Net neutrality has been getting so many “hot takes” lately, it almost makes you wish someone would be non-neutral about this content and block it. These have come during the run-up to today’s Federal Communications Commission vote, which will likely reverse the Commission’s June 2015 reclassification of internet service providers as Title II (of the 1934 Communications Act) telecommunication common carriers.
Reclassification as common carriers, however, made ISPs subject to FCC regulation.
So-called “edge providers” (like FAMGA – Facebook, Apple, Microsoft, Google, Amazon) are contract carriers. They, like a typical market service, provide their content and apps subject to mutual agreement. From the beginning of the commercial internet until the 2015 reclassification, this was true of internet service providers, too. Their reclassification as common carriers, however, made ISPs subject to FCC regulation, like telecommunications companies and other public utilities are. The primary stated aim of this reclassification was to ensure access neutrality for online content.
Status Quo Ex Ante
If the December 14th Commission vote goes the way most people expect it to go, ISPs will basically return to the status quo ex ante. Title II will no longer apply to them. Instead, ISPs will again be under the jurisdiction of the Federal Trade Commission, which will again be responsible for pursuing cases to protect consumer privacy and data security, including cases involving fraudulent, deceptive or otherwise unfair and anti-competitive business practices.
Notice, then, that this will not be a move from public utility-style regulation to no regulation. Rather, the effect will be a shift in the regulatory modus operandi: from a set of prescriptive rules under the FCC, to a framework based on case-by-case enforcement by the FTC to ensure “fair competition” and ISP transparency, including transparency about how ISPs handle customers under various service plans.
Which of these regulatory regimes best ensures that internet access is broadly available, and not subject to unreasonable restrictions or abuse of ISP market power in certain areas, is an empirical question. Unfortunately, it has become a source of ideological hand-wringing, often giving rise to speculations about a dystopian internet future.
The early 90s internet was basically just a few big newspapers and a bit of porn.
One consideration in examining the empirical question is the history of the development of the internet in the period from the 90s to the 2015 reclassification. The most significant tech policy that applied to the early internet was the 1996 Congressional update to Title 47 telecom law in Section 230, which carved out significant legal space for an environment of permissionless online innovation.
The early 90s internet was basically just a few big newspapers and a bit of porn (with pics taking upwards of 45 frustrating seconds to load). You might check your email or maybe buy a few books (instead of, well, basically anything) on Amazon, too, but you would quickly run out of things to do. Anyway, you might need to free up the telephone line or want to turn on whatever Must See TV (literally must, since streaming options didn’t exist) happened to be programmed viewing at that precise moment.
Power of Information
But in this deregulated environment, in the span of only about 20 years, we now have access to an amazingly creative, entertaining, dynamic and connected virtual world that now even extends into meatspace (with Uber, AirBnB, etc., and driverless cars just around the corner). All this happened, of course, without FCC-enforced net neutrality regulations.
Actually, the early 90s internet is a strikingly accurate picture of the worst dystopian fears of net neutrality advocates who want public utility regulation for ISPs. Then, we purchased access to the internet by purchasing access to content centers, like those curated by CompuServe or AOL. These ISPs only provided access to their associated content, forum sites and users. The wider world of the web was essentially blocked. Over time though, and pretty quickly, ISPs came around to the current model where they provide genuine access, and along with FAMGA, et al., some content, apps, and other services, as well.
As long as barriers to market entry are sufficiently low, ISPs will be pressured to provide consumers with the internet they want.
Again, all this happened without public utilities-style FCC prescriptive regulations. Are there reasons to think the pre-2015 environment was a bad basis for internet innovation and access to continue apace?
One worry I have already alluded to concerns limited ISP competition. Most customers have at least two wireline competitors, but some still only have one. ISPs will, if they can, abuse situations where they have market power. To the extent they have it, of course, they do because we mostly continue to live with the structure left over from when local telephone and cable networks were public monopolies.
But this sounds like a job for the FTC – to address complaints about anti-competitive practices (and, by the way, the FTC doesn’t have legal enforcement authority over Title II public utilities). I think more should be done to promote ISP competition, but in addition to cable broadband services, there is also competitive pressure from cellular and satellite providers. As long as barriers to market entry are sufficiently low, I would expect this pressure to induce ISPs to provide consumers with the internet they want.
Open These Markets
Even if these worries are more serious than I’ve credited them, are there reasons to think FCC regulations would address them in ways better than FTC oversight? Would the FCC be a better guarantor of openness and access neutrality? I’m doubtful. George Carlin taught me that one of the FCC’s primary functions is to regulate media content and I’d rather not have the FCC anywhere near internet content.
This is one of those policy debates that’s not about ends, but means.
More, it turns out that the Open Internet rules the FCC devised based on its Title II authority expressly permit ISPs to block, filter and curate content. Finally, if the regulatory structure administered by the FCC is more costly for ISPs than what it takes to satisfy FTC oversight, then it’s possible companies will have less revenue to devote to infrastructure investments in areas currently underserved.
Look, I’m just a philosopher, not a tech analyst or economist. But I hope to have at least convinced you that this is one of those policy debates that’s not about ends, but means. Whatever side of this you’re on, it’s quite probable that the people you’re demonizing want the same things you want.