Net neutrality is going to get “killed,” “destroyed,” “dismantled,” and “obliterated,” by the Federal Communications Commission during an upcoming vote on the issue. This is what every other media outlet seems to be screaming from the edge of virtual precipice right now. They claim the FCC will allow internet providers to slow down your service and control what customers can access online, and that the current “net neutrality” rules, just passed in 2015, have saved the internet from being hijacked by service providers.
So what’s going on? Does Pai oppose net neutrality as his critics claim? Is net neutrality — the principle that internet service providers should treat all data on the internet the same and not discriminate or charge differently based on where it’s coming from or who it’s going to – being eliminated?
With the release of Pai’s plan, and the vote a full three weeks away, the chairman is showing a level of transparency that has been uncommon for the FCC. The previous chairman, Tom Wheeler, who led the charge to pass the regulations Pai is seeking to repeal, did not release the new regulations publicly until two weeks after the FCC passed them.
Supporting net neutrality and opposing the current rules is not a contradiction. Pai and others who support rolling back the current rules believe that Congress has a responsibility to act and pass an actual law pertaining to net neutrality. Congress could create rules against blocking and throttling traffic on the internet which would protect net neutrality in the long run, regardless of the actions taken at the FCC. In creating the current regulatory framework, the FCC used a 1930s era law to claim authority over broadband internet. Title II of the Communications Act allows the FCC to regulate common carriers, and the 2015 Open Internet Order allowed the FCC to assert its authority over broadband. The commission said it would forbear from its ability to regulate some of what it is allowed to regulate under the 1930s law, but future commissions could choose to expand the FCC’s regulatory power, just as others could walk back that power. This regulatory uncertainty can ebb and flow with each new FCC chairman, which is why many believe Congress must spell out net neutrality rules rather than relying on a law intended to regulate telephone monopolies.
Pai made it clear in a Wall Street Journal op-ed Tuesday, and on numerous occasions in the past, that although he rejects the broader powers the FCC has claimed in the name of net neutrality, he supports the inherent principles of net neutrality which are that internet providers operate in an open and fair manner. Pai is clear that so long as his FCC proposal passes its December 14 vote and any legal challenges to it aren’t successful, the FCC will give up its authority to actually enforce net neutrality regulations.
Contrary to what one might expect – especially if one reads most mainstream news publications today – the FCC giving up its authority to enforce net neutrality and have control over internet providers doesn’t mean that net neutrality won’t exist anymore. Instead it means that there will be a new cop on the beat, or rather a return of a previous cop: the Federal Trade Commission and state attorneys general.
There has been a misconception that FCC’s Title II authority is equivalent to net neutrality. Due to a successful lobbying campaign by activist groups and Netflix, Title II has become conflated with strong net neutrality rules. For years, before the FCC claimed its Title II powers over broadband, the FTC and state attorneys general policed internet providers and looked out for the best interests of consumers. Now they will have opportunity to do so again if Pai’s plan passes.
Since the Open Internet Order went into effect, the FCC has had the exclusive right to police internet providers. The Ninth Circuit Court of Appeals ruled in a 2016 case that the FTC and other agencies could not regulate internet providers that fell under the FCC’s jurisdiction. This created a gap in the law. The FTC, for example, had long policed privacy regulations, and the FCC had no privacy rules on the books, forcing the FCC to pass its own privacy rules at the end of last year. These rules were later repealed after complaints they were heavy-handed next to the FTC rules, which were still in effect for edge providers, like Facebook and Google.
It’s true that the FTC and state attorneys general won’t have the same broad, expansive power that the FCC does currently, but as FTC acting chairwoman Maureen Ohlhausen has noted in the past, unfair and anticompetitive behavior will be examined on a case-by-case basis.
Ohlhausen’s former lieutenant, Tad Lipsky, the former acting director of the FTC’s bureau of competition, said earlier this year at a Free State Foundation event, that any argument based on the idea that the FCC having less power would result in anticompetitive conduct is “demonstrably unrealistic.” Lipsky emphasized the importance of plaintiffs within antitrust, and noted that the U.S. antitrust litigation framework makes it “very easy” for injured parties to file lawsuits. He said FTC enforcement is “what awaits those who would engage in any antitrust conduct as an ISP (Internet Service Provider) or a telecommunications carrier, out beyond whatever security is provided by a regulatory breakwater.”
However, Terrell McSweeny, the only Democratic commissioner at the FTC said on Twitter Tuesday in response to Pai’s proposal that “even if FCC does this FTC still won’t have jurisdiction. But even if we did, most discriminatory conduct by ISPs will be perfectly legal.” She followed that up with another comment saying, “This won’t hurt tech titans w deep pockets. They can afford to pay all the trolls under the bridge. But the entrepreneurs & innovators who truly make the Internet great won’t be so lucky. It will be harder for them to compete.”
McSweeny said to the House of Representatives’ antitrust subcommittee on November 1 that most U.S. broadband markets are highly concentrated, and that “most consumers don’t have a lot of choices when it comes to deciding which providers to use.” Ohlhausen on the other hand argues that there has been increased competition in the market in the last decade and so consumers can switch providers if they don’t like the service they are receiving.
Republicans and acting chairman Ohlhausen often cite a 2007 bipartisan analysis conducted by the FTC on net neutrality that cautioned against regulation and its impact on innovation within the ISP industry and concluded that the current antitrust laws were sufficient to protect against anticompetitive behavior in the broadband market. Proponents of net neutrality have few cases to point to where there have been violations of net neutrality principles, offering an appearance of effectiveness to the earlier regulatory framework that was in use until 2015. Nevertheless there have been some allegations of net neutrality violations in the past few years.
For Pai, the goal is to return to the same regulatory environment under which the internet saw vast growth, beginning under the Clinton administration and continuing until 2015. The Open Internet Order, Pai argues, has slowed broadband expansion. He explained in the Wall Street Journal: “Encouraged by light-touch regulation, private companies invested over $1.5 trillion in nearly two decades to build out American communications networks. Without having to ask anyone’s permission, innovators everywhere used the internet’s open platform to start companies that have transformed how billions of people live and work.” Economists have found a decline in investment since the reclassification under Title II.
To be clear, Pai’s plan would require Internet service providers to be transparent and disclose any changes in their pricing models or speed allocations but they will be allowed to let some sites to load faster than others, which is what net neutrality activists fear.
Websites could pay Internet service providers like AT&T or Verizon to give them preferential treatment, however Pai argues this would have benefits.
In an interview with NPR, Pai gave the example of a health care startup paying to prioritize the traffic of its patients who are being monitored remotely, which he said “could be perk.”