July 24, 2017

Private: The Assault on the Open Internet Rules

ACSblog’s Symposium on Regulatory Rollback, Gigi B. Sohn, Kevin Werbach, Net Neutrality

by Gigi B. Sohn*, Fellow, Georgetown Law Institute for Tech & Society, Open Society Foundations and Mozilla and Kevin Werbach, Associate Professor of Legal Studies & Business Ethics, The Wharton School, University of Pennsylvania

*Sohn previously served as Counselor to FCC Chairman Tom Wheeler from Nov. 2013 - Dec. 2016. 

**This post is part of ACSblog’s Symposium on Regulatory Rollback

The Open Internet (or “net neutrality”) rules adopted by the Federal Communications Commission (FCC) in 2015 were the Obama administration’s most significant achievement in communications regulation. They were among the first rules the Trump administration targeted following the 2016 election. In May, the Trump FCC began a rulemaking proceeding to repeal them. It also rejected the legal authority in which the rules are grounded, and failed to recommend anything in their place.

The Open Internet rules prohibit broadband Internet Service Providers (“ISPs) like Comcast, AT&T, Verizon, and Charter, from discriminating against or favoring any content, applications or services on the Internet. Among other things, the rules specifically prohibit ISPs from blocking or throttling, and prohibit ISPs from extracting fees in exchange for faster or better quality delivery to the consumer (“paid prioritization”).

In a world without net neutrality, Netflix can pay to reach the consumer faster than other streaming services like Hulu and Vimeo, and Comcast can favor its affiliated NBC programming over Fox and CBS. Imagine if ten years ago eBay had the ability to pay for better quality of service to its customers than the craft marketplace Etsy – it is likely that the latter would never have gotten off the ground. Net neutrality ensures that the consumer, and not Comcast or AT&T, decides who wins and who loses over the internet.

Legal Authority for the Rules – Title II

The 2015 rules are grounded in Title II of the Communications Act of 1934. Title II says that broadband ISPs are essential “telecommunications services,” and as such, can be prohibited from discriminating against or favoring certain internet traffic. Prior to adopting the 2015 rules, the FCC twice tried to enforce net neutrality principles under sections of the Communications Act other than Title II, and both times the D.C. Circuit vacated the rules.  In June 2016, the D.C. Circuit, in US Telecom v. FCC, upheld the 2015 rules because they were grounded in the strongest legal authority – Title II. 

Title II also gives the FCC a means to address, among other things, ISPs’ fraudulent billing practices, price gouging and privacy violations. Should the Trump FCC reverse the 2015 decision, broadband ISPs would be almost completely free of oversight. In a market where the current  FCC found that 58% of Americans have a “choice” of zero or one ISP and 87% have a choice of 2 or fewer ISPs, consumers will be the losers if there is no referee on the field to oversee anti-consumer and anti-competitive practices by ISPs. 

What Happens Next

The FCC issued a “Notice of Proposed Rulemaking” that signaled the agency would not only reverse the 2015 decision to classify broadband ISPs as telecommunications services, but would also repeal the rules in their entirety without replacement. Initial comments were due on July 17, and reply comments are due on August 16.  Already, over 10 million comments have been submitted, nearly three times more than were submitted in the proceeding that led to the 2015 rules. Some are predicting a final decision sometime in the final quarter of 2017.

Interestingly, the ISPs and their surrogates claim to support the idea of net neutrality. They acknowledge that blocking and throttling could stifle free speech and innovation on the internet. They focus their concern on the breadth of the FCC’s authority under Title II, and the possibility that a future FCC could engage in more heavy-handed regulation (specifically rate regulation of ISPs). So they urge that Congress take on the task of codifying net neutrality rules and deciding the limits of the FCC’s authority over broadband. While the FCC’s reclassification proposal is pending, there is a chance that the agency will take a “regulatory pause” to see if Congress can pass legislation resolving the matter.

Passing legislation codifying net neutrality will not be easy. The ISPs may be willing to live with certain net neutrality rules (although likely not the ban on paid prioritization), but they would be unlikely to agree to strong and flexible FCC authority to oversee the broadband market. Conversely, public interest advocates and many tech companies and competitors to the ISPs will not abide any bill that permits paid prioritization or removes FCC authority to oversee broadband. The Trump FCC rushing to repeal the 2015 rules has not exactly engendered a spirit of bipartisanship, which was in short supply to begin with on Capitol Hill.

The Future of the Internet

The battle over the future of net neutrality is also a battle over the future of the internet. The open, decentralized broadband internet has enabled, among other things, free speech, political organizing, economic opportunity and access to education and health care. In the absence of net neutrality rules limiting ISPs’ incentives and ability to discriminate, the internet will likely become more like cable TV – where providers pick and choose which services get favored access to consumers and which do not.  Large majorities of the American people, across party lines, have made clear that is not the internet they want.