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FCC and Congress Work to Roll Back Net Neutrality

In the United States, “net neutrality” has long been one of the guiding principles of the Internet. It means that ISPs like Comcast, Time Warner, and Verizon should treat all legal Internet use with equal priority — no playing favorites. Reasonable network management was allowed — ISPs could make quick, operational decisions to work around abuse, illegal use, or problems — but ISPs couldn’t downgrade or block particular applications (like Netflix or BitTorrent) or treat traffic from their preferred business partners (like Sony or Microsoft) better than anyone else.

Yet, net neutrality had no solid legal foundation in U.S. law and regulation for most of the Internet’s history. The Federal Communications Commission first tried to set out net neutrality principles in 2005, but by 2007 they were struck down as unenforceable by a Comcast court challenge. The FCC tried again with 2010’s Open Internet Order, but in 2014 that too was successfully challenged in court, this time by Verizon (see “Net Neutrality Is Down, but Not Out,” 20 January 2014).

So in 2015, the FCC pulled out its big gun and reclassified both traditional and mobile ISPs as “common carriers” under Title II of the Communications Act of 1934 (see “FCC Goes All-in on Net Neutrality,” 7 Feb 2015). The FCC can tell common carriers what to do, and the agency essentially told them they had to abide by net neutrality principles and not play favorites with Internet traffic. Of course, ISPs took the FCC to court (again), but this time they lost. The FCC’s authority to declare ISPs common carriers and mandate net neutrality was upheld in 2016, and that decision was effectively reaffirmed just this week.

So the irony now is that the FCC, under a new chairman aligned with the Trump administration, is moving fast to undo the net neutrality framework that has been upheld by the courts. Furthermore, the Republican-controlled Congress is moving to strip the FCC of the authority it used to create that legal foundation in the first place, so in the future the FCC would not have the authority to “redo” the “undo.” And it’s all being done in the name of “restoring freedom.”

What The FCC Proposes — Under new commissioner Ajit Pai (who was originally appointed to the FCC by President Obama in 2012), the FCC is proposing once again to reclassify ISPs as “information services” rather than common carriers. This would effectively undo the legal framework under which the FCC successfully implemented net neutrality regulations.

Admittedly, today’s Title II regulatory requirements for common carriers weren’t born in the Internet age: the concepts come from freight operators in the early 19th century and were later applied to telegraph and phone companies in the 1930s and the Ma Bell monopoly in the 1980s.

But reclassifying ISPs as “information services” would mean that they’d be free to degrade or block any traffic on their network that they dislike (such as that of competitors), as well as introduce paid prioritization schemes (often called “fast lanes”) whereby they charge major Internet firms like Amazon, Netflix, Google, Facebook, Microsoft, and Apple for preferred, unfettered access to their networks and customers.

Do We Need Net Neutrality? — During his time at the FCC, Chairman Pai has consistently characterized net neutrality as a solution looking for a problem, noting that in all the years American ISPs were operating without any enforceable net neutrality regulations, there was no evidence of widespread, systemic harm to consumers or their privacy. Chairman Pai — and most ISPs — argue it’s simply contrary to ISPs’ interest to block or degrade traffic, even that of their competitors. After all, consumers expect an open Internet, wherein they can access any lawful content from any network. If ISPs hindered that, they would be less competitive and consumer
backlash would harm their businesses. In short, Pai feels market forces will handle net neutrality better than government regulation.

Pai also claims that eliminating Title II classification will boost broadband deployment and competition in the United States by removing hurdles and enabling major ISPs to open up new revenue streams through business practices like fast lanes. More competition and more revenue will attract even more investment, accelerating Internet development. Since the Title II classification went into effect in 2015, Pai claims the 12 largest ISPs have scaled back broadband investment by $3.6 billion, and nearly two dozen small providers have slowed or halted development. Of course, additional investment will, in theory, also create jobs — one of
the chief aims of the Trump administration.

Net neutrality advocates would argue Pai’s claims don’t hold water. For instance, Pai’s proposal offers no evidence that the 2015 Open Internet Order’s prohibition on blocking or throttling of Internet traffic has harmed users. (The FCC, nonetheless, is now asking for any examples.)

ISPs have deliberately degraded lawful Internet traffic in the past. The last decade of debate over net neutrality kicked off in 2007 because Comcast deliberately blocked and degraded BitTorrent traffic. In 2014 Verizon and Comcast deliberately allowed Netflix’s performance to degrade at peering points until Netflix paid for preferred access.

One could argue the reason more ISPs didn’t try things like that was because the legal landscape was unclear under previous net neutrality regimes. Under Pai’s “Restoring Internet Freedom” proposal, however, the landscape would be clear: basically, ISPs would have the freedom to do anything they liked.

The argument that competition and consumer backlash stand in the way of ISPs blocking or degrading popular services can also be questioned. In 2016 the FCC itself found that 10 percent of Americans lack access to modern broadband (defined as 25 Mbps downstream, 3 Mbps upstream), with those numbers increasing to 39, 41, and 66 percent for rural Americans, tribal areas, and U.S. territories respectively. Even when consumers have access to broadband, the Center for Public Integrity in 2015 found most Americans have only
one or two choices for service
since ISPs appear to divide up territories to avoid overlap. Although these figures represent improvements over previous years — and mobile Internet is a major factor in many areas — it would be difficult to describe broadband competition as vigorous or effective in many U.S. markets.

Further, Commissioner Pai doesn’t want the FCC regulating ISP business practices. He sees the Federal Trade Commission (FTC) being the appropriate agency to deal with any complaints of anticompetitive behavior or consumer privacy violations amongst ISPs (for more on Pai’s philosophy, see “Congressional Republicans Kill FCC ISP Privacy Rules,” 3 April 2017).

And Congress Too? — The chairmanship of the FCC isn’t the only thing that changed with the 2016 election: the Presidency and the United States Congress are now controlled by the Republican party. From the Republican point of view, undoing the 2015 Open Internet Order is a good start. However, if there were a change in presidential administration — say in 2020 or 2024 — the FCC could, in theory, just hit “redo” on the 2015 Open Internet Order and reclassify ISPs as common carriers again! The agency’s legal authority to do so would remain intact.

So, Senator Mike Lee (R-UT) has introduced the “Restoring Internet Freedom Act.” The full text isn’t yet available, but the gist is that it would strip the FCC of the authority to reclassify ISPs as common carriers. The bill enjoys some high-profile co-sponsors like former Republican presidential candidates Ted Cruz and Rand Paul, but still has to wend its way through Congress.

What Happens Next? — The FCC will vote on the Restoring Internet Freedom NPRM (Notice of Proposed Rulemaking) on 18 May 2017; once that’s done, the proposal will remain open for public comment until 17 July 2017, followed by a month-long reply period. The 2015 rulemaking proposal attracted so many comments that the system crashed several times; however, the FCC says they’ve upgraded their systems (and even have an API for taking comments in bulk), so perhaps the commenting system will behave better this time. Or not — comedian John Oliver’s segment on net neutrality, complete with a custom link that redirected to the FCC comment page, encouraged so many comments that it took the FCC site down again once already. Click the +Express link to add your comment.

However, the writing is on the wall: Commissioner Pai has the votes to roll back the FCC’s 2015 Open Internet Order. The real question is what sort of regulatory framework, if any, will replace it. Any rollback of the 2015 Open Internet Order will almost certainly be challenged in court by net neutrality advocates. However, they probably have an uphill fight, as courts have almost always deferred to the FCC on common carrier classifications.

In the meantime, expect ISPs to start experimenting with new business models. These will likely include paid prioritization, granting partners exemptions to any data caps, impeding top-tier services that refuse to ante up, and potentially blocking or limiting access to any sites, apps, or services they believe to be disruptive to their operations.

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