The Race to Bury Net Neutrality

The Internet is currently full of news articles describing how the FCC will soon be putting to bed the last vestiges of its order a few years ago to eliminate net neutrality rules. The order that is widely being called the net neutrality ruling was a far-reaching change at the FCC that essentially wrote the FCC out of any role in regulating broadband.

Eliminating net neutrality rules was only a small part of that order. Net neutrality is a set of principles that describe how ISPs and network owners are to not discriminate between bits carried over the Internet. Most of the largest ISPs said that they could live with the net neutrality principles, and eliminating net neutrality was not a high priority for companies like AT&T and Comcast. The real priority for the big ISPs was to take advantage of a friendly FCC that was open and willing to deregulated broadband – particularly willing to eliminate any threat of broadband rate regulation.

So when you read the flood or articles this month talking about net neutrality, you need to substitute the term ‘net neutrality’ with ‘regulating broadband’ as you read articles on the topic. The FCC chose to disguise their attempt to kill regulation under the moniker of net neutrality and was successful since the average American probably has no idea that the FCC no longer regulates ISPs and broadband.

The FCC is holding a vote on October 27, just before the presidential election to cement the last open pieces from the FCC’s order to eliminate broadband regulation. The FCC’s order to write the agency out of broadband regulation was challenged in federal court. The court basically said that the FCC had the regulatory authority to either change the rules (or not change the rules) to walk away from broadband regulation.

However, the court said that the FCC needs to demonstrate that eliminating regulatory authority over broadband didn’t impact three areas negatively. The FCC was asked to clarify:

  • How eliminating broadband regulation impacts public safety;
  • How the FCC can still regulate pole attachments if it doesn’t regulate broadband;
  • If walking away from regulation negatively impacts the FCC’s ability to offer the FCC Lifeline programs that benefit low-income Americans.

On October 27 the FCC is going to take a vote to say that it’s earlier order doesn’t negatively impact any of these issues. It’s clear that that the FCC wants to finish the elimination of broadband regulation before the election on the chance that a new Democratic president will mean a new head of the FCC. The FCC has openly said that it changed the rules on broadband regulation in such a way that will make it hard for a future FCC to overturn its order.

A new FCC can obviously undo anything that was done by a previous FCC. However, the net neutrality order was done in such a way that a new FCC would have to go through the full cycle of the FCC’s processes that including various cycles of notices of proposed rulemaking, a final rulemaking, and then the inevitable court challenges to any attempt to reregulate broadband – all done with vigorous opposition from the big ISPs. The process of reversing the deregulation of broadband would likely stretch over many years.

However, there is a much shorter and quicker path for reversing the FCC’s order. Congress is free to reset the FCC rules in any way it seems fit, and Congress could finally pass a new telecom act. There hasn’t been any major telecom legislation out of Congress since 1996 – during the heyday of dial-up Internet. In today’s political environment it would take a Democratic sweep of the White House and both houses of Congress to get new telecom legislation passed.

Even should that happen with the election, the new Democratic majority would have to agree on what is contained in a new telecom act. I can’t foresee that being an easy or quick process. There is an accumulation of topics in addition to broadband regulation that would benefit from Congressional clarification including privacy, regulation of web companies, solving the digital divide, elimination of outdated cable TV and telephone regulations, a national policy on spectrum, regulation of low orbit satellites, and a host of smaller issues.

If the Democrats don’t make a clean sweep of Congress and the White House, then the current FCC will largely have succeeded and it might be many years until a determined FCC could reestablish any regulatory authority over broadband. What is clear to somebody who closely watches industry regulation – it’s going to be interesting few years ahead of us in this industry regardless of what happens at the polls in November.

What is Light-Touch Regulation?

One thing I’ve noticed recently is that a lot of people are climbing on board the idea of building better broadband to rural America. A lot of people seem to think that the FCC can somehow act to fix a lot of the shortcomings of rural broadband – but in doing so they have missed the entire point of what the FCC calls ‘light-touch’ regulation – because, from a practical perspective, broadband is not regulated at all.

It’s not hard to understand why people would misunderstand the situation, because ‘light-touch regulation’ is one of those euphemisms that governments invent to disguise what they are really doing. Chairman Pai at the FCC never misses an opportunity to talk about his regime of light-touch regulation. I have to wonder if there would be as much support for the light-touch regulation if that phrase was replaced with the simpler and more descriptive phrase ‘deregulated’. I suspect a lot of people would be uncomfortable that one of our largest industries is largely deregulated.

The FCC pulled off this huge change by hiding the deregulation inside of their move to undo net neutrality. The FCC didn’t just reverse the net neutrality rules put into place by the previous FCC, they killed Title II regulation – which is the authority given to the FCC by Congress to regulate ISPs as common carriers. The FCC gave up Title II authority and gave the tiny remaining vestiges of broadband regulation to the Federal Trade Commission – even though the FTC is not a regulatory agency. The FTC doesn’t create or enforce new rules – they are more like corporate police that fine corporations when they’ve abused their customers too egregiously.

What does it mean to give up Title II authority? The FCC can no longer judge, or even track broadband prices. ISPs are free to raise rates to any level they want and make any profits they want. There hasn’t been an FCC since the dawn of the broadband industry that has invoked price regulation – but the fact that they could always acted as a brake on bad ISP behavior.

The FCC can no longer intervene in disputes between ISPs or with their biggest customers. Under Title II regulation, the FCC could decide if an ISP was fairly dealing with Netflix or some other large user of broadband. When Title II regulation was killed, the FCC stopped acting as the arbiter in industry disputes – ISPs are free to act in any way they want.

The FCC can’t even intervene when ISPs abuse customers. I recently wrote about the FCC complaint process. Before the end of Title II regulation, ISPs would try to resolve issues raised during the complaint process. The FCC had the authority to make ISPs treat customers fairly if they decided to exercise it – and it was the threat of the FCC creating new rules that made ISPs willing to curb some of their worst behavior. But now the FCC is nothing more than a gatekeeper – they lamely pass on consumer complaints to ISPs, which the ISPs largely toss into the wastebasket since the FCC no longer has any regulatory teeth.

It’s not completely fair to say that ISPs are 100% deregulated because there are a few areas of regulation that were not created under Title II authority that are still in place. For example, the Patriot Act created the requirement that ISPs have to allow federal law enforcement to be able to ‘wiretap’ broadband connections in the same way they used to wiretap telephone connections. The FCC can’t shed that responsibility and so they still enforce the CALEA rules that require ISPs to respond to subpoenas.

There are also various types of privacy and billing rules that were the result of other acts by Congress, and the FCC still oversees these remaining vestiges of regulation. As an example, the whole recent controversy over removing Section 230 protections for online companies like Twitter also applies to ISPs and is enforced by the FCC.

But the core basis for FCC regulation of ISPs was due to the fact that ISPs are common carriers, similar to telephone companies or cellular carriers. ISPs provide a two-way communications path with customers, and it is that basic function that justified regulating them under Title II regulations.

The FCC undertook one of the most bizarre steps in regulatory history when their voluntarily neutered themselves as broadband regulators. They no longer have the authority to force the big telcos to provide better rural broadband. They no longer have the authority to stop an ISP from raising rates to the point of unaffordability. They no longer even have the power to stop an ISP from billing customers for non-existent products. This is all easy to remember if you replace the term light-touch regulation with unregulated.