People + Policy
= Positive Change for the Public Good
FCC Chairman Ajit Pai officially released the agency’s Notice of Proposed Rulemaking (“NPRM”) last week to begin a process intended to undo the 2015 Open Internet Order and roll back vital Net Neutrality protections. The NPRM summarizes Pai’s thinking and sets up questions the FCC intends to explore during the rulemaking process.
Unfortunately, it’s as bad as we expected.
Not only does the NPRM propose to eliminate the FCC’s only viable way to enforce Net Neutrality under Title II of the Communications Act, it specifically suggests elimination of bright-line Net Neutrality rules that prevent ISPs from engaging in paid prioritization, blocking and throttling content and websites.
Yet Pai and his supporters in the cable industry are pretending that they’re not gunning for the Net Neutrality rules themselves. This claim is front and center on the homepage of cable industry front group Broadband for America: “The FCC is not trying to repeal Net Neutrality; it is working on separate regulations called Title II or ‘utility’ regulation.”
This doublespeak obscures two central pillars of Pai’s approach (scattering in a few extra falsehoods along the way, like the inaccurate reference to so-called utility rules, and the repetition of Pai’s constant lies about alleged harms from Title II).
First, taking away Title II as Pai proposes would remove the FCC’s best and only authority for rules against ISP blocking and discrimination. Without Title II, there’s simply no real Net Neutrality possible under current law. As a notable aside, Pai’s proposal to eliminate Title II authority also puts Lifeline broadband offerings in major peril, drawing great concern from racial-justice, civil-liberties and digital-rights groups that care about connecting poor people to broadband.
Second, the NPRM most certainly does propose repeal of the Net Neutrality rules themselves. Through the questions it asks and premises it advances, Pai’s NPRM paints a dark future of an internet entirely controlled by a few large corporations that sell access to it. The NPRM makes it clear that Pai intends to kill the bright-line rules against paid prioritization, throttling and blocking for websites and online services. These rules, and the FCC’s ability to enforce them and adapt them over time, are what keep the internet open and free — not empty promises from cable and phone companies.
Pai intends to undermine the foundation of these rules. He’s said as much in public remarks made even before he opened the record in the new proceeding that’s supposed to inform the agency’s decision.
There’s no good reason for the FCC to return to this issue now. The FCC’s 2015 reclassification of broadband internet access service providers as Title II common carriers in the Open Internet Order is the right reading of the law, and it’s also key to maintaining any effective open internet rules. Going back to the wholly insufficient Title I classification for broadband as Pai wants to do is a recipe for failure. The courts have said it can’t be used as a basis for strong Net Neutrality rules.
The FCC’s current Net Neutrality rules are working. The rules are integral to protecting free speech online and they ensure that people organizing for civil rights, liberties and racial justice can communicate freely online — without interference or censorship from their ISPs.
The Pai NPRM is full of misleading statements and disingenuous questions to make it appear otherwise. And it displays a weak grasp of not just the history and importance of Net Neutrality, but of how the internet works too.
Pai’s Attack on the Net Neutrality Rules Themselves Is Plain to See in the NPRM
However furiously the chairman and the cable companies spin it, there’s no missing the frontal assault on the Net Neutrality rules in this proposal. Here’s what the NPRM tees up and suggests as Pai’s path forward on those rules:
Elimination of the general conduct standard, which prevents “unreasonable interference or unreasonable disadvantage that harms consumers or edge providers” (NPRM ¶ 72)
The FCC’s 2015 Open Internet Order protects a broadband user’s right to communicate over the network without undue interference from the broadband-network owner. This “general conduct” standard is a catch-all intended to prevent unreasonable discrimination by ISPs, even if and when that interference (arguably) falls outside of the three bright-line rules the 2015 order adopted against blocking, throttling and paid prioritization.
There was some debate about the precise contents and contours of the general conduct rule at the time of the order’s passage, but the FCC ultimately said it would examine factors like the impact of any questionable ISP practices on consumers, competition and free speech. Retaining the FCC’s ability to enforce the law in this way is essential to preserving Net Neutrality. To keep the internet open for free expression and economic innovation, the agency must be able to at least assess ISP practices that don’t fit neatly within the categories the bright-line bans lays out.
This does not mean that the FCC has to issue pre-clearance for any new ISP business plan. It simply means that when the free flow of information to internet users breaks down, and the slowdown is not necessarily due to blocking or throttling the user’s connection, the FCC still has a place and a duty to examine the situation.
But Pai’s NPRM proposes “not to adopt any alternatives to the Internet conduct rule” and asks, “Is there a need for any general non-discrimination standard in today’s Internet marketplace?”
The answer should be a resounding yes. Cable and phone companies that sell access to the internet have the ability and the incentive to devise new methods of discrimination that favor their own services. The NPRM’s questioning of the need for such vital protections opens the door to broadband-ISP interference in how their customers access the open internet.
Elimination of the no-blocking rule (NPRM ¶ 80)
The no-blocking rule explicitly prohibits broadband ISPs from “blocking lawful content, applications, services, or non-harmful devices.” This means that ISPs can’t block online applications from their rivals (like Amazon, Hulu, Netflix or the smallest video startup) that might want to deliver video content that competes against the ISPs’ own cable-TV offerings.
It also means that ISPs can’t block applications merely to exact a toll from an app maker, even if that online service doesn’t compete with the ISP’s own voice or video offerings. ISPs also can’t block their customers’ access to news websites showcasing viewpoints the ISP may not like, nor otherwise prevent their customers from reaching websites and accessing lawful content on the internet.
Despite Pai’s insistence that he opposes ISPs’ blocking lawful material online, the NPRM asks “whether a codified no-blocking rule is needed to protect such freedoms.”
The answer, once again, should be yes. Examples of the need for such a rule abound: ISPs have been caught blocking competitors’ applications like Google Wallet in favor of their own mobile-payment services. Comcast has been caught blocking peer-to-peer video services. AT&T blocked FaceTime, Google Voice and Skype. The list goes on. But Chairman Pai seems set on ignoring the problem and eliminating the rule.
Elimination of the no-throttling rule (NPRM ¶ 83)
As the NPRM states, “the no-throttling rule mirrors the no-blocking rule and bans the impairment or degradation of lawful Internet traffic.” Yet Chairman Pai tees it up for elimination anyway, asking whether this rule prevents ISPs’ “future innovative, pro-competitive business deals that would not by themselves run afoul of merger conditions or established antitrust law?”
Just like outright blocking of content, slowing down a customer’s access to a particular website or service would gravely inhibit that person’s access to the content of their own choosing. It’s understandable that ISPs might want to line their pockets and pad their bottom lines by resorting to such tactics, but that doesn’t make such practices “innovative” or “pro-competitive” for the rest of us. Just the opposite.
There are many practices that don’t run afoul of antitrust law — think of the cable-TV business model, for example — yet severely limit user choice, or drive up the price to access particular types of content. And antitrust enforcement is an exceedingly expensive and time-consuming undertaking at best, in which the operator of the throttled website or app would have to show that it was a competitor to the ISP’s own service offerings. With all of those hurdles to surmount, most startups and new applications would have no chance to save themselves from throttling.
Elimination of the no paid-prioritization rule (NPRM ¶ 85)
In the 2015 Open Internet Order, the FCC banned ISPs from favoring the internet traffic of websites or applications willing to pay for such prioritized treatment. (It also banned ISPs from prioritizing the delivery of their own traffic or that of their affiliates, meaning that Comcast can’t prioritize the delivery of NBC content it owns.)
This is the rule that keeps the internet a level playing field. It allows a small Spanish-language online video service to compete for viewership with the likes of the broadcast networks (Comcast also owns Telemundo) or YouTube. With the wave of consolidation over the past few years, the danger of paid prioritization turning the internet into a glorified cable system is even more dire. ISPs own huge content and media companies. Being able to prioritize their own content over anything else available online would allow cable companies to reap huge dividends at internet users’ expense.
Yet the NPRM asserts that this ban “address[es] an apparently nonexistent problem,” failing to recognize that rules preventing this kind of behavior are the only reason the problem hasn’t manifested as it would under Chairman Pai’s laissez-faire framework. In fact, in its 2013 court challenge to the Net Neutrality rules, Verizon admitted that “but for” the existence of those protections, the company would explore the very kind of paid-priority arrangements the current rules ban.
In the end, while the NPRM resorts time and again to suggesting that there’s no proof of harm from internet blocking, throttling and slow lanes, it’s Pai’s proposal that lacks proof and real-world examples. The NPRM muses about hypothetical “pro-competitive or pro-consumer paid prioritization arrangements” but is silent when it comes to providing examples of such practices.
Elimination of the enhanced transparency rule and all transparency rules (NPRM ¶ 89)
In 2015, the FCC bolstered its existing transparency rules for broadband providers and mandated additional disclosures on prices, data caps, network performance characteristics and other information. Despite Chairman Pai’s paeans to transparency, the NPRM questions whether the rule “remains necessary in today’s competitive broadband marketplace.”
Now, not everyone would agree with the FCC’s rosy assessment that the broadband marketplace is very competitive. In fact, just over a year ago, when he was still in the minority at the FCC, Pai suddenly admitted that ISPs weren’t deploying broadband in a timely fashion to everyone in the United States. Now that he’s been the chairman for four months, apparently everyone magically has lots of choices when they look for options other than the local cable monopoly.
Pai’s flip-flopping aside, it’s a big problem that the FCC has seriously proposed eliminating not just the so-called “enhanced transparency” rules that require disclosure of information on promotional rates, hidden fees and other limitations. This NPRM proposes eliminating any transparency rules whatsoever, trusting that cable and telephone companies’ legendary customer service will give people all the information they need.
It should go without saying that baseline transparency rules are essential to internet users at the point of sale and during the lifetime of the customer contract. But these rules serve other purposes too. Consumer advocates and watchdogs can’t file complaints if they don't have access to information about broadband-ISP practices. Without the FCC guaranteeing the availability of this information, consumers and their advocates would be left in the dark about the nature of the services they purchase.
Elimination of broadband-privacy authority (NPRM ¶ 66)
Earlier this year, congressional Republicans passed and President Trump later signed a bill that dismantles the FCC’s 2016 broadband-privacy rules. Those rules prevented broadband ISPs from using, selling or sharing personal information like web-browsing histories without first getting their customer’s consent.
Even without those rules in place, the responsibility to protect the privacy of broadband customers remains with the FCC under Title II. And Chairman Pai himself suggested that even after Congress overturned those rules, the FCC still had the statutory mandate to enforce broadband privacy.
That was a convenient excuse for Pai in the moment, as he and members of Congress in his party rightly took the heat for eliminating those privacy rules. But now Pai proposes abandoning that mandate and letting other agencies police the practices of companies that carry internet traffic.
Pai’s proposal would punt all internet-privacy oversight to the FTC, an agency with limited resources and no rulemaking authority. What’s more, the FTC can only respond to a company’s violations of its own tailor-made privacy policies. That’s a recipe for dismantling privacy protections, not enhancing them.
Pai’s Attack on the Fundamental Underpinnings of the Net Neutrality Rules Is Based on Dishonest Reasoning.
There’s no mistaking the NPRM’s direct attacks on the existing Net Neutrality rules. But it also goes after the legal foundation for the rules: Title II of the Communications Act.
Removing Title II authority and once again putting the FCC’s broadband jurisdiction on shaky ground would serve the same purpose as a more direct repeal of the Net Neutrality rules. It would make them unenforceable for broadband-internet users and innovators whose rights ISPs have repeatedly violated in the past. And it would put the FCC on the path to yet another loss in court just two years after the agency finally got it right with the 2015 Open Internet Order.
The NPRM justifies its assault on the Title II legal framework with an assortment of mischaracterizations about that 2015 order, the history of the open internet, and the health of broadband internet access providers since reclassification. Here are just three of the places where the NPRM goes wrong in a major way.
The FCC’s 2015 Open Internet Order didn’t place ISPs under utility-style regulation (NPRM ¶ 23)
Pai’s desire to mislead people about the current Open Internet framework is evident right off the bat. In just its third paragraph, the NPRM suggests that the FCC “decided to apply utility-style regulation to the Internet,” which “represented a massive and unprecedented shift in favor of government control of the Internet.” That’s nonsense on several levels, with no basis in fact or in the law, yet the Pai FCC insists on repeating this meaningless mantra as the sole justification for this whole proceeding.
Far from government control of “the internet,” the FCC’s 2015 decision reestablished a light-touch framework for protecting broadband users’ access to the internet. The wires in the ground and the wireless channels people use to connect to the internet are vital pathways to all of the content on it — but your broadband connection isn’t the same thing as a website you visit or an application you use online (more on this below).
In any case, you won’t find the term “utility-style regulation” in the Communications Act. It’s a ridiculous throwaway insult that cable lobbyists cooked up in their (largely failed) attempt to portray internet access as something other than an essential service. But to the extent that the term means anything, the FCC isn’t engaging in “utility-style” regulation. For instance, the agency isn’t setting broadband rates, requiring carriers to file their pricing plans and terms of service with the agency in advance, or requiring broadband providers to serve all customers within their service territories.
Plain and simple, returning to Title II was the correct interpretation of the law. The FCC’s 2015 order classified ISPs as Title II “common carriers” because broadband internet access service is what the Communications Act defines as a “telecommunications service.” It offers people the capability to transmit information of their choosing between the points of their choosing.
Those are the rights that the Net Neutrality rules implement. These rules simply allow internet users to access sites, apps and content of their own choosing without undue interference from their internet service provider.
The FCC’s reclassification decision restored the agency’s congressionally granted authority to ensure that ISPs can’t block, slow down or privilege some types of content over others based on content providers’ ability to pay. Reclassifying under Title II put those longstanding principles of internet openness on firm legal footing, based on the statutory prohibition in Title II against unreasonably discriminatory common-carrier practices. The appeals court asked to review the FCC’s 2015 reclassification decision has ratified it again and again. There’s simply no good reason for Chairman Pai to revisit it now.
Title II reclassification hasn’t decreased ISP infrastructure investment (NPRM ¶ 44)
The NPRM makes the same misleading claims about falling broadband investment that Chairman Pai has repeated elsewhere. There’s little need to dwell on this topic here, as Free Press has (quite literally) written the book on the flaws in Pai’s investment analysis.
Despite the NPRM’s evidence-free claims, reports from publicly traded ISPs show that their investments have increased by 5 percent in the two years since the FCC reclassified broadband-internet access. Comcast’s capital expenditures are up 26 percent since the FCC reclassified; T-Mobile’s are up by 13 percent. Cable operators across the board have seen nearly a 50 percent increase in their core network expenditures in that time period.
But these aggregate numbers are actually a pretty poor measurement of how the market and the individual ISPs in it are faring. Investment in broadband is cyclical, and companies invest more or less depending on the demand for their services and where they are in their upgrade cycles to meet that demand.
A closer look at the financial disclosures these companies make paints a fuller picture of how healthy their investments and their profits have been in the wake of the FCC’s reclassification decision. And you don’t have to take our word for it. AT&T’s CEO Randall Stephenson told investors as much in his speeches.
When asked about AT&T’s capital investments in 2015, long after reclassification, Stephenson said quite clearly that the company was going to “deploy more fiber” even as the “capital requirements [to do so] are going down.” In other words, AT&T’s capabilities and speeds were going up even as its costs were going down. That sounds like good business to most people, but Chairman Pai ignores that reality in favor of his fables.
The truth is that by the time of the 2015 Open Internet Order, AT&T had started to realize the efficiency gains of its just-completed investments. And when asked point blank about the Net Neutrality rules’ impact on AT&T’s business plans, Stephenson told investors that there had been no such impact.
Net Neutrality has been longstanding U.S. policy (NPRM ¶ 6)
Chairman Pai insists that common carriage for internet-access providers, and strong Net Neutrality rules based on that classification, are novel principles the Obama administration and former FCC Chairman Tom Wheeler dreamed up. But the United States has always recognized a distinction between communications networks and the information carried on them.
The NPRM badly misreads the history of U.S. communications law and the FCC’s Computer Inquiries proceedings. In this series of decisions, the FCC drew a clear separation between the access network and the services that use that network. In 1980, the FCC ruled that services offering transmission capability over a communications path should be considered basic services and subject to common-carriage rules under Title II of the Communications Act.
Congress codified this distinction between the network and the content on it when it updated Title II with the Telecommunications Act of 1996. The wired phone network that provided the platform for dial-up internet service providers like AOL fit easily within the updated “telecommunications service” definition in Title II. So too did wireless networks and cable systems.
This was all called into question in 2002 when then-FCC Chairman Michael Powell wrongly reclassified broadband internet access as a Title I “information service” — blurring the long-held distinction between the network itself and the content and services that flow over it.
Powell’s decision, and those of his successors in the Bush administration, ultimately paved the way for cable companies to begin experimenting with blocking and throttling of websites and online content. The open-internet “principles” that the FCC adopted in 2005 were struck down for lack of proper authority. Pai’s NPRM mentions these principles, then brushes past the inconvenient truth that an appeals court tossed them out in 2010. The same fate befell the FCC’s 2010 rules because they were grounded on Title I.
Yet despite the FCC’s past floundering on the authority question, we’ve always had in place some form of explicit protections — either based on the presence of common-carrier nondiscrimination laws, Net Neutrality “principles,” or both. Telephone networks couldn’t block content and services, including dial-up internet-access services, before the Bush FCC’s series of wrongheaded classification decisions beginning in 2002. Neither could cable or wireless providers, at least according to the Title I principles and rules the FCC adopted before those efforts were struck down in court.
This long history shows that far from being a novel Obama-era invention, network openness and Net Neutrality have been foundational principles at the FCC since the beginning of the information age. Chairman Pai threatens to reopen a decade’s worth of litigation over the proper authority for rules when he knows they can’t be supported under Title I of the Communications Act.
And maybe that’s the whole point. Pai wants to pretend that he’s preserving the open internet, but he’s made up his mind to dismantle the rules that protect it and the foundation on which those rules stand.
People + Policy
= Positive Change for the Public Good