s own Android mobile operating system. Independent and unafilliated artists can currently get their stuff on those services pretty easily via inexpensive “digital aggregators” like TuneCore, CD Baby and Reverbnation. Indie labels use IODA, Merlin and other online distributors. If it became more profitiable to cut deals with big content providers who could afford to pay a premium for better delivery, indies could be shut out of a crucial developing market.

Non-discrimination Requirement: When providing broadband internet access service, an ISP cannot “undu[ly]” discriminate against any lawful content, application, or service in a way that causes “meaningful harm” to competition or to users. Any prioritization of Internet traffic is presumed to violate the non-discrimination standard unless the ISP shows that the discrimination did not result in any “meaningful harm.”  Notably, the proposal prohibits “paid prioritization” of content — where content creators pay a fee to broadband providers to make their web sites load faster than others — though again, this restriction does not apply to wireless broadband.

The Verizon-Google proposal seems to allow exceptions to this principle. Besides the lack of non-discrimination rules for wireless, it describes how “additional online services” don’t count. Discrimination that does not result in any “meaningful harm to competition or to users” also gets a pass. The fact that “meaningful harm to competition or to users” is kind of vague means that the non-discrimination requirement could carry a lot of weight — or no weight at all — depending on interpretation.  For example, Professor Barbara van Schewick has asked whether a “harm to users” standard would be violated if a broadband provider blocked access to a filesharing site; such an action could harm some users who enjoy lawful filesharing (such as independent filmmakers who distribute their films this way) but might also benefit other users who experience faster download speeds due to less congestion on the network. (There had been some precedent with the now-overturned FCC order against Comcast, which is kind of why we’re talking about all this in the first place. Freaky, huh?)

Transparency: Broadband providers must give consumers and users — including content and application providers — accurate and clear information about the broadband provider’s services and practices. The transparency rule applies to both wireline and wireless services. That doesn’t seem so terrible.

Network Management: The proposal allows broadband providers to engage in “reasonable network management.”  The big question here is what constitutes “reasonable” network management. “Reasonable” is one of those nebulously defined terms that makes it easy for carriers to carve a big ol’ loophole in net neutrality legislation. For example, in Comcast v. FCC, Comcast argued that its practice of discriminating against BitTorrent traffic, stymieing its customers’ ability to make lawful use of the filesharing network, constituted “reasonable network management.” On the other hand, the FCC’s own proposed net neutrality draft rules uses the same language. At some point, we have to believe that explicitness will be necessary on the road to enforceable rules.

The Verizon-Google proposal lists a number of practices as examples of those companies’ read on “reasonable network management.” Some do seem quite reasonable, actually, such as the ability “to address traffic that is unwanted by or harmful to users, the provider’s network, or the Internet,” (e.g., denial of service attacks). However, it also includes examples that could open the door for overbroad discrimination, such as the permission granted “to prioritize general classes or types of Internet traffic.” A certain amount of data packet prioritization is standard practice to ensure quality of service (for instance, to minimize latency on VoIP calls, or to block spam.) That said, a blanket rule allowing prioritization of “general classes or types of Internet traffic” might be used to defend a practice of blocking or degrading certain traffic regardless of legality or impact on overall quality of service. If the terms are too vague, “network management” could provide a way to duck the non-discrimination requirement. This could make it difficult for independent creators to distribute their work, depending on what’s being discriminated against (and why).

Additional Online Services: Here’s where a lot of people’s alarm bells go off. This clause exempts unspecified “additional online services” from the proposed neutrality protections for broadband internet. These exemptions have led some to believe that the Verizon-Google plan will effectively create two “separate and unequal internets” — a public internet regulated by the FCC, and a private, unregulated network to support “additional online services.”

Public Knowledge writes that this is a loophole allowing third-party content developers to pay for prioritized delivery.  “According to Ivan Seidenberg of Verizon, these [additional online services] can even include entertainment content—he gave examples including a local opera house paying so that its operas are given prioritization, and 3D content,” notes PK staff attorney John Bergmayer. Permitting paid prioritization in these (hypothetical) private networks would give large content providers an advantage over smaller startups and independent creators.

It would also give carriers the incentive to invest more in “additional online services” at the expense of regular broadband. Professor Marvin Ammori writes that special rules for services like these are “an obvious, potential, end-run around the net neutrality rule, where wealthy content-providers (and those content-providers owned by the carriers themselves) can get special access to consumers that Internet start-ups and the rest of us would lack.” It could even indirectly affect traditional internet service, since “carriers will likely have incentives to allocate more and more capacity to these services at the expense of investing in Internet capacity — even though American networks have capacity and speeds trailing far far behind global leaders.”

Then there’s the issue of accountability in the realm of “additional online services.” The clause states that the FCC will “report if it finds at any time that these services threaten the meaningful availability of broadband Internet access services or have been devised or promoted in a manner designed to evade these consumer protections.” But who decides what constitutes what’s meaningful about what is or isn’t available? Again, the lack of definition is an issue. Furthermore, the crux of the net neutrality issue is not merely the “availability” of service, but of quality: how fast is “meaningful availability?” Protecting only the “meaningful availability” of the so-called “public internet” could still give the ISPs carte blanche to give up on developing public, open services while pouring the lion’s share of their resources into private, unregulated “additional online services.” It’s pretty clear which one would be more awesome.

Under such a regime, big media companies would have a clear incentive to move their content (and their audiences) into premium channels where independent creators may not have access. On the other hand, creators and content entrepreneurs large and small need to be able to take risks based on potential return on investment, so you can see the attractiveness of certain premium delivery platforms. But it’s all about who gets to play. And judging from history, it probably won’t be independents.

Wireless Broadband: The exemption for wireless broadband is the other elephant in the room. The Verizon-Google proposal specifically exempts wireless broadband internet from its proposed regulations. Their policy prescription includes no neutrality principles for the mobile space; the only rule that applies to wireless is a “transparency principle” that would require carriers to inform customers about their network management practices. In the absence of a non-discrimination requirement, wireless providers are allowed to prioritize and even block services to their heart’s content. For example, there is nothing in the rules to prohibit AT&T from blocking its iPhone customers from viewing YouTube videos on its mobile network — as it has tried (unsuccessfully) to do.

Once again, the lack of proposed regulation in the wireless space leaves independent creators at the mercy of powerful gatekeepers if they hope to enjoy access to an increasingly valuable platform. We’d like to see at least the acknowledgement that innovation includes creative expression, which also deserves a shot in the marketplace of ideas (and moolah).

Case-By-Case Enforcement: The proposal strips the FCC of any rulemaking authority related to consumer protection and non-discrimination rules (listed above), but the Commission would be able to enforce these rules though case-by-case adjudication. (Meaning, someone would have to complain through the right channels, and there would have to be a way to validate the complaint.) This would all take place under “reasonable network practices” provisions and alongside constantly-evolving network technology. Professor van Schewick, who we mentioned earlier, has warned against such a proposal, arguing that case-by-case adjudication does not provide the certainty that network providers, application developers, and investors need in order to predict whether their particular services violate the rules.

Additionally, the cost of a regulatory proceeding places considerable burden on end users, application developers, and startups who seek to challenge ISP behavior. Parties would be encouraged to go through “non-governmental dispute resolution processes established by independent, widely-recognized Internet community governance initiatives,” which may be more sympathetic to industry than a governmental body would be. Public Knowledge speculates that “presumably, the FCC would act like a common law court… Or it might be relegated to rubber-stamping industry-crafted settlements. Either way, this proposal does nothing to fill the huge gap in the FCC’s authority to oversee communications infrastructure.”

The proposal also sets a $2 million cap on fines that can be imposed for violations of the nondiscrimination and consumer protection rules.  Professor Ammori argues, because “Verizon makes 2 million dollars in revenue every 10 minutes” and “10 million in profit every 3 hours,” this penalty is unlikely to deter bad behavior on the part of broadband providers.

Regulatory Authority: The proposal makes it clear that the FCC cannot regulate or censor internet content. This has been the FCC’s longstanding approach; it regulates internet access but not the applications, content, and services that run over it. Also, no other regulatory authorities would have authority over broadband internet service. No problems here.

Broadband Access for Americans: The proposal calls for a legislative fix to overcome the recent legal obstacles that threaten the National Broadband Plan. The court decision in Comcast v. FCC undermined the legal basis the Commission planned to use to fund broadband deployment in high-cost and rural areas. The proposal makes universal service fund support available for broadband and calls for making broadband internet accessible to disabled persons. That’s another easy thing to stand behind, but we’ll leave it to smarter folks to commend or criticize this provision.

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The fact that anyone is even talking about net neutrality in any serious way is something of a victory. Back when organizations like ours started bringing up the idea that open access technology platforms are beneficial to musicians and music entrepreneurs, we were met with quite a few blank stares. We’d like to once again take a moment to thank the thousands of Rock the Net artists who have stood with us in explaining net neutrality to policymakers and the public.

And lastly, we want to reiterate that the Verizon-Google proposal is not law. Even if it were made of rainbows and candy, nothing here is enforceable on any level. Which is why we keep calling for clear and comprehensible rules of the road for the web. And we’re gonna keep doing it until we get ‘em.