Yet Another Net Neutrality Opinion

The term “net neutrality” refers to two different aspects, and the debate revolves around both of them. One part refers to priority treatment of some types of traffic over other types. Pure net neutrality would state and require that all traffic be treated equally. The other part involves access to all of the Internet regardless of which Internet Service Provider is used. In other words, net neutrality as an ideal requires that an Internet Service Provider cannot block access to its competitors’ sites. I have heard and read so much on this topic that I needed to find a way to synthesize my research, and this post is the result.

WHAT IS WHAT

First, four terms need to be defined in how they are affected by anything that does or does not get done on this issue. The first is pretty obvious, End User. An End User is you or me, anyone who consumes content using Internet services, regardless of how the content is delivered (it doesn’t matter if you use cable, DSL, your smartphone, or satellite internet services). An Edge Provider could also be you or me, IF we produce content that is consumed by other people. YouTube.com is certainly an Edge Provider. Facebook, Netflix, and Google are all Edge Providers. They PROVIDE content that End Users consume. A Broadband Provider is your Internet Service Provider, unless you are using dial-up services.  Dial-up service is not the same as Broadband. Cable, DSL, Satellite, and your smartphone’s carrier data service all fall under this description of Broadband Provider. Finally, the Backbone Network is that behind-the-scenes network that is interconnected across the world that picks up the data passed from your ISP and transmits it over fiber-optic lines to the ISP of the person or server receiving that piece of communication you initiated or requested.

VOICES HEARD

In no particular order, the most vocal of the players at this table include House Minority Leader Nancy Pelosi, The Internet Association, which represents major Internet companies like Netflix, Google, Facebook, and eBay, Verizon, AT&T, Comcast, Public Knowledge, Fight for the Future, Senetor Ed Markey from Massachusetts, Representative Henry Waxman from California, and somewhere around 105,000 petitioners (Johnson).

LET’S TALK ABOUT TITLE II

One of the phrases that is tossed around with abandon is “Title II.” It refers to Title II of the Communications act of 1934. Broadband providers are currently regulated under Title I, which covers “information services.” Title II covers “communication services.” A January 2014 decision by the District of Columbia circuit court (download a pdf of the decision here or read it online here) determined that  the Federal Communications Commission (FCC) doesn’t have the authority to regulate behavior of the providers; in fact, the FCC doesn’t have the authority to do much of anything under the current Title I standing of ISP’s. We saw that under Title I, any strong rules that the FCC may make will likely be struck down in court. Any that survive will have very little impact on protecting an open internet (Net Neutrality).  For that reason, some groups and a significant contingent of individuals are calling for a reclassification of broadband providers to Title II entities, (Berkman) which covers phone companies and cellular companies; basically, Title II covers telecom services (Fung). Under Title II, common carriers cannot make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services (Berkman); Title I is lacking that language. Two of the FCC Commissioners, Ajit Pai and Michael O’Reilly, believe the Commission does not have the authority or scope to regulate Internet connections in any of the ways that a net neutrality proposal would intend to do (Cox).

In May of 2014, the FCC proposed a “lanes” system–specifically, a fast lane for traffic that required it or that the Edge Providers were willing to pony up money to the ISPs to treat with priority access. The proposal passed by a 2-3 vote in the Commission, but in congressional hearings, it met with significant disfavor, and users also voiced displeasure. Since that time, two of the three Commissioners who voted in favor of it have changed their positions. (Cox)

TITLE II–PRO

The concerns of the pro-Title II faction are several, one being that if no action is taken, the FCC could become marginalized in its authority over communcations (Fung). Some legislators, End Users, and Edge Providers have also expressed concern that without taking proactive measures, an ISP could prevent its customers from visiting some websites, provide slower speeds for services like streaming video or audio, or possibly redirect users from one website to a competing website favored by the ISP. Without action, the players say, companies could purchase priority access and then pass the costs of that access along to consumers (Net Neutrality). The proposed rules would prevent these issues by requiring providers to connect users to all lawful content on the Internet equally, without giving preferred treatment to some sites or services (Net Neutrality).

BUMPY ROAD

This game includes no slam-dunks. Neither the FCC nor the Broadband Providers have any reason to anticipate an easy road. We should expect ISPs to argue that the FCC hasn’t provided a reasoned basis for reclassification, a challenge they would likely lose. The FCC would need to be able to explain why they only want to reclassify only Broadband, and why to do the reclassification at all (Gross).

Moving forward with a Title II reclassification is said to prevent ISPs from giving “fastlane” treatment to certain sites while slowing down competitors’ traffic (Roberts). (It is worth noting that two attempts to use other laws to accomplish this have failed. (Roberts) However, it would turn telecoms into public utilities, which introduces objections and obstacles that have not gotten the attention they deserve.

TITLE II–CON

The Telecommunications Act was written in the 1930’s, and suffered some revisions along the way (Title II). The FCC does have power to suspend certain rules; this power is called Forbearance (Title II). Just since 1996, there have been 141 petitions for forbearance; the average time for disposition of a petition is 372 days (Title II). Of those 141 petitions, 68 were either dismissed, denied, or withdrawn, 23 were denied in part, and 44 were granted in full (Title II). A decision on forbearance can be reversed. The section labeled Title II contains 16 rule parts, 111 subparts, 682 pages, 987 rule sections, and more than a thousand subsections, any of which could raise a forbearance petition. The current Title II provisions on the law and forbearance do not allow for a ruling that would regulate the SERVICE and the CARRIER but not the TRAFFIC (The Multi-Billion), so under the Act as it stands, it wouldn’t really do what the proponents want it to do. The proposal also includes wording like “reasonable” and “case-by-case,” giving no clear guidance as to how the providers, producers, and consumers, could expect the rules to be enforced (Kaminsky).

Turning telecoms into public utilities would grant to the federal government the power to regulate rates, rather than letting the market set them (Powell). Lack of market input tends to reduce incentive for improvements, as we’ve seen with other public utilities like water and sewer systems (Roberts). Europe has strict Internet regulations, and is serviced largely by a DSL-type model. Despite the speed advantages Europeans enjoy, they have produced almost no significant Internet companies (Downes).

State governments would gain the power to impose new taxes on Internet access (Powell), a cost not exposed to much discussion. Under current rules, there are no fees and taxes imposed on the Internet (Powell). Tom Schatz, President of Citizens Against Governm Waste, said that “…net neutrality rules will not be neutral with it comes to taxpayers. Any new federal regulatory role will necessitate a giant and expensive bureaucracy, whose employees will serve as the Internet police (CAGW).” Google-YouTube estimates that this shift to Title II would cost them between $5.7 billion and $16.4 billion each year (The Multi-Billion)–costs that would, of necessity, end up being passed on to the consumer. And instead of the heavy-users paying the cost that their use incurs, rates will be regulated by the government, thereby raising rates on ALL users (Kaminsky).

Regulations can be costly, and they can discourage new players. The advantage is always to the incumbents, who know how to play the system and navigate the rules. Fresh faces spend a lot of time and precious startup dollars figuring out what rules apply to them and what those rules say they aren’t allowed to do (Powell). The process is already fraught with politics. Says CAGW’s Tom Schatz, “Before the FCC has even gaveled the meeting to order, special, politically-driven carve-outs are reportedly being negotiated behind closed doors (CAGW).” Players would be applying for waivers along the lines of the Affordable Care Act (Hayward).

The Internet is currently un-regulated and un-metered. A reclassification to Title II will change internet traffic into regulated, metered traffic (The Multi-Billion). Approximately 10% of users consume 80% of bandwidth (Kaminsky), and many Internet content and apps providers originate (produce and push OUT ONTO the Internet) much more traffic than they terminate (consume and PULL IN FROM the Internet) (The Multi-Billion).

Moore’s Law, first articulated in 1965, posited that computing power doubles every 12-18 months, with prices falling proportionately. Internet companies have seen low entry costs and rapid scaling. Core components continue to grow faster, cheaper and smaller, and in the history of industrial economies, this is the first time a core commodity has behaved that way. In 1996, if you can remember using Internet services back then, 56kbps was top speed, and compared to the prices and speeds today, purchasing access at that speed was no bargain. It wasn’t long after that time that the advocates of the public-utility model began expressing concern that the dominant players (like AOL and GeoCities) would have power to prevent then-beta Google Search from achieving relevance (Downes). Capital markets tend to reward less-regulated industries with their investment funding as well (Powell).

The proponents of Title II reclassification–and of net neutrality rules in general–express concern over what they identify as a lack of competition among providers. Choices for Internet access do exist, though. In most markets consumers have at least two wired options (even if that’s just one cable provider and one DSL provider, that’s still two choices, and FIOS is expanding those choices further), and four or more wireless providers (Downes). The danger of turning to Title II is that we as users will be exchanging the choices we have now for a government rule as to how traffic should be managed (Kaminsky). Cato Institute adjunct scholar Timothy Lee advises, “The real risk is that you end up with bureaucrats rather than entrepreneurs making technical and business decisions about how networks will work (Kaminsky).”

Additionally they fear that providers have the ability to block some sites and redirect traffic to their preferred sites, but no evidence has been produced to indicate that as a genuine possibility (Hayward).

Net neutrality rules would force providers to treat simple, one-page blogs the same way they handle streaming media–or worse, treat streaming media the way they handle simple, one-page blogs. Voice-Over-IP phone traffic would suffer as well, because under the same rules, voice traffic is data traffic, and has no more preferred status over those simple, one-page blogs (Hayward).

 

MY TAKEAWAY:

I don’t see any real evidence of a problem that needs fixing. President Obama has stated that the Internet has become essential to our way of life. While I don’t disagree with that sentiment, I do agree with this one from Larry Downes in Harvard Business Review: “Surely it has, but it is a very strange kind of regulatory logic that concludes that when a technology is wildly successful due to a carefully considered decision not to overregulate it, it suddenly requires intensive government oversight (Downes).”

Title II is bad for the Internet, bad for innovation, bad for producers, bad for carriers, bad for providers, and bad for you and me.

 

WORKS CITED:

Berkman, Fran. “Title II is the key to net neutrality–so what is it?” The Daily Dot. 20 May 2014. 10 December 2014. <www.dailydot.com/politics/what-is-title-ii-net-neutrality-fcc/>.

Cox, Kate. “Newest Critics of FCC’s Net Neutrality Plan: the FCC Commissioners Who Voted For It.” Consumerist. 25 September 2014. 10 Dec 2014. <consumerist.com/2014/09/25/newest-critics-of-fccs-net-neutrality-plan-the-fcc-commissioners-who-voted-for-it>.

“CAGW to FCC: Net Neutrality Rules are a Bad Solution in Search of a Non-Existent Problem.” Electronics Business Journal. (2009): 419. ProQuest. Web. 10 Dec 2014. <http://proquest.umi.com/pqdweb>.

Downes, Larry. “Why the Public Utility Model Is the Wrong Approach for Internet Regulation.” Harvard Business Review. 11 November 2014. 12 December 2014. <https://hbr.org/2014/11/why-the-public-utility-model-is-the-wrong-approach-for-internet-regulation>.

Fung, Brian. “Here’s how net neutrality can still survive.” WashingtonPost.com. 15 January 2014. 10 December 2014. <www.washingtonpost.com/blogs/the-switch/wp/2014/01/15/heres-how-net-neutrality-can-still-survive/>.

Gross, Grant. “Net neutrality: Reclassifying broadband would be a long road.” PC World. 28 May 2014. 10 Dec 2014. <www.pcworld.com/article/2236980/net-neutrality-reclassifying-broadband-would-be-a-long-road.html>.

Hayward, John. “Net Neutrality for Dummies.” Human Events. 30 April 2012: 14. ProQuest Web. 10 Dec 2014. <http://search.proquest.com/docview/1325588513?accountid=34664>.

Johnson, Ted. “Netflix Makes Case for Rigorous ‘Title II’ Approach to Net Neutrality.” Variety. 16 July 2014. 10 Dec 2014. <variety.com/2014/biz/news/netflix-makes-case-for-rigorous-title-ii-approach-to-net-neutrality-1201263425/>.

Kaminsky, Ross. “Net ‘Neutrality’ Would Mean Government Theft.” Human Events. 5 October 2009: 16. ProQuest. Web. 10 December 2014. <http://search.proquest.com/docview/235935192?accountid=34664>.

“Net Neutrality.” Public Knowledge. 10 December 2014. <https://www.publicknowledge.org/issues/ netneutrality>.

Powell, Michael K. “Guest: The FCC is stuck in the past when regulating the Internet.” Seattle Times. 10 November 2014. 12 December 2014. <seattletimes.com/html/opinion/2024989416_ powellopedfccinternet08xml.html>.

Roberts, Jeff John. “Title II is the only path to net neutrality, Here’s why almost nobody thinks the FCC will take it”. GigaOm. 24 July 2014. 10 December 2014. <https://gigaom.com/2014/07/24/title-ii-is-the-only-path-to-net-neutrality-heres-why-almost-nobody-thinks-the-fcc-will-take-it>.

“The Multi-Billion Dollar Impact of FCC Title II Broadband — for Google & entire Internet ecosystem.” Net Competition. 10 December 2014. <www.netcompetition.org/congress/the-multi-billion-dollar-impact-of-fcc-title-ii-broadband-for-google-entire-internet-ecosystem>.

“Title II: Net Disaster, Not Net Neutrality.” NCTA. 10 December 2014. <https://ww.ncta.com/titleII>.