In response to the FCC’s latest effort to pass legally-enforceable rules limiting how Internet service provides (ISPs) manage increasingly complex Internet traffic, advocacy groups and others have intentionally upended the process with extreme rhetoric, leaving most users unsure whether Chairman Tom Wheeler’s on-going initiative would advance or undermine the open Internet (as the FCC refers to net neutrality).
That confusion is clear from even a random sampling of over a million comments submitted so far, many of which could not be read over the air without violating FCC decency rules. Most reflect little understanding of the proposal’s actual content, or the legal and technical context in which Wheeler and his two Democratic colleagues are operating. Instead, consumers are understandably upset over misleading claims that the Democratic commissioners are trying to “kill net neutrality” and “end the Internet as we know it.”
In fact, the chairman insists, he is trying to do just the opposite.
How did we get here? Despite the doomsday scares of a technology apocalypse, the current fight over who and how to regulate the Internet is not about the future of innovation, Internet access, broadband pricing, competition, fairness, or motherhood. It’s something much less exciting, though, depending on the outcome, much more dangerous.
The strength of the Internet has always been its openness. Its technical protocols aren’t owned by anyone, meaning everyone can create a Web site, send and receive e-mail, or host advanced audio and video services just by following the standards. So long as they know where to find it, users can access whatever content they are interested in.
If that is all that is meant by net neutrality, there is no serious argument about its value. But the realities of Internet engineering have never been so simple. The real and often intentionally hidden issue in the net neutrality debate has always been who should oversee the specific technical decisions that must be made on a daily basis. Should they be left to the engineers themselves? Or should we rely on traditional regulators — the United Nations, the FCC, and/or state public utility commissions?
In the United States, that question was definitively answered in 1996, when a bipartisan Congress, along with the Clinton White House, gave regulators minimal authority over the then-nascent commercial Internet, hoping to protect it from overregulation.
That was a wise decision. Since 1996, network operators have invested over $1 trillion building and upgrading infrastructure, reinventing “the Internet as we know it” from static, text-based Web pages and slow dial-up to the video-dominated, high-speed wired and wireless broadband we enjoy today.
No surprise, then, that as the FCC sought in 2010 to codify its open Internet principles into legally-enforceable rules, an extended and contentious public comment process uncovered only four examples of possibly dangerous behavior, only one of which (the blocking of Internet telephone services by a small rural phone company) required FCC action to correct.
Earlier this year, however, a federal appellate court threw out much of the 2010 rulemaking on procedural grounds. But the court also agreed with the agency that a largely unused provision of the law, known as Section 706, could be used to ground the rules more securely.
That’s when the process was intentionally derailed. From inside the FCC, word leaked out in April that new rules Wheeler was drafting weren’t simple revisions needed to comply with the court’s ruling. Rather, according to a noisy campaign led by self-styled consumer advocates and a few large Internet companies, the three Obama appointees were plotting to “kill” net neutrality.
The new rules, users were told, would not, as the 2010 rules had tried to do, prohibit dangerous network management practices. Instead, the Democrats were secretly planning to “authorize” ISPs to create last-mile Internet “fast lanes” available to the highest bidder. (“It’s True,” wrote one of the advocacy groups. “The FCC’s ‘Open Internet’ Proposal Would Bless Internet Discrimination and Destroy Net Neutrality.”)
The fast lane claim was a red herring. Despite the absence of any legally-enforceable rules between 1996 and today, no ISP has ever tried to sell such services. Some have indicated they have no objection to an explicit and prophylactic ban.
When the actual proposal was made public in May, in any case, Wheeler’s supposed conspiracy was exposed as a complete fabrication. The rules he proposed differed only trivially from their 2010 counterparts. The “no blocking” and “transparency” rules were the same. To satisfy the court’s instructions, a third rule that prohibited ISPs from engaging in network management practices that “unreasonably discriminated” among content providers was changed to one that prohibited practices that were “commercially unreasonable.”
That’s it. There was no reference in the rules to “fast lanes” or the equivalent. In the agency’s official notice and in the separate comments of the Democrats, even the idea of last mile preferences was explicitly rejected. Nothing was “authorized” or even “blessed.” The rules were and continue to be legal prohibitions (“shall not engage”) on ISP behavior.
And in terms of FCC enforcement of the rules, the difference between “unreasonable discrimination” in network management and “commercially unreasonable” network management is probably no difference at all.
So why the hysteria? Many of the groups involved in what became a very personal campaign against Wheeler have long sought to turn the Internet into a regulated utility or even to nationalize it outright. Any real or perceived threat to “the Internet as we know it,” even a manufactured crisis, is simply another opportunity to push an agenda Congress wisely rejected in 1996.
The extremists don’t want the FCC to adopt any rules. They want the agency, instead, to take over. That’s the hammer; net neutrality is just a convenient nail.
Yet much of the mainstream media, including The New York Times and US News, continue to validate the non-conspiracy. They continue to accept, for example, that Wheeler is proposing to “authorize” practices dangerous to the Internet (again, the rules only prohibit practices), to “end” existing net neutrality rules (there are none), and even to allow ISPs to “block” content at their discretion (the no-blocking rule explicitly prohibits this, as does antitrust law).
While Internet engineering groups and leading content providers have tellingly stayed out of the current firestorm, Internet video giant Netflix continues to stoke the flames for reasons of its own. Since March, founder Reed Hastings has personally tried to hijack the discussion from one about the last mile to one about the inner workings of the Internet, where content companies connect with ISPs.
Which is odd, because, like all large content companies, Netflix uses the full suite of network management technologies and partners to serve its millions of customers. The company, for example, has long made use of Content Delivery Networks, which replicate content, especially video, at key points in ISP networks. (Smaller companies rent space on CDNs from third parties including Akamai and Limelight, or, like Netflix, save money by building their own.)
Netflix has also recently joined every other large content provider in placing its equipment at co-location facilities, where they cross-connect directly to ISP networks.
These services were designed to speed up the delivery of video and other high-bandwidth content. (Netflix video accounts for a third of all Internet traffic during peak viewing hours.) But they do so without degrading the performance of other content — including content of competitors. That’s why CDNs and co-location, along with almost a dozen other technologies, were explicitly exempted from the 2010 rules as “reasonable” forms of non-neutral network management.
Netflix, of course, doesn’t want CDNs and other optimization technologies banned. They just don’t want to continue paying for them. Understandably, the company, which faces ballooning prices for the programming it licenses, wants to cut access costs to the bone. So unlike other large content providers and third parties large and small, Netflix has insisted that smaller ISPs host its equipment free of charge (refusing to pay what Hastings calls, unhelpfully, “Internet tolls”).
Netflix now hopes, under cover of the chaotic net neutrality proceeding, that it can convince the FCC to step in even deeper, micromanaging core engineering activities such as transit and interconnection, or what Hastings calls “strong net neutrality.” Specifically, Netflix wants the FCC to mandate that ISPs accommodate any and all CDNs and co-located servers at no charge from any content provider (or maybe just Netflix).
Make no mistake, however, about the company’s motives. Though Netflix has co-opted the rhetoric of consumer advocacy, the company’s activism, for better or worse, is transparently self-serving. Just as taxicab companies are using regulators to stop Uber and Lyft, and hotels are lobbying for prohibitions on Airbnb, Netflix is using the net neutrality debate to improve its own bottom line.
An inch below the surface, the company just wants regulations that would constrain its competitive rivals and suppliers. It’s what economists call “rent-seeking behavior,” and it’s as old as capitalism.
In this case, however, it’s particularly dangerous behavior. And if it results in the FCC treating the Internet like a power or water company, a Netflix victory could prove pyrrhic. Transforming Internet access into a public utility might sound like a solution to a range of hypothetical problems — until you consider the decayed state of our existing utilities and regulated infrastructure, which, on any measure, continue to deteriorate. (The American Society of Civil Engineers gives most of it a “D.”)
At best, a full or partial government takeover of Internet access would almost certainly slow future network evolution. And in a bit of irony lost on the advocates, such a radical move, assuming it passed legal muster, would actually make “fast lanes” easier, not harder, for ISPs to market.
There’s simply no benefit — and enormous cost — to turning the Internet over to the FCC. Indeed, given the dearth of serious technical or legal problems in nearly 20 years of an unregulated Internet, it’s not clear that any new FCC rules are required. But in no sense is the Democrats’ proposal designed to “kill” net neutrality or otherwise destroy the Internet.
As far as the Internet is concerned, Congress and the White House got things very very right in 1996. A million piece of hate mail to FCC Chairman Tom Wheeler and new terminology can’t change the past. Let’s hope it won’t change the future either.
Downes is co-author with Paul Nunes of “Big Bang Disruption: Strategy in the Age of Devastating Innovation” (Portfolio 2014). He is a Project Director at the Georgetown Center for Business and Public Policy.