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The FCC voted to repeal net neutrality rules today in a 3-2 vote along party lines. These are the statements from two pro-repeal Republican members of the Commission, Chairman Ajit Pai and Commissioner Brendan Carr.
FCC Chairman Ajit Pai:
STATEMENT OFCHAIRMAN AJIT PAI
Re: Restoring Internet Freedom, WC Docket No. 17-108.
The Internet is the greatest free-market innovation in history. It has changed the way we live, play, work, learn, and speak. During my time at the FCC, I’ve met with entrepreneurs who have started businesses, doctors who have helped care for patients, teachers who have educated their students, and farmers who increased their crop yields, all because of the Internet. And the Internet has enriched my life immeasurably. In the past few days alone, I’ve downloaded interesting podcasts about blockchain technology, ordered a burrito, managed my playoff-bound fantasy football team, and—as you may have seen—tweeted.
What is responsible for the phenomenal development of the Internet? It certainly wasn’t heavy-handed government regulation. Quite to the contrary: At the dawn of the commercial Internet, President Clinton and a Republican Congress agreed that it would be the policy of the United States “to preserve the vibrant and competitive free market that presently exists for the Internet . . . unfettered by Federal or State regulation.”
This bipartisan policy worked. Encouraged by light-touch regulation, the private sector invested over $1.5 trillion to build out fixed and mobile networks throughout the United States. 28.8k modems gave way to gigabit fiber connections. Innovators and entrepreneurs grew startups into global giants. America’s Internet economy became the envy of the world.
And this light-touch approach was good for consumers, too. In a free market full of permissionless innovation, online services blossomed. Within a generation, we’ve gone from email as the killer app to high-definition video streaming. Entrepreneurs and innovators guided the Internet far better than the clumsy hand of government ever could have.
But then, in early 2015, the FCC jettisoned this successful, bipartisan approach to the Internet. On express orders from the previous White House, the FCC scrapped the tried-and-true, light touch regulation of the Internet and replaced it with heavy-handed micromanagement. It decided to subject the Internet to utility-style regulation designed in the 1930s to govern Ma Bell.
This decision was a mistake. For one thing, there was no problem to solve. The Internet wasn’t broken in 2015. We weren’t living in a digital dystopia. To the contrary, the Internet is perhaps the one thing in American society we can all agree has been a stunning success.
Not only was there no problem, this “solution” hasn’t worked. The main complaint consumers have about the Internet is not and has never been that their Internet service provider is blocking access to content. It’s that they don’t have access at all or enough competition. These regulations have taken us in the opposite direction from these consumer preferences. Under Title II, investment in high-speed networks has declined by billions of dollars. Notably, this is the first time that such investment has declined outside of a recession in the Internet era. When there’s less investment, that means fewer next-generation networks are built. That means less competition. That means fewer jobs for Americans building those networks. And that means more Americans are left on the wrong side of the digital divide.
The impact has been particularly serious for smaller Internet service providers. They don’t have the time, money, or lawyers to navigate a thicket of complex rules. I have personally visited some of them, from Spencer Municipal Utilities in Spencer, Iowa to Wave Wireless in Parsons, Kansas. I have personally spoken with many more, from Amplex Internet in Ohio to AirLink Services in Oklahoma. So it’s no surprise that the Wireless Internet Service Providers Association, which represents small fixed wireless companies that typically operate in rural America, surveyed its members and found that over 80% “incurred additional expense in complying with the Title II rules, had delayed or reduced network expansion, had delayed or reduced services and had allocated budget to comply with the rules.” Other small companies, too, have told the FCC that these regulations have forced them to cancel, delay, or curtail fiber network upgrades. And nearly two dozen small providers submitted a letter saying the FCC’s heavy-handed rules “affect our ability to find financing.” Remember, these are the kinds of companies that are critical to providing a more competitive marketplace.
These rules have also impeded innovation. One major company, for instance, reported that it put on hold a project to build out its out-of-home Wi-Fi network due to uncertainty about the FCC’s regulatory stance. And a coalition of 19 municipal Internet service providers—that is, city-owned nonprofits—have told the FCC that they “often delay or hold off from rolling out a new feature or service because [they] cannot afford to deal with a potential complaint and enforcement action.”
None of this is good for consumers. We need to empower all Americans with digital opportunity, not deny them the benefits of greater access and competition.
And consider too that these are just the effects these rules have had on the Internet of today. Think about how they’ll affect the Internet we need ten, twenty years from now. The digital world bears no resemblance to a water pipe or electric line or sewer. Use of those pipes will be roughly constant over time, and very few would say that there’s dramatic innovation in these areas. By contrast, online traffic is exploding, and we consume exponentially more data over time. With the dawn of the Internet of Things, with the development of high bit-rate applications like virtual reality, with new activities like high-volume bitcoin mining that we can’t yet fully grasp, we are imposing ever more demands on the network. Over time, that means our networks themselves will need to scale, too.
But they don’t have to. If our rules deter the massive infrastructure investment that we need, eventually we’ll pay the price in terms of less innovation. Consider these words from Ben Thompson, a highly-respected technology analyst, from a post on his blog Stratechery supporting my proposal:
The question that must be grappled with . . . is whether or not the Internet is ‘done.’ By that I mean that today’s bandwidth is all we [will] need, which means we can risk chilling investment through prophylactic regulation and the elimination of price signals that may spur infrastructure build-out. . . .
If we are “done”, then the potential harm of a Title II reclassification is much lower; sure, ISPs will have to do more paperwork, but honestly, they’re just a bunch of mean monopolists anyways, right? Best to get laws in place to preserve what we have.
But what if we aren’t done? What if virtual reality with dual 8k displays actually becomes something meaningful? What if those imagined remote medicine applications are actually developed? What if the Internet of Things moves beyond this messy experimentation phase and into real-time value generation, not just in the home but in all kinds of unimagined commercial applications? I certainly hope we will have the bandwidth to support all of that!
I do too. And as Thompson put it in another Stratechery post: “The fact of the matter is there is no evidence that harm exists in the sort of systematic way that justifies heavily regulating ISPs; the evidence that does exist suggests that current regulatory structures handle bad actors perfectly well. The only future to fear is the one we never discover because we gave up on the approach that has already brought us so far.”
Remember: networks don’t have to be built. Risks don’t have to be taken. Capital doesn’t have to be raised. The costs of Title II today may appear, at least to some, to be hidden. But the consumers and innovators of tomorrow will pay a severe price.
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So what is the FCC doing today? Quite simply, we are restoring the light-touch framework that has governed the Internet for most of its existence. We’re moving from Title II to Title I. Wonkier it cannot be.
It’s difficult to match that mundane reality to the apocalyptic rhetoric that we’ve heard from Title II supporters. And as the debate has gone on, their claims have gotten more and more outlandish. So let’s be clear. Returning to the legal framework that governed the Internet from President Clinton’s pronouncement in 1996 until 2015 is not going to destroy the Internet. It is not going to end the Internet as we know it. It is not going to kill democracy. It is not going to stifle free expression online. If stating these propositions alone doesn’t demonstrate their absurdity, our Internet experience before 2015, and our experience tomorrow, once this order passes, will prove them so.
Simply put, by returning to the light-touch Title I framework, we are helping consumers and promoting competition. Broadband providers will have stronger incentives to build networks, especially in unserved areas, and to upgrade networks to gigabit speeds and 5G. This means there will be more competition among broadband providers. It also means more ways that startups and tech giants alike can deliver applications and content to more users. In short, it’s a freer and more open Internet.
We also promote much more robust transparency among ISPs than existed three years ago. We require ISPs to disclose a variety of business practices, and the failure to do so subjects them to enforcement action. This transparency rule will ensure that consumers know what they’re buying and startups get information they need as they develop new products and services.
Moreover, we empower the Federal Trade Commission to ensure that consumers and competition are protected. Two years ago, the Title II Order stripped the FTC of its jurisdiction over broadband providers. But today, we are putting our nation’s premier consumer protection cop back on the beat. The FTC will once again have the authority to take action against Internet service providers that engage in anticompetitive, unfair, or deceptive acts. As FTC Chairman Maureen Ohlhausen recently said, “The FTC’s ability to protect consumers and promote competition in the broadband industry isn’t something new and far-fetched. We have a long-established role in preserving the values that consumers care about online.” Or as President Obama’s first FTC Chairman put it just yesterday, “the plan to restore FTC jurisdiction is good for consumers. . . . [T]he sky isn’t falling. Consumers will remain protected, and the [I]nternet will continue to thrive.”
So let’s be absolutely clear. Following today’s vote, Americans will still be able to access the websites they want to visit. They will still be able to enjoy the services they want to enjoy. There will still be cops on the beat guarding a free and open Internet. This is the way things were prior to 2015, and this is the way they will be once again.
Our decision today will also return regulatory parity to the Internet economy. Some giant Silicon Valley platforms favor imposing heavy-handed regulations on other parts of the Internet ecosystem. But all too often, they don’t practice what they preach. Edge providers regularly block content that they don’t like. They regularly decide what news, search results, and products you see—and perhaps more importantly, what you don’t. And many thrive on the business model of charging to place content in front of eyeballs. What else is “Accelerated Mobile Pages” or promoted tweets but prioritization?
What is worse, there is no transparency into how decisions that appear inconsistent with an open Internet are made. How does a company decide to restrict a Senate candidate’s campaign announcement video because her views on a public policy issue are too “inflammatory”? How does a company decide to demonetize videos from political advocates without notice? How does a company expressly block access to websites on rival devices or prevent dissidents’ content from appearing on its platform? How does a company decide to block from its app store a cigar aficionado app, apparently because the company perceives that the app promotes tobacco use? You don’t have any insight into any of these decisions, and neither do I. Yet these are very real, actual threats to an open Internet—coming from the very entities that claim to support it.
Look—perhaps certain companies support saddling broadband providers with heavy-handed regulations because those rules work to their economic advantage. I don’t blame them for taking that position. And I’m not saying that these same rules should be slapped on them too. What I am saying is that the government shouldn’t be in the business of picking winners and losers in the Internet economy. We should have a level playing field and let consumers decide who prevails.
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Many words have been spoken during this debate but the time has come for action. It is time for the Internet once again to be driven by engineers and entrepreneurs and consumers, rather than lawyers and accountants and bureaucrats. It is time for us to act to bring faster, better, and cheaper Internet access to all Americans. It is time for us to return to the bipartisan regulatory framework under which the Internet flourished prior to 2015. It is time for us to restore Internet freedom.
I want to extend my deepest gratitude to the staff who have worked so many long hours on this item. From the Wireline Competition Bureau: Annick Banoun, Joseph Calascione, Megan Capasso, Paula Cech, Ben Childers, Nathan Eagan, Madeleine Findley, Doug Galbi, Dan Kahn, Melissa Kirkel, Gail Krutov, Susan Lee, Ken Lynch, Pam Megna, Kris Monteith, Ramesh Nagarajan, Eric Ralph, Deborah Salons, Shane Taylor. From the Office of General Counsel: Ashley Boizelle, Jim Carr, Kristine Fargotstein, Tom Johnson, Doug Klein, Marcus Maher, Scott Noveck, Linda Oliver, and Bill Richardson. From the Wireless Telecommunications Bureau: Stacy Ferraro, Nese Guendelsberger, Garnet Hanly, Betsy McIntyre, Jennifer Salhus, Paroma Sanyal, Jiaming “Jimmy” Shang, Don Stockdale, and Peter Trachtenberg. From the Office of Strategic Planning and Policy Analysis: Eric Burger, Mark Bykowsky, and Jerry Ellig. From the Consumer and Governmental Affairs Bureau: Jerusha Burnett. From the Public Safety and Homeland Security Bureau: Ken Carlberg. And from the Media Bureau: Tracy Waldon.
FCC Commissioner Brendan Carr:
STATEMENT OF COMMISSIONER BRENDAN CARR
Re: Restoring Internet Freedom, WC Docket No. 17-108.
This is a great day for consumers, for innovation, and for freedom. We are reversing the Obama- era FCC’s unprecedented decision to apply Title II regulations to the Internet. I am proud to help end this two-year experiment with heavy-handed regulation—this massive regulatory overreach.
Prior to the FCC’s 2015 decision, consumers and innovators alike benefited from a free and open Internet. This was not because the government imposed utility-style regulation. It didn’t. This was not because the FCC had a rule regulating “Internet conduct.” It had none.
Instead, through Republican and Democratic administrations alike—including through the first six years of the Obama Administration—the FCC abided by a 20-year, bipartisan consensus that the government should not control or heavily regulate Internet access.
The Internet flourished under this framework. The private sector invested over $1.5 trillion in broadband networks. Consumers were protected and enjoyed the freedom to access the websites and content of their choosing. Every part of the Internet economy benefited—from innovators on the edge to startups and businesses of every size. Title II did not build that. Title II did not create the open Internet. And Title II is not the way to maintain it. The FCC’s light regulatory touch—coupled with the robust consumer protections we restore today—supported our country’s extraordinary Internet success story.
After a two-year detour—one that has seen investment decline, broadband deployments put on hold, and innovative new offerings shelved—it is great to see the FCC returning to this proven regulatory approach.
Now, there is no doubt that the debate over Internet regulation has generated significant public attention, as it should. Americans cherish the free and open Internet. But when it comes to this proceeding, far too many are simply fanning the false flames of fear. The apocalyptic rhetoric is quite something—even by Washington standards. No, the FCC is not ending the Internet. Or, as President Obama’s first Federal Trade Commission Chairman recently put it, “the sky isn’t falling. Consumers will remain protected, and the internet will flourish.”1
What we’re doing with today’s vote is reversing a two-year old decision and returning to a tried- and-true regulatory framework—one that we know from our own experience works for consumers and for innovators.
Many of the myths that are out there go to what I call “the Great Title II head fake”—which is attributing to Title II things that it does not do.
Some claim, for instance, that Title II is preventing ISPs from selling bundled or curated plans that offer access to only a portion of the Internet. Not true. The FCC has expressly stated that Title II allows providers to do just that.2
1 Jon Leibowitz, Everybody Calm Down About Net Neutrality, THE WALL STREET JOURNAL (Dec. 12, 2017), https://www.wsj.com/articles/everybody-calm-down-about-net-neutrality-1513124905.
2 See Brief for Respondents at 145, n.53, United States Telecom Ass’n v. FCC, No. 15-1063 (D.C. Cir. Sept. 14, 2015) (The 2015 Title II Order “would not apply to a . . . company that advertised ‘filtered’ Internet access catering to a particular audience or that offered access only to curated content.”), https://go.usa.gov/xnnYb; see also
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Some claim that Title II is preventing ISPs from increasing their prices for broadband. But the FCC emphasized that its Title II decision involves “no rate regulation.”3
And some claim that Title II is preventing ISPs from blocking, throttling, or engaging in paid prioritization. Also, not true. The D.C. Circuit said that Title II allows ISPs to “block[] websites,” to “throttl[e] . . . applications chosen by the ISP,” and to “filter[]. . . content into fast (and slow) lanes based on the ISP’s commercial interests” provided that they disclose those practices.4
In other words, Title II is not the thin line between where we are now and some Mad Max version of the Internet. There are reasons that consumers enjoyed a free and open Internet long before Title II. There are reasons why consumers are free to access any website or online content of their choosing. And those reasons will continue to hold true long after our Title II experiment ends.
What are they? Well, the D.C. Circuit has offered its view. When it observed that Title II allows ISPs to offer filtered Internet access, it also said that none were doing so because of fear of subscriber losses.5 In other words, market forces, not the Title II rules, are regulating this conduct.
Now, there are some that will never accept market forces as a solution, either in the broadband marketplace or otherwise.
But for them, today’s Order has some more good news. We are not relying on market forces alone. We are not giving ISPs free reign to dictate your online experience. Our decision today includes powerful legal checks.
First, Americans will enjoy robust online protections. When the FCC classified broadband as a Title II service in 2015, it divested the Federal Trade Commission of 100% of its consumer protection authority over ISPs, including its ability to police ISPs that engage in unfair or deceptive practices. Repealing Title II will restore those important protections for Internet openness.
Second, consumers will regain strong online privacy protections. Before the FCC stripped it of jurisdiction, the FTC—the nation’s most experienced privacy enforcement agency—brought over 500 privacy enforcement actions, including against ISPs. By reversing Title II, consumers get those privacy protections back.
Opposition of Respondents to Petitions for Panel Rehearing and Rehearing En Banc at 28, United States Telecom Ass’n v. FCC, No. 15-1063 (D.C. Cir. Oct. 3, 2016) (“Of course, as the panel acknowledged, a broadband provider could ‘choose to exercise editorial discretion—for instance, by picking a limited set of websites to carry and offering that service as a curated internet experience . . . .’ Any such provider, however, would be exempt from the [2015 Title II] open internet rules.”), https://go.usa.gov/xnnY5.
3 See, e.g., Protecting and Promoting the Open Internet, WC Docket No. 14-28, Report and Order on Remand, Declaratory Ruling, and Order, 30 FCC Rcd. 5601, 5612, para. 37 (2015), https://go.usa.gov/xnnYU.
4 United States Telecom Ass’n v. FCC, 855 F.3d 381, 389-390 (D.C. Cir. 2017) (Srinivasan, J., and Tatel, J., concurring in the denial of rehearing en banc).
5 Id. at 390 (“No party disputes that an ISP could do so if it wished, and no ISP has suggested an interest in doing so in this court. That may be for an understandable reason: a broadband provider representing that it will filter its customers’ access to web content based on its own priorities might have serious concerns about its ability to attract subscribers.”).
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Third, federal antitrust law will protect against discriminatory conduct by ISPs. As a former Obama Administration FTC Chairman recently said, this is a “formidable hammer against anyone who would harmfully block, throttle or prioritize traffic.”6
Fourth, state consumer protection laws will apply and state attorneys general can bring actions against ISPs. These authorities will provide another strong set of legal protections against unfair business practices by ISPs.
In short, this is no free for all. This is no Thunderdome. The FCC is not killing the Internet.
While I have spent most of my time today talking about the policy debate surrounding Title II, there is also a threshold legal question that the Commission must answer. Does Internet access service qualify as a Title I information service or a Title II telecommunications service? Thankfully, I do not need to go beyond what the Order itself says on this point. After all, in 2005, the Supreme Court expressly found that the FCC has authority to classify Internet access service as a Title I service.7 This remains the only classification blessed by the Supreme Court. So our decision today rests on sound legal footing.
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In closing, I want to look back to 2015 one more time. In October of that year, long before I became a Commissioner, I gave a speech where I talked about the FCC’s Title II decision. I ended it by saying this:
I am optimistic that the U.S. will return to the successful, light-touch approach to the Internet that spurred massive investments in our broadband infrastructure. Efforts are underway in both the courts and Congress to reverse the FCC’s decision. And following next year’s presidential election, the composition of the FCC could be substantially different than it is today.
Now, two years ago, I certainly did not imagine that I would be part of the FCC’s new composition. But I am very grateful for the opportunity to serve. And I am grateful that my optimism back then has proven to be well-founded. I am glad to cast my vote today in favor of Internet freedom.
6 Leibowitz, supra note 1.
7 Nat’l Cable & Telecomms. Ass’n. v. Brand X Servs. 545 U.S. 967 (2005).
This article originally appeared on Recode.net.
