#NetNeutrality News Never Sleeps (Even in August)

August in Washington (DC) is hot and muggy. Especially in an election year, denizens abandon the city and policy news generally grinds to a halt. But when the future of the Internet is at stake, there’s no break in the news.

President Obama and Senate Majority Leader Reid Back Net Neutrality

“One of the issues around net neutrality is whether you are creating different rates or charges for different content providers. That's the big controversy here,” said President Barack Obama on August 5. “So you have big, wealthy media companies who might be willing to pay more and also charge more for spectrum, more bandwidth on the Internet so they can stream movies faster. I personally, the position of my administration, as well as a lot of the companies here, is that you don’t want to start getting a differentiation in how accessible the Internet is to different users. You want to leave it open so the next Google and the next Facebook can succeed.”

What President Obama seems to be opposing, noted Brian Fung in the Washington Post, is the idea of paid prioritization, or the notion that companies should be able to pay for better, smoother access to consumers. The remarks also seem to contrast with the FCC's current proposal on network neutrality, which would tacitly allow for such commercial deals so long as the agency didn't consider them "commercially unreasonable." On the other hand, FCC Chairman Tom Wheeler has on occasion come out explicitly against Internet fast lanes, saying that paid prioritization in his view would be commercially unreasonable.

Free Press President and CEO Craig Aaron jumped on Obama’s statement saying, "The President gets why real net neutrality matters, but unfortunately his FCC chairman still doesn’t. The only way to prevent the sort of differentiation and discrimination the President spoke out against is to reclassify broadband access providers as common carriers under Title II of the Communications Act. FCC Chairman Tom Wheeler’s current approach would do the opposite of what the President says he wants: It would encourage individualized negotiations and allow new kinds of discrimination. It would strand the next Google or Facebook in the slow lane. There’s no longer any doubt that Wheeler now has the political support — from the president, from Senate leadership, and from millions and millions of Americans — that he needs to abandon his current proposal and protect real Net Neutrality."

And President Obama isn’t the only politician to make news in support of an open Internet recently. “Let me be clear: I support net neutrality,” wrote Senate Majority Leader Harry Reid (D-NV) to David Segal of Demand Progress. Noting Segal asked him to tell the FCC to regulate Internet service providers as common carriers under Title II of the Communications Act of 1934, Majority Leader Reid answered, “Let me assure you that I will lead the fight to protect any Open Internet rules promulgated by the FCC” while pledging to “lead the fight” to protect net neutrality rules “against the inevitable Republican attack against such rules.” “I favor,” Reid writes, “rules that will keep the Internet open and allow ideas and innovation to thrive.” Sen. Reid concludes the letter writing, “I will work to ensure that these rules give consumers access to the lawful content they want when they want it, without interference and ensure that priority arrangements that harm consumers are prohibited.”

The Title II vs Sec 706 vs No Rules at All Debate

But wait a second, writes Information Technology and Innovation Foundation Policy Analyst Doug Brake. All the major carriers insist they have no interest blocking or degrading traffic or splitting up websites into tiers or packages. The real controversy is not over who’s for an Open Internet – who isn’t, he asks -- but over the appropriate jurisdictional framework for the FCC to build its rules on. There are two possible starting points: either (1) Section 706 of the Communications Act; or (2) a new classification of broadband under Title II. And which way the FCC chooses to go has profound implications for the way Internet infrastructure and web services will be regulated: “Section 706 is surgical, allowing the FCC to only step in where necessary, whereas Title II brings full weight of the FCC’s regulatory authority designed for the old monopoly phone system, delaying any enforceable Open Internet rules, slowing innovation and investment in potentially both infrastructure and the services that ride on top, all for very little gain.”

Brake’s reading of Reid’s letter is that it backs the FCC’s proposal to move forward with strong net neutrality rules under Section 706 of the Communications Act. “If anything, Reid is giving [FCC Chairman Tom] Wheeler the cover for moving forward with Section 706 as the jurisdictional hook for Open Internet rules. Explicitly declining to support Title II regulations but instead supporting any net neutrality rules seems much more like ‘cover’ for relying on Section 706 than anything else.”

Brake concludes that Free Press and the like have done their best to paint Section 706 as somehow anti-net neutrality and Title II as the only “real” net neutrality and unfortunately much of the popular media has taken up this view. But just because, Brake argues, they have convinced John Oliver does not mean it is established fact that Title II is the only way to get strong net neutrality rules that protect the Open Internet. Everyone (Wheeler included) supports an open Internet whereby, in Obama’s words, the “next Google or the next Facebook can succeed.” There is no way such a statement can be read as an endorsement of the extreme step to Title II. Vague statements in support of the open Internet have no bearing on the jurisdictional hook the FCC should use. This should be a debate fundamentally about the economic and technological facts, not about twisting people’s words into political cover for your own abstract idealism.

In Can Net Neutrality Rules Promote Regulatory Certainty and Flexibility?, the America Enterprise Institute’s Jeffrey Eisenach highlights a speech by FCC General Counsel Jonathan Sallet delivered to the Federal Communications Bar Association in June. Sallet spoke to the need for a “jurisprudence of innovation” and suggested that a key objective for any new rules should be to strike a regulatory balance between certainty and flexibility -- certainty to allow innovators to be able to make plans and take risks, flexibility to accommodate the highly dynamic nature of the marketplace. That goal, he argued, would be well served by the FCC’s proposed alternative to a public utility style approach [Title II]: Case-by-case deliberation on the effects of specific conduct within the context of an enforceable legal standard, bolstered by “clearly established factors that give additional guidance on the kind of conduct that is likely to violate” that standard. But, Eisenach concludes, “whatever the merits of a 'case-by-case' approach to FCC regulation of net neutrality, the case for not adopting any new rules that further centralize regulatory power over the Internet is stronger still.”

In an August 4 editorial for the Wall street Journal, writer L. Gordon Crovitz argues that common-carrier rules would subject the Internet "to the sort of regulations that micromanaged railroad monopolies in the late 19th century and the phone monopoly in the 20th." This future dystopia, Crovitz writes, would resemble a past where "bureaucrats ... dictate how networks operate, which technologies can be used, and what prices can be charged."

On August 7, Free Press Senior Director Timothy Karr answered Crovitz in a Huffington Post op-ed. “Common carrier is only for dusty old utilities like Ma Bell, not for the Internet and not for the future,” he writes to summarize Crovitz’s argument. But Karr counters:

Actually, according to settled law, common carriage applies to any carrier that "holds itself out... to carry for all people indifferently." This makes common carriage "of substantial social value," Columbia University economist Eli Noam wrote in a 1994 paper in which he accurately predicted industry efforts to kill the standard. "It extends free speech principles to privately owned carriers. It is an arrangement that promotes interconnection, encourages competition, assists universal service and reduces transaction costs."

Karr writes, “Common carriage is a successful legal framework functioning across the U.S. economy. It applies to wireless carriers (like Sprint) and more than 800 small rural carriers offering DSL and fiber access (like Iowa Network Services). Common carriage applies to other competitive markets as well -- like airlines, private buses, parcel shipping, department-store elevators and even roller coasters. None of these businesses are utilities, nor are they monopolies. Many are very profitable -- some extremely so.”

Karr’s main point: “Common carriage is the basis for protecting free speech over private networks. Hundreds of millions of people now speak via digital platforms. The sheer scale of free speech today is without precedent in human history, and common-carrier rules -- even more than the First Amendment -- will protect our rights to connect and communicate going forward. Common carriage worked in the past. It's working right now in innumerable industries. And common carriage applied to the Internet will work just fine in the future.”

Public Knowledge Begins Formal Open Internet Complaints

On August 6, Public Knowledge filed letters with AT&T, Sprint, T-Mobile, and Verizon as the first step in the formal open Internet complaint process.

The complaint is in relation to AT&T, Sprint, and Verizon’s practice of throttling wireless data subscribers with “unlimited” data plans, as well as T-Mobile’s practice of exempting speed test applications from throttling. The letters explain how the carriers are violating the Open Internet transparency rule that survived court challenge. Sprint and Verizon violate the transparency rule, Public Knowledge argues, by failing to meaningfully disclose which subscribers will be eligible for throttling. AT&T, Sprint, and Verizon violate the transparency rule, says Public Knowledge, by failing to disclose which areas of the network are congested, thus subject to throttling. Finally, Public Knowledge says that T-Mobile violates the transparency rule by preventing throttled subscribers from determining the actual network speed available to them.

In order to comply with the FCC’s transparency requirement, Sprint and Verizon must publish monthly data-based thresholds (as opposed to merely percentage-based thresholds) for throttling eligibility. AT&T, Sprint, and Verizon must publish real-time information about parts of their network that are congested enough to trigger throttling. All of this information must be made available in open and accessible formats that would allow third parties to integrate it into applications and facilitate public scrutiny. T-Mobile must end its practice of exempting speed test applications from network throttling.

In Putting the Open Internet Transparency Rule to the Test, Public Knowledge Vice President Michael Weinberg explains Public Knowledge’s concerns with the companies’ policies. He concludes, “Once ten days have passed, we can file a formal complaint to the FCC. At that point, AT&T, Sprint, T-Mobile, and Verizon will each have an opportunity to reply to our complaint, and we will have the opportunity to reply to that reply. Of course, that process can stop at any time. As soon as AT&T, Sprint, T-Mobile and or Verizon comply with the transparency rule, we will drop our complaint.”

FCC Interested in Throttling, Too

On July 30 we learned that FCC Chairman Tom Wheeler had written Verizon Wireless CEO Dan Mead about the company’s plan to throttle the speeds on its unlimited plans which is supposed to help the carrier manage its LTE network congestion. Wheelers asked three questions:

1. What is your rationale for treating customers differently based on the type of data plan to which they subscribe, rather than network architecture or technological factors? In particular, please explain your statement that, "If you're on an unlimited data plan and are concerned that you are in the top 5% of data users, you can switch to a usage-based data plan as customers on usage-based plans are not impacted."
2. Why is Verizon Wireless extending speed reductions from its 3G network to its much more efficient 4G LTE network?
3. How does Verizon Wireless justify this policy consistent with its continuing obligations under the 700 MHz C Block open platform rules, under which Verizon Wireless may not deny, limit, or restrict the ability of end users to download and utilize applications of their choosing on the C Block networks; how can this conduct be justified under the Commission's 2010 Open Internet rules, including the transparency rule that remains in effect?

In an August 1 response, Verizon said customers will only experience slowdowns "under very limited circumstances." It will only happen at "particular cell sites experiencing unusually high demand." Verizon notes that any throttling will cease immediately when demand on a strained cell site returns to normal. "Our practice is a measured and fair step to ensure that this small group of customers do not disadvantage all others in the sharing of network resources during times of high demand." The carrier insists only big data users who "have an out-sized effect on the network" will be slowed down. Verizon claims those same people almost always have unlimited data plans and have "no incentive not to" hog up network resources.

Verizon hammered on the fact that it's by no means alone: Every other major wireless provider in the United States — AT&T, Sprint, and T-Mobile — have already implemented some form of data throttling or "network optimization" as it's often called. "This practice has been widely accepted with little or no controversy." Verizon writes. Verizon goes a step further and says its competitors often have "less tailored" policies that can impact customers even when network congestion isn't an issue. Verizon noted that T-Mobile gives itself the right to throttle "regardless of whether customers are at a location experiencing congestion."

Verizon's letter also essentially dismisses the idea of LTE being a viable replacement for home internet. "The network's capacity remains a shared and limited resource that we must manage to provide the best experience for all of our consumers.” In response to Wheeler's reference to C Block rules and the FCC's Open Internet Order, Verizon appeared confident that everything it's doing is perfectly legal and already permitted under current FCC rules. "Our customers continue to be free to go where they want on the Internet and to use the applications, services, and devices of their choice."

And Don’t Forget Paid Peering

A FCC investigation of how network interconnection problems affect the quality of Internet service began in June when the FCC obtained the paid peering deals Netflix signed with Comcast and Verizon. On August 1 we learned that the FCC has asked another six Internet service providers and content providers for copies of similar agreements. The FCC official would not say which companies other than Netflix, Comcast, and Verizon got the requests, although Chairman Wheeler said in June that he would try to get information from YouTube. Google, Amazon, Facebook, Microsoft, and other companies have direct connections with ISPs, the financial details of which have not been disclosed.

The investigation was spurred by months of Netflix problems on ISPs such as Comcast, Verizon, and AT&T. Eventually, Netflix agreed to pay the ISPs for direct connections to their networks in order to avoid congestion that makes streaming video play slowly, in lower quality, or not at all. So far, it does not appear that the FCC will create any rules governing the interconnection market. "This is not a regulatory exercise. It's strictly information gathering," a FCC official said. When asked if it could turn into a regulatory exercise, the official said the next steps will "depend on what the attorneys and engineers find as a result of this information gathering."

The FCC admits that it knows little about the interconnection market. The Commission's 2010 net neutrality rules, which were mostly struck down in court, targeted the "last mile"—the point from which traffic enters an ISP's network and starts traveling toward consumers. The rules did not apply to how ISPs connect their networks to the rest of the Internet. The FCC has proposed a new set of net neutrality rules, but as currently written, these rules would not cover interconnection, either.

"Interconnection is an area that the Commission hasn't studied before, and to make sure the public is being served, we need to educate ourselves about how the ecosystem is working," the FCC official said. “Chairman Wheeler decided consumers needed to understand the points of congestion and how traffic is being managed across the network in general, not necessarily limited to the last mile," the official said.

It's still too early to say what types of details the FCC will make public. It's "premature to say how we would explain to consumers what's going on before we have a good handle of what's going on ourselves," the official said.

Conclusion

The FCC’s current Open Internet proceeding has generated over 1.1 million comments from the public. (Many, we learned, can’t be reprinted in a family telecommunications policy newsletter.) The great public interest in the issue moved the FCC to release the comments in a series of six XML files, totaling over 1.4 GB of data – approximately two and half times the amount of plain-text data embodied in the Encyclopedia Britannica.(1) The debate over what’s reasonable network management, how net neutrality rules will evolve, and if regulatory reclassification is needed will continue for some time – and we’ll be tracking it all in Headlines.

Notes: Whoops! Another chance for us to practice transparency: William Benton, father of Benton Foundation Chairman Charles Benton, owned the Encyclopædia Britannica.