The new Republican majority on the Federal Communications Commission voted Thursday to begin the process of rolling back Barack Obama’s network neutrality rules. These rules were designed to ensure that all online content and services get equal treatment online. But Trump’s choice to lead the FCC, Ajit Pai, argues that they represent unnecessary government meddling in the internet’s infrastructure.
“The Internet wasn’t broken in 2015” before Obama’s rules went into affect, Pai said in a Thursday statement. “We were not living in a digital dystopia.” But now, as a result of the new Obama rules, “innovative providers hoping to offer their customers new, even free services had to fear a Washington bureaucracy that might disapprove.”
Liberals say that’s nonsense. While formal net neutrality rules weren’t in place before 2015, liberals argue that Obama simply codified the internet’s de facto rules of the road, locking in the open network design the internet has had since the beginning.
But in a 2-1 vote on Thursday, the FCC officially approved a notice of proposed rulemaking that gets the ball rolling to repeal the regulations. Next will come an open comment period, after which the FCC will hold a final vote on the future of net neutrality rules.
In the next few months, we may see a repeat of the 2014 network neutrality debate, when grassroots activists bombarded the FCC with millions of public comments, most of them favoring stronger network neutrality rules. The big difference, of course, is that the Republicans on the FCC now have a majority. So this time, arguments in favor of strong network neutrality protections are likely to fall on deaf ears.
Network neutrality has become such a partisan issue that the rules change dramatically every time there’s a change of power in the White House. That’s a problem because both sides in the debate agree on the importance of stable and predictable rules. Ultimately, only Congress will be able to settle this debate with compromise legislation — but that doesn’t look likely to happen this year.
Advocates say net neutrality protects online openness and innovation
In a world where big telecommunications companies increasingly own technology and content companies — Comcast owns NBCUniversal, for example, and Verizon owns Yahoo and AOL — net neutrality supporters worry that broadband network owners could give an unfair advantage to their own content and services. Independent content and services could get relegated to an internet “slow lane” or be charged high fees to reach customers.
To address those concerns, the FCC in 2015 adopted new rules that dramatically expanded its authority to regulate the behavior of broadband providers. The new rules barred ISPs from blocking or slowing down content downloaded by consumers or accepting payments from content providers to give some content priority over others. The rules also barred "unreasonable interference and discrimination," a deliberately open-ended standard to allow the FCC to police provider misconduct that doesn't run afoul of the other three rules.
But Pai now argues that these changes were trying to address problems that didn’t actually exist. In an April speech, he argued that the Obama-era regulations were motivated by “hypothetical harms and prophecies of doom.”
“The internet is the greatest free market success in history,” he said. “For decades before 2015, the free and open internet flourished under light-touch regulation.”
Of course, supporters of network neutrality dispute this. They say there have been a number of cases where ISPs have played favorites on their networks. And while there weren’t network neutrality rules in effect prior to 2015, the FCC has been working on rules since 2008 (the agency’s proposals were struck down twice by the courts), giving ISPs an incentive to be on their best behavior.
Josh Stager, a network neutrality supporter at New America, points to a 2014 dispute between big broadband providers and major content providers. For months, big broadband providers such as Comcast were in a standoff with content providers like Netflix over who should pay for network upgrades to deliver rising traffic to their own customers. As a result, customers saw the quality of their Netflix streams decline for several months.
Stager places blame for the dispute at the feet of large internet service providers that traditionally covered the cost of these upgrades, and he says the FCC’s 2015 rules helped prevent this kind of dispute from recurring.
Network neutrality supporters worry that if the Republican majority on the FCC guts network neutrality rules permanently, ISPs will become more aggressive about abusing their privileged position in the internet ecosystem, ultimately hurting consumers who want to access content that’s not favored by the ISPs.
Pai says the Obama rules discourage broadband investment
In his April speech, Pai argued that ISPs had responded to the FCC’s 2015 regulations by cutting back their investments in network infrastructure. He pointed to several small ISPs — one in Arkansas, another in rural Illinois — that scrapped plans to expand service or upgrade speeds after the FCC’s regulations were put in place.
“Just this week, 22 small ISPs, each of which has a thousand broadband customers or fewer, told the FCC that the Title II order had affected their ability to obtain financing,” he said.
But Free Press, a liberal group that supports network neutrality, says the data doesn’t back up Pai’s statement. “If you take account of the industry’s spending as a whole, you’ll see that broadband-industry investment was nearly 5 percent higher in the two years following the FCC’s 2015 Open Internet Order than it was in the two years prior,” Free Press policy director Matt Wood said in a February statement.
“I think the rules are working well,” said Gigi Sohn, who was a senior policy adviser to FCC Chair Tom Wheeler as he was crafting the 2015 rules. “AT&T just spent billions on a spectrum auction. Obviously these companies don't think this is a bad business.”
It’s hard to know who is right here because all of the relevant numbers come from people with a clear dog in the fight. Hal Singer, an economist who does consulting work for the telecom industry, did his own calculations that excluded certain types of investments — like wireless handsets — that aren’t relevant for broadband infrastructure investment and finds that investment has fallen. But critics accuse Singer of cherry-picking which items to exclude to reach this result.
Only broadband companies themselves have the data that would be required for independent researchers to settle the question. And so far they’ve shown little inclination to share it.
Only Congress can ultimately settle the network neutrality fight
Like many other aspects of American politics, the network neutrality fight is becoming increasingly polarized. Most Democrats favor strong network neutrality rules. Most Republicans oppose them.
One consequence of this is that Pai’s reforms are unlikely to survive longer than there is a Republican in the White House. If a Democrat becomes president in 2020 or 2024, she is almost certain to appoint network neutrality supporters to the FCC. With a new Democratic majority, the FCC is likely to reverse itself and once again establish strong network neutrality rules.
It’s a dynamic that’s bad for everyone. After all, one of the key arguments in favor of network neutrality regulations is that it offers certainty for online innovators. Suppose you’re an entrepreneur thinking about creating the next Netflix. In a world without network neutrality protections, you might be worried that once the service starts to get traction, major broadband providers would decide it’s a competitive threat and jack up the fees to deliver content to their customers. Anticipating this, people will become less likely to create startups in the first place.
A key argument against network neutrality is also about certainty. Suppose you’re an entrepreneur thinking about creating a new kind of wireless service — one that manages traffic in a way that wasn’t foreseen by the authors of network neutrality rules. In a world with complex network neutrality rules, you might not get an official ruling on whether your service is legal until after you’ve invested millions of dollars into creating it. Again, that could discourage investment and entrepreneurship.
Depending on your politics, you might find one of these arguments more compelling than the other. But now we’re in danger of having a system that combines the worst features of a world with network neutrality and a world without it.
The best solution to this dilemma would be for Congress to pass bipartisan legislation that gives half a loaf to each side in the debate. Because legislation is harder to pass than new FCC rules, congressional action could finally establish stable, predictable rules for the broadband market.
During the 2015 network neutrality debate, Republicans in Congress called for a compromise in hopes of forestalling stronger regulations by the Obama administration. Their legislation would have given the FCC authority to enforce a set of network neutrality rules established by Congress, but it would have stripped the FCC of the authority to update those rules over time as the market evolved.
Now, surprisingly, Republicans like Sen. John Thune (R-SD), the chair of the Senate Commerce Committee, are still seeking a compromise even though they now control the FCC.
“Whenever an agency isn't sure what authority it has, going to Congress and asking them to intervene is to me the ideal approach,” said Ryan Radia, a network neutrality skeptic at the Competitive Enterprise Institute. “Whether the Democrats are willing to work with Thune is an open question.”
But so far, Democrats and liberal activists haven’t been impressed with the Republican proposals. They argue that it would hamstring the FCC too much, rendering the agency incapable of adapting the rules to fit changing technologies.
But with no compromise, the result is likely to be no network neutrality protections until 2021 — and, if Donald Trump wins the 2020 election, years after that.