Net Neutrality Series

FCC Net Neutrality Ideology Out of Step with Internet Reality

Posted by | Broadband Internet, Net Neutrality Series, Regulatory State, Video | 3 Comments

“Today, we celebrate the first glorious anniversary of the Information Purification Directives. We have created, for the first time in all history, a garden of pure ideology—where each worker may bloom, secure from the pests purveying contradictory truths. Our Unification of Thoughts is more powerful a weapon than any fleet or army on earth. We are one people, with one will, one resolve, one cause. Our enemies shall talk themselves to death, and we will bury them with their own confusion. We shall prevail!” Apple advertisement, 1984.

There are now two Internets. The Internet envisioned by the ideology embodied in the FCC’s new net neutrality rules, and the Internet as it exists in reality. The “net neutral” Internet is “a garden of pure ideology” where content companies “are one people . . . with one cause” and network congestion is merely a figment of the imagination. The real Internet is different — congestion is commonplace and the interests of content owners are divergent.

The pests of reality’s contradictory truths threw the first hammer at the ideological Internet on Monday, when the Wall Street Journal reported that HBO, Showtime, and Sony Corp. want to stream their Web-TV content separately from the “public Internet.” They fear Internet congestion will only get worse as viewers stream more video content and they don’t want to offer consumers a frustrating experience. So they are talking with major broadband providers about having their streaming services treated as managed services that would give consumers the best experience possible. Read More

CBIT White Paper: Broadband Transmissions Are Not “Telecommunications”

Posted by | Broadband Internet, Net Neutrality Series, Regulatory State | 3 Comments

This paper authored by Fred Campbell was filed yesterday at the Federal Communications Commission in General Docket No. 14-28.* The complete paper can be downloaded HERE.

The FCC lacks authority to classify broadband Internet services as “telecommunications services,” because broadband transmissions are not “telecommunications.” The definition of “telecommunications” in 47 U.S.C. § 153(50) distinguishes between (1) plain old telephone services (POTS) that are interconnected with the public switched telephone network (PSTN) and (2) packet switched services that are not interconnected with the PSTN. When determining whether a particular service is subject to common carriage obligations, arguments about the ownership of the underlying network facilities, “gatekeepers,” and innovation are definitionally irrelevant. A transmission is “telecommunications” with in the meaning of 47 U.S.C. § 153(50) only if the transmission is capable of communicating with all circuit switched devices on the PSTN.[1] Read More

President Obama’s Plan to Impose Title II Regulations on the Internet Promises More Economic Despair

Posted by | Broadband Internet, Net Neutrality Series | No Comments

A version of this post was previously published by 4G Trends.

It’s no mystery why the Democratic Party lost big in this year’s election: “The party of economic despair will always lose.” President Obama has presided over six years of lackluster economic growth. “Progressive Democratic policies on Keystone, power-plant closures and oils exports crushed younger, unionized job seekers.”

This week, the President doubled down on his bad economic policies when he announced his plan to impose net neutrality through ‘Title II’ price regulation of Internet broadband providers — a plan that will discourage investment in new communications infrastructure and threaten our economic recovery.

Over the last three years, America’s broadband providers have been the brightest source of economic hope during a particularly gloomy recession.

The Progressive Policy Institute (PPI) ranks AT&T, Verizon, and Comcast among the top ten U.S. “investment heroes” — the companies who are investing the most capital in the United States. These three companies alone have invested nearly $125 billion in the U.S. over the last three years, with AT&T and Verizon topping the list on an annual basis.

Obama’s response to their investments in America’s long-term future? A government plan that would take the value of their investments and gift it to his allies in Silicon Valley — companies that haven’t been willing to make the same level of investment on American soil. Read More

Net Neutrality: Broadband Is Not Telecommunications

Posted by | Net Neutrality Series | No Comments

Tim Wu and other net neutrality advocates argue that reclassifying broadband as a Title II service would be “obvious and easy.” They are, at best, naive. Yesterday I met with the general counsel’s office at the FCC to explain why reclassifying broadband as ‘telecommunications’ would be far riskier than using the agency’s authority under Section 706. The legal explainer is pasted below (with an updated cover page). Read More

Net Neutrality: FCC Authority Over Non-ISP Gatekeepers Under Title II

Posted by | Net Neutrality Series | No Comments

This is the fifth post in the CBIT net neutrality series.

The previous post in this series explained how sponsored data could promote competition among so-called ‘edge’ companies who provide gatekeeper services on the Internet. In their responses to reporter Howard Buskirk’s coverage of the post for Communications Daily, net neutrality advocates didn’t dispute the critical fact that non-ISP service providers exercise gatekeeper control over other edge providers on the Internet. They merely claimed that concerns about regulatory parity are “silly” and that addressing non-ISP gatekeepers would “muddy” the net neutrality waters.

They thus admitted my fundamental point: That attempting to regulate the transmission component of services that include information processing functions under the ‘gatekeeper theory’ would indeed “muddy” the FCC’s regulatory waters. Avoiding such uncertainty is why the FCC adopted a bright line distinction between basic transmission services (i.e., plain old telephone services) and services that are not in its Final Computer II decision 34 years ago. Even then the FCC was concerned that any attempt to “delineate a distinction between communications and data processing services” would result in a “boundary line . . . [that] can vacillate, and confidence in decisions made based on that distinction would be diminished.”

The bright line approach exempting services that combine transmission and information processing functions from regulation walled off many services from Title II regulation that had been regulated in the context of plain old telephone service. Replacing the bright line approach exempting broadband services from Title II regulation with the ‘gatekeeper theory’ would dramatically expand the FCC’s regulatory authority to cover broadband services that have previously been considered off limits. If net neutrality advocates continue to insist on the reclassification of broadband Internet access services under Title II, they should dispense with sloganeering and engage in a serious discussion about the implications of regulating broadband Internet services as common carriers.

The inability of net neutrality advocates to articulate a meaningful difference between the ‘gatekeeper control’ exercised by ISPs and the control exercised by non-ISP gatekeepers cannot be casually dismissed by the FCC, whose reasoning regarding reclassification would almost certainly be scrutinized by an appellate court. Contrary to popular opinion among net neutrality advocates, Title II regulation — and thus, the gatekeeper theory — is not limited to ‘last mile’ facilities. The Communications Act provides the FCC with broad authority over “communication by wire or radio” and all its “instrumentalities” in order to make available a “nation-wide, and world-wide wire and radio communication service.” There is nothing in the Act to suggest that this authority magically dissipates at some amorphous boundary between the ‘last mile’ and the ‘Internet beyond the wall’, or that ‘last mile’ facilities inherently present “special concerns” with respect to the theory of gatekeeper control. The FCC’s legal authority over communications services has always applied on an ‘end-to-end’ basis, from one communications device to another and everything in between.

The implications of combining the theory of ‘gatekeeper control’ with the FCC’s ‘end-to-end’ jurisdiction over communications services under Title II is discussed in more detail below with regard to mobile operating systems, Internet search engines, and online video distributors specifically, though these implications would likely extend beyond those three particular categories. Read More

Net Neutrality: How Sponsored Data Plans Would Promote Competition on the ‘Edge’

Posted by | Net Neutrality Series | One Comment

This is the fourth post in the CBIT net neutrality series. A shorter version of this post was previously published by 4G Trends.

I’ve previously explained how the theory of ‘gatekeeper control’ underlying the FCC’s 2010 approach to net neutrality is applicable to any Internet intermediary that is capable of blocking, degrading, or favoring particular Internet services, applications, or content — a category of ‘non-ISP gatekeepers’ that includes the mobile operating systems offered by Apple and Google. The FCC has nevertheless focused its net neutrality efforts entirely on ISPs.

The result of the FCC’s myopic regulatory strategy: Google has engaged in precisely the type of behavior that net neutrality was intended to prevent in order to cement its control over the Android operating system and mobile search. Read More

Net Neutrality: Title II Forbearance Is a Pig in a Poke

Posted by | Net Neutrality Series | 2 Comments

This is the third post in the CBIT net neutrality series. Previous posts in the series are available HERE and HERE.

The previous post in this series concluded that the gatekeeper theory of net neutrality regulation is radically over-broad under Title II and inconsistent with the competition theory of communications regulation set forth by Congress in the Communications Act. The proponents of Title II reclassification are trying to sell the FCC on the idea that forbearance is the solution to this over-breadth problem.

What they are really selling is a pig in a poke. It is unlikely that the FCC could grant forbearance from certain Title II tariffing requirements under the FCC’s current regulatory standard, and the net neutrality proponents who are selling forbearance as a solution haven’t indicated that they would actually support it. To the contrary, they have implied that reclassification would result in the regulation of broadband as a public utility.

What happens if net neutrality supporters oppose any form of forbearance after the FCC has already reclassified broadband services as telecommunications? A regulatory disaster of biblical proportions, that’s what. Read More

Net Neutrality: FCC Gatekeeper Theory Applies to Google, Apple, and Netflix

Posted by | Net Neutrality Series | 3 Comments

This is the second post in a series addressing fundamental questions presented by the prospect of applying per se net neutrality rules under Title II. The first post is available HERE.

The first post in this series concluded that the logic of the gatekeeper theory the FCC used to justify the imposition of per se net neutrality rules extends to any Internet intermediary that is capable of blocking, degrading, or favoring particular Internet services, applications, or content. This post presents a brief analysis of some intermediary services to which the gatekeeper theory would apply if the FCC relies on it to impose per se net neutrality rules under Title II.

The analysis demonstrates that Internet companies must also ‘ask permission’ to pass gates erected by Google, Apple, and Netflix (non-ISP gatekeepers) in order to obtain access to end users:

  • These non-ISP gatekeepers routinely use their gatekeeper control to block, degrade, or discriminate against upstream edge providers (far edge providers);
  • End users may incur significant costs in switching from one non-ISP gatekeeper to another; and
  • These non-ISP gatekeepers provide services in market segments that are highly concentrated.

It would thus be arbitrary and capricious for the FCC to impose per se net neutrality obligations only on ISPs under Title II.

To be clear, I’m not suggesting that reclassification of broadband Internet access services as ‘telecommunications services’ under Title II is necessary or that the FCC should otherwise regulate non-ISP gatekeepers. The analysis in the post is intended to illustrate that the FCC’s theory of gatekeeper control is radically over-broad under Title II and inconsistent with the competition theory of communications regulation set forth by Congress in the Communications Act. Read More

Net Neutrality: FCC Theory Would Extend Beyond ISPs Under Title II

Posted by | Net Neutrality Series | 5 Comments

This is the first in a series of net neutrality posts that will address fundamental questions presented by the prospect of applying per se net neutrality rules under Title II.

There is more at stake than net neutrality in the reclassification debate at the Federal Communications Commission (FCC). Imposing per se prohibitions against business-to-business arrangements involving ‘paid prioritization’ under Title II would be a radical departure from the core principles embodied in our communications laws. Yet the nature of this departure and its predictable consequences have received little attention thus far. That must change.

By its own logic, the theory of ‘gatekeeper control’ the FCC relied on to justify its imposition of per se net neutrality rules extends to any Internet intermediary that is capable of blocking, degrading, or favoring particular Internet services, applications, or content. If the FCC were to apply this theory under Title II, it would be required to impose net neutrality obligations on a host of Internet companies that have not been subject to common carrier regulation, including Google, Apple, and Netflix.

Summary of Regulatory Theories Governing Communications

A brief review of the prevailing theories of communications regulation in different eras is helpful in understanding why many companies that are considered ‘edge’ providers today would inevitably be subject to common carrier regulation if the FCC imposes per se net neutrality regulations under Title II. These theories are either embodied in the Communications Act or, with respect to net neutrality, in an FCC order.

cbit-theory-chart-08-12-14-v3
Natural Monopoly Era. The Communications Act of 1934 presumed that telephone service was a natural monopoly. As implemented by the FCC, the 1934 Act subsidized uniformly low rates for residential telephone service through tariff filings.

Competitive Era. The Telecommunications Act of 1996 presumes that removing barriers to entry enables competition among communications services and envisions an era in which market-based competition completely supplants Title II regulation as the means of protecting consumers. The 1996 Act promotes competition and reduces regulation by removing barriers to entry.

Net Neutrality Era. The Open Internet Order presumes that Internet companies must have ‘neutral’ access to all end users on all Internet platforms at all times in order to survive, irrespective of competition. Per se net neutrality rules regulate gatekeepers in order to subsidize access to end users for upstream Internet companies, who are presumed to pass their resulting benefits on to all end users. Read More