Wednesday, August 27, 2014
Inquirer Daily News

GOP - misleadingly - tries to kill off net neutrality

Congressional Republicans are pushing to reverse the FCC's modest net-neutrality rules - and meanwhile pushing a fallacy: that neutrality is a reversal of the past. Actually, it's the framework that allowed the web to flourish.

GOP - misleadingly - tries to kill off net neutrality

On the Senate floor today, and in op-eds such as this one in today's Inquirer, congressional Republicans are trying to reverse last year's modest attempt by the Federal Communications Commission to set basic standards for network neutrality - the principle that Internet network owners such as Verizon, AT&T and Comcast can't favor or disfavor data packets they handle based on factors such as their content or their source.

Sen. GOP leader Mitch McConnell and Sen. Kay Bailey Hutchison (R., Texas), Senate sponsor of a House-passed resolution that would roll back the December 2010 FCC decision, start their op-ed argument with a fundamental fallacy - that net neutrality is a reversal of policies that allowed the Internet to blossom into a huge economic engine. It's a misstatement of history that has been debunked by, among others, Web inventor Tim Berners-Lee.

McConnell and Hutchison write:

The Internet has flourished for two decades without burdensome federal regulations. In its early days, a hands-off approach helped it grow and evolve rapidly. The Federal Communications Commission adopted a sensible noninterference policy in 1998, and hundreds of billions of dollars of investment in high-speed broadband infrastructure followed.

Without broadband, do-it-all smartphones and two-way video calls would still be the stuff of science fiction. Broadband has created nearly a million jobs and become an essential part of daily American life. Broadband networks have powered the information and communications industries, which in 2009 accounted for more than 3.5 million high-salary jobs and about $1 trillion in economic activity.

Despite all this, the FCC is about to reverse course and begin regulating the Internet. Unless the Senate acts on a measure under consideration this week, Internet service providers will be subject to the commission's new "Net neutrality" rules.

Under these mandates, broadband companies would lose control over the traffic and technology flowing through their infrastructure. Government bureaucrats would tell companies what is and is not a "reasonable" way to operate their systems. These regulatory burdens would discourage Internet service providers from innovating and investing, inject uncertainty into a thriving sector of our economy, and jeopardize the information industry's vast potential for growth.

More regulation would diminish broadband providers' expected returns on their capital. Lower returns mean less investment, which means fewer jobs created. Smaller companies would suffer the most, as they operate on thinner margins. With unemployment over 9 percent, do we really need this kind of regulatory overreach?

Success seems unlikely, at this point, although Hutchison's bill has acquired 42 co-sponsors - so far all Republicans.  President Obama has vowed to veto the resolution. But as network owners continue to push back against the rules in Congress and also in the courts, it's worth recalling what Berners-Lee and others, such as New York University's Center for Policy Integrity, have pointed out repeatedly: the Internet started out governed by the same strict neutrality rules that had long governed telephone networks.

There's a long and complicated history to this issue that I recounted here after cable companies won the Supreme Court's "Brand X" decision, freeing them from the stricter rules governing phone companies. Right away and as everybody predicted, phone companies immediately demanded and won equal treatment from the FCC. But even under Republican leadership, the FCC tried to enforce basic neutrality standards - leading to the BitTorrent case, in which a user discovered that Comcast was blocking perfectly lawful content.

The biggest irony of all is that the FCC's 2010 ruling was a compromise with network owners that contains what many observers - not just open-Internet advocates - consider huge loopholes.  Hard-wired and wireless broadband network owners have to disclose their "network management practices," and wired broadband providers "may not block lawful content, applications, services, or non-harmful device," or "unreasonably discriminate in transmitting lawful network traffic." Mobile-broadband providers are under even weaker constraints, barring them only blocking "lawful websites" or "applications that compete with their voice or video telephony services."  Otherwise, apparently, they can unreasonably discriminate to their hearts' content - which they do every day when they limit your ability to connect other companies' phones to their networks.

To some, such as Janney Capital Markets analyst Tony Wible, those roles are so loose that services such as Netflix's video streaming may be doomed if they try to compete with a core service - delivering movies and TV - of the broadband network owners.  

"The guys who own the pipes in the ground, and the guys who own content, are going to come out ahead. Unfortunately, Netflix owns neither," Wible told me recently.

Wible is right in arguing that the FCC order is weak, but at least it gives companies such as Netflix a fighting chance to compete by enabling them to challenge practices they believe "unreasonably discriminate."  It's also a shot across the bow of network owners that might be tempted to partner with other Internet businesses - travel websites, say - and make their partners' sites work well and competitors sites malfunction.

The fact that the GOP is nearly united in its efforts to reverse such a modest order is evidence that it's guided once again by anti-regulatory orthodoxy - and perhaps by the desire to please large corporate contributors.

In a letter yesterday to Congress, Consumers Union urged members to reject the GOP resolution:

The Internet has been governed by principles of openness and consumer choice since its inception. These principles of an Open Internet have allowed the Internet to flourish as a marketplace, public forum, and unprecedented information resource. The FCC has adopted a framework that will allow it to adopt and implement rules that will ensure that all consumers will have access to an Open Internet. The rules provide certainty that consumers continue to be able to access available content on the Internet.

But Berners-Lee put the GOP's fallacy to rest even better in 2008 - back when neutrality supporters thought they might get Congress to enact legislation in favor of an open Internet - in a blog post explaining the issue succinctly and authoritatively:

Net neutrality is this:

If I pay to connect to the Net with a certain quality of service, and you pay to connect with that or greater quality of service, then we can communicate at that level.

That's all. Its up to the ISPs to make sure they interoperate so that that happens.

Net Neutrality is NOT asking for the internet for free.

Net Neutrality is NOT saying that one shouldn't pay more money for high quality of service. We always have, and we always will.

There have been suggestions that we don't need legislation because we haven't had it. These are nonsense, because in fact we have had net neutrality in the past -- it is only recently that real explicit threats have occurred.

Control of information is hugely powerful. In the US, the threat is that companies control what I can access for commercial reasons. (In China, control is by the government for political reasons.) There is a very strong short-term incentive for a company to grab control of TV distribution over the Internet even though it is against the long-term interests of the industry.

Yes, regulation to keep the Internet open is regulation. And mostly, the Internet thrives on lack of regulation. But some basic values have to be preserved. For example, the market system depends on the rule that you can't photocopy money. Democracy depends on freedom of speech. Freedom of connection, with any application, to any party, is the fundamental social basis of the Internet, and, now, the society based on it.

Broadband networks are an essential part of the 21st century's infrastructure.  So why exactly does the GOP want to give a handful of network owners - which all owe their positions in part to government's past grants of monopolies or exclusive local licenses - free and unfettered control over them?

Jeff Gelles Inquirer Business Columnist
About this blog

Jeff Gelles, who writes the Inquirer's weekly Consumer 14.0 and Tech Life columns, takes a broad look at the marketplace of goods, services, and ideas.

Reach Jeff at jgelles@phillynews.com.

Jeff Gelles Inquirer Business Columnist
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