Once more into the net neutrality breach, friends.
In the waning days of the Obama administration, an increasingly activist Federal Communications Commission plunged head-first into regulatory waters that had long been the exclusive domain of non-governmental engineering groups.
The FCC passed or considered rules prescribing specific network management, data collection and use, interconnection and intellectual property procedures, setting retail service rates, preempting state regulation of municipal networks, and even whether mobile providers could continue to offer free data services.
But the most controversial intervention into the Internet’s engineering remains the notorious 2015 Open Internet order, which transformed consumer broadband service from a collection of private networks into a public utility, regulated by the FCC and state utility commissions.
The agency claimed that utility “reclassification” was necessary to enact “prophylactic” net neutrality rules that would ensure network operators didn’t slow or speed up Internet traffic for anti-competitive reasons.
It was a far cry from the days when a far-sighted majority of a Bill Clinton-era Congress declared in 1996 that the policy of the U.S. was to leave the Internet “unfettered by Federal or State regulation.”
The courts, Congress, and now the Commission itself have since restored much of the balance in the Internet ecosystem, undoing many of the most dangerous experiments before they had time to do much damage.
Now, it seems, FCC Chairman Ajit Pai is ready to begin clean-up of the public utility tangle.
Though no proposal has yet been made public, Pai is reported to have held numerous meetings in recent weeks describing his plans to reset the utility decision.
The meetings included industry stakeholders such as the Internet Association, which represents leading content and service companies.
Many of the Association’s member companies here in Silicon Valley have been ambiguous, to say the least, about utility treatment for broadband. Google, Netflix, and others who at one time supported reclassification have since changed their minds, recognizing the risk, as Google’s former CEO Eric Schmidt said at the time, of the FCC “starting to regulate an awful lot of things on the Internet.”
That concern was shared by the Internet Society, the Consumer Technology Association, and other non-partisan engineering groups.
Netflix in particular, recognizing belatedly that public utility regulations for broadband could someday extend to its own non-neutral conduct, reconsidered its advocacy soon after the 2015 Order was passed. It has repeatedly told investors in recent months that it no longer thinks FCC rules are even necessary.
That admission may surprise you. It may also surprise you to learn that broadband providers, who have also been meeting with Pai, are by no means opposed to the Open Internet principles (as the FCC refers to net neutrality) or the Commission’s attempts to enforce them.
AT&T and others, for example, praised the FCC’s 2010 version of the rules, which only Verizon challenged in court and then only on jurisdictional grounds. Verizon, whose business has changed dramatically in the interim, now supports the most recent version. Most leading broadband providers are bound to some version of the rules in any case, as conditions for approval of recent mergers.
The Public Utility Proxy
As these facts suggest, the net neutrality story is by no means the simplistic Internet freedom narrative that characterizes most of the public discussion and press coverage—inflammatory rhetoric guaranteed to reach new heights once Pai’s proposal is published.
That’s because much of the D.C.-based advocacy promoting net neutrality has nothing to do with the network management principle vaguely defined in 2003 by a legal academic, which argued that traffic traveling on the public Internet was not and should not be sped up or slowed down for anti-competitive reasons—a principle no one disagrees with, regardless of how they think it ought to be enforced.
The actual (and only-sometimes admitted) goal of the most vocal inside-the beltway activists and their chief funders in the decade-long net neutrality “debate” has instead been to turn broadband into a government or quasi-governmental service.
(The Ford Foundation did not respond to several requests for comment.)
Open Internet rules and “net neutrality” have simply been their populist shorthand—one easily digested by Internet users and the media.
But recognizing the unpopularity of calls to nationalize wired and mobile broadband infrastructure, especially given the sorry state of our existing utilities, pro-utility forces fixed on net neutrality as their slogan, hoping consumers and reporters don’t look too closely to see what’s really behind the curtain.
Indeed, as ISPs and others in the Internet ecosystem continue to work more closely together to resolve real network management issues, the politics of net neutrality have mutated far from their roots.
“Net neutrality” has become a meaningless term, a proxy for whatever gets the most visceral response from consumers at any given moment. The term is now used interchangeably to mean everything from free speech to democracy itself.
The clearer it becomes that there is already broad consensus on the original meaning and importance of neutrality, it seems, the more desperately pro-utility activists swerve to keep the flight alive, even if it means throwing the interests of actual Internet users under the bus.
As part of the Internet fear-mongering that began soon after Donald Trump’s election, for example, Pai was accused, even before being appointed, of wanting to “kill,” “destroy,” “dismantle,” or “abolish” not just the reclassification order but the Internet itself. Just talking about alternative enforcement mechanisms brings predictably dire warning of the “end of the Internet as we know it.”
The crucial distinction, intentionally buried in these sound bites, is that utility treatment for the Internet and net neutrality are two very separate things.
One can support a prophylactic ban on anti-competitive and other behaviors that actually harm consumers, in other words, but also believe that nationalizing a still-emerging and rapidly changing technology infrastructure into just another decaying water, electrical or transit system is a cure far worse than the disease.
That not-so-subtle difference isn’t likely to get much attention in the next few months. Instead, with their 2015 victory perhaps soon to be undone, utility advocates are ramping up for a full-on Internet tantrum. Pai’s proposal, which isn’t even finished, is already being condemned by those who now at least acknowledge that their true agenda was at best only peripherally about network traffic management.
Rather, as one legal clinician admitted earlier this week, the new net neutrality fight is actually “about whether or not internet access is a utility rather than a luxury.” (Implying these were the only two possibilities.) “If it’s a utility, it needs to be subject to rules, laid out in advance, about availability and quality.”
Regardless, she predicted, whatever Pai does will be a “catastrophe.”
Likewise, another self-described utility activist and former advisor to the previous FCC Chairman now insists that reclassification was essential not to provide a legal foundation for net neutrality rules after all, but as the only protection consumers have against “fraudulent billing, price gouging, and other harmful ISP practices.”
(She doesn’t mention that the Federal Trade Commission had full power to protect against such practices—and did so, until the FCC’s own action in reclassifying stripped its sister agency of authority.)
What also goes unmentioned in the current round of flame-throwing is that an imminent return to net neutrality hostilities was entirely avoidable.
Before the 2015 order, both Democratic and Republican FCC Chairmen had rejected the idea of reclassification, as did a bi-partisan majority of Congress. Tom Wheeler, President Obama’s final FCC Chairman, resisted it until the end. Reclassification had always been considered the “nuclear option” for the FCC—one with potentially fatal economic if not legal defects.
In fact, after a second defeat in the courts for the agency’s efforts to overcome Congressional limits on their authority over broadband networks, Wheeler declared that the D.C. Circuit Court of Appeals had at last provided a legal “roadmap” to get the rules enacted without the need for reclassification—a life preserver he quickly grabbed and set out to utilize.
An actual solution to the net neutrality problem, however, presented utility activists with their worst-case scenario.,
Recognizing that the FCC was poised to pass sustainable net neutrality rules without reference to utility treatment, the activists staged what they themselves described as a “coup,” working with friendly if naïve officials in the White House to craft an alternative proposal, released much to Wheeler’s surprise as “President Obama’s Plan” for the Internet.
The Obama Plan dispensed with any pretense, insisting that in addition to net neutrality rules, broadband Internet service should also be transformed into public utilities.
The White House provided no evidence, however, of the kind of devastating market failures that have historically been seen a prerequisite to nationalizing private infrastructure.
No matter. Blindsided, Wheeler deep-sixed a nearly-complete order that had been carefully drafted to comply with the court’s “roadmap,” and started over. In early 2015, with a bare majority of the Commission’s support, a patchwork alternative was approved that subjected broadband services, as the White House demanded, to the yellowed volumes of federal law originally drafted to control the long-gone Bell telephone monopoly.
Snatching victory from the jaws of defeat, the decade-long campaign to conflate net neutrality rules with public utility authority culminated in the decision to reclassify first, and then use the vast new powers the agency had given itself to re-enact net neutrality rules, more-or-less an afterthought.
Nearly all of the lengthy order’s contents dealt with getting around dozens of legal land mines standing in the way of reclassification and of force-fitting the Internet into the square peg of 1930’s telephone law. In the end, only a few pages were spent on the net neutrality rules themselves.
Fears about the long-term consequences of utility regulation, supported by over a century of research in the economics of public utilities, were shouted down. The agency’s own chief economist at the time referred to the 2015 order as an “economics-free zone”--a nasty surprise for investors who had spent over $1.5 trillion to build new network infrastructure while public roads, bridges, water, power and transit utilities increasingly collapse, fail, or explode, respectively.
Whether reclassification really was the agency’s only option, or whether the cost of utility regulation was even remotely offset by the benefits of FCC enforcement of anti-competition law, was analysis entirely absent from the 400-page decision.
As Pai now takes on the difficult task of unraveling the public utility order, it’s unclear how he intends to continue his longstanding support for the Open Internet principles themselves.
The optimal solution remains Congressional action, such as a bill first proposed in 2014 by Republican leadership, which would have made strong net neutrality rules a matter of federal law.
But Democrats, anticipating they would retain the White House and control of an activist FCC in the 2016 election, saw no reason to negotiate a more permanent solution. That position doesn’t seem to have changed, though now for very different reasons.
In the interim, the next-best solution may be to return enforcement of potentially anti-competitive practices to the Federal Trade Commission, which was cut out of the picture by the FCC as part of its reclassification order. The FTC, the expert agency for dealing with anti-competitive behavior, has long served as cop on the beat for broadband providers as well as other Internet companies, and could return to doing so as soon as the reclassification mess is cleaned up.
Whatever happens next, it won’t be pretty. Or necessary. A confusing new war over Internet governance, more costly and uglier than all the previous fights, wouldn’t be happening at all if Wheeler had been left alone to follow the roadmap provided by the courts.
That would have allowed the FCC and FTC to share authority over broadband. If would have given consumers more protections than they have in nearly any other industry.
But as will become abundantly clear in the next few months, protecting Internet users was never the objective of pro-utility activists, who continue to poison the net neutrality well long after making it politically toxic.
So contrary to what you will soon be hearing, the Internet apocalypse is still not upon us, nor will it be. As the latest net neutrality slogans become ever more incendiary, ask yourself what the real objective is of those calling you to the barricades.
And consider whether you’re really being cast as a freedom fighter, and not simply cannon fodder.