Net Neutrality

FCC Chairman Says Net Neutrality Won't Mean New Internet Taxes. Here's Why One Agency Commissioner Says That's Wrong.

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Ajit Pai Twitter

As Federal Communications Commission (FCC) Chairman Tom Wheeler has pushed forward with the reclassification of broadband Internet service from a Title I information service to a utility-like Title II telecommunications service as part of an effort to implement net neutrality rules, his office has repeatedly insisted that the move won't result in new taxes on Internet service.

You can see this, for example, in an official agency document released yesterday that claims to "separate fact from fiction" regarding the agency's regulatory overhaul. It's a "myth," the sheet says, that the new rules will increase broadband bills or raise taxes.

This is the official position of the FCC under Chairman Wheeler. But it's not the position of all of the agency's five commissioners. In a detailed and compelling 62-page dissent, Commissioner Ajit Pai, one of the two Republican appointees who voted against the Title II switchover, argues that the move clearly paves the way for new taxes and fees on Internet service.

Most phone bills, Pai explains, contain an additional line for what's known as a "universal service fee"—essentially a tax added to your phone bill by the FCC which raises about $9 billion in revenue each year. Because this is a feature of Title II service, it's never been applied to Internet service before.

But now that broadband falls under Title II, there's a clear path to seeing these fees applied. As Pai writes, "the Order explicitly opens the door to billions of dollars in new taxes on broadband." Pai notes that this is explicit in the order, which "authorizes the Commission to impose universal service contributions requirements on telecommunications carriers—and, indeed, goes even further to require '[e]very telecommunications carrier that provides interstate telecommunications services' to contribute."

As a result "the FCC now has a statutory obligation to make sure that all Internet service providers (and in the end, their customers) contribute to the Universal Service Fund. That's why the Order repeatedly states that it is only deferring a decision on new broadband taxes—not prohibiting them."

So Wheeler and his backers are dodging the issue when they claim that there are no new taxes or fees on Internet service as a result of the Title II transition. No, the new rules don't explicitly install the new fees right this minute, but they make it possible, and even likely, that they will be put in place before long. (One important decision on local Universal Service Fees is expected in April.) 

This is typical of the FCC's approach under Title II, which relies on forbearance—essentially holding off on some aspects of Title II regulation—to escape some of the new title's required regulations. But as Pai points out elsewhere in his response, the forbearance process is hardly a guarantee that the FCC will hold off on a regulatory manuever forever. It is, at best, a promise, easily broken, that the current FCC won't move in that direction. Essentially, the FCC is saying, "trust us, this won't happen." 

But the very history of the Title II order suggests that the agency's leadership can't be trusted to stay on course. Chairman Wheeler spent most of last year talking up a middle ground proposal that would have put some net neutrality rules in place without reclassification. Title II was not really under serious consideration.  But after President Obama released a statement in support of Title II, Chairman Wheeler quickly changed his tune. The rapid shift, and the rush to pass the new rules, suggests how easily it is for the Commission to alter its direction when the political winds change. And it further suggests that the agency's various promises that it will avoid onerous regulations or new taxes and fees under Title II should be treated with a fair amount of skepticism. 

Watch ReasonTV's interview with Pai below:

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        1. Sheesh, you’d think the head of the FCC would know swearing is against he rules.

          1. Not until a TEAM RED chairdude is in there.

      1. ooh… DP

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  1. I’m still hazy about how non-elected officials get to make new laws by terming them “regulations” and not having to put them to a vote.

    I know it happens, I’m just curious as to the justification of the practice.

    1. The justification is pretty self evident: Fuck You. That’s Why.

      1. but how? Is it just a practice that’s gone on so long it’s ok? Has it (i’m sure it has) gone to the scotus- and what was their reasoning?

        1. It probably did go to scotus and they probably said something like “It’s the duty of the Executive to implement and oversee the laws made and passed by Congress. Something, something safety and welfare of the citizens, something something. Therefore, beuracracy making new regulations that meet their original charters intent are a-ok with us.”

        2. but how?

          Because they can? They know full the electorate is going to be too oblivious and/or apathetic to change any of this. Stupid democracy.

        3. What difference, at this point, does it make?

        4. Formulating what should be done gets deferred by the constitution to Congress; how it gets done, to the executive.

          Congress establishes an act (the Administrative Procedure Act) where they make a register of laws that they ‘de facto’ approve of and that they, or the executive grant access to certain agencies to write to/remove regulations to/from the registry.

          Various layered iterations exist but, obviously, they can’t all be experts at everything and be expected to read all the details of every bill. Ipso facto, dominion by (literal) federal clusterfuck.

          1. We plebians get to challenge the constitutionality of any particular addition to the CFR (or Schedule of Controlled Substances or Title II firearms or w/e) through SCOTUS who’s job is to simultaneously act as a check on and defer to the other two branches.

            1. *mad.casual realizes he refreshed while in offline mode and apologizes to everyone who explained more thoroughly below.*

          2. Just about every law these days is simply an authorization to some power hungry unaccountable bureaucrats to do to us whatever they want. We live under a myriad of mini Erg?nzungsgesetzen,

          3. Various layered iterations exist but, obviously, they can’t all be experts at everything and be expected to read all the details of every bill. Ipso facto, dominion by (literal) federal clusterfuck.

            Again, turn all regulatory agencies into “advisory” agencies. Let them write the regulations and deliver them to congress as regulatory “packages”, then congress can give a thumbs-up or thumbs-down vote on the package as a whole.

            1. You might not like the result when every license required to market a drug, medical device, food additive, pesticide, refrigerant, and lotsa other stuff I don’t know about requires an act of Congress & POTUS’s sig, because right now each such licensing is an administrative rulemaking.

            2. This, they can act as advisors to congress, but let representatives make the final decision. Anything else removes the people as a check against government, which is the whole point if a representative government…

        5. It’s actually a lot older than most of the people responding to you here. The Administrative Procedure Act was actually a kind of limit on the practice: Congress taking something that was already being done in a chaotic and unlimited way and making it regular and, to some degree, limited.

          This:

          http://en.wikipedia.org/wiki/U…..v._Grimaud

          is the case you’re looking for. It’s not an incredibly well written article (obvious bias being obvious), but it is a decent overview.

          The broader question of Congressional delegation of legislative authority is handled somewhat in this one:

          http://en.wikipedia.org/wiki/N…..n_doctrine

          So, in other words, if you believe that Congress genuinely doesn’t have the Constitutional ability to delegate its legislative power to another branch of the government, the Supreme Court has been getting it wrong, badly wrong, for more than a century. Not surprising: the Supreme Court has been a shockingly blaise defender of constitutionalism of any kind essentially since its creation, instead preferring to play ‘political referee’ at its most honest and virtuous and ‘kingmaker’ at its most corrupt and interested.

    2. Congress delegates power to regulators, so the regulation has the force of the original law. They do this because these regulations are messy and unpopular, and the Congresscritters might not get reelected if they made those rules themselves. So they can claim to oppose these regulations all day long without doing a damn thing about it, and then keep winning elections.

      1. I think that’s part of it, and another part is that the Congresscritters are all too often legislating about things they don’t know a fucking thing about. So the laws they write have a lot of “fill in the blank” spots pretty much by design.

        As an aside, I’ve always figured that that’s a big reason the drafters of the Constitution tried to limit what Congress could legislate on: not some dry political theory but rather the more directly practical reason that no person (no matter how well educated) can possibly legislate intelligently on every subject under the sun.

        1. Or even some subjects. Or even one subject.

        2. The critters know exactly what they are doing: figuring obscure ways to convert more private property to their government revenue streams. 99% of all laws and regs are designed to direct more money from the private to the public economy. Check the old scifi flick, “The Blob” for an analogy. These shitz never do anything that lets a citizen keep more of what they’ve earned.

    3. I know it happens, I’m just curious as to the justification of the practice.

      When congress passes a law they usually state in the law the the appropriate agency will make the rules and regulations to implement the law.

      For instance:

      Title 25 – INDIANS
      CHAPTER 23 – DEVELOPMENT OF TRIBAL MINERAL RESOURCES
      Sec. 2107 – Regulations; consultation with Indian organizations; pending agreements

      ?2107. Regulations; consultation with Indian organizations; pending agreements
      Within one hundred and eighty days of December 22, 1982, the Secretary of the Interior shall promulgate rules and regulations to facilitate implementation of this chapter. The Secretary shall, to the extent practicable, consult with national and regional Indian organizations and tribes with expertise in mineral development both in the initial formulation of rules and regulations and any future revision or amendment of such rules and regulations. Where there is pending before the Secretary for his approval a Minerals Agreement of the type authorized by section 2102 of this title which was submitted prior to December 22, 1982, the Secretary shall evaluate and approve or disapprove such agreement based upon section 2103 of this title, but shall not withhold or delay such approval or disapproval on the grounds that the rules and regulations implementing this chapter have not been promulgated.
      (Pub. L. 97?382, ?8, Dec. 22, 1982, 96 Stat. 1940.)

      1. but that’s different from reclassifying something, isn’t it?

        1. but that’s different from reclassifying something, isn’t it?

          Yes, it is. It depends on what the enabling statutes for the FCC says about their power. IF they have the power to reclassify something, then they can, otherwise the courts will should strike it down.

          1. At least according to one tech guru I can’t be arsed to dig up, it’s likely to be stuck down again. Which means whatever statutory doctrine they’re using to justify this on paper can’t be much stronger than pleading with the court that Obama really, really wants this to flesh out his skimpy legacy.

      2. In other words, the bullshit laws they enact are too complicated for them to monitor, so they erect and maintain a bureaucracy to do it for them. It’s all just a product of having vastly too much government and too many laws. Which is inevitably what happens with government.

        1. It’s also how the executive branch ends up with more and more power.

        2. Look, there’s nothing left to cut.

          NOTHING.

    4. when they unelectedly change the rules and it affects your pay or profits, it’s common sense regulation. when a democratically elected official changes the rules that affect government employee’s pay, it’s BREAKING A SACRED CONTRACT.

    5. They put the word “common sense” in front of the word “regulations,” and boom! Magical authority!

    6. Congress created a framework with the Administrative Agencies Act in the middle of the last century that essentially allowed them to delegate some powers to administrative agencies.
      Also the regulations they pass are different from ‘laws’ in that ‘law’ implies the possibility of criminal punishment. Agencies can only issue civil punishments. (thus why all they can do is fine people…unless Congress gives criminal effect to a rule an agency would like to have) Further, agency rules aren’t ‘set in stone’ the way legislation is. Most statutes don’t include sunset clauses all rules are constantly subject to termination.

      SCOTUS has ruled on it and said it is OK. What is worse is the standard to overturn an agency ruling is ‘arbitrary and capricious’ which is a pretty high standard to prove to get a decision reversed.

      1. That’s not true. In many cases agencies issue licenses to do things that are criminal violations if you don’t have the license.

      2. but did Congress delegate the authority to the FCC to decide what industries it can regulate? (I don’t know)

        With Title I and Title II, it is clear that some things the FCC gets to mess with, others it doesn’t. Congress gas shown several times in the past that it does not want regulation over the internet, and has voted down Net Neutrality.

        As a layman, I believe a good case could be made in court that Congress never gave the authority to the FCC to government the internet,l and had in fact voted to not give it authority.

    7. I’m still hazy about how non-elected officials get to make new laws by terming them “regulations” and not having to put them to a vote.

      The way this happens is that Congress passes a law that said “for anything in this area, make up any regulations you want, we don’t need to review them first”.

  2. Say no to the Tube Tax!

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  4. so, the FCC has grabbed a huge amount of power and promises not to use it?

    why am i not convinced that will hold?

    i mean, when’s the last time government had a ton of power lying around and failed to use it?

    when was the last time government got the ability to pick winners and losers on a market and politicians were not immediately bought and sold by crony capitalists?

    imposing article 2 on the net over peering issues (purported net neutrality) is like imposing fascism on a country to make the trains run on time.

    1. Because Millennials wanted this and they’re tech-savvy. Why would the tech-savvy demand something that would get out of control?

  5. It’s not a tax, it’s a penalty?

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    1. That money will come in handy to pay for for the new Intertube taxes.

  7. As bad as this is, it may have a happy ending. Things like the FCC have remained around so long because they made sure both parties’ cronies were taken care of. That meant neither side really wanted to kill them even if their supporters wanted them to. Now the FCC has dropped the mask and is apparently in business for the single purpose of paying off Democratic cronies. I can’t see that working out well for them over the long run. Sure, the Republicans are not going kill the FCC first chance they get, though they should. Over the long run, however, it is very hard to continue to exist in Washington without at least some power base in both parties.

    1. I think a lot of the sycophants of the Dem side have swallowed the line about demographic change obviating the republican party, at least from a presidential perspective, hook line and sinker so they think they don’t have to worry about that anymore…

      1. Given the drubbing they’ve taken at the state level this seems incredibly stupid of them.

        1. These are people who buy into socialism.

          Need I say more?

        2. When does a prog ever earnestly engage with reality?

  8. The Internet will be dead in 5 years.

    1. The internet died when they got rid of BBS.

      1. Prodigy forever.

      2. Funny enough I designed the I/O board that went into the World’s First BBS.

    2. It won’t die. But it won’t grow or evolve either. Regulators are typically unintelligent and obtuse, caring about their power more than anything else. Most of their power resides in their ability to say “No,” so that’s what they do. Especially with regards to things that they don’t understand, which is most things.

  9. I still think this is going to get sued into oblivion but in the meantime I am certainly going to sit back and laugh uproariously at the absolute cretinous morons who supported NN as everything they thought was going to happen doesn’t and everything they were repeatedly warned about does.

    1. as everything they thought was going to happen doesn’t and everything they were repeatedly warned about does

      And when that occurs, they will blame it on Republicans or Korporations without the teeniest, tiniest glimmer of either introspection or retrospection.

      1. The great thing about this debate, more so than many others, is that it was fought by those retards online. That means all you have to do is pull up where they were warned and smack them with it over and over again like STEVE SMITH.

        1. That means all you have to do is pull up where they were warned and smack them with it over and over again like STEVE SMITH.

          As if that ever changes their minds. They’ll always invent some ad hoc explanation for why the magical promise of govt intervention didn’t work as advertised?e.g. the intervention simply wasn’t enough so we need more of it, or bc the evil market meddled with the regulatory process, etc.

    2. You don’t understand how this works.

      (1) Progressives pass legislation to get more free stuff that corporations are supposedly denying them.

      (2) Regulations have the opposite effect of what was desired: they increase inequality, make stuff more expensive, cause companies to leave the market.

      (3) Progressives blame evil corporations rather than their own regulation and go back to (1).

      Once a market is so regulated that no sane company wants to operate in it anymore, companies are asking for subsidies. When those get out of hand, some company will simply be chosen as the “winner” and become a government-blessed monopoly.

  10. FCC Chairman Says Net Neutrality Won’t Mean New Internet Taxes

    Yeah, that’s bullshit.

    1. Read Their Bits, No New Taxes

    2. It’s not a penalty; it’s a fee?

    3. Well, it won’t be called a ‘tax’, it’ll be called a ‘fee’. So, they’re technically right, a bureaucrat’s favorite kind of right.

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  12. Net Brutality is about one thing: Power. Within that subset is the power to make ISPs do things that gets the government votes. Except for innovation and low costs, but when that slows/stops, it will be the fault of business.

  13. Net Neutrality means fatcats like the bot above will pay their fair share of taxes on the $64000 they made in 9 days on the internet!

    1. Spammers who make enough money to pay bribes to gov will be empowered. And their profits will grow. And the profits will be invested in new innovations in spamming.

  14. Baby steps. Don’t worry, we’ll strangle you slowly. I work for the industry which benefits from USF, so this is good news for me.

    1. It’s not a fee; it’s an incentive?

      1. And when I say incentive, I mean an incentive to get people to start using the USPS.

        Think of the multiplier effect when HnR has to be done by pony express.

        The preview button should work better, anyway.

        1. The fonts would stay the same too. I mean, it’s tiny. Then it’s big, tiny, big, looking normal, OMG HUGE.

          Some things cannot be tolerated!

        2. Wait, I’m confused. What does the USPS have to do with the USF? Or is there a joke here I’m missing?

  15. “Tom Wheeler……his office has repeatedly insisted that the move won’t result in new taxes on Internet service.”

    What kind of fucking idiot does this lying cocksucker think I am?

    Obumblecare. Now this.

    They have lost their fear of us. No more sneaking around, no more slight of hand. They are in our face. They are doing shit that is going to be painful for everyone and they are not shy about doing it.

    I don’t see this ending well for anyone, especially the political class.

    1. I don’t see this ending well for anyone, especially the political class.

      Eh. Life will go on and it’ll end perfectly well for them in their favor, as these things always do.

    2. I know people who are all for it. They’re convinced websites like this one will load painfully slowly because some giant corporation will just buy up all the bandwidth while twiddling their mustaches. They think bandwidth is a zero sum game and we can never make any more of it.

      1. They think bandwidth is a zero sum game and we can never make any more of it.

        Now that government is involved, it basically is. Government is the great stagnator.

        1. Sort of like how hospitals have to get government permission before installing a new MRI machine because they might not “need” it.

          1. Exactly. All innovations and improvements would require government permission. Permission is granted based not upon the merits of the innovations and improvements, but on whether or not your company has kissed all the right asses. Business decisions become political, not practical.

            1. Business decisions become political, not practical.

              Which is the Progressive Dream: The subjugation of all life to politics.

      2. Just ask them how much bandwidth there was 10 years ago…and where did it all come from now?

        1. Bigger wires?

          1. Quite the opposite!

        2. Just ask them how much bandwidth there was 10 years ago…and where did it all come from now?

          They’d claim that greedy corporations had been hoarding it for decades and have only been releasing a slow trickle of it in an attempt to stave off the benevolence of govt regulation.

        3. Government. Duh. You didn’t build that.

        4. and where did it all come from now?

          Al Gore started holding his hands further apart when he speaks, right?

    3. What kind of fucking idiot does this lying cocksucker think I am?

      It is quite possible he is lying to his supporters, like that other fuckhead Gruber.

      Or maybe he is just a naif.

    4. What kind of fucking idiot does this lying cocksucker think I am?

      That really isn’t fair. Cocksuckers generally decorate your homes, make your wife’s wedding dresses, and cut your hair.

      Government regulators are anemic, anorexic, privileged heterosexual white males with trophy wives, 1.5 children, and a mistress or two, living in $2 million homes in wealthy suburbs of Washington DC, usually in Virginia.

  16. Because many families between $150,000 and $411,500, the vast middle and upper-middle class…

    Wait what? Household income of $150K is upper middle, and anything over a quarter mill per year is straight “upper class”. The working rich if you will. While this segment of the population might be referred to as sizable, it can’t in any meaningful way be called “vast”.

    1. You think someone in NYC making $250K is rich?

      1. They can always get a cold water walkup across the river and stretch their dollar.

      2. Yes! Living in NYC is a total luxury good in my book and they’re consuming it. Some people spend it on cars, some people on McMansions in the suburbs, and some people blow it all on an authentic living in NYC experience, but they’re rich enough all the same.

    2. You think you could post this comment to the correct thread?

    3. Wait what? Household income of $150K is upper middle, and anything over a quarter mill per year is straight “upper class”.

      If you make a salary, you are not “upper class”. The upper class is so wealthy that they don’t have to work. People drawing salaries, even $500k/year, are generally just working professionals towards the end of their careers, with a few good years left to save for retirement.

      In places like the Bay Area, you need around $150k/year to be able to afford any kind of 1-2br condo. If you want to be able to afford a house, you generally need to spend around $2M, and need a salary to match.

  17. According to most of what I’m seeing online this is great because Comcast really sucks guys. Like, really, really sucks.

    1. Comcast does really suck. Government regulations MADE IT THAT WAY.

      1. But MOAR BETTAH regulations will fix that. Along with the right TOPMEN!

      2. Whatever dude. Comcast totally paid off local politicians to get a monopoly in my area. If that’s not proof that free market capitalism is totally evil and government regulations completely necessary, then I don’t know what is.

        1. Thom I hope you were being sarcastic because what you wrote contradicts itself .

          A monopoly granted by a government is regulations and not free market capitalism. What you see as a problem , Comcast’s monopoly, is caused by what you say is the answer to the problem, which is government power to regulate.

          Comcast has a monopoly because of government regulation, Government regulation isn’t the answer to Comcast’s monolopy it is the cause of it.

          You thought process is compeletely ass backwards.

          If government didn’t have the power to grant monopolies Comcast wouldn’t have one.

        2. Not sure if serious.

          Being a rich and powerful evil corporation means fuck-all if the local politicians don’t have the power to force a monopoly.

          Imagine this scenario, if you will; You are concerned about being robbed at night. To alleviate this fear, you hire a security guard. You furnish him with a gun, and leave strict instructions NOT to allow anybody to rob your home.

          You wake up the next morning to find that your home has been robbed. When you question your new security guard, he explains that he allowed a friend of his to rob your home in exchange for a large sum of money. You rant and rave for a while, then you hit upon an idea of how to keep this from happening again.

          You furnish your security guard with TWO guns! Now, with twice the power, he will clearly be able to stop that thief that he had allowed to rob your home the night before. Genius! With this thought rattling happily around in your head, you head off to work.

          1. When you arrive home, you find that the robber from the night before is in your living room. When you ask your security guard about this, he explains that he allowed the man to move into your home in exchange for a large sum of money, and there was nothing that could be done about it, because Market Forces. You rant and rave for a while, and then strike upon a brilliant idea; you furnish your guard with full body armor! Of course! With no fear of pain or reprisal, the security guard will be sure to remove this interloper. With that fear rattling around happily inside your brain, you head to bed and fall asleep.

            You wake up outside, the early morning rain soaking your pajamas. You have been moved out of your home and into the yard. You attempt to re-enter your house, only to find the door locked. You hammer upon the wood, and it finally opens, revealing the face of your armed and armored security guard.

            “What is the meaning of this?” You cry.

            “Yeah, I’ve given your home to my friend, in exchange for a large sum of money. I’m working for him now. Leave, or I will kill you.”

            You look at the weapons and armor you have furnished the security guard. It slowly begins to dawn on you that perhaps you have done something wrong.

            You should have paid the man more money, obviously!

    2. They also paid off government to make regulations to keep it that way.

  18. So a tax is now a Contribution, that makes me feel a lot better. since its a contribution now does that mean I can write it off of my taxes?

    1. It’s not an incentive; it’s a contribution?

      1. Think of it as a Shared Responsibility Payment.

    2. It’s a tax on the companies that they’re allowed to pass on to you. So, totally not a tax on you, and blaming it on the FCC is totally unfair.

      1. That’s right. We all get wealthier when the government does, especially at the expense of evil, vile corporations.

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  22. So, while it’s not yet a reality, it’s a possibility: taxation without representation.

    My memory is a little fuzzy, but I seem to recall somewhere a war was fought over that issue, somewhere in the world…say, about two and a quarter centuries ago, I think…

    1. My memory is a little fuzzy, but I seem to recall somewhere a war was fought over that issue, somewhere in the world…say, about two and a quarter centuries ago, I think…

      Pre-Revolutionary Americans had already been relatively well-accustomed to self-governance, experiencing little if any intervention by the British crown for something like a century. Very different mentality today.

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  24. Yes, but what about that bipartisan bill that promised no new Internet taxes *forever*?

    That’s been a big “see, NN will work!” Thing amongst many otherwise politically rational people I’ve argued this with. No. New. Taxes.

    Man, the blind spot with fairly libertarian techie friends of mine on this is Montana sized.

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  27. Show me on the doll where the internet tpuched you.

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