Some Final Thoughts on the FCC and Title II Ahead of Tomorrow’s Vote on Net Neutrality

Tomorrow, the FCC is expected to vote on a proposal for new rules around Net Neutrality. The vote is likely to be 3-2 in favor of the rules, split along partisan lines (3 democrats, 2 republicans – shocker…). There has been an enormous amount of bombastic rhetoric in the past few months about the issue that has recently become especially politicized in the same way the debate about SOPA/PIPA unfolded.

I’ve been very public about being a supporter of net neutrality and the idea that the FCC should put down clear, legally enforceable rules around it. However, every time I write or tweet something about the topic, I get a flurry of responses telling me why I’m wrong, why this is bad, or why I’m an idiot. I find these helpful as they force me to focus on the objectionable issues, although I have to put some work in to separate the noise from the signal. And unfortunately there’s a lot of noise these days around anything our government tries to do.

I’m not a lawyer, nor do I ever plan to be one, but I spent plenty of time with them. As a result, over the past 20 years I’ve learned a lot about how the law works in the context of innovation, new products, infrastructure, and consumer protection. I’ve been involved in a number of public policy debates, especially around the Internet, innovation, and immigration. And I’ve made a bunch of friends, on all sides of the discussions, who I’ve argued with, agreed with, been frustrated by, and likely annoyed greatly with my strong opinions and continuous questions to better understand whether my opinions are valid. I learn, evolve, and change my mind based on data and compelling arguments, not on sound bites, so this can be hard work to sort through, but it’s the way my brain was trained, both through my experience at MIT and reflecting on many of the successes and failures I’ve had along with what I’ve learned from them.

A few weeks ago I wrote the post Explaining Net Neutrality to My Dad. He and I engaged in a continuous discussion about this in the past few weeks. He’s endlessly intellectually curious and deeply negative about our government as a result of their engagement with the healthcare system so he has been sending me the “anti-net neutrality” and “the government is taking over the Internet” messaging that has been floating around. I was able to directly respond to some of it, especially the real nonsense, but there were some things that I didn’t completely understand, so I talked to some of my lawyer friends about it.

A few days ago, I decided to summarize what I believe to be the truth around several of the key things I keep hearing over and over as opposition to the FCC proposal, especially around the reclassification of ISPs as Title II telecommunication services. My perspective is informed by two meetings I’ve attended with Wheeler – one a year ago where I was terrified by where he was starting from and one a month ago where I strongly endorsed where he had ended up. In the most recent meeting, I learned a lot about his own intellectual framework for what he’s proposing, which I wrote about in my post Death of Distance and the End of Time.

So – here are a few of the things that I’m regularly hearing as opposition to the new FCC proposal, along with what I’ve believe to be the facts. This comes from the premise that I have which is that strong net neutrality rules are critical to protect an Open Internet and that I’m directly aligned with companies like Twitter who recently wrote why they favor #NetNeutrality and Tim Berners Lee, who invented the World Wide Web, who recently said “YES to #NetNeutrality.”

The Government Is Taking Over The Internet: The rules will not lead to the FCC regulating the Internet. The rules around Title II only allow the FCC to regulate transmission which many refer to as the on-ramps to the Internet provided by cable and telephone companies. There used to be rules around this, but there haven’t been for over a year since the federal court struck down the prior rules.

Title II Will Make the Internet a Public Utility: Reclassifying ISPs as Title II “telecommunications services” will not make them “public utilities.” While Title II is the firmest legal ground for the net neutrality rules, the FCC is applying a light-touch version of Title II where there will be no rate regulation, no tariffs, no burdensome administrative filings, and no last-mile unbundling. Instead, there will be prohibitions on blocking, throttling, and paid prioritization.The FCC will be able to stop any practice that harms user choice or edge providers’ ability to reach users and will be able to act on complaints that ISPs are acting unreasonably when they interconnect with transit providers (e.g. Level 3) or content delivery networks (e.g. Netflix, Amazon.)

ISPs and Broadband Companies Will Invest Less In Their Networks: There is no evidence that Title II will cause ISPs to invest less in their networks. Most Wall Street analysts have said that they see no threat to investment from reclassification because there will be no rate regulation. Sprint, Google, Verizon, Charter, Comcast, Time Warner Cable and others have told Wall Street that Title II poses no threat to investment. Mobile voice is already regulated under light-touch Title II and wireless companies invested nearly $300 billion in their networks in the last 20 years.

Obama is Forcing the FCC To Do This: When I met with Wheeler about a year ago, he had a very different starting point around this issue. I had a strong negative public reaction to this during the initial public comment period and made my point of view clear on the original set of proposals along with about four million of my American friends. I’ve been told this was by far the most comments on FCC rules of any sort. The vast majority of people asked for the strongest possible net neutrality rules which align with the Title II approach. These got incorporated into the proposal as a result of this public response and Obama didn’t actually weigh in publicly until after Title II was incorporated into the proposal. When I checked on history, it turns out that it’s not unusual for the President to weigh in on FCC matters as Nixon, Reagan, Clinton, and Bush have all publicly urged the FCC to take certain actions on regulatory matters.

Everything Was Done In Secret: This is a talking point that apparently started when one of the FCC Commissions (Ajit Pai) put it out there that the upcoming final proposal (what government people call “the order”) was not made public before the FCC vote. It turns out that no FCC Chairman has ever made the full text of an order public prior to a vote. Given how the existing process works, which incorporates public comments on the draft (remember those four million comments I mentioned above), the notion around the FCC making the final proposal public before the vote seems like a cynical ploy for delay, as any comment on the proposal would have to then be considered and incorporated, leading to an endless cycle of public comment.

Ultimately, Congress can weigh in with new laws around this. Remember that the FCC can’t make new laws, they can only enforce things under current laws. There’s a clear-minded article in the New York Times this morning titled F.C.C. Net Neutrality Rules Clear Hurdle as Republicans Concede to Obama that create additional perspective on both the partisan dynamics at play along with the challenge that paralyzes Congress in general right now.

While this certainly isn’t the end of this issue, and given the dynamics around networks in general, I expect it will be one we face for the rest of time, I continue to believe strongly in the proposal the FCC is considering. And I’m proud that so many people have engaged constructively in the discussion.

  • Sean Lawrence

    I would recommend you consider FCC Net Neutrality as part of an overall legislative and policy perspective. Consider it in context with TPP and the Obama administration pushing for “information security sharing” with the government and tech giants. In my mind, this is one of the first plays in a grander strategy. Obama’s sudden interest in NN is telling g on this point. Just my two cents. And I am all for an open and vibrant Internet and feel the current situation is not conducive to that. It beats the coming Internet under the emerging political landscape, though.

  • kermit64113

    Brad, excellent summary of the situation. From nearly 20 years in the industry, here’s where this heads. 1) Duopoly pricing and slower Google Fiber deployments (ad-subsidized networks will not be considered “just and reasonable” which is why Eric Schmidt tried to intervene at the last minute (see WSJ article); 2) No throttle option for wireless users (think T-Mobile $50 Simple Choice plans) – rather than slower speeds, low ARPU wireless users will get no data unless they pay more – this amounts to a regressive tax; 3) An increase (at least for a while) in the imbalance between equity value created between software and transmission (MSFT, AMZN, GOOG, AAPL, FB created $200 billion more market value less dividends than the entire telecom industry combined in 2014 alone – for the past three years this number is nearly $500 billion); 4) Elimination of a new market for low-latency applications (as I described in a previous comment, a better Caller ID experience would be one easy example).

    Less private sector-created competition, less data for low ARPU wireless users, imbalanced returns between software and transmission, and elimination of an addressable market. Get ready for cable/ DSL carrier-imposed data caps on cable and DSL broadband: utility-style pricing which no one can argue is “unjust and unreasonable.” That’s what you’ll get with this regulation. – JIm Patterson

    • StevenHB

      Jim: I wish that you’d written that while remembering that not all of Brad’s readers are as immersed in this subject as he or you are. For example, what is a “low ARPU user”? I know that I can go look it up, but, honestly, I’m not wiling to do the research required to understand all of your points (and you didn’t even post a link to the WSJ article, which, I imagine, is behind a pay wall).

      • Rick

        “is behind a pay wall”
        .
        Maybe kermit is selling that service. When it comes to the internet you just can’t be sure anymore. Everything is about selling. I for one am all for it. ABS is what I say. That means Always Be Selling. .
        .
        In a captialist country the way to regulate is to ensure every average Joe can get into the biz and compete! Not through regulation. Regulation helps big players get a tighter grip on the money.
        .
        Don’t get me wrong. I’m not against any of this stuff because I don’t care. I’m just saying this all is for not. It will stifle competition that’s all it will do.
        .
        Again the way to regulate in the US is to make it easier for the average Joe to take a piece of the pie for him/herself!

        • StevenHB

          I don’t see net neutrality as helping the “big players get a tighter grip on the money” (though, it may keep some money out of Comcast’s, Verizon’s, etc. hands) Frankly, I think that it makes total sense to treat internet service similarly to the way that phone service is treated – I wouldn’t want the ISPs holding up startups for more money in exchange for better service. It’s not like Sears paid Ma Bell for the privilege of allowing me to call them.

          • kermit64113

            Steven – If we treated a broadband bit the same way we treat a phone minute, Netflix would be paying Comcast a transit fee for every packet that terminated to Comcast. In the phone world, this is called terminating switched access. It’s paid by the originating phone caller’s company. You got charged a per minute of use fee. Terminating switched access rates have changed a lot over the past 15 years, but treating Netflix like phone would be devastating to their company and consumers.

            Let’s ask it a different way – Should consumers who have 4K TVs have the choice to pay $5 of $10 more to get the movie in 4K definition (this is the step up from HD)? This concept is called consumer-driven paid prioritization. While we need to wait for the rules to come out, I think the answer will be “no.” By the way, this prioritization could also apply to get an unbuffered/ unpixelated stream of your favorite NFL team to your Verizon smartphone.

          • The falsity in this is that the ISPs are hugely profitable in their current form. Some analysts have stated that Verizon’s margins on Internet access are near 90%. The ISPs are getting paid plenty. Why do they need to increase prices in an industry where the cost of delivering bits drops every year?

            If the FCC doesn’t stop Verizon I think it’s only a matter of time before they decide to sell their customer base to MS Bing and block Google.

            This is monopoly rent collection. If the last mile wasn’t a monopoly/duopoly behavior like this wouldn’t be possible..

          • Rick

            The only problem with that is not everyone has the resources to get in on the action. If you change it so that everyone has the same opportunity then all will be good.
            .
            You guys are being distracted from the most important point. The only reason there is even a discussion at all is because the game isn’t open to everyone.

          • kermit64113

            Rick – how would you propose that everyone get in on the action? Self-installed fiber to a common community interface device? I’m confused on what you mean by “get in on the action” – JIm Patterson

          • Rick

            I’m trying to get people to open their eyes. There is no reason to sit around blowing hot air over this shit! They are gonna’ do what they are gonna’ do. It’s always been that way and always will be unless you want to start a civil war? Do you? I don’t.
            .
            Me asking if they are talking about how average Joe can get in on the action is just to help nimrods realize they don’t care about the average Joe. They care about filling their pockets and the pockets of their friends with fat stacks of cash.
            .
            That being the case. Our only options are to either stop using the internet or to find ways to make money from the changes. I say we find ways to make money from these changes.
            .
            The reason people come to Brad’s blog isn’t to hear horseshit opinions from armchair quarterbacks about this that and the other thing. We are here to talk about how to make money and lots of it!!!

            .
            So let’s all stop with the wasted hot air and get started looking at how these changes can be leveraged to make us all some cash.

          • kermit64113

            I am sorry you view my opinion as horseshit. But, after reading the Report and Order, I’ll be glad to suggest several ways to profit from the regulations. One that comes to mind prior to reading the order is to find your favorite Class Action attorney and have them read the order. I know that sounds sarcastic, but if the FCC is going to leave the definition of “unjust and unreasonable” wide open, lawyers are going to sue.

          • Rick

            Don’t try to make this personal. Your opionion is no different than others in this case. They are all just a waste of effort. The players will play the game as they see fit.
            .
            Good to see someone here is on-topic – how to make money!

          • Rick

            If we make it so that anyone can get in on the action it will all work out.

          • Rick

            None of that matters. If the discussion is not about making sure average Joe can get in on the money making then it’s not about freedom or capitalism.

            .
            As long as everyone has the same opportunity then all is good. So again unless they are talking about how average Joe can get in on the money it’s not any good.

          • I blogged about that at pointsnfigures.com. Linked to a study that shows how Comcast will line their pockets and win

          • Rick

            Goooooo Comcast!!!

        • kermit64113

          Rick – I do not work for the media or a cable company. But I have written a blog for over five years. It’s free. mysundaybrief dot com. There is a column I wrote a few weeks back called “Four Questions For the FCC Chairman” which I would encourage you to read. I generally agree with all of your statements above.

      • kermit64113

        Steven – http://www.wsj.com/articles/how-white-house-thwarted-fcc-chief-on-internet-rules-1423097522 is the article that I was referring to. It specifically states: “As rumors swirled last fall that Mr. Obama was preparing to call for tougher Internet regulations, Comcast Corp. CEO Brian Roberts called Ms. Jarrett, pressed her for information and urged the White House not to go through with the move, people familiar with the matter say. She offered no help, these people say. Google Inc. Executive Chairman Eric Schmidt spoke with White House officials, urging them not to go through with utility-like rules.”

      • kermit64113

        Steven – a low ARPU user is one who does not have the credit to qualify for the best phone deals (roughly 42% of the population using FICO scoring as the basis). They elect to buy services that limit the amount of high-bandwidth usage they receive in a given month (their current family plan allots 2.5 GB per user per month, but this reverts to 1 GB per user starting 1/2016). After the threshold is reached, the throughput is reduced to 2G speeds (approx 128 Kilobits per second), a 90% reduction. No doubt this will be deemed “unfair and unreasonable” even though the customer selected to be throttled.

        • It’s not throttling if you clearly state what the plan includes. For example unlimited data access at 2G speeds, 2.5GB per month at LTE speeds.

          The problem here is in deceptively advertising unlimited data at LTE speeds and failing to mention the bit about it be limited to 2.5GB.

          • kermit64113

            Jon – there’s real issues with the concept of throttling anyone who has signed up for an unlimited plan and the FCC has been extremely critical of Verizon’s practices in particular. However, T-Mobile’s practices of throttling after X GB as well as their practice of Music Freedom (included unlimited music streaming for certain plans) could be designated as “unjust and unreasonable.” I agree with your statement as it pertains to existing unlimited plans but also agree with the right of carriers to modify these plans when conditions warrant. Telecoms are utilities now, and there are no unlimited electricity/ gas/ water plans in most locals. You have to pay for what you use. Welcome to broadband by the GB.

          • kermit64113

            Jon – here’s the statement on throttling from the FCC’s news release (hopefully they clarify it to mean what you imply in the final Report & Order): “broadband providers may not impair or degrade
            lawful Internet traffic on the basis of content, applications, services, or
            non-harmful devices.” The text does not read “unlimited” services (I agree with your position – if the carrier promised unlimited and did not disclose, they should provide unlimited until they sunset the plan). However, this statement is wide open to interpretation (there is no additional clarification). – Jim Patterson

      • “ARPU” is a term wireless carriers use, which stands for Average Revenue Per User. I believe Kermit6411 is suggesting consumers who pay less will get “throttled” and receive low or not data/bandwidth.

        • kermit64113

          Yes, as John points out, I am only looking at one specific use case that will be impacted by the order. But throttling is the primary reason why T-Mobile can make their Simple Choice plan economically work for $50/ mo. This has driven substantial market share gains for T-Mobile. The FCC might (we need to read the order) disallow throttling. That would force users who are currently OK with the 128 Kbps experience to a) pay overage (which T-Mobile eliminated); b) “buy up” to a $60 or $70/ mo. plan or c) receive no Internet services for the remaining billing cycle. Sounds regressive and choice-limiting to me. Why not allow the user to choose a throttled plan? – JIm Patterson

  • Xiaohua Yi

    Thanks for this very informative post.

  • Rick

    Good information. But more politics!?
    .
    If I wasn’t on your “do not call” list I would call about this!

  • Dave Linhardt

    Thank you for taking the time to summarize and clarify this issue based on the considerable time you’ve spent working on it.

    As a libertarian, my starting point of view is similar to your father’s it seems. However, I agree that the threat of a dominant player like Comcast throttling users and holding bandwidth hostage would not be a healthy development for the ecosystem. It sounds like the government is exercising restraint here, which seems reasonable. I do fear the slippery slope as once you let the camel into the tent…I think history shows this often leads to more draconian and incompetent government intervention over time. Health care is a useful analog in my opinion.

    In general, I support a set of rules that are exclusively focused on keeping the internet open and free.

    I also find it curious that we’ve gotten this far without any oversight from the government. This begs the question as to why we need government oversight at this time. Consumer’s internet usage in the US is some of the best in the world. It seems there is adequate commercial investment in internet infrastructure to meet the needs of most consumer’s today. Google and other fiber development plans seem to be continuing for super fast superhighway.

    In a truly free market, competition leads to innovation and a better deal for consumers. I do think there needs to be more competition in telecommunications infrastructure in general. Prices are increasing over time in wireless and broadband and that is not a good thing for innovation or consumers. When I launched the PCS markets at AT&T Wireless, there were as many as 8 wireless providers in different cities in the US. Prices fell dramatically and new features like text messaging came online. Now, it’s either AT&T or Verizon, which is woefully insufficient to provide robust consumer choice. Both companies are a pain in the ass to deal with as anyone can tell you.

    The real issue behind net neutrality is the increasing power of a few dominant telecom providers mucking up the free Internet. New rules to keep the internet open and free are a good start, but I’d like to see the government start breaking some of these guys up in a way that encourages more consumer choice, lower prices and more innovative products and services.

    • kermit64113

      Dave, to bolster your comments about competition, look at the DSL Reports reviews of Google Fiber service: http://www.dslreports.com/comments/3910. Not only did Google improve bandwidth services to much of Kansas City (although their fiberhood prioritization would likely be considered “unjust and unreasonable” as they served higher net worth areas first), they forced Time Warner Cable and AT&T to step up their games. This has also happened with TWC and AT&T in Austin where Google has barely begun development. One of the first questions I will ask after reading the regulation is “How does this encourage more Google Fiber?” – Jim Patterson

      • Dave Linhardt

        That’s excellent Jim. Exactly what I think we need to be working towards.

      • Rosey

        Ditto! Google laid fiber in my neighborhood (Johnson County, Kansas City Metro area) under my front yard last fall. AT&T laid fiber under my back yard a month ago. So I have two high bandwidth providers (competition) to pick from as long as they do not collude on price when they ‘turn on’ my fiberhood. I’m cautiously optimistic.

        I’ll defer and tip my hat to Jim Patterson as well.

  • Top thing I want out of this is to stop the ISPs from hiding behind “upto”. I was subscribed to a 50Mb/s plan last May when Verizon started messing with Netflix in NYC. During the month of May my Netflix performance dropped to 300Kb. When I called in to complain Verizon hid behind “upto”. In my book only being able to get 300Kb out of a 50Mb pipe is a breach of contract – Verizon was not doing their best effort to provide me with the service I had paid for. I didn’t get 50Mb service to read email, I got 50Mb service to watch video. Their attitude was that any bandwidth number form 0 to 50Mb was ok via the “upto” clause.

    My Verizon contract happen to expire in June of that year and I switched to Comcast. But Comcast has its own set of issues.

    • And if they opened more spectrum maybe those two oligopolies would get a competitor

  • John Hadley

    I have nothing but respect for Brad’s intellect and experience, as well as his candid self-examination regarding the real issues at play here, and I sincerely appreciate his thoughtful contributions to this vital dialog. Unfortunately, our core disagreement rests in trusting “Net Neutrality” advocates who promise a “light-touch version of Title II” regulatory oversight by the FCC. Government power – once granted on a limited basis – has consistently demonstrated an inexorable expansion over time, often to the detriment of us all. The single best illustration of this is our constitutionally “limited” Federal government that has evolved into an astronomical $4 trillion per year bureaucracy. This current reality is certainly beyond anything even conceived of just 50 years ago, much less at our founding. New powers always include “taxpayer protections” or “strict limits” that are inevitably pushed aside whenever the next regime finds the restrictions inconvenient to their agenda or political advantage.

    Once in place, there is nothing to stop a future FCC Chairperson (or even Mr. Wheeler himself) from actively setting rates, rules and other innovation-stifling actions under the guise of “just & reasonable.” The Internet is simply too important – commercially, socially… in every way, really – to take this action under legislative authority originally intended to address railroad monopolies in the 19th century. In fact, that they would attempt this massive change by regulatory fiat along purely partisan lines should raise a red flag to all, even those inclined to agree. It surely fuels greater distrust from the skeptics.

    The only true “just & reasonable” solution is to work through Congress to craft new legislation to address these unique 21st century challenges. Messy though this prescription might be, it is how our government is designed to operate. In the meantime, the FCC should employ a “light-touch” by slowing down this current process and opening their deliberations to greater public transparency (regardless of past agency precendent). As we learned with Obamacare, the “we have to pass the bill so that you can find out what is in it” approach is both a terrible way to run a government and damaging to the civic trust upon which our republic relies.

    • TravisJSays

      “Unfortunately, our core disagreement rests in trusting “Net Neutrality”
      advocates who promise a “light-touch version of Title II” regulatory
      oversight by the FCC. Government power – once granted on a limited basis
      – has consistently demonstrated an inexorable expansion over time,
      often to the detriment of us all.”

      Indeed, that is the dividing line, between those who trust Government to do it right while distrusting the free market, versus those who distrust Government and having more faith in limited regulation and markets to arrange things reasonably.

  • Cody

    It’s my understanding that the 322 page regulation is being kept secret from the public. If that is true then 1) How do you have any knowledge of the details of this regulation? 2) How many times throughout history have secret regulations turned out really, really well for the average American? Your fathers suspicions are well grounded.

    • Two thoughts here. One is that as Brad mentioned you can find the draft that was issued for comments by searching for FCC 14-61. Two is that the last mile internet was regulated under Title II prior to 2005 and that seemed to turn out OK.

      • Cody

        That’s interesting. There are public figures claiming the details of this regulation are being kept secret from the public.

        • People are making a distinction for some reason that I can only guess, Brad believes it is a stall tactic. Regardless, the FCC makes a draft order available to the public for comment. They did so on this matter last year. Based on draft order comments and a number of other factors the FCC modifies the draft order into a final order. The final order is not made public until after the vote. The FCC has issued talking points, which are exactly that, for the final proposal. I think it is pretty clear what they want to do. Prevent packet discrimination by IP carriers from ISP termination points to the end user. Based on my experience in the ISP world I believe this is the right thing to do.

          • kermit64113

            The Notice of Proposed Rulemaking (NPRM) was distributed in May 2014. I’ve read it several times. Think of it as a “we could do this/ we could do that” document. It’s not a specific set of recommendations and therefore is not a draft of a Report & Order. It’s merely trying to define the “addressable market” for the resolution. LInk to NPRM is here: https://apps.fcc.gov/edocs_public/attachmatch/FCC-14-61A1.pdf. A simple read of the introduction proves that this is not a report draft. – Jim Patterson

      • TravisJSays

        “the draft that was issued for comments by searching for FCC 14-61”
        For me, this produced the detailed document … from their May 2014 proposal. Clearly an old draft out of line with the vote they made this week and not up to date.

        There is a lack of transparency here. Discouraging sign of things to come.

        • Nick Ambrose

          That may be true, seems to be a red-herring here because as Brad said, the FCC has always worked this way, so to bring it up as a complaint in only this specific topic seems like a desperate attempt by some to muddy the waters and stall the decision.

          I agree that the final documents being voted on should be public (although that should not be an excuse for infinite debate and stalling things people don’t like)

          It’s my understanding that if congress wanted to change the rules regarding making these documents public in advance, then it could do that and congress is currently controlled by republicans so it seems if they are so concerned about this then they can easily fix it …

          Of course that might not work out so great for them in the future I guess so instead they try to muddy the water (at least it seems to be my right-leaning friends who are regurgitating this talking point).

          • TravisJSays

            “That may be true, seems to be a red-herring here because as Brad said, the FCC has always worked this way, so to bring it up as a complaint in only this specific topic”

            The FCC has since 1996 treated the internet as not under Title II, so this is a drastic change in policy, not a small bore rule here. As such, it should be accorded maximum transparency and caution; even one of the FCC commissioners who voted for the rule urged them to go slow.

            “congress is currently controlled by republicans so …”
            … they wont piss up a rope on this if Obama just vetoes it. Obama’s position, like on other matters, is precluding a bipartisan compromise. If Congress passes the Thune bill on net neutrality, will Obama veto it? This bill that was in the works since last year, would give the FCC the authority to enforce net neutrality rules, but stop there – no title II authority. A news report on the Thune bill status: “The Democrats have been pushed away from negotiating with us,” Senate Commerce Committee Chairman John Thune, R-S.D., said. Bottom line: Republicans want a bipartisan bill on net neutrality that Obama would sign on this, but Obama’s not interested in compromise. This IMHO is dangerous because a big downside to the FCC’s approach is the uncertainty and litigation that is sure to follow. A congressional law with limited bright line regulatory authority is clearer and more certain and secure.

          • Nick Ambrose

            the GOP has spent the last number of years defacto vetoing huge amounts of what Obama, Democrats and a lot of people in the US actually want (instead of actually trying to find ways to improve things)

            Strange that the call for “transparency” just happens to come when it benefits them the most (or rather when it benefits their corporate sponsors the most)

            Same with the recommendations from (say) the GAO … whenever they disagree with what republicans want they cannot possibly be relied on and are being partisan but when its convenient (and especially now that the GOP can exert more influence over them) they rely on it.

            Hippocrasy of the highest amount.

          • TravisJSays

            “defacto vetoing” – translation: ‘not vetoing’ (only presidents do it) but merely not supporting the other party’s agenda. That’s normal give-and-take in politics.

  • Thanks for this. I am empathetic to your arguments. I am not hopeful in the long term the vision that you have will manifest itself. Theory and practice would say even if you are correct the end result will be what Prof George Stigler called in 1971 Regulatory Capture.

    It’s a great paper. Time and time again it plays out in different industries. Dodd-Frank caused big banks to get bigger and small banks to get crushed. Same happened with futures industry clearing firms. Obamacare caused mega mergers in hospital and delivery operations. Little guys crushed. Farm Bill good for Monsanto and corporate farmers Independent farmers get hurt Big Oil can afford regulations and taxes, upstarts cannot

    Net Neut will cause….

    • Rick

      Now pointsnfigures you know from your experience in business that change brings about opportunity. We WANT change so that we can make money. What we should all be doing is figuring out how to take advantage of these changes to fill our pockets with money!

    • TravisJSays

      “Dodd-Frank caused big banks to get bigger and small banks to get crushed.”

      Yes, they shot the innocent (community banks) while coddling the guilty (the TBTF banks that were malefactors in the bubble).

      The support for Title II of BigCorp internet content players like Amazon, Google and Facebook makes ‘sense’ in terms of gaming business structures for their pecuniary advantage.

      The support for title II from startup entrepreneurs really doesn’t make sense from that angle. rather it seems more a naive faith-based belief that an ‘open internet’ that grew up on light-touch regulation now has to be secured with a very different regulatory scheme. History and precedence shows the faith is not well-placed.

  • Really great post Brad; thanks. I appreciate the extent to which you’ve studied the arguments here

  • Bill Adkins

    It seems the primary argument for NN has been “keep Comcast, Verizon and TWC from controlling costs and limiting my choice”. Yet aren’t they products of current govt regulation in the first place? It would appear that regulation of _them_ rather than the entire internet would be more in order. Given that the FCC is an appointed body and not subject to normal scrutiny, that we are subject to their whims (similar to the IRS). Witness their (in IMO) irresponsible overreaction to Janet Jackson/Superbowl years ago with their subsequent enforcement of indecency on TV/Radio (~$500k per market/broadcast instance for something they deem indecent). Their relationship to ClearChannel was another concern. There is nothing to say that in a different administration that things couldn’t go south again. Being angry about Comcast’s monopoly power and handing authority over to an appointed govt body with limited checks/balances is concerning, IMO.

    • kermit64113

      The irony here, Bill, is this is the same FCC who is likely to approve the Comcast/ Time Warner Cable and AT&T/ DirecTV mergers. ONe can only wonder if this “sweet” was needed because the “sour” was coming. – JIm Patterson

      • TravisJSays

        “Bill, is this is the same FCC who is likely to approve the Comcast/ Time Warner Cable”

        we’d have a better internet if that merger was stopped and Title II regulation was stopped, both. Title II regulation is not positive for competition.

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  • TravisJSays

    “Title II where there will be no rate regulation”

    FCC commissioner Ajit Pai in his dissent points out that rate regulation *is* in the FCC’s Title II mandate, and they *are* using it. FCC will set rates on what Internet service providers may charge and will set a price of zero for certain commercial agreements. Forbidding tolling and paid prioritization inherently requires rate regulation.

    “Instead, there will be prohibitions on blocking, throttling, and paid prioritization.”

    The first two (no throttling and no blocking) are fine, but why insist that we OUTLAW paid prioritization, rather than consider the possibility that there are legitimate business model cases (eg building private intranets need high QOS) where such cost-sharing is warranted? And as such, let business negotiation works things out (as ended up in netflix vs comcast) rather than a hard-and-fast rule?

    “It turns out that no FCC Chairman has ever made the full text of an order public prior to a vote”

    I have seen contrary commentary on this point. One example I read:” I have dealt with FCC regulated and/or licensed services for decades and the normal practice of FCC has always been to publish new rule proposals (NPRMs) months and even years in advance. It is my opinion that the usual procedures were not followed here because the administration and its co-partisan commissioners wished to conceal the scope and content of this proposed regulation.”

    Or FCC commissioner Jessica Rosenworcel lamenting going too fast: “So I support network neutrality. But I believe the process that got us to this rulemaking today is flawed. I would have preferred a delay. I think we moved too fast to be fair. ”

    Why such a short runway and no public release of text prior? There’s not a good reason for that. Considering the complexity and how drastically the FCC is changing regulations with this order, such caution is warranted. if they didn’t do it before, no better time than now to start.

    The goals of the open internet that Brad Feld espouses has been shared and was promulgated by former FCC chairman Michael Powell, who reacted negatively to it.

    There is one argument that Brad Feld didn’t address, which is that Title II is the wrong approach to achieve net neutrality and that in attempting it, the FCC will make things worse for the industry due to the uncertainty created as this gets hashed out. They will impose 12 provisions of title 2 regulations, many provisions going far beyond the net neutrality bright line items, and even Title II supporter EFF has raised concerns wrt to uncertainty regarding ‘general conduct’ rules:

    https://www.eff.org/deeplinks/2015/02/dear-fcc-rethink-those-vague-general-conduct-rules

    FCC commissioner OReilly pointed out that the: “premise for imposing net neutrality rules is fundamentally flawed and rests on a faulty foundation of make-believe statutory authority. I have serious concerns that this ill-advised item will create damaging uncertainty”

    To wit, expect years of litigation on the many details of this significant change in regulation in this area, and further uncertainty in the meantime.

  • I think this is a “damned if you do, damned if you don’t scenario.”

    Corporate money lobbying Government, and some members of Government taking the bait on one side … and the possibility of Government intervention on the other side.

    “Light” Title II restrictions sounded like a negotiation to me.

    This is the Internet, not a corporate plaything. That’s why the FCC has to have “some” authority within a legal system to act.

    That said, over-intervention in any business can spawn future over-intervention in different businesses later on. Could open the door for some drastic overreaching and “too much Government involvement.”

    Perhaps the solution lies in creating a “checks and balances” system as it applies to the Internet, if the Internet is important enough. Treat the Internet itself as another “United States” etc… (not as a country per se, but by using the same structure to Govern it)?

    I don’t know what the exact answer is … but a “balance” has to be reached where any Government cannot over step their boundaries, but also so Corporate lobbying money cannot do its worst either (and yes, Corporate power left unchecked will do so).

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  • DoktorThomas

    Look at how our government runs. It is not even a poor imitation of the original intent. We are less than a stone’s throw from King George’s Tories running the Nation. Never met your dad, but I think he is more insightful on this (and other government matters) than you. I am a law school (and others) graduate. There are no words that an average lawyer cannot distort to get to the meaning a high paying principal wants. (Excellent lawyers reach epiphany and leave the profession for good reason. Only the crooks and flotsam remain.)

    Look at the landline telephone business history; the FCC regulated that into the ground. Who has a landline phone anymore? What about taxes? Are landline telephones and their services free of taxes? Neither will the Internet be–taxes that will favor the big pockets of mega Corporations. You won’t be able to say, “I watched the NFL last night” on your blog without paying a user fee to the league. That is what this about… it will not help users; it will hinder on multiple levels.

    Whenever the fed.gov “fixes” something it always goes to hell. History is replete with examples a thousand times over. The only change that is needed is for users to be able buy access from any ISP of their choice–no geo-location restrictions. That will stop the throttling by aspholes like comCast and will force dishonorable providers like MediaCom from advertising huge transfer rates and delivering less than 12% on a good day; transfer rates which they say is certified by the FCC. (I measure their speeds regularly–all lies.)

    The fed.gov never ever gives more than it takes. This a Trojan horse freedom lovers will loathe to their graves. ©2015

    • Matt

      Well said. Anything the Gov’t regulates is typically bad for the end user. You can’t make the internet more free than it already is. Since when do appointed officials have the power to create law on anything without the people expressing theyr concerns? This should have gone through congress no matter what prior to the FCC voting on anything.

      No blogger should be in favor of this regulating of the govt. They will silence you eventually.

    • Govt Does No Right

      Anything positive from Wheeler is a smokescreen. When the dust settles, the internet will be far worse off as the usual suspects reclaim what was lost to an open internet. If the government wants to fix anything with the internet why don’t they find out why the majority of areas are only covered by one service provider.

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