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Sony Hack Reveals Concerns About Title II In Hollywood

Hollywood executives had grave misgivings about Internet net neutrality regulations according to emails leaked in the Sony hack.

The email exchanges, which are available on WikiLeaks, took place over the course of several months last summer while the Federal Communications Commission was accepting public comments about proposed net neutrality regulations.

The emails indicate Hollywood was apprehensive about the impact the new rules would have on content distribution, and some executives were even dubious of the justifications behind them. Title II “might put up roadblocks on how we distribute content,” Warner Brothers Executive Vice President and General Counsel John Rogovin fretted in an email to Sony regarding the movie industry’s assessment of the regulations.

The FCC, with support from President Barack Obama, voted in February to take the bold step of re-classifying Internet service providers as “common carriers” under Title II of the 1934 Communications Act—a law originally designed to regulate telephone networks. Title II is intended to enforce net neutrality by preventing ISP’s from either blocking legal content or prioritizing certain types of content by charging fees for faster access speeds. (RELATED: FCC Votes in Favor of Net Neutrality)

In the months-long run-up to the decision, tech companies in Silicon Valley lobbied intensively for Title II.

On May 6, 2014, Sony lobbyist Jim Morgan informed colleagues that, “A coalition of Internet companies has asked Sony to join a letter to FCC Chairman Wheeler in support of [their net neutrality lobbying] effort.”

“The Chairman is apparently looking for public demonstrations of support that will provide the necessary political cover for him to move forward,” Morgan noted, remarking that Sony’s participation “would earn us some amount of gratitude.” However, he also pointed out that, “Sony might not want to be associated publicly with some of the coalition members” with whom it has been at odds with over issues like copyright protection.

Leah Weil, senior executive vice president and general counsel for Sony Pictures Entertainment, responded the following day advocating a circumspect approach in light of the disparate effects net neutrality might have on different aspects of Sony’s business.

“Ensuring non-discriminatory practices will allow for businesses such as SNEI [Sony Network Entertainment International] to grow and flourish,” she wrote. “But also makes clear the need to ensure that rules preserve and not dilute the right of content owners such as SPE, SME [Sony Music Entertainment], and SCEA [Sony Computer Entertainment America] to combat illegitimate sites and content.”

That followed a back-and-forth lasting into September, in the course of which Sony executives identified severally problematic aspects of the FCC’s approach to net neutrality. (RELATED: Title II Will Kill Internet Investment, Critics Claim)

Some of the strongest comments were made in July by Spencer Stephens, SPE’s chief technology officer. While observing that, “if the network weren’t congested we wouldn’t be debating net neutrality,” he predicted that simply prohibiting content prioritization would not improve the customer experience.

“The Internet has drawn investment precisely because it isn’t a utility,” he argued. “My expectation is that prioritized services will mean investment in infrastructure which would expand the size of the pipe.” (RELATED: The Consumer Costs of Net Neutrality)

Stephens had words regarding Netflix, one of the most vocal proponents of Title II, saying, “their claims that they have been held to ransom are, IMHO, complete BS.” Netflix had helped catalyze the push for Title II with claims that ISP’s had threatened to slow down delivery of its content unless Netflix agreed to pay a premium to account for the heavy traffic it generates.

“Net Neutrality rules should not apply to content producers … [the] Telecom Act doesn’t give FCC that authority,” concluded Keith Weaver, SPE’s executive vice president of government affairs, in an email sent in September. (RELATED: Goodlatte Predicts $11 Billion in New Taxes, Fees From Net’s New Rules)

In a subsequent follow-up, Weaver added that comments filed by other companies in the entertainment industry “also seem to suggest caution in regulating around these areas and transparency in network management.”

Sony ultimately declined to take a public position on Title II, a decision that may have at least partially reflected Weaver’s (mistaken) prediction that “the FCC is unlikely to do nothing on this issue or reclassify the Internet as a common carrier (despite the public sentiment in support of this direction).”

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