Monday, July 28, 2014

Politics is about to destroy the internet

President Obama and FCC Chairman Tom Wheeler in happier times. Karen Bleier / Getty

The internet as we know it in America is about to fundamentally change, and it's because our politics are too broken to stop it.

On Wednesday, the Wall Street Journal reported that the Federal Communications Commission is about to issue new rules for internet service providers that will allow them to create "fast lanes" of service that will allow companies like Netflix and Amazon to deliver their content faster than competitors. That's a first for American internet policy, and it's strictly against the rules in other countries, particularly in Europe.

Allowing big companies to pay for prioritized access to consumers flies in the face of the internet's egalitarian ideals, which allow anyone or any company free access to a vibrant market free of tolls or restrictions — allow service providers like Comcast and AT&T to start creating artificial barriers to entry, and you make it harder for the next generation of college kids to start the next Facebook or Google. As a whole, the various rules that protect these ideals are generally called net neutrality — they're the rules that say your service provider has to treat all internet traffic equally, and shouldn't be allowed to block, degrade, or enhance access to certain websites or services.

It was actually illegal for service providers to create fast lanes in the US until January, when an appeals court struck down the FCC's 2010 Open Internet rules after a lengthy court battle with Verizon. The 2010 rules were a big deal — President Obama even made the open internet a part of his 2008 campaign platform, saying "I'll take a backseat to no one in my commitment to net neutrality."

But Obama has been firmly in the backseat to the powerful ISP lobby from the beginning. The 2010 rules were the product of a bungled process and political mishandling; service providers claimed that the FCC's original plan to classify internet service as a utility like phone service meant that Obama wanted to "regulate the internet" — an insidious conflation between the freedoms of individual internet users and powerful corporations that was quickly taken up as a right-wing attack line.

As a result, the FCC backed off its original plan for the 2010 rules and instead tried to pull off what was essentially lawyer magic: instead of calling the internet a "telecommunications service," the agency called it an "information service" and tried to apply utility-style rules anyway. Observers like Cardozo Law School's Susan Crawford called the strategy "a house of cards," and Verizon called immediately filed a lawsuit. After two years of wrangling; the court of appeals agreed. Even though the FCC had proven that "broadband providers represent a threat to internet openness," said Judge David Tatel, the agency didn't have the authority to impose the Open Internet order under the "information service" classification. The 2010 rules were struck down, although the FCC was left with the vague power to "encourage broadband deployment" on a case-by-case basis under section 706 of the Telecommunications Act.

That left the FCC with two choices: either it could undergo the bruising fight to reclassify broadband as a telecommunications service — which National Cable and Telecommunications Association CEO (and former FCC chair) Michael Powell called "World War III" — or it could try to find another way to thread the needle and somehow enact net neutrality rules using its power under section 706 without irritating huge ISPs like Comcast and AT&T.

That brings us to now, and the new rules leaked by the Wall Street Journal. New FCC chairman Tom Wheeler has responded strongly to the leaks, saying his proposal "would establish that behavior harmful to consumers or competition by limiting the openness of the Internet will not be permitted," and that he will use his authority under section 706 to ban service provider actions that aren't "commercially reasonable." Here's his summation of the coming rules:

To be clear, this is what the Notice will propose:

That all ISPs must transparently disclose to their subscribers and users all relevant information as to the policies that govern their network;
That no legal content may be blocked; and
That ISPs may not act in a commercially unreasonable manner to harm the Internet, including favoring the traffic from an affiliated entity.

And there's the entire problem. Wheeler's plan, in a nutshell, is to say that service providers can do anything they want as long as it's not "commercially unreasonable" — and that he's is in charge of deciding what's reasonable and what's not. This is regulation by muddle: Wheeler's thrown a new vague term into the mix and declared that vagueness to be power. Instead of fighting the hard fight for the letter of the law, Wheeler's plan is to threaten the industry with a thousand tiny fights to preserve its spirit.

This plan is excellent politics, but terrible policy. It is also doomed.

Wheeler has a long background as a telecom lobbyist; observers from both sides of the debate praise his toughness and ability to get results. He's looking at the situation as it currently stands and deciding whether or not it's worth devoting all of his resources to fighting World War III against a vertically-integrated information behemoth like Comcast, which is currently lobbying like mad to gain approval for its buyout of Time Warner Cable, or getting through this moment and turning his attention to achievable goals, like his upcoming spectrum auctions and wiring the nation's schools and libraries for high-speed broadband.

To be clear, this is a rational decision; when Comcast bought NBC it agreed to abide by the 2010 Open Internet rules until 2018 anyway, and it will extend the rules to Time Warner Cable if that buyout is approved. Assuming that deal happens, Wheeler can kick the can down the road to 2018 with the nation's largest broadband provider beholden to the old rules while holding other providers like Verizon and AT&T at bay with vague threats under Section 706.

The problem is that the internet is so central to our economy and our future that these short-term pragmatic politics aren't enough to protect it — especially not against service providers who have no competition, no fear, and endless legal dollars to spend fighting for what is a guaranteed boost to their bottom line. If you're Comcast, would you rather invest in risky new products that customers might not buy, or in lobbying and litigation that will eventually allow you to simply charge Netflix and Apple and Amazon more money to stream the same videos? If the only check on your power is an ineffective FCC, why wouldn't you push the boundaries as far as you can?

Just last month, Comcast pushed Netflix into paying unprecedented commercial peering fees; Netflix speeds to Comcast customers immediately shot up. No engineering work was required; Comcast just used its brutal size and market power to demand a monetary concession. Why wasn't this a violation of the 2010 rules? Because peering was legally excluded from those rules when they were passed. Somewhere a Comcast lawyer is smiling the sly grin of the long game. If only our policymakers yearned to feel the same satisfaction.

Obama and Wheeler might be winning the battle they can win today, but their deeply political strategy will almost certainly lose the war for the soul of the internet. And when that happens we will all lose something much greater.

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