Techsplanations: Part 4, Net Neutrality – So You Want To Regulate

Written by Stan Adams

Previously in this series, we talked about what the internet is and how it works, what the web is, and what the concept and history of net neutrality is in the U.S.  In this post, we survey some methods for regulation, compare different venues for regulation, attempt to sort out facts from rhetoric, and distill a must-have checklist for net neutrality regulation. As before, please refer to this glossary for quick reference to some of the key terms and concepts (in bold).

At the end of our last post we had just emerged from the Fireswamp only to be captured by the six-fingered man. No, no, that’s not right. We had just caught up to the present, in which the agency responsible for regulating the communications industry is trying to get rid of the rules it just put in place and is also trying to undermine its own authority to regulate at all.

Advocates are urging Congress to use the Congressional Review Act (CRA) to wipe out the FCC’s rollback of the Open Internet Order (OIO, the rules). At the same time, ISPs are pushing for legislative action to lock in the exact kind and amount of regulation they are okay with. Meanwhile, separate court cases to strike down the OIO and the Restoring Internet Freedom Order (RIFO, the repeal of the rules) are ongoing. Depending on the outcome of either one or both, we may be left with rules, no rules, or something in between. If you’re not confused by now, you should be.

I am. I’m confused. What a mess. Can you break this down a bit?

Yes. We will eventually look at what each of the major players could do. But we’ll have to start with some assumptions about how the current proceedings might end up in the short-term (and we’ll ignore the pending Supreme Court decision about whether to hear the case against the OIO for now). Here we go…

If the CRA fails and the lawsuit against the RIFO fails: Then the RIFO stands, which means the net neutrality rules go out the window along with the FCC’s authority to police ISP practices. Any enforcement actions would be taken by the FTC, which can only act after a company does something unfair or deceptive. The FTC has limited authority to make rules, making it potentially tough to keep ISPs from violating net neutrality principles as long as they were up front about it.

If the CRA fails and the lawsuit against the RIFO succeeds: Then the RIFO goes away (or parts of it) and we are left with the existing rules from the OIO. The FCC is unlikely to enforce these rules, however, and may make a second attempt to repeal them. No matter who wins this litigation, the losing party will appeal, but the outcome in that case is too far away to predict.

If the CRA succeeds: Then the RIFO goes away and the FCC is prohibited from enacting “substantially similar” rules in the future. The OIO rules would stand, but, again, not be enforced under this administration.

So, we either end up with no rules or rules that are unlikely to be enforced for the next three years. On top of that, a new administration could flip the balance of the FCC and pave the way for another policy reversal (back to protecting net neutrality), which would almost certainly be challenged by the telecom industry.

So we end up back at square one and/or we keep fighting about it? Isn’t there a way to fix this permanently

Well…permanence is relative. And longer-term solutions have their own kinds of drawbacks. Telcos and cable operators (don’t forget that your ISP is probably also your cable and phone provider) have been pushing Congress for a few years to step in with legislation to replace the FCC’s efforts to regulate. Likewise, the FCC has been working for more than a decade to promulgate an effective, sustainable set of rules. The FTC basically just had net neutrality oversight dumped in its lap, and its interest and abilities in this area are untested. Finally, since the demise of the OIO rules, states have entered the fray with their own efforts to protect consumers and competition from discriminatory practices of ISPs. For now we will skip over the state efforts and take a look at the pros and cons of the three federal avenues for regulation.

FCC Rulemaking

Pros:

  • The FCC is the expert agency for telecommunications technologies. It understands how networks operate and can compel telecom companies to disclose operating practices.
  • Agency rulemaking is inherently more flexible than legislation (maybe a pro and a con), which allows the FCC to make more detailed, nuanced rules and to address changes in technologies and practices.

Cons:

  • The political makeup of the Commission, by law, changes to reflect the party that controls the presidency, which can make consistent policy approaches difficult, especially on issues with substantial resistance from the regulated industry.
  • There is a risk of “agency capture” where the Commission is more responsive to the wishes of the regulated industry than to the public interest.

FTC Enforcement

Pros:

  • The FTC is a consumer protection agency, so it may be more immune to industry pressure or more consistently representative of the public interest.
  • At least someone might do something.

Cons:

  • The FTC lacks the kind of authority necessary to establish rules like those in the OIO, which makes it difficult to prevent unwanted practices.
  • The FTC lacks technical expertise on network management and other technologically complex issues.
  • The FTC is limited in the kinds of practices it may address and its enforcement methods may not effectively deter unwanted practices.

Federal Legislation

Pros:

  • Acts of congress are, well, notoriously difficult to achieve (maybe also a con), which means that legislation, once passed, is unlikely to be reversed in the near-term.
  • In theory, at least, legislation could be more reflective of the public interest because members want to be reelected.
  • In a favorable congress, legislation might be as strong as (dare we hope for stronger than?) the OIO rules.

Cons:

  • Because acts of congress are difficult to achieve, they might not ever happen. For the same reasons, legislation is unlikely to be adjusted in a timely fashion to reflect changes in technology or practices.
  • The nature of legislative compromise means that a new law may be so watered down as to be ineffective.
  • Legislative language must be broad and adaptable to account for technological change and to appease interests on both sides of the aisle. This means that agency interpretation and enforcement will likely be necessary, putting the issue back in the FCC’s (or the FTC’s) jurisdiction. Refer to the pros and cons above.

That was…not exactly an answer. What do we do?

Good question. We could ask the telcos to just stop fighting us on this, agree to provide non-discriminatory treatment to all network traffic, and behave in such a way as to make this kind of regulation unnecessary. (This is not a viable solution because as we discussed in previous posts, it would mean forgoing significant potential profit.) We could continue the resistance against deregulation until the political tide turns again, then fight to reinstate the rules. (This is the default solution.) We could wait for congress to take up the issue and then hope they get it right or otherwise try to minimize the damage. (Waiting/hoping might not be a real solution.) Or we could encourage congress to legislate in a way that preserves both the principles of net neutrality and an enforcement method (or agency authority) to make sure ISPs follow the rules. To be sure, the telecom industry is not waiting; it is actively telling congress what it wants and how to make that happen.

So how does an industry convince congress to legislate in its favor on an issue where more than 80% of everyone disagrees with the industry position?

First, the industry claims it agrees with the public and that it loves and supports net neutrality principles. Second, it describes the applicable regulations in a way that only prohibits practices the industry is not interested in. Third, it muddies the waters around the contentious practices so that legislators are reluctant to regulate them. Fourth, it claims that regulation (of the kind it opposes) will irreparably damage the industry and ultimately hurt consumers. Let’s sift through the rhetoric of the telecom industry’s efforts to get favorable legislation and look at what’s left.

ISPs love net neutrality: They don’t. ISPs are fine with rules against blocking because they just don’t really want to do that. They are mostly okay with rules against throttling for the same reason. But there are other practices that ISPs would like to engage in that do violate net neutrality principles, like paid prioritization and certain forms of differential pricing (we will get into these later). Which is why they limit their definition of what net neutrality looks like (see below).

Net neutrality regulation only prohibits blocking and maybe throttling: The legislative proposals put forward by Sen. Kennedy and Sen. Blackburn to preserve the open internet only prohibit things ISPs don’t really care about doing anyway. These bills notably do not stop ISPs from charging edge providers for faster service, nor do they allow the FCC to address other discriminatory practices. In fact, the bills would severely limit the FCC’s ability to address anything beyond blocking and throttling and remove its authority to regulate ISPs through other channels.

(Paid) Prioritization is important for public safety: One thing ISPs really want to do is charge internet companies more money. One way to do that is by offering “prioritized” traffic delivery for a fee. ISPs don’t say it like that, of course. They build up the important services that they say require prioritized treatment. They talk about “innovative” service offerings that need to be treated differently than regular internet traffic. They rarely mention the “paid” part, instead focusing on the dire need to prioritize some traffic. Here’s the thing: the OIO created a broad exception for all those services that need special treatment. It even allowed payment for prioritized treatment, as long as those services were not BIAS (regular internet access).

The OIO discourages investment: This has been a central point in favor of repealing the OIO, although there are few, if any, ways to prove this claim. Infrastructure investment decisions are made years ahead of when the money gets spent and are influenced by many factors, so there is no real causal link between regulatory approach and investment levels in the short-term. In addition, network infrastructure investments are naturally cyclical; companies spend large amounts to deploy new physical assets, then much less over the following years as they utilize the new assets. Compared to the cost of actually burying or hanging new wires, system upgrades (which are often largely software-driven) are relatively cheap. So even if it is true that investment has decreased since the 2015 rules took effect, it is highly unlikely that the rules (or the “regulatory burdens” of Title II) had anything to do with it.

If we end up looking to Congress to act, what should that look like?

Effective net neutrality regulation should address, at a minimum, the following issues:

Blocking – network operators must not block access to legal content, applications, or services, nor should they block the connection of non-harmful devices to their networks.

Throttling – network operators must not degrade or otherwise interfere with the speed or performance of legal content, applications, services, or non-harmful devices.

Reasonable network management – the rules against blocking and throttling should be subject to an exception for reasonable network management so that network operators can maximize network utilization when traffic exceeds network capacity and address security threats.

Transparency – broadband providers must disclose in an accessible and understandable format their policies and practices relating to the provision of services, network management, and data collection and use. This should include any metrics relevant to advertising claims or billing methods, and should accurately reflect both speed and capacity of the network between the end user and any interconnection points.

Paid prioritization – must be banned in the context of general purpose internet access service, but exceptions for limited-purpose “specialized” services might be acceptable as long as those services are not used to evade regulation and do not detract from the growth of bandwidth available for general purpose broadband.

Other discriminatory practices – effective regulation and regulators must be able to address, on a case-by-case basis, practices that could be used to create discriminatory or market distorting effects. The regulator must also be able to address policies or practices having the effect of evading or circumventing the regulatory scheme. This authority should extend to cover interconnection practices.

Monitoring/measurement to determine compliance – there must be some way to detect, report, or audit network practices to identify violations or attempts to evade the rules. Ideally, this would be performed by both governmental and private entities and would result in appropriate action by the enforcing agency.

Meaningful enforcement – there must be an enforcement mechanism that effectively deters or sufficiently punishes violations and the implementing agency must have the authority and directive to do so.

Technological neutrality – the language must remain applicable as communications technologies change.

Any legislative or administrative approach to preserving the principles of net neutrality must have these elements.

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