Asus (TPE: 2357) has admitted that some of its WiFi routers and tablets were not FCC-compliant, and has settled the case for a $240,000 fine.

“ASUSTeK admits that its marketing of these intentional radiators violated the Commission’s rules. To resolve the investigations, ASUSTeK will pay a civil fine of $240,000 and implement a compliance plan that will extend for more than three years to ensure future compliance with the Commission’s equipment marketing rules,” a statement released by the FCC read.

The products involved were the RT-N65U 802.11n router, the RT-AC66U 802.11ac router, and the Eee Pad Slider SL101.

The case was initiated in August 2013, when rival Netgear (NASDAQ: NTGR) filed a complaint with the FCC alleging that Asus had non-compliant products on the market.

Asus’ RT-N65U 802.11n router, the RT-AC66U 802.11ac router were both praised by consumers for their functionality, performance and effective range.

The products will not be pulled from shelves in the US. Asus will have to prove to the FCC that is has implemented a compliance plan so that all future products comply with standards.

In addition to filing a complaint with the FCC, Netgear also sued Asus over claims of unfair business practices and deceptive marketing. This lawsuit has also been settled although the exact terms of the deal were not released.

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In yet another public blog about new neutrality and the open internet, FCC Chairman Tom Wheeler, has once again tried to clarify where he stands on the open internet and net neutrality, while almost entirely focusing on the open internet and trying to define exactly what it means. In his blog post, Tom Wheeler tries to quell some of the backlash of some of his statements and previous blogs in a way that placates the masses that are currently angry with the FCC and their proposed rules for open internet standards that would effectively create a “fast lane” for companies that pay for that access to ISPs.

Tom Wheeler states that the idea of net neutrality and/or an open internet has been discussed for a decade without any lasting results and that today the internet’s openness is mostly decided on an ad hoc basis by big companies. He also says that any further delays will only exacerbate the problem. Not just that, but the NPRM (notice of proposed rule making) is seeking input on the best way to protect and promote the open internet. Even though, Wheeler fails to admit or recognize that much of those failures have been as a result of the fact that Congress has failed to pass any legislation and that the FCC has failed to enforce any rules that they have put in place.

He then brings up the Verizon v. FCC court case and how the court laid out a blueprint for how the FCC could use Section 706 of the 1996 Telecommunications Act to create open internet rules that would stick. Tom believes that this court ruling was an invitation to do this and he fully intends to do so, and once again, they ask for comment on this approach in their NPRM. But he fails to say in any way how he will use this invitation to protect the open internet anywhere in his letter or any previous blogs. We literally know nothing about how he proposes to create an open internet using that law and the court’s guidance. Because he believes that creating any laws or rules that ignore the Verizon v FCC court decision will merely result in more years of delays  and ultimately would accomplish nothing.

I do not believe we should leave the market unprotected for multiple more years while lawyers for the biggest corporate players tie the FCC’s protections up in court.  Notwithstanding this, all regulatory options remain on the table. If the proposal before us now turns out to be insufficient or if we observe anyone taking advantage of the rule, I won’t hesitate to use Title II. However, unlike with Title II, we can use the court’s roadmap to implement Open Internet regulation now rather than endure additional years of litigation and delay.

If you want to read his whole post verbatim, I highly recommend you head on over to the FCC’s official blog to read it, as it is quite lengthy, so we paraphrased a lot of it above.

As for the post  itself? Wheeler expressly clarifies what “commercially reasonable” finally means, as they’ve been throwing that term around ever since the whole dust up about the NPRM happened and the whole internet got all up in arms about it. His clarification is a very specific one and establishes a very specific set of tests and examples that won’t pass the “commercially reasonable” test.

Let me be clear, however, as to what I believe is not “commercially reasonable” on the Internet:

• Something that harms consumers is not commercially reasonable. For instance, degrading service in order to create a new “fast lane” would be shut down.
• Something that harms competition is not commercially reasonable. For instance, degrading overall service so as to force consumers and content companies to a higher priced tier would be shut down.
• Providing exclusive, prioritized service to an affiliate is not commercially reasonable. For instance, a broadband provider that also owns a sports network should not be able to give a commercial advantage to that network over another competitive sports network wishing to reach viewers over the Internet.
• Something that curbs the free exercise of speech and civic engagement is not commercially reasonable. For instance, if the creators of new Internet content or services had to seek permission from ISPs or pay special fees to be seen online such action should be shut down.

If you were to go off these four different tests alone, Wheeler’s proposed rules don’t seem as ridiculous, but the truth is that his idea of commercially reasonable doesn’t necessarily mean it’ll be the one that a court will interpret or any future FCC Chairman. Additionally, in the whole of the document, Title II is mentioned four times with a few of those being a mention that they can always go that route if necessary, yet he continues to state it as an option rather than a solution. I’m just not sure why he continually avoids trying to reclassify internet service as a common carrier to protect and regulate consumers. Perhaps, because if he does that, the NSA, CIA, FBI and all other agencies will actually need to get warrants from a judge to intercept communications over the internet. Because as a Title I, or unclassified, they have a lot more freedom to do what they want, and I suspect there’s a lot of internal politics within Washington D.C. that doesn’t want internet service to be reclassified. It is the nuclear option, and I think its the only weapon we’ve got left because the ISPs want to maintain the status quo and keep growing their control.

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It seems as if we’ve been talking about this way too long, and in fact, we have been. So long, that even then Senator Obama had pledged Net Neutrality laws if he was elected President. Alas, President Obama has more than failed to deliver on his promise of Net Neutrality, he has allowed the ISPs and the FCC to run amok in ways that seriously jeopardize the US’ position of the leader of the internet. The NSA revelations regarding their spying on global network traffic hasn’t helped much in the US’ position either, but ultimately these new proposed FCC rules would make it difficult for our knowledge-based economy to be effective. After all, without all of these internet companies, the US would likely be in a deep deep depression. A short list includes Microsoft, Google, Facebook, Twitter, Yelp, Netflix, just to name a few. All of these companies would be affected if ISPs like Comcast and Time Warner Cable were allowed to meddle with users’ traffic in ways that ultimately result in a poorer experience for consumers or businesses because of their pay-to-play models. Net Neutrality simply isn’t beneficial for these enormous cable and ISPs.

Why is this happening? Because the three biggest ISPs in America also happen to deliver a TV service in addition to Internet, and for some, this is their bread and butter. Comcast, AT&T and Time Warner cable alone serve more than half of the broadband customers in the US and there have been talks about a Comcast and Time Warner merger, making the combined company nearly twice the size of their nearest competitor. They want to protect their content that they’re selling to consumers and if they can’t they’ll charge their competitors a fee for ‘faster’ service. As of right now, Netflix is forced to pay Comcast a fee in order to ensure that their streaming service is delivered to customers uninhibited, which is just wrong when you consider that ISPs (and cable companies as a whole) are effectively local monopolies. In most markets you have one or two options for internet service which are generally Comcast or Time Warner and/or AT&T Uverse. There are a few exceptions, but this is more the rule than the exception. As a result, they effectively operate without any competitive pressure and are allowed to essentially charge whatever prices they want to, which is why Google’s Fiber rollout has challenged them so seriously. Google offers speeds 10-20x faster than the fastest speeds that their competitors are offering and naturally, they want to stop this.

Now, getting back to the FCC and Net Neutrality, the real problem here is that the FCC has continued to choose to classify internet broadband service as a Class I Telecommunications Service, which effectively takes the regulation of these companies out of the hands of the FCC. Since if they were to classify the ISPs as Class II Telecommunications Services, they would be given full right to regulate these providers and it would force those companies to provide their services without ANY interference of services. The FCC is looking to meet on May 15th with Chairman Tom Wheeler at the helm to discuss how they will implement new Net Neutrality rules that will be implemented as a result of the court ruling regarding Net Neutrality that was passed down in January. All of this furor about the Net Neutrality proposal was sparked by a Wall Street Journal (paywalled) article that claimed that the new rules would introduce, “new rules on Internet traffic that would allow broadband providers to charge companies a premium for access to their fastest lanes.” Tom Wheeler countered this article with a blog that explains exactly what his stance is stating, “There has been a great deal of misinformation that has recently surfaced regarding the draft Open Internet Notice of Proposed Rulemaking that we will today circulate to the Commission.” He followed this up by stating the following,

           The Notice proposes the reinstatement of the Open Internet concepts adopted by the Commission in 2010 and subsequently remanded by the D.C. Circuit. The Notice does not change the underlying goals of transparency, no blocking of lawful content, and no unreasonable discrimination among users established by the 2010 Rule. The Notice does follow the roadmap established by the Court as to how to enforce rules of the road that protect an Open Internet and asks for further comments on the approach.

It is my intention to conclude this proceeding and have enforceable rules by the end of the year.

To be very direct, the proposal would establish that behavior harmful to consumers or competition by limiting the openness of the Internet will not be permitted.

Incorrect accounts have reported that the earlier policies of the Commission have been abandoned. Two points are relevant here:

1. The Court of Appeals made it clear that the FCC could stop harmful conduct if it were found to not be “commercially reasonable.” Acting within the constraints of the Court’s decision, the Notice will propose rules that establish a high bar for what is “commercially reasonable.” In addition, the Notice will seek ideas on other approaches to achieve this important goal consistent with the Court’s decision. The Notice will also observe that the Commission believes it has the authority under Supreme Court precedent to identify behavior that is flatly illegal.
2. It should be noted that even Title II regulation (which many have sought and which remains a clear alternative) only bans “unjust and unreasonable discrimination.”

The allegation that it will result in anti-competitive price increases for consumers is also unfounded. That is exactly what the “commercially unreasonable” test will protect against: harm to competition and consumers stemming from abusive market activity.

To be clear, this is what the Notice will propose:

1. That all ISPs must transparently disclose to their subscribers and users all relevant information as to the policies that govern their network;
2. That no legal content may be blocked; and
3. That ISPs may not act in a commercially unreasonable manner to harm the Internet, including favoring the traffic from an affiliated entity.

If you clearly read his statement, you can see that he feels as though the FCC is being attacked unjustly about Net Neutrality and that classifying these ISPs as Class II does not resolve the problem because it only bans “unjust and unreasonable discrimination.” However, he states that the beliefs that the new rules would result in higher costs and worse service are unfounded, even though he fails to recognize the $200 billion that the American Tax Payers have given these ISPs to strengthen and speed up their networks with fiber and to this day only Verizon and Google offer fiber to the premises to only a few million lucky customers. These companies simply cannot be trusted to obey Net Neutrality and operate on the premise of what is “commercially unreasonable” because to most broadband providers data caps and speed caps are “commercially reasonable” in order to protect their bottom line and ensure profitability (which they ALL have). Last year, Time Warner made $2 billion which pales in comparison to AT&T’s $18 billion and Comcast’s $6.8 billion, so these companies profitability isn’t necessarily in jeopardy if things are allowed to continue as they are right now. However, they all recognize the importance of internet content and media, most of which they don’t own and directly compete with. So, in the longhaul, there is a chance that these services could challenge these ISPs’ bottom line, but the real truth is that these companies should be considered utilities, not simply broadband providers. After all, in the end, they enjoy the same competitive protections in the US that many water and electricity companies do and those companies are regulated very heavily. Not to mention the essential nature of internet service in today’s society where most people prioritize their critical needs as power, water, food and internet, with some prioritizing internet over water or food.

So, in the end, the FCC wants to protect themselves politically without slapping any heavy Net Neutrality regulation on these ISPs and still ‘protect’ the “Open Internet” even though they have failed to do so, so far. Ultimately, what needs to happen is that the companies who’s entire business rides on Net Neutrality need to step up and use their lobbying power to squash the influence of these cable and media companies on the FCC. After all, Obama is best friends with Comcast’s Executive Vice President and chief of “corporate communications, government and regulatory affairs, public affairs, legal affairs, corporate administration and community investment.” Essentially, he is their Lobbyist-in-Chief. Which is why Obama’s relationship with him causes such concern about the Executive Branch’s supposed role in checking the power of different branches of the government. Even though, technically, the FCC falls under the jurisdiction of Congress because they are supposedly an independent branch of the government. And since the Congress has been so incredibly dysfunctional they have done almost nothing to actually regulate the FCC effectively. And the members of the FCC are actually appointed by none other than Obama himself and approved by Congress until they can become officers of the FCC. We won’t even talk about the revolving door of members of the telecommunications industry working on the FCC’s panel, including Tom Wheeler. Ultimately, these 5 commissioners may determine the future of Net Neutrality and even more importantly the US economy for decades to come, and that isn’t an exaggeration by any measure.

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