Making Sense of the Net Neutrality Hysteria

I have been asked many times about my take on the “net neutrality debate”. I am a type of person who prefers to dig deep and find the answers or at least understanding from the source and not third-party tweets/updates/rants/diatribes/etc. If you are wondering why I’m so late in responding to this whole conversation (after the vote), it is because I’ve been digging through the 200+ pages from the Net Neutrality Repeal AND the 400+ pages of the 2015 Net Neutrality Regulations.

There are a few key terms that if you’ve not heard these or are not familiar it may be a bit more difficult to engage in the discussion.

  • Title 2 | “Common Carrier” | Net Neutrality — This is basically when the internet is required to become a government utility. (My view: not good)
  • FCC Regulation Control — This is basically allowing the FCC to not allow monopolies to exist (in the government utility scenario above, monopolies CAN exist). These regulations also prevent price-fixing and no collusion and unfair practices. (My view: okay/good)
  • Open Internet Rules | “Bright Line” Rules — This basically establishing rules for no throttling of bandwidth, no blocking of content, and no paid priority content. (My view: very good)

A Little History

Let’s go back to 2005 when the FCC established the Open Internet policy. At this point, the FCC declared that the Internet was still new and there wasn’t really much the FCC could do to set guidelines. In 2010, the Open Internet policy became the Open Internet Rules which many refer to as the “Bright Line”. This was a very good time of growth, protection, and freedoms.

One of the first major speed bumps came in 2014 when Verizon and the FCC when to court. The end result for this court case was that the FCC would be prevented from enforcing the Open Internet Rules against Verizon UNLESS it also enforces the Title 2 reclassification of turning the internet into a government utility. This was a really bad decision from a 3-judge panel that is still having ramifications today.

In 2015, the “Net Neutrality” rules were pushed out and combined the Open Internet Rules which was renamed to “Bright Line” (very good) with the Title 2 Utility Reclassification of the internet (not good).

Finally, a few days ago, the Net Neutrality was repealed and combined the FTC Regulations oversight (good) with the no Title 2 classification of the internet (good) but it also removed the Open Internet Rules (not good).

Why do you think the 2015 Net Neutrality was “not good”?

My rationale has nothing to do with partisan sides and it is not because it included the Open Internet Rules from 2005. It is solely because it included the Title 2 Utility Classification of the Internet. The other aspect of the rules from 2015 that many seem to have missed is the issue that the Open Internet Rules are only provisionally as long as the government can control the Internet by turning it into a government utility. The CRAZY thing is that the Open Internet Rules were already a part of regulations since 2005. So basically, the 2015 Net Neutrality rules were just a repackaging of regulations that ALREADY existed BUT allowed the government to take control of the Internet.

But everyone on the Internet has told me that ISPs are now going to charge me and throttle me now…

As part of the “Net Neutrality” repeal that happened this past week, we reverted back to FCC regulations and oversight. Here are several notes everyone needs to acknowledge are valid and on record.

  • from FTC Privacy Regulations (section 177) – What about protection against online companies stealing your private data?
"Restoring FTC [Federal Trade Commision] jurisdiction over ISPs will enable the FTC to apply its extensive privacy and data security expertise to provide the uniform online privacy protections that consumers expect and deserve."
  • from FCC release (page 83) – But but but… I don’t want to be throttled!!!!
"Many of the largest ISPs (Comcast, AT&T, Verizon, Cox, Frontier, etc.) have committed in this proceeding not to block or throttle legal content. These commitments can be enforced by the FTC under Section 5, protecting consumers without imposing public-utility regulations on ISPs."
  • from FCC release (page 82) – How can we be protected from ISPs who just want to do bait-n-switch shady stuff?
"The FTC's unfair-and-deceptive-practices authority "prohibits companies from selling consumers one product or service but providing them something different," which makes voluntary commitments enforceable. The FTC also requires the "disclos[ur]e [of] material information if not disclosing it would mislead the consumer," so if an ISP "failed to disclose blocking, throttling, or other practices that would matter to a reasonable consumer, the FTC's deception authority would apply."
  • Sherman Act Antitrust Laws, Section 144 … from the FCC release (page 85) – Is there a way to prevent ISPs from conspiring together?
"Section 1 of the Sherman Act bars contracts, combinations, or conspiracies in restraint of trade, making anticompetitive arrangements illegal. If ISPs reached agreements to unfairly block, throttle, or discriminate against Internet conduct or applications, these agreements would be, per se, illegal under the antitrust laws.
  • from FCC release (page 85) – But I want unlimited everything!
"If an ISP that also sells video services degrades the speed or quality of competing "Over the Top" video services (such as Netflix), that conduct could be challenged as an anticompetitive foreclosure."
  • from FCC release (page 85) Isn’t the Internet not a “safe space” for me anymore?
"We also conclude that the Commission should have been cautioned against reclassifying broadband Internet access service as a telecommunications service in 2015 because doing so involved "laying claim to extravagant statutory power over the national economy..."
  • from FCC release But what if an ISP starts behaving badly? (basically, the FCC reserves the right to send ISPs back to Title 2 if they screw up)
"We also reject AT&T's assertion that the Commission should conditionally forbear from all Title 2 regulations as a preventive measure to address the contingency that a future Commission might seek to reinstate the Title 2 Order. Although AT&T explains that "conditional forbearance would provide an extra level of insurance against the contingency that a future, politically motivated Commission might try to reinstate a 'common carrier' classification (reinstate 2015 Net Neutrality Regulations), we see no need to address the complicated question of prophylactic forbearance and find such extraordinary measures [are] unnecessary."
  • a final assurance from the FCC
"Should the hypothetical harms that proponents of the Title 2 imagine eventually come to pass, application of the antitrust laws would address those harms.

So… what’s the summary?

  1. FCC claimed that the 2015 regulations gave the government “extravagant statutory power over the national economy”.
  2. Regulatory oversight of the ISP now includes the FTC (Federal Trade Commission) and unlike the FCC, the FTC can also go after companies for being a monopoly. Internet companies were “protected” against being classified as a monopoly under the 2015 Net Neutrality Regulations, but now…. if you act like a monopoly, the US government (under the FTC) can go after you.
  3. FCC IS enforcing against throttling, censorship, restrictions, etc, by invoking consumer protection and anti-trust laws (via FTC).
  4. If ISPs collectively conspire to paywall a content-provider, they are subject to FTC anti-trust penetration.
  5. FCC repeatedly acknowledges that its new policy is deliberately business-friendly in hopes to increase competition in the market so companies like “Comcast” aren’t the only ones in an area. The FCC acknowledges that potential abuse of this friendliness will result in stricter policy.
  6. The United States has some of the worst Internet in the world because the infrastructure is antiquated and fiber-optic trenching projects keep getting killed. Title 2 Classifications strangles investments, but this repeal that just happened attracts it. Better infrastructure means faster speeds and cheaper service.

But… But… But… There Has to Be Something EVIL About This Repeal!!!

Again, leaving “politics” out of it. There is one major loophole that has been pointed out.

"Many of the largest ISPs have committed to not to block or throttle legal content. These commitments can be enforced by the FTC..."

FTC prevents throttling and blocking because that’s what ISPs are advertising, and they must be held accountable. If multiple ISPs each individually stop advertising it, it’s not immediately clear that the FTC can hold them all accountable for it. However, if the ISPs collude to collectively enact abusive policies, then the FTC can take crippling enforcement. Further, if an ISP paywalls websites, they must explicitly notify consumers. If customers have no alternative ISP and are forced to obey their one ISP’s abusive policies, then the FTC can declare them a monopoly. That would create a MASSIVE mess for the ISP, but it could still happen.

What about that Verizon v. FCC Court Case from 2014?

This is the “stick in the mud”. The DC Circuit court that presided over the Verizon v. FCC case ruled that the FCC CANNOT enforce the open-internet regulations UNLESS they force the ISP to become a Title 2 Utility. This means that in order to enforce Open Internet Regulations the FCC must declare that the company in question must be protected against being declared a monopoly (which would get the FTC involved).

So… in light of the restrictions the 2014 court case has a stranglehold over regulation and enforcement, it is understandable why the FCC needed to repeal the Net Neutrality Regulations from 2015 in order to allow the FTC to get involved in enforcing consumer protection and anti-trust violations.

I Don’t Believe You – Give Me An Example!

  • Comcast decides to throttle Netflix
  • Netflix declares it to be unfair and won’t pay Comcast extra to stream on their connection, so Netflix decides it won’t serve any Comcast customers.
  • Comcast customers get upset they can’t watch Longmire and Stranger Things.
  • Social media goes bonkers.
  • Everyone who can leave Comcast
  • For those that cannot leave Comcast, NOW (with the Net Neutrality Repeal) the FTC (not FCC) can declare Comcast a monopoly and can FORCE and legally bind Comcast to their past promises of Open Internet since there are no competitors keeping them in check.

Conclusion

The FCC, this past week, couldn’t have done any more for the Open Internet due to the D.C. Circuit court’s strangling of the FCC’s jurisdiction. So the FCC said fine, we will bring the FTC (Federal Trade Commission) into play and do what the FCC has been blocked from doing since 2014. NOW, we can truly prevent blocking and throttling because enforcement can actually happen. There was ZERO enforcement allowed under the 2015 Net Neutrality Regulations due to the 2014 court case. But I do have two concerns that I can’t say yet whether they will come to reality:

  1. The possibility still exists that paid-prioritization (bundling internet packages by speed) will emerge in the future, especially if the FTC fails to crack down on monopolies.
  2. The possibility that markets will fail to produce enough competitors to the existing ISPs.

I hope this helps see a way through the hysteria and reactionary partisan shouting that has been occurring over the past few days. I want to thank a number of Reddit, Twitter, Facebook, Google Plus, LinkedIn, Gab, and personal emails that have helped put this post together.

4 Comments:
  1. Excellent summary and explanation, Benjamin. Thank you for offering the issues in a non-political format (as much as possible). I will be referring friends to this article.

  2. This is the best outline I’ve seen of “net neutrality” and what the repeal may/may not mean. It’s not all good, not all bad – just like most things. Thank you for sifting through the documents and laying out a rational analysis, with actual references instead of fear-mongering infographics.

  3. Great work Benjamin, as others may not realize Comcast and Fios have been throttling accounts who only have internet and not bundled services for quite some time now. For instance if you have Dish TV and use Comcast for internet, your dish steaming service slow down significantly. Comcast routinely rate limits all accounts, most people do not realize it. Additionally if your neighbor starts bandwidth “hogging” you get punished as well for it. People hop on a bandwagon in this country just because twitter, facebook and google have search algorithms to push out agendas that they support. I have been talking about this subject for 2 years, finally some of it is being disclosed. You are the voice of reason thanks so much.

  4. Thanks Benjamin for your research and opinions/conclusions.

    Maybe I’m just jaded but my takeaway is that corporate lawyers will be the biggest winners. I really hope that’s not what happens.

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