Regulatory classification

With a full set of commissioners and a chief economist named, the Federal Communications Commission is set to undo network neutrality rules put in place during the Obama administration, but thorny issues around industry consolidation remain.

Former FCC commissioners, antitrust scholars, and at least one GOP senator share competition-related concerns about discarding net neutrality — the idea that internet service providers, who perform a gatekeeping function, should treat all data online equally, with no blocking, throttling, or unreasonable discrimination of legal content. On July 5, FCC Chairman Aji Pai announced that Jerry Ellig, a senior research fellow at George Mason University with a focus on competition policy, will lead economic analysis for rule-makings. President Donald Trump nominated Brendan Carr to the FCC for a Republican-designated seat, along with former FCC Commissioner Jessica Rosenworcel for a Democratic opening. That will make for a 3-2 Republican majority, up from the current 2-1 edge, with Pai and GOP-appointed Commissioner Michael O’Rielly often on opposite sides of votes with Democrat Mignon Clyburn.

Facebook and Google will be joining a mass online demonstration in support of the Federal Communications Commission’s network neutrality rules, apparently. The two internet giants join dozens of other companies and activist groups planning to rally grassroots support next week for the regulations, which require internet service providers to treat all web traffic equally.

They had been conspicuously quiet as Republican FCC Chairman Ajit Pai has launched proceedings to repeal the protections, arguing that the agency overstepped under the Obama Administration by reclassifying internet service providers as common carriers. “We have not heard directly from either Facebook or Google, but we’re glad to hear that these companies are listening to their employees and Internet users and will speak out for net neutrality with the rest of the Internet on July 12,” Evan Greer, campaign director at Fight for the Future and an organizer for the event, said in a statement. “In previous years these companies have often been on the sidelines of these fights, so we hope that they plan to do something meaningful in the spirit of the protest and educate their users about what’s at stake if we lose net neutrality protections that protect our online free speech, and give them opportunities to take action.”

A group of more than 100 YouTube stars is calling on the Federal Communications Commission to preserve its network neutrality rules, which are currently in the process of being repealed. In an open letter, 132 internet entertainers said that eliminating the rules could imperil their industry. “Online video traffic already represents over 70% of all global web traffic and is estimated to grow to over 80% of all traffic by 2020,” the letter reads. “Our rapidly growing industry employs hundreds of thousands of people and yet it barely existed more than a decade ago. As creators in this fast-moving industry, changes to the existing Net Neutrality rules would have an outsized impact on our field and jeopardize our livelihood.” Among the acts signing the letter are Benny Fine of Fine Brothers Entertainment, a group that runs a popular comedy video channel on YouTube and other platforms. The Fine Brothers have 15.7 million subscribers on YouTube alone. Also signing on to the letter is Dane Boedigheimer, whose web series the Annoying Orange has nearly 6 million Youtube subscribers.

An interview with Vint Cerf, the co-creator of tech that makes the internet work.

Cerf said, "My biggest concern is to equip the online netizen with tools to protect himself or herself, to detect attempts to attack or otherwise harm someone. The term 'digital literacy' is often referred to as if you can use a spreadsheet or a text editor. But I think digital literacy is closer to looking both ways before you cross the street. It’s a warning to think about what you’re seeing, what you’re hearing, what you’re doing, and thinking critically about what to accept and reject...Because in the absence of this kind of critical thinking, it’s easy to see how the phenomena that we’re just now labeling fake news, alternative facts [can come about]. These [problems] are showing up, and they’re reinforced in social media."

To support the 2015 Open Internet Order (OIO), the Federal Communications Commission cited four potential violations of network neutrality over the previous ten years, only two of which it explicitly challenged. Why, then, did the FCC say a rule was desperately needed and Broadband Internet Access Service (BIAS) providers say the rule would be devastating given that their past behavior meant that the rule would not affect them much? To mix common sense with econspeak, why did anyone care about the Order if it was not binding? Tim Brennan, professor in the School of Public Policy at the University of Maryland, Baltimore County and former FCC Chief Economist, addresses this question and explores the potential effects of the OIO 2015 rule in “The Post-Internet Order Broadband Sector: Lessons from the Pre-Open Internet Order Experience.” In particular, he explores what lessons policymakers might learn from the handful of cases as they continue to grapple with net neutrality.

This post is the fourth in a series featuring the contents of a recent special issue of the Review of Industrial Organization, organized by the Technology Policy Institute and the University of Pennsylvania’s Center for Technology, Innovation, and Competition. The short answer to why the Order matters if it doesn’t matter is that it is likely to affect future business models and network development. The longer answer is more nuanced. In summary, Brennan notes that the current net neutrality debate can be informed by past events, and should include additional issues in the present. He contends that things might not change all that much, under 2015 OIO or future net neutrality rules, but policymakers must consider how BIAS providers will be incentivized to innovate while stuck between edge providers and end users.

The Federal Communications Commission is currently considering reversing so-called "Network Neutrality." "Minneapolis, the elimination of Net Neutrality might be good for them. I think up here in North Dakota it might be detrimental. I don't see any positives for us," Ronald Marsh, Chair of the University of North Dakota's Computer Science Department said. He says repealing Net Neutrality could lead to an even tighter monopoly on the internet in our area. Resulting in lower speeds and higher costs. "To squeeze every penny they can out of the customer. I think that's what the end result will be is not immediately but 5 years, 10 years down the road there will be the haves and the have nots when it comes to the internet," Marsh said.

Democrats have promised to take technology issues like network neutrality and broadband privacy to the voters in the 2018 midterms. And fresh off the July 4 holiday, many of them will be doing just that at town hall events across the country. Sen. Maria Cantwell (D-WA) is hosting an event with Federal Communications Commission member Mignon Clyburn on July 7 focusing on net neutrality and "rules put in place during the Obama administration protecting a free and open internet [that] have come under attack." Sens. Ron Wyden (D-OR), Brian Schatz (D-HI) and Jerry Moran (R-KS) are also huddling with constituents for events that may include talk of broadband privacy and internet surveillance.

Sen Ron Wyden (D-OR) says only an outpouring of public opposition to proposed federal changes can save the internet from becoming an "information aristocracy." The Sen said that a proposal by the Federal Communications Commission — now led by an appointee of President Donald Trump — will end the principle of internet service providers treating all data the same, no matter who originates it, what the content is, or how it is delivered. "We are trying to create a citizen juggernaut so that politicians cannot look the other way," Sen Wyden said at the Friday Forum of the City Club of Portland, cosponsored by the World Affairs Council of Oregon. "I am telling you that citizen pressure really matters — and we have to have it now in the fight for net neutrality. It is a federal policy that embodies the Oregon way and gives everybody a fair shake."

[Commentary] It’s clear that most US consumers depend upon a few big players in order to access the internet. Therefore, the critical question is whether these companies have the incentive and ability to harm consumers and competition. That is, are they motivated to control what kinds of innovations come to consumers? And do they have the tools to do so? Both the Federal Communications Commission and the Department of Justice have recognized in recent proceedings that the answers are yes and yes.

In 1776, Thomas Paine didn’t need the permission of any other content creator or distributor to circulate Common Sense. But without rules prohibiting blocking, throttling, and the like, broadband providers would gain the power to limit what unpopular content flows over their networks—to the detriment of consumers and democracy. One challenger to the 2015 Open Internet Order argued exactly this to the DC Circuit: that the rules violated its right to block legal but unpopular content. An Open Internet has worked for America, creating a virtuous circle of innovation, trust, adoption, and further innovation. That circle should not be broken.

[Terrell McSweeny is a commissioner of the Federal Trade Commission. Jon Sallet is the former general counsel of the Federal Communications Commission. Both are alumni of the antitrust division of the Department of Justice]