Federal Communications Commission chief Ajit Pai revealed his plan Wednesday for a net neutrality rollback, aimed at replacing FCC rules passed under the Obama administration with a framework that repeals the agency’s reclassification of broadband as a service subject to anti-monopoly regulations.
During a speech at the Newseum in Washington Wednesday President Donald Trump’s pick to lead the FCC confirmed rumors he’ll seek to reverse the FCC’s reclassification of internet service providers (ISPs) as common carrier public utilities under Title II of the Communications Act — authority originally used to regulate telephone monopolies in the 1930s.
“Nothing about the internet was broken in 2015,” Pai said. “Nothing about the law had changed. And there wasn’t a rash of internet service providers blocking customers from accessing the content, applications, or services of their choice.”
Pai made declining investment in broadband infrastructure his driving concern for repeal, saying broadband investment decreased 5.6 percent, or $3.6 billion, between 2014 and 2016.
“Now, when you talk about less infrastructure investment, many people’s eyes glaze over,” he told attendees. “But it’s important to explain in plain terms what the consequences are. Reduced investment means fewer Americans will have high-speed internet access. It means fewer American will have jobs. And it means less competition for consumers.”
It’s not Comcast, AT&T, or Verizon that can’t weather Title II but the nation’s smallest providers, Pai said, adding more than 20 told the FCC this week they’ve had trouble obtaining financing to expand their networks since the rules were passed.
“Our nation’s smallest providers simply do not have the means or the margins to withstand the Title II regulatory onslaught,” he added.
The FCC will vote on Pai’s notice of proposed rulemaking (NPRM) during its May 18 open meeting, beginning the process of hearing feedback on his proposal. The last net neutrality proceeding received more than four million public comments.
The chairman explicitly stated he’ll seek to return broadband to a Title I information service, previously regulated by the Federal Trade Commission (which will also return privacy regulation to the FTC) and repeal the 2015 Open Internet Order’s general conduct standard, used by his predecessor Tom Wheeler to go after zero-rating offers by AT&T and Verizon.
“Title I classification was expressly upheld by the Supreme Court in 2005, and it’s more consistent with the facts and the law,” Pai said. “Do we want the government to control the internet? Or do we want to embrace the light-touch approach established by President Clinton and a Republican Congress in 1996 and repeatedly reaffirmed by Democratic and Republican FCCs alike?”
The NPRM will seek comment on how to approach the three bright-line rules barring ISPs from blocking, throttling, or prioritizing content. Fellow FCC Republican Commissioner Michael O’Rielly followed Pai’s brief remarks supporting the case for paid prioritization, suggesting the FCC may take a hands-off approach to that rule.
Previous reports suggested Pai will leave it up to ISPs to pledge against blocking and throttling content in their user service agreements, inclusions that could subject them to legal action if caught violating such agreements.
Contrary to the previous net neutrality order and in keeping with his pledge to make the agency more transparent, Pai said the entire NPRM will be available to read by Thursday afternoon.
“This time will be different,” he said. “You may agree or disagree with the proposal, but you’ll be able to see exactly what it is.”
During a press call with Senate Democrats earlier in the day, Massachusetts Sen. Ed Markey slammed Pai for stating “he wants to take a weed wacker to the Open Internet Order.” Undoing the reclassification of ISPs as public utilities while keeping some net neutrality principles in place, he argued, is “like saying you value democracy, but you don’t see a need for a constitution.”
Markey said almost half of all venture capital invested in the U.S. last year — $25 billion — went to internet and software-based businesses, while broadband and telecommunications providers invested more than $87 billion in their networks in 2015, the most in the last ten years. Proof, the Massachusetts Democrat said, that net neutrality is working and not, as Pai and other Republican opponents assert, hurting investment and growth.
To withstand legal scrutiny, Pai will have to show something significant has changed in the market since the rules were passed in 2015, backed up by a fact-based docket. The previous FCC’s rules, Democrats added, have already been upheld in federal court.
“Any effort to roll back in draconian fashion this kind of rule would be potentially against the law,” Connecticut Sen. Richard Blumenthal added. “They’re going to have to present evidence, and that’s going to be quite a hurdle because the evidence all points in the opposite direction.”
Craig Aaron, president of Free Press, a pro-net neutrality and First Amendment group, described the Trump FCC’s portrait of a broadband market threatened by regulation as “alternative facts.” Evan Greer of Fight for the Future, an open internet non-profit, warned Pai’s net neutrality rollback was the first step toward Trump asking ISPs to slow web traffic going to media outlets like the New York Times, which he frequently describes as part of the “fake media.”
“Hell hath no fury like the internet scorned,” Greer said, suggesting Trump may have misjudged his voters “who already pay too much money” to their ISPs “to decide what they can see and do online.”
During a separate call backers of Pai’s plan from the voice over IP (VoIP) industry (which competes with ISPs in the voice market) asserted the bustling internet ecosystem of today only occurred because of a lack of regulation, specifically because Congress decided in the 1990s VoIP wouldn’t be regulated like traditional telephone networks.
“It cost three dollars a minute to have scratchy voice to China, now you can have free Skype,” Tom Evslin, founder of VoIP provider ITXC, said. “That wouldn’t have happened…this kind of regulation kills innovation.”
Toby Farrand, vice president of engineering and operation for VoIP provider Ooma, explained it isn’t big ISPs that slow down Ooma traffic but other popular edge providers like Netflix, who act as “free riders” by hogging bandwidth during peak hours (as much as 30 percent according to Farrand).
“The idea that somehow Netflix requires protection is kind of backwards relative to a company like Ooma,” Farrand said. “A couple years ago when they released ‘House of Cards’ season 2 or 3, it created problems for our customers. We traced it. We know exactly where the routers were that were causing the problems.”
The group argued net neutrality lobbyists have been co-opted by the commercial interests of edge providers like Netflix and Google as a means of using regulation to benefit their side of the market, a term known as “rent seeking.”
On Tuesday FCC Commissioner Mignon Clyburn, the FCC’s lone Democrat and only commissioner left to have voted for the rules, said she was “uncomfortable” with the idea of ISPs simply promising to be good actors.
“You’ve heard me say this dozens of times, about the internet and broadband being one of the greatest equalizers of our time, and what it enables,” she said according to Axios. “And something that important, for a handful of entities saying this is how it’s going to be done, I’m a little bit uncomfortable [with] that. I haven’t seen anything, but just the promise of that makes me feel a little uncomfortable.”