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Trump administration’s repeal of net neutrality a big gift to America’s internet providers

Ajit Pai, Chairman of the Federal Communications Commission
REUTERS/Aaron P. Bernstein
FCC Chair Ajit Pai testifying before a Senate Appropriations Financial Services and General Government Subcommittee in June.

With Thanksgiving over, it’s officially holiday shopping season — but America’s internet providers are already set to get an early Christmas gift from the federal government: an end to net neutrality.

Last week, the chair of the Federal Communications Commission, Ajit Pai, officially announced his plan to undo rules put in place during the Barack Obama administration that codified the concept of net neutrality — the idea that the internet should function similar to a utility, accessible to the public with minimal restrictions on access, and no discrimination between types or providers of content.

Pai had been expected to move quickly to strike the 2015 net neutrality protections, which block internet service providers (ISPs) like Comcast from leveraging their control of internet connections to block certain sites, privilege certain kinds of content, or deliberately slow internet speeds for some users and companies.

In the view of Pai — himself a former Verizon lobbyist —and the Trump administration, net neutrality protections are solutions in search of a problem, and make it much harder for the ISPs to innovate, improve, and offer better choices to consumers.

But Pai’s proposal, made official last week, goes further than many anticipated in limiting the power of the FCC to regulate how ISPs operate, by shifting the bulk of the federal burden in policing the ISPs to the Federal Trade Commission, the federal agency tasked with preventing anti-competitive practices in business.

To advocates for net neutrality — which is now a crucial business concern for Silicon Valley and a cause that has inspired millions of Americans to passionate activism  — the very future of the internet is on the brink, with a final vote on the proposal just weeks away.

‘Heavy-handed’ rules

On November 21, Pai declared that the federal government was set to “stop micromanaging the internet.”

He announced a draft proposal, dubbed the Restoring Internet Freedom Order, that would repeal what he called “heavy-handed, utility-style regulations” placed on the internet by Obama. “That decision was a mistake,” he said. “It’s depressed investment in building and expanding broadband networks and deterred innovation.”

The “mistake” in question is the Open Internet Order, a decision by the Obama administration FCC to classify ISPs as so-called common carriers, subjecting them to federal regulation under Title II of the Communications Act of 1934, which was designed to ensure that telecommunications corporations in charge of vast and vital networks were acting in the public interest.

Placing ISPs under Title II regulation codified net neutrality by mandating that those companies cannot make “any unjust or unreasonable discrimination” in how they charge for internet services, provide content, and otherwise administer how Americans connect to the internet.

The new FCC order would repeal the Open Internet Order, and shift the most essential ISP regulation to the Federal Trade Commission, which Pai argues is best-suited to ensuring ISPs are being fair to consumers. Some experts, however, are skeptical the FTC has the bandwidth to take on that task.

The only remnant of net neutrality at the FCC, under Pai’s proposal, would be the enforcement of a transparency provision that would require ISPs to report to the public any change in practice that could affect how consumers access internet services.

Echoing the FCC, 2nd District GOP Rep. Jason Lewis hailed Pai’s move in a statement to MinnPost. “The best way to ensure free expression and an open internet is not to let government use utility-style regulation and controls to stifle the internet,” he said.

“A vibrant internet and one that is available to consumers requires proven market solutions. That way Minnesotans throughout our state can have the option to purchase the kind of plan they want — just as they did before 2015.”

Pai told NPR that his rule change would bring the internet’s regulatory framework back to where it was during its golden age of innovation and expansion.

"President Clinton got it right in 1996 when he established a free market-based approach to this new thing called the internet, and the internet economy we have is a result of his light-touch regulatory vision," Pai says.

"We saw companies like Facebook and Amazon and Google become global powerhouses precisely because we had light-touch rules that apply to this internet. And the internet wasn't broken in 2015 when these heavy-handed regulations were adopted."

ISPs: Trust us

The internet may not have been broken when Obama’s FCC passed the Open Internet Rule, but the landmark net neutrality policy did not come out of nowhere: for years, the ISPs had been experimenting with ways to capitalize on their control of internet infrastructure.

The history of the internet before 2015 offers plenty of examples of ISPs deliberately slowing down internet speeds for certain customers or content — a practice called throttling — and examples of how they leveraged their networks to make more money or to stifle competitors.

In late 2013, for example, Netflix mysteriously began to grow slower and slower for Comcast customers. The country’s largest ISP was reportedly allowing Netflix traffic — which is substantial — to bottleneck at so-called interconnection ports that connect Netflix with the ISPs.

In January 2014, Comcast and Netflix agreed on a deal to connect “more smoothly,” which reportedly involved a hefty payment to Comcast from the streaming giant. After that deal was made, Netflix download speeds for Comcast customers shot up by over 40 percent in just a few months.

Supporters of net neutrality fear that overturning the Open Internet Order will usher in an era where the ISPs have sweeping power to enact plans to wring as much money out of consumers and internet-based companies as possible.

Under the order, for example, if Comcast were allowing streaming traffic to bunch at interconnection ports, Netflix could file a complaint to the FCC, which had the authority to intervene on a case-by-case basis. If Pai’s plan moves forward, ISPs would once again have significant leverage over content providers at interconnection ports.

Beyond that, ISPs are very interested in a strategy called paid prioritization, in which companies would pay them in exchange for consumers accessing their content at higher speeds. Such a scheme could force streaming rivals — Netflix, Hulu, and Amazon, for example — to outbid each other to obtain the highest speeds on Comcast, Verizon, or AT&T networks, potentially jacking up streaming costs for consumers.

Net neutrality advocates have also expressed concern that ISPs could block certain sites outright. Barbara van Schewick, a net neutrality expert at Stanford University, writes that “Verizon told a federal court in 2013 that it should have the right to charge any website any fee Verizon liked — and if, for instance, the Wall Street Journal didn’t pay up, Verizon should be allowed to block its site.”

“ISPs have wanted to change that since 2006, and Chairman Pai’s plan would finally allow them to do so.”

Leading ISPs publicly insist they will not carry out consumers’ worst fears. On November 22, Comcast tweeted that “we do not and will not block, throttle, or discriminate against lawful content. We will continue to make sure that our policies are clear and transparent for consumers.”

Some experts believe the company’s language suggests it is moving toward paid prioritization: Jon Brodkin of the tech site Ars Technica wrote the company’s promise to not “discriminate against lawful content” or impose “anti-competitive paid prioritization” gives it wiggle room it to impose paid prioritization it deems competitive, which it would likely have the authority to do.

Comcast has continued to vehemently deny it has any plans to enter into paid prioritization agreements.

Who benefits, and when?

In light of the ISPs’ records, and the millions of dollars they’ve spent lobbying Washington on the topic, net neutrality supporters are skeptical that the telecom giants would not explore ways to change how internet services are priced, and how content is delivered.

According to Ryan Singel, a former tech journalist who is now a media and strategy fellow at Stanford Law School, the ISPs do not have a lot of credibility. “I don’t see any real innovation from broadband ISPs that anyone really wants other than faster speeds and more access,” he told MinnPost. “I don’t see that removing these rules is going to do that.”

There’s also a debate over the effects Pai’s plan could have on innovation across the internet economy, from publishing platforms to start-ups and podcasts. Pai argues that paid prioritization could give an advantage to start-ups by offering them an opportunity to get their traffic privileged.

Singel sees it differently. He used the example of podcasts: a big audio producer like Slate could afford to pay to privilege its podcasts, while smaller outlets could not. “You’ll start to see where companies with money have an advantage over upstarts,” he says.

“Internet users in the U.S. haven’t had to worry about whether ISPs might block or discriminate against certain kinds of content or applications,” van Schewick writes. “Entrepreneurs who have an idea for a new application have not needed permission from ISPs in order to innovate and have been able to realize their ideas at a low cost.”

For consumers, though, there could be some benefits, explains Soumya Sen, a professor at the University of Minnesota who specializes in internet networks. He said the ISPs could offer more competitive pricing, and that existing rules and antitrust laws could stifle blatantly anti-competitive behaviors, like paid prioritization.

“What I think might happen is there’d be different solutions targeted at different segments of society,” Sen said. “You can think of having a basic plan available at ultra-affordable prices so that anyone can have access to them. Maybe they would be throttled at peak times, maybe they’d have access to only a limited set of useful websites, but that doesn’t mean people would be forced to have that bundle.”

“What we might see is maybe there’d not be enough innovation in the basic tier, and higher priority for the higher tier, where the fast lanes get more innovation.”

Where Sen believes the telecom companies could respond to market forces — like bad press resulting from blatantly anti-consumer moves — Singel is more pessimistic.

“Fifty-one percent of Americans have zero, or one, choice of broadband providers,” he said. “So you can yell all you want, but what are you gonna do?”

On December 14, the FCC’s board of commissioners is slated to vote on the new rule. With Republicans holding an advantage of three to two on the five-person board, Pai’s plan is expected to pass.

Net neutrality advocates are mounting an intense public pressure campaign and are calling on elected officials to exert their influence, too. Spurred on by tech giants like Facebook, millions of Americans registered pro-net neutrality comments during a period of public comment the FCC held over the summer.

Singel cited a study that found over three quarters of Americans in support of the Obama-era net neutrality rules. That could put some heat on Congress, he says, in the lead-up to the FCC vote.

“There’s a lot of time between now and then, and a lot of upset voters. Congress still has a chance to stop this.”

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Comments (11)

Folllow the money

Does Pai retain any Verizon stock? If so, his decision amounts to insider trading, as that stock is going up in value. He stands to make a lot of money through this decision.

If the Comcast's of the world mess up the internet to maximize profits while hurting customer service, we still have the ability to take our business elsewhere. Wells Fargo is teaching that lesson.

"If the Comcast's of the

"If the Comcast's of the world mess up the internet to maximize profits while hurting customer service, we still have the ability to take our business elsewhere"

From the article above: “Fifty-one percent of Americans have zero, or one, choice of broadband providers,” he said. “So you can yell all you want, but what are you gonna do?” So in fact most Americans have no ability to exercise this option "to take our business elsewhere."

Closed mind

Aside from whether Pai owns Verizon stock,the fact that he is now rescinding a policy which he was actively opposing as lobbyist points to the very parts of the "swamp" which Trump claimed he was going to drain. Pai apparently doesn't have enough brains to at least keep his real views to himself and publicly state, even insincerely, that he wants to keep an open mind while revisiting these rules. the DC Court of Appeals has held that bias can corrupt an agency rulemaking decision where the agency member has demonstrated an "unalterably closed mind on matters critical to the disposition of the rulemaking." At least for Pai, showing this will not be hard and the FCC will have a hard time justifying this repeal of the rules which it adopted only two years ago.

Are you reassured to read

Are you reassured to read this?--"Leading ISPs publicly insist they will not carry out consumers’ worst fears. On November 22, Comcast tweeted that 'we do not and will not block, throttle, or discriminate against lawful content. We will continue to make sure that our policies are clear and transparent for consumers.'"

They say they won't do what the Obama-era regulations prohibited them from doing, under net neutrality. So, why are they refusing to admit that these regulations don't prohibit them from doing what's right? They are being disingenuous, like the banks and other Wall St. entities that always assure us that they have consumers' best interests at heart and they won't do what they were known to have done, prior to the FCC net neutrality rules.

What disturbs me, is that there are hundreds of thousands of internet users (including those who might be the next founder of a Facebook, etc.) who have written to or signed petitions to the FCC and asked for the FCC not to rescind the net neutrality rules, all to no avail. Pai and his two GOP colleagues are on Vereizon's and Comcast's side., and the die is cast. Period.

I long for the days when America used to be democratic in its processes, and when there were actually hearings on stuff that had huge impacts on the average American.

When I see that Google and

When I see that Google and Facebook support net neutrality rules, I can only laugh… They have huge monopoly on the information which is much more important than monopoly on the way to pass it on. Google is the tool for over 90% of searches in the US. What if it wants to change its search engine method to block the sites it doesn’t like?

Having a choice matters

"What if it wants to change its search engine method to block the sites it doesn’t like?"

Then you can use one of the many other search engines out there. But as you may have read in the article, 51% of Americans either have one or no choice of broadband providers. When they decide to throttle down your preferred content what options do you have?

Monopoly

The term "monopoly" actually means something. Google and Facebook have big market shares. They do not have monopolies because their market shares don't block the competition. Anyone can use competing sites.

That isn't true for ISPs - there are only a handful of choices, and in some cases, only one provider to choose from.

“Google and Facebook have big

“Google and Facebook have big market shares. They do not have monopolies because their market shares don't block the competition. Anyone can use competing sites.” Correct, they do not block competitors so technically the legal term monopoly does not apply. However, they are in the information business and we know that fake news may be powerful and that blocking some information may be helpful.

“That isn't true for ISPs - there are only a handful of choices, and in some cases, only one provider to choose from” But no one blocks competitors here either. At some point, people had only one choice in car colors – black. And then it changed…

Anyone who trusts Comcast

Is crazy.

It's more of a

From Comcast, Verizon and those types of ISP providers, what they are suggesting they want is more of a "You could but you can't...unless..." Meaning if you pay more then you get want you want. That is their cable service and phone service to their customers right now. Right now cable services are limited in any area. In my area you can get only Comcast or CenturyLink and you pay a different rate for each of their tiers. They have the basic services on up to the premium services. With their internet services, you pay a different amount for different rates of speeds. So now they want more control. They won't change the way they deal with their customers. It's their corporate plan. Charge more for more content, for more speeds, change the rules whenever they want, and laugh all the way to the bank. And you better check your bills monthly, each and every month.

Google and Facebook aren't the same as ISP providers. A person can choose any search engine they want and they can use all of them for free. Facebook isn't the favorite choice of the younger crowd but none charge a fee to their users. Their money comes from advertisers. Laugh all you want Ilya!...lol.

Irony

Big cities are always going to have internet options - the density and infrastructure makes it cost effective for ISPs to operate. If existing ISPs misbehave, new entities will enter the market.

Its a different story in rural areas, which already have fewer, if any, ISP options. ISPs can charge more and offer less, and without net neutrality, customers will just have to take it.

The great irony is that rural areas elected the Republicans who have brought about the end of net neutrality. Once again, voters voting against their own self-interest.