This past January, in Verizon v. Federal Communications Commission (FCC), the US Court of Appeals for the D.C. Circuit struck down the FCC’s net neutrality rules, which required Internet service providers (ISPs) to deliver all Internet content at the same speed. Contrary to some media reactions, the D.C. ruling does not mark the death of net neutrality. Although it did strike down certain FCC anti-blocking and anti-discrimination rules, it did so on the grounds that the rules are too similar to common carrier requirements that regulate telecommunications companies such as telephone companies. Essentially, the court agreed that net neutrality should be upheld by the FCC, but disagreed with the way the FCC was trying to accomplish this goal.
The court’s decision, then, is an example of the FCC’s failure in the last decade to devise a coherent federal policy toward high-speed Internet access. Instead of reacting to the ruling with softer net neutrality rules, the FCC must break with its half-hearted efforts to uphold net neutrality and seek bolder policies to promote competition in the telecommunications market and prevent future violations of net neutrality, whether it be through municipal broadband—Internet access provided by local governments—or the reclassification of ISPs as common carriers.
A Non-Net-Neutral World
Critics of net neutrality have long argued that government regulation is unnecessary to preserve the neutrality of the Internet. In an interview with the HPR, James Gattuso of the Heritage Foundation argued, “there is competition in this industry, there is innovation … it does not exhibit any of the hallmarks of a monopolistic industry that needs government regulation.”
Most of the experts who spoke to the HPR, however, agree that there is high potential that net neutrality will be violated by ISPs, especially with the current lack of net neutrality regulations. Benjamin Edelman, an associate professor at Harvard Business School, draws an analogy between the fate of net neutrality and the fate of a turkey in a turkey farm. As he told the HPR: “the turkey is doing okay. He’s a year old, then he’s two years old, and then he’s dead. Net Neutrality has a similar characteristic. It’s not a problem until it is. Your video is working fine until the day Netflix or YouTube is too slow.”
Furthermore, during the oral examination of the recent D.C. court case, Helgi Walker, Verizon’s lawyer, explicitly stated that Verizon would like to charge certain websites more money for more reliable service, saying, “I’m authorized to state from my client today that but for these [net neutrality] rules we would be exploring those types of arrangements.” The threat of losing net neutrality is not merely theoretical, but an imminent likelihood.
Losing net neutrality would fundamentally transform the Internet industry, and not for the better. Internet start-ups will have to face the challenge of paying ISPs to reliably reach Internet users. Speaking to the HPR, Ethan Zuckerman, director of the MIT Center for Civic Media, said, “we’re celebrating this culture of innovation … but we may actually be changing the circumstances that make it possible for people to run successful start-ups.” Even large corporations will find it difficult to continue offering free, or very cheap, services. As Edelman told the HPR, “Despite Microsoft’s wealth, it has little incentive to pay ISPs to keep Skype working. The numbers just wouldn’t add up.”
How We Got Here
The roots of today’s dilemma can be found in the FCC’s 2002 decision to classify ISPs as “information services”, which meant that they were exempt from common carrier rules that would have given the FCC significant regulatory authority. Since then, the FCC repeatedly declined to reclassify ISPs as common carriers and has resorted, instead, to passing net neutrality rules such as the Open Internet Order. Though effective for several years, this approach eventually backfired when the D.C. court ruled against the FCC’s regulations, finding that they were too similar to common carrier rules.
The FCC decision is an ongoing problem for regulators argues Susan Crawford, a visiting professor at Harvard Law School and co-director of the Berkman Center for Internet & Society. She told the HPR, “having given away your legal administrative label that would’ve given you the power to talk about common carriage when it comes to high speed Internet access, you can’t now pretend to do it in some other mechanism.”
Effective lobbying from giant telecommunications companies like Comcast and Verizon has further weakened net neutrality. As Marvin Ammori, a Future Tense Fellow at the New America Foundation told the HPR, “they’ve been really effective. They’ve put in far more money than the tech companies, who are divided on this.” Despite calling for the preservation of net neutrality, technology companies have been unwilling to spend the necessary money to lobby against the large ISPs. With effective lobbying from one side only, Congress is likely to continue opposing any net neutrality policies that oppose the interests of companies like Verizon.
Re-Neutralizing the Internet
Instead of appealing the January ruling, the FCC has announced intentions to use the limited authority given to it by the D.C. court under Section 706, which allows it to regulate and promote broadband deployment. Essentially, the FCC will attempt to devise net neutrality rules similar to those of the Open Internet Order, only less regulatory in order for the rules to avoid seeming too much like common-carrier laws.
Proponents of net neutrality have voiced their disappointment with the FCC’s probable policy plans. “The decision [FCC v. Verizon] was a major blow against Net Neutrality but it didn’t have to be a death blow, except the FCC is now pretending that they can continue supporting net neutrality under Section 706, which is pretty crazy in my opinion,” said Ammori. Reclassifying ISPs as common carriers, however, would require a huge legal battle that would start, in the words of former FCC chairman Michael Powell, “World War III.”
Alternate proposals have focused on finding ways to increase competition within the ISP market. With few, if any, alternative options, neither websites nor consumers can help but accept the packages and prices offered to them by large ISPs such as Verizon or Comcast. Speaking to the HPR, Aaron Shull of the Centre for Internet Governance Innovation said that although it is unclear whether net neutrality is the central problem or a symptom of a lack of competition, “almost 70 percent of every person in the USA that has access to Internet is stuck with either one or two choices.”
While the issue of whether net neutrality is the problem or a symptom of a larger problem is debatable, it is clear that the lack of competition in the ISP market is exacerbating the situation. “I think if we had real functional competition, it wouldn’t be nearly as serious an issue,” Zuckerman said.
Some experts have proposed the promotion of municipal broadband, or broadband Internet access provided by local governments, as a way of promoting competition in the ISP market. The FCC has announced that it would leave this option open, too, but has offered no concrete policy direction yet. Zuckerman, pointing to examples in Tennessee and Louisiana, calls it “a very potentially promising area.”
Just like reclassification, building a municipal fiber network would be a very politically unpopular decision and would require a significant legislative struggle. Zuckerman points to “the ways in which the cable and the phone companies have quite aggressively gone after municipal broadband.” An FCC decision to promote municipal broadband will undoubtedly be met with substantial opposition at the federal as well as state level. Municipal broadband, however, is the best long-term solution available and would ensure not only a neutral high-speed Internet but also more competition in the ISP market.
The D.C. court ruling on FCC v. Verizon has not killed net neutrality. Perhaps the most significant effect of the case is to serve as a wake-up call for the FCC, whose ineffective policies have made net neutrality a contested issue for far longer than necessary. To quote Crawford: “The FCC’s house of cards has fallen.” Now, it must prepare for an arduous and ongoing battle for net neutrality, a battle that it can only win if it finally breaks with its halfhearted approach to this issue and pursues bold policies such as reclassification and municipal broadband. FCC’s chairman, Tom Wheeler, however, has recently announced that the FCC’s next proposal will allow ISPs to engage in “commercially reasonable” traffic discrimination, suggesting that the FCC has decided not to seek robust action to protect net neutrality. If the proposal passes the commission’s vote and is enacted, the prospects for net neutrality will be bleak.