Staying Neutral

Net neutrality is a risk. Is a fox running the FCC’s henhouse?

Net neutrality is a boring but noble cause. It ensures the internet favours no one. So, why is the new chairman of the Federal Communications Commission, Ajit Pai, determined to scrap it?

“For decades before 2015,” said Pai in a recent speech broadcast on C-SPAN2, “we had a free and open internet.

Indeed, the free and open internet developed and flourished under light-touch regulation. We weren’t living in some digital dystopia before the partisan imposition of a massive plan hatched in Washington saved all of us…”

Pai also says he wants to “take a weed whacker” to net neutrality, and that its “days are numbered”.

These are strong words. A possible reason for them is that Pai was previously Associate General Counsel at Verizon. To understand why this is significant, we must delve into recent history.

In 2007, Comcast (owned by Verizon) was caught blocking BitTorrent traffic. This was ruled illegal by the FCC, and in 2009 Verizon settled a class action for $16 million.

In 2011, Verizon also blocked Google Wallet from being downloaded and installed on its phones in favour of its own, now-unfortunately titled ISIS service, which it founded with T-Mobile and AT&T.

In response, the FCC imposed its Open Internet Order, which forced ISPs to stop blocking content and throttling bandwidth.

At the time, ISPs in the US were regulated under Title I of the 1934 Communications Act. This classed them as “information services” and provided for Pai’s so-called “light touch” regulation. Title II companies are “common carriers” on a par with the phone companies themselves, and are considered part of the national infrastructure.

Verizon went to court, and in 2014 successfully argued that the FCC had no authority to impose its will on mere Title I companies. This backfired. In 2015, the FCC decided that ISPs were now part of the national infrastructure, and made them Title II companies. Problem solved, dystopia averted.

Times have changed, and the new Washington administration is keen to roll back what it sees as anti-business Obama-era regulation. Pai was appointed chairman of the FCC in January this year. Given his past at Verizon, his attitude to abolishing net neutrality raises real concerns about the internet’s future.

In an April 2017 interview on PBS News Hour, Pai was asked a direct question: supposing a cable broadcaster, like Comcast, created a TV show that competed with an equally popular Netflix show. Without net neutrality, what’s to stop Comcast retarding Netflix traffic over its own network, while prioritising that of its own show?

“One thing that’s important to remember,” came Pai’s reply, “is that it is hypothetical. We don’t see evidence of that happening…” In fact, net neutrality ensures this situation cannot currently happen, which is why there’s no evidence of it.

Taking a wider view, Pai’s attitude is also curiously uninformed given that his own web page at the FCC shows that from 2007 to 2011, when neutrality violations were big news and the FCC had to impose its Open Internet Order, he was the FCC’s Deputy General Counsel, Associate General Counsel, and Special Advisor to the General Counsel. After a stint in the private sector, he returned to become an FCC Commissioner in 2012.

In his speech on C-SPAN2, Pai also asked, “What happened after the FCC imposed Title II? Sure enough, infrastructure investment declined.”



However, the opposite of this assertion is a matter of public record. As Ars Technica discovered, after Title II was imposed, ISP investment continued to rise. Indeed, Verizon’s own earnings release shows that in the first nine months of 2015, now labouring under the apparently repressive Title II, the  company invested “approximately $22 billion in spectrum licenses and capital for future network capacity”. 

Interestingly, Pai’s page at the FCC also states his regulatory position in a series of bullet points. These include:

• Consumers benefit most from competition, not preemptive regulation. Free markets have delivered more value to American consumers than highly regulated ones
   
• The FCC is at its best when it proceeds on the basis of consensus; good communications policy knows no partisan affiliation.

History shows that Title II regulation wasn’t pre-emptive. It was a response to increasingly bold and shady practices by ISPs that forced the Commission’s hand.

Net neutrality currently maintains the kind of free market that big corporations usually crave. It’s a rare example of regulation removing barriers to trade. Companies of all types and sizes are currently free to compete on the internet, but cannot deny others from competing.

Scrapping US net neutrality will also affect non-US internet users who access US-based content via a VPN. At the US end of the VPN, traffic is handed off to a US ISP. If that company favours some sites over others (or even blocks them), the ability to access content will be guided towards the choices set out by commercial interests, just as if the user was in the US.

Given all this, it is perhaps rather cynical that the Bill to remove Title II status from ISPs, sponsored by Republican senator Mike Lee of Utah, is called the “Restoring Internet Freedom Act“. With Pai also a declared Republican, and dead set on rolling back Title II, the meeting on May 18th to decide whether to proceed could have been a short one with a distinctly partisan flavour.