An Update on Net Neutrality

Last week’s big news in the tech industry was the announcement by FCC Chairman Tom Wheeler of his proposal to classify Internet as a telecommunications service using the FCC’s Title II authority under the Communications Act of 1934.

[quote author=”Tom Wheeler, Chairman of the FCC”]Using [the Title II] authority, I am submitting to my colleagues the strongest open Internet protections ever proposed by the FCC. These enforceable, bright-line rules will ban paid prioritization, and the blocking and throttling of lawful content and services. I propose to fully apply—for the first time ever—those bright-line rules to mobile broadband. My proposal assures the rights of Internet users to go where they want, when they want, and the rights of innovators to introduce new products without asking anyone’s permission.[/quote]

What this means

First, I want to explain what Title II is and how it applies to the issue of net neutrality. Title II is a portion of the Communications Act of 1934 that determines how common carriers of communication, such as telephone services, are regulated. Defining something as a common carrier broadly means that “if a consumer wants to use a certain service or mode of transportation and is willing to pay a reasonable price for it, the service provider can’t discriminate against that customer — regardless of race, religion or gender — and deny service.”1 Applied to Internet service, this means that providers cannot treat various types of traffic differently. In other words, your Internet provider would not be allowed to treat Netflix any differently than it treats an up-and-coming fashion blog. Title II also classifies the Internet as a public utility, like electricity or water, and allows the FCC to set prices for the service.2 In fact it is this part of the law that has Internet service providers (ISPs) so concerned because they “fear the FCC may set rates too low to allow them to recoup the costs associated with building out their networks.”3

Proponents of Title II, though, are happy about the classification and believe that it will create more fairness and promote innovation. In their view, outlawing “fast lanes,” or the ability for ISPs to deliver certain sites more quickly, will prevent wealthy companies from paying large sums of money to run their sites faster and will provide newer companies an equal opportunity to reach customers.

Responses

Now as you can imagine, there has been a mixed response to Chairman Wheeler’s announcement. And, as expected, the responses largely fell along party lines. President Obama and many Democrats have lauded the FCC’s move.

Republicans, however, are fighting back against the proposal. While it has not been formally introduced, Congressional Republicans, led by Representative Fred Upton (R-MI) and Senator John Thune (R-SD), have released a draft bill with their own plan for net neutrality. According to The Hill, “[t]he bill is meant to enforce many of the net neutrality rules that Democrats and other advocates have recommended, while also preventing the Federal Communications Commission from reclassifying broadband Internet similar to a public utility.”4 More specifically, the bill would classify the Internet as an information service, rather than a telecommunications service, and would prevent ISPs from blocking, slowing, or speeding up certain traffic. It would also remove the FCC’s regulatory power over the Internet. Because of this, most Democrats are not in favor of this bill, but they have expressed a willingness to work with Republicans in Congress to find a solution that works for both sides of the aisle.5

Following Chairman Wheeler’s announcement, Senator Dean Heller (R-NV) criticized the agency for a lack of transparency. This week he announced legislation that would reform the FCC to promote “[t]ransparency, [f]airness, and [e]fficiency in [c]ommission [o]perations”: [quote author=”Senator Dean Heller (R-NV)”]In amending the rules, the public will know exactly what the FCC is voting on well before the vote. Right now, we don’t even know what major decision like the FCC’s net neutrality order says. How is that an example of solid rulemaking? The transparency in this legislation delivers a better product for consumers as they will know for certain the cost of regulations to economic growth and whether new rulings are justified based on current problems facing the market. These are principles that all consumers deserve.[/quote] While the FCC commissioners are appointed by the President and confirmed by the Senate, the agency is intended to be independent. In light of President Obama’s November push for Title II classification and the FCC’s net neutrality decision, Congress has begun to question if the agency is truly independent. Senator Ron Johnson (R-WI) of the Senate Homeland Security and Governmental Affairs Committee and Jason Chaffetz (R-UT) of the House Oversight and Government Reform Committee sent letters to the FCC expressing concern about the influence of the White House on the proposal and asking Chairman Wheeler to explain his decision-making process. They also asking for “ ‘all documents and communications’ between the FCC and the White House regarding the net-neutrality rules” prior to the FCC’s final vote on the proposal.6 The FCC denies that anything unusual took place and said that “Wheeler’s position on net-neutrality rules had been evolving before Obama made his public comments.”7

New this week, municipal broadband networks are also coming out against the Title II classification. As the name implies, these are networks offered by smaller Internet providers that are, at least partially, government-funded. This past Tuesday, 43 of these networks wrote a letter to Chairman Wheeler expressing concern, saying that the new rules “will undermine the business model that supports our network, raises our costs and hinders our ability to further deploy broadband.”8 As The Hill’s “Overnight Technology” blog points out, this puts Democrats in a tough position as they are advocates for both Title II classification and the presence of small local network providers that increase competition.9

Also this week, Senator Rand Paul expressed skepticism about banning fast lanes and advocated for “keep[ing] government out of the internet.” In a speech for “Reboot Congress” put on by Lincoln Labs, the Kentucky Senator said “I’m not ever sure [the proposal] is good in the sense that it stops paid prioritization” He elaborated that offering different services for different fees is not unusual, saying, “so this is an economic fact that bulk supply, bulk contracts, get different prices.”10

What’s next?

The FCC is set to vote on Chairman Wheeler’s proposal on February 26 and it is expected to pass by a 3-2 vote, with Democrats voting for and Republicans voting against. Congress continues to discuss possibilities for a net neutrality bill but, as of this week, Senator Thune has said he will wait until after the FCC vote to introduce anything.

For now, the regulation of the Internet is still up in the air. While we anticipate that Chairman Wheeler’s proposal will pass, we don’t know exactly what type of bill, if any, will get through Congress and how that might change how the Internet is regulated.

Resources
1 Cheng, R. and Rubin, B. (2015, February 2). Net Fix: Title II, the two words that terrify the broadband industry. CNET. Retrieved from http://www.cnet.com/news/net-fix-title-ii-the-two-words-that-terrify-the-broadband-industry/
2 Cheng.
3 Cheng.
4 Trujillo, M. (2015, January 16). GOP lawmakers offer net neutrality bill. The Hill. Retrieved from http://thehill.com/policy/technology/229785-gop-releases-net-neutrality-legislation
5 Trujillo.
6 Puzzanghera, J. (2015, February 9). Congress probing White House role in FCC chief’s net-neutrality plan. The Los Angeles Times. Retrieved from http://www.latimes.com/business/la-fi-net-neutrality-fcc-chaffetz-probe-20150209-story.html
7 Puzzanghera.
8 Trujillo, M. and Hattem J. (2015, February 12). Congress Takes on the FCC.  The Hill: “Overnight Tech.” Retrieved from http://thehill.com/policy/technology/overnights/232558-overnight-tech-congress-takes-on-the-fcc
9 Trujillo, M. and Hattem J.
10 Trujillo, M. (2015, February 12). Paul skeptical of banning Internet ‘fast lanes.’ The Hill. Retrieved from http://thehill.com/policy/technology/232632-paul-skeptical-of-banning-internet-fast-lanes

Featured image and Wheeler block quote via Wheeler, T. (2015, February 4). FCC Chairman Tom Wheeler: This Is How We Will Ensure Net Neutrality. Wired. Retrieved from http://www.wired.com/2015/02/fcc-chairman-wheeler-net-neutrality/

Heller block quote via Senator Dean Heller. (2015, February 10). Heller on FCC Process Reform: “Do what is in the best interest for consumers” [Press Release]. Retrieved from http://www.heller.senate.gov/public/index.cfm/pressreleases?ID=6024e394-77ce-4cd8-9430-60110e651cda