Net Neutrality

Will 2015 Be the Year the FCC Regulates the Internet Back to 1934?

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credit: Stephen D. Melkisethian / Foter / CC BY-NC-ND

In June of 1934, the United States passed the Communications Act, a sprawling law regulating the delivery of telephone service and radio communications. It reorganized much of the existing law governing the regulation of radio, telegraph, and telephone service, transferring power to the Federal Communications Commission (FCC) from the Federal Radio Commission (which was scrapped) and creating several categories of regulation. Those classified as Title I "information services" would be regulated with a less heavy hand, while those deemed "telecommunications services," a category of utilities dubbed "common carriers," like telephone service, would be subject to stricter rules and oversight.

The passage of the Communications Act of 1934 set the stage for the modern era of communications and telecom regulation, and while it was amended in 1996 by the Telecommunications Act, much of its essential structure remains in place, including the critical distinction between Title I and Title II services.

That distinction is at the forefront of the current debate over net neutrality, a regulatory principle which is sometimes vague but which broadly states that Internet infrastructure should be prohibited from discrimination against certain types of information or content.

It's a sometimes-dense, sometimes-abstract policy debate that has raged through multiple administrations and FCC leaders, through multiple high-profile court cases and a seemingly endless number of regulatory proposals and comment periods and responses and arguments over the last few years. It is a policy argument that remains in a perpetual state of flux; something is always on the verge of happening, or something that has happened is on the verge of being taken down. The debate over net neutrality has, over the years, spawned a vast ecosystem of argument, professionalized and organized, one that often seems designed more for self-perpetuation than resolution.

The most recent stage of that argument began when Tom Wheeler was appointed Chairman of the Federal Communications Commission at the end of November 2013. Like his predecessor, Julius Genachowski, he picked up work on net neutrality, a key issue in Obama's first campaign and a priority for many of the administration's young, tech-savvy supporters.

Under Genachowski, the FCC had put in place net neutrality rules at the end of 2010. Those rules were thrown out in court after a drawn-out legal challenge. The FCC, the court said, did not have the statutory authority to impose net neutrality on Internet service providers (ISPs), at least not in the particular way that the FCC had chosen to go about it.

This left Wheeler with two options: Either attempt to establish a modified set of net neutrality rules that might pass a legal challenge, or reclassify broadband internet service from its current status as a Title I "information service" provider to a Title II "telecommunications service"—which would, many advocates hoped, give the FCC far more authority to set rules of the road for the Net.

For the last year or so, then, we've been in a holding pattern, with the FCC releasing a draft proposal of new rules regulating net neutrality, a slew of comments and arguments over those rules, and a related push by liberal advocacy groups and activists urging the FCC to make a big, splashy move and reclassify broadband under Title II. At least initially, Wheeler seemed resistant to the idea, preferring a middle ground proposal he hoped would mostly satisfy net neutrality advocates but not anger the broadband providers who were adamantly opposed to regulation. The providers argued that Title II would stifle innovation, preventing investment in what would essentially be a public utility.

Title II reclassification has, for years, been the big prize many of the most hardcore net neutrality advocates. Only with the stricter regulatory apparatus of Title II, they believed, could the FCC keep broadband providers in check. But until Wheeler arrived, the ideas was never taken very seriously. Moving to Title II would be a complicated, legally fraught process; even backers of a switch tend to agree that applying the full weight of Title II regulations would be too onerous. The FCC, they allowed, would need to rely on "forbearance," a process in which the agency essentially swears off certain regulatory requirements, like, for example, the Title II price controls. The particulars of the forbearance process were likely to be challenged in court however, probably along with the larger Title II switch. A move to Title II was a giant legal landmine. The FCC was trying to avoid the sort of endless legal disputes that had plagued the net neutrality process, not wade in further. 

But the Title II advocates gained a significant ally last year when President Obama released a statement urging Wheeler and the rest of the FCC to start the process of reclassification and forbearance. Wheeler is the head of what is technically an independent agency, but he was appointed by the president; the administration couldn't order Wheeler to comply, but its wishes carried great weight.

Which is why it wasn't too surprising to see that, at a speech at the Consumer Electronics Show yesterday, Wheeler strongly hinted that he'll proceed with a move to Title II reclassification.

(Flickr/Federal Communications Commission)

"We're going to propose rules that say that no blocking, no throttling, [no] paid prioritization, all that list of issues, and that there is a yardstick against which behavior should be measured. And that yardstick is 'just and reasonable,'" Wheeler said, referencing the "just and reasonable" standard required under Title II.

In explaining his thinking, Wheeler said that he was struck by how well the wireless phone industry had flourished under Title II plus forbearance. "For the last 20 years, the wireless industry has been monumentally successful," he said.

But as Jon Healey of the L.A. Times notes, Wheeler's story about the success of the wireless industry left out an important caveat: Wireless data networks were shielded from Title II by the FCC back in 2007—right when wireless data services began to really take off.

There are other potential issues with Title II as well; it might result in as much as $15 billion in tax and fee hikes annually, because it would be subject to local utility levies. And of course it would almost certainly trigger another round, or rounds, of intense litigation.

If Wheeler decides to go forward with reclassification, the proposal will be put to a vote amongst the five FCC commissioners. The outcome is practically predetermined: If Wheeler puts Title II on the table, it's virtually certain it will pass with his vote and the votes of the two other Democratically appointed commissioners. We'll find out which route he takes on February 26, when his proposal is expected and a vote likely to be held.

If Wheeler does take this route, as he now seems to determined, we'll end up with an Internet that is more regulated, more subject to regulatory uncertainty in the near-term, and more like a public utility from another era than an information delivery service for the modern age. It'll be 2015—but for the Internet, it'll be 1934 all over again.

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63 responses to “Will 2015 Be the Year the FCC Regulates the Internet Back to 1934?

  1. Stifle innovation, degrade service and investment, leave ability to squash in hands of gov employees – feature, not bug to Donkey Party hacks. And the Elephants will probably only squawk because the Chamber tells them to, not out of any icky principle.

  2. Look, all that’s important is that we fuck Comcast good and hard and get as much as we want of pr0n torrents. M’kay?

    1. I think your single-sentence explanation is better than my three paragraphs below.

    2. I’m all for fucking Comcast good and hard; the delusion comes in when they think the FCC won’t have their ass for dessert eventually.

      1. Again, there’s a perfectly libertarian alternative to net neutrality: increased competition.

        Ban government franchise monopolies and stop public subsidization of closed infrastructure to increase competition.

        For some reason Reason never mentions those alternatives in any of the article and acts like the only options are net neutrality or crony capitalism.

        1. It’s because they’re cosmotarians.

        2. Oooo, they didn’t mention to wash your hands after pooping either.

          THEY MUST BE PRO-COOTIE.

          1. Considering the alternative Dragon suggested was directly relevant to the discussion while your analogy was completely off topic and idiotic, you fail.

            1. No, twatknuckle, I don’t fail.

              Stormy is largely a raving troll and the franchise monopoly issue isn’t part of NN in this instance. It’s correct as to the problem, but dead wrong in terms of Reason’s motivations. So, it’s just its way of pretending to contribute to some conversation, but really jerking off the whole time.

              Have fun fucking off, now.

              1. It’s also Stormy’s cutesy-poo way of supporting NN without directly supporting it.

                Every time he’s wandered into these NN threads and posted pro-NN shit he got fucking owned by people like Paul. who actually know what the fuck they are talking about.

                So he plays the “but you didn’t address…” game so people don’t jump his fucktardation.

                1. See hier, for its little mongoloid game.

                  Alas, Paul is not handing its ass to it there.

                2. Well, then please forgive my lack of context. However, municipal monopolies should still go.

                  1. Well, then please forgive my lack of context. However, municipal monopolies should still go.

                    Agreed 1,000%

              2. So…breaking up the government mandated monopoly isn’t a helpful goal, then?

                1. Sure it is. But exactly how do we go about doing it?

        3. That alternative isn’t on the FCC’s table–maybe that’s why they didn’t bother to mention it.

          However, you’re probably right that mentioning it, and mentioning it often is the best way of circumventing the FCC’s insanity. That, and radical entrepreneurial action by people willing to risk jail and police brutality. I mean, seriously, you think expensive and time-consuming lawsuits are going to stop the FCC? Or maybe you can just wave your magic wand and make the FCC forget that the internet even exists?

    3. We must end Comcast’s monopoly by exposing them to the sort of fierce competition found only amongst public utilities.

      1. That sounds dangerous. Last week in fact I was nearly smothered to death by the avalanche letters from my utility providers informing me of rate cuts. I don’t know that I could handle similar from my ISP.

      2. You forgot the [sarcasm] tags!

      3. I will be quoting this one.

  3. It has always amazed me how many of the “tech-savvy”, “keep the internet free” types are so anxious to regulate the internet as a public utility, of all things. I can’t think of anything worse to do to the internet.

    I think it has to do with many peoples’ learned and rote desire to hate corporations and to trust the government more. Of course, it makes no sense.

    This all just comes down to prices. Certain data takes a lot of bandwidth and is in high demand, like Netflix. This higher demand is reflected by this particular data being able to command a higher price. The providers are willing to pay this higher price and satisfy their customers. Naturally, then, it must be evil.

    1. Yeah, Net Neutrality advocates mostly consist of bandwidth hogs like Netflix and their customers who want others to subsidize their consumption.

      1. Next, are you going to bring up “level the playing field” and “fairness” as reasons to subjugate the internet to one of the most onerous regulatory schemes that the federal government has to offer?

      2. Is it really “subsidizing their consumption” when they are just utilizing the service within the guidelines of their contract?

        1. It is when the law mandates that heavy users cannot be charged for their heavy usage. That lowers their prices while raising everyone else’s. I.e., light users subsidize heavy users’ consumption.

          And notice that this is not just a volume play. As a high bandwidth user, Netflix might deserve a lower per unit cost. But more crucially, Netflix is highly sensitive to latency. Guaranteed delivery is what they are seeking when they make deals with carriers and ISPs. And those are exactly the arrangements that will be lost in time under net neutrality, like tears in rain.

          1. I thought that you COULD charge for heavy usage…at least where I am, my ISP will bump you up to a more expensive package if you go over your bandwidth allotment consistently. However, for the rest of it, it makes sense, thanks for the explainer.

    2. It has always amazed me how many of the “tech-savvy”, “keep the internet free” types are so anxious to regulate the internet as a public utility, of all things. I can’t think of anything worse to do to the internet.

      The ones that do so and then talk up or invest in BTC are the one’s that baffle me the most.

      1. I’m a software developer, so I see these kinds of people. Just like most other people, they see everything in a case by case perspective. They don’t think in terms of general principles being uniformly applied to different situations. They also just think of themselves.

        So, yeah, bitcoins, cool! There’s really good software tech behind that.

        Corporations stealing my bandwidth? Bad!

    3. The ISPs will have the last laugh on Netflix.

      “What’s that? Your customers are complaining about excessive buffering? All the basement-dwelling torrent geeks are sopping up bandwidth? Hold on a sec and let me prioritize your traf…Oh, that’s right, I CAN’T.”

      Be careful what you wish for.

    4. That’s because all those “Tech-Savvy” types aren’t that interested in economics. Part of it is hate for Corporations (except the right ones of course, like Apple), but most of it is just ignorance.

      Spot on with the last paragraph though.

  4. One continuing irritation from the supporters of net neutrality and the media that parrot them is the persistent whinge that new companies using the internet will be harmed by a lack of net neutrality. I can’t imagine anything further from the truth.

    Unless they are trying to go head-to-head against Netflix, new companies and their communication are simply not going to be on the radar of the internet carriers. And if new companies are building their business model on high volume requirements, then their business model should include the purchase of that volume on terms determined with the carriers. To limit internet carriers from making such deal — and thus making life harder on the thousands of new companies that aren’t at all of interest to internet carriers — for one or two hypothetical cases of pigs who feel entitled to free ride on everyone else’s access is really counterproductive.

    Net neutrality is simply a case of controlling big companies whose names people know for the sake of controlling big companies whose names people know.

  5. Huh, Reason posts another giant article on telecom issues and AGAIN not a single mention of the role government franchise monopolies played in created the situation we’re currently in.

    1. That seemed to be the gist here.

      Of course, neither gets over the “last mile” problem. It would be interesting to see how that problem is solved without requiring telecoms to surrender the physical networks they built.

      1. By neither I mean “net neutrality” or “ending monopolies.”

        I’ve never really understood the “monopoly” argument anyway. I have 4 service provider options, DSL (slow), cable from Comcast (meh), WiFi over several different cell networks (sell organs expensive), or satellite (slow and expensive and spotty in inclement weather).

      2. Whene the incumbents are getting $8.7 billion a year in taxpayer funding in the name of “universal access”, do the physical networks really belong to them?

        1. Oh, the “they got subsidies so the ‘people’ own them” argument. Lovely.

          So what, nationalization?

          1. Yeah, it sucks to be a fence when the owners show up and want their stolen property back.

            1. Uh, what?

        2. Did you actually read that document? Most of that money came from the carriers themselves and is allocated to specific purposes as prescribed by law.

          1. No, it came from the carriers’ customers in the form of the 15% tax on everyone’s bill.

            1. So the government forced the telecoms to force their customers to pay for an expansion of network the government was forcing the telecoms to make.

              And that means the “people” own the network…

              You know how I know you aren’t a libertarian, but only a shabby populist progressive who likes playing concern troll? Shit like this.

            2. The tax is placed on the carriers themselves. Many carriers pass some of the cost of it on to their customers as a line-item on their bill.

              However, the tax is still paid “by the carrier” in the same way sales taxes are paid “by the merchant”. Yes, you as the consumer foot the bill, but that is ultimately true of any business expense. No customers, no revenue.

              Although telecoms can opt out of receiving USF funds, they cannot opt out of paying the USF tax.

              Yes, the USF should be abolished. How exactly the existence of the USF constitutes sufficient justification for the nationalization of the telecommunications industry, though, is beyond me.

    2. Maybe because that point is patently fucking obvious?

  6. The internet ain’t broke, so don’t “fix” it.

    1. They’ll fix it alright. Right at 1997.

      Y U NO WORK NETFLIKX?

    2. They’re trying to “fix” it like one would “fix” a dog.

  7. Net neutrality supporters seem to have a static view of the internet, which is strange for tech-savvy people.

    So, this issue is about scarcity. People are demanding more bandwidth than is available. So, there are areas where prices might go up.

    But, even with the current not so perfect system, bandwidth is growing like crazy. The issues we’re seeing now are mere growing pains for a still-young internet. Growing up can get a little bumpy.

    But people demand a smooth road, NOW! They want to permanently subject the internet to a huge regulatory apparatus in order to “solve” a transient problem. Tech-savvy people are supposed to be able to grasp the difference between static and dynamic systems. I guess impatience overcomes rationality.

    1. Maybe they aren’t as tech-savvy as they like to think they are?

      1. Its the a perfect example of “a little learning is a dangerous thing.” They know how programming and software works but not the business side. Or they just assume business is evil, because you know, they make profit or something.

      2. See my post below. Using an app to post LOLpics doesn’t make you tech savvy.

      3. Their tech-savvy is fine. Their government-savvy is unrealistic.

  8. Once prices rise and access becomes more limited, lefties will admit that net neutrality was a bad idea. Just like they did with ObamaCare.

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  10. a key issue in Obama’s first campaign and a priority for many of the administration’s young, tech-savvy supporters.

    *sigh*

    Sorry, using Instagram to post LOL pics and update your facebook wall does not make one tech savvy.

    I am tech savvy, and I use none of these services. I understand how traffic flows, how switching networks work, how packets are prioritized, how data flows through routers, what the network layers mean, how they’re used and applied and why. Net Neutrality is an abomination. And anyone who knew the kind of things that I know would agree that it is an abomination.

    You may now return to laughing at your LOLpics and referring to your millennial self as “tech savvy”.

    Thank you very much.

    1. Does your tech savvy tell us how to stop the FCC from enforcing their silly regulations on us? Because they will if they get the chance.

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  12. Once the government gets its foot in the door . . . regulating speech, regulating content, taxation. Does anyone learn?
    I don’t know if “net neutrality” is a good idea or not, but giving government any power over the internet is a BAD idea for liberty.

    1. I particularly appreciate the part about “forbearance.”
      Is that, “If you like your interet service you can keep your internet service?”

  13. Might be time to forbid the FCC the ability to expend any funds on enforcement of CA-34.

  14. How much is Comcast paying you?

    We have been living under effective net neutrality from the birth of the internet until very recently. In that time, the United States has produced the largest internet firms in the world and start-ups have flourished.

    Imagine if every company had to negotiate their own price for electricity. Large companies would use their size advantage to block access to upstarts and innovation would be stifled.

    What we need to do is force Comcast and Time Warner to divest their media divisions and allow free competition for broadband by destroying the local regulations that give these companies their monopolies.

    If you get rid of net neutrality without breaking up the large broadband companies, you effectively put the worst companies in the world in control of the internet while they are competing with other media companies to whom they are selling access.

    1. No, what we need is competition. Instead of more heavy-handed government policies that the large broadband companies can influence and control. Don’t you lefties ever learn? More government control means more corporate power. The Corps rely on government to do their dirty work for them, and people like you *unwittingly* argue in support of the corporations, even while you think you’re fighting them.

      What irony!

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