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The FCC's New Take on Net Neutrality: What You Need to Know

Published on .

At its monthly meeting on Thursday, the FCC will vote to accept a proposal by Chairman Ajit Pai entitled 'Restoring Internet Freedom.' Here's what that means.
At its monthly meeting on Thursday, the FCC will vote to accept a proposal by Chairman Ajit Pai entitled 'Restoring Internet Freedom.' Here's what that means. Credit: Federal Communications Commission via Wikimedia Commons

The Trump administration's Federal Communications Commission on Thursday officially begins the process of unraveling the Open Internet rules passed by the commission under Barack Obama. The FCC's rules on net neutrality dominated tech policy circles in 2014 and 2015, and 2017 is shaping up to be similar. Here are answers to your basic questions:

Wait, remind me again, what is net neutrality? The basic idea is that internet service providers shouldn't be allowed to treat traffic on their networks differently based on the source or type of content. Supporters of net neutrality think that there should be rules to keep, for instance, AT&T from providing preferential treatment to streaming video from DirecTV, which it owns, giving itself an advantage while harming other businesses and their customers. Another example of a violation would be if Verizon slowed down Netflix traffic until the company paid for speedier service.

What's happening today? At its monthly meeting, the FCC will vote to accept a proposal by Chairman Ajit Pai entitled "Restoring Internet Freedom." It's the first step in the commission's rule making process -- the document Pai is presenting is called a Notice of Proposed Rulemaking, or NPRM. In the broadest sense, these rules are intended to undo the 2015 rules. And while Pai has the votes to win today, undoing the rules will take awhile. Nine months passed between the time that Tom Wheeler, Obama's FCC chair, introduced his open internet proposal in 2014 and the vote on the final rules. As Pai said in a speech at the end of April, this is the beginning of the discussion, not the end. (UPDATE: The commission voted 2 to 1 to approve the notice. The next step, taking comments from the public, goes through July 17.)

What did the commissioner think was wrong with the old rules? Pai doesn't see this as a debate over net neutrality. When he gave a speech outlining his approach in April, he didn't even use that phrase. His complaint is that the existing rules create a system that, in his words, "gives the FCC a roving mandate to micromanage the internet." Wheeler's FCC decided to treat broadband service as a utility under Title II of the federal Communications Act, which gave the commission stronger oversight. Pai was on the FCC in 2015 and objected to using Title II. The main goal of his plan is to reverse that decision.

But what about net neutrality? Instead of laying out a new set of rules, Pai has decided to ask for suggestions about how to structure them. But he does say that there has never been any evidence of a need for net neutrality protections. His plan asks whether it would make sense to have the industry police itself, whether anti-trust regulations would be enough to stem any bad behavior, and whether it even makes sense to automatically assume that harm comes from things like paid prioritization (speeding up traffic from businesses that pay) or throttling (slowing down certain kinds of traffic.) One thing that Pai does explicitly oppose is blocking legal material outright. In any case, the FCC seems prepared either to have no rules at all, or to have significantly weaker ones.

What has been the impact of the current approach? One big fight among people debating the Wheeler rules (and net neutrality rules in previous incarnations) is how internet regulation impacts investment in broadband. Opponents say the regulations drive investments down, because running a broadband company would be less profitable. In his speech Pai claimed the country's 12 largest internet providers reduced their domestic capital expenditures by 5.6% from 2014 to 2016. Yet the Internet Association, which represents net neutrality advocates like Google, Facebook, and Netflix, said telecom investment among publicly traded companies increased 5.3% in 2015 and 2016, compared with 2013 and 2014.

Most people just pick the set of statistics that fit into their ideology, says Brent Skorup, a research fellow at the Mercatus Center at George Mason University who opposes the Wheeler rules. He says this is the wrong way to think about the issue. If Washington has too much power, he argues, companies that are best at pulling the levers of government will come out ahead. Bigger companies are better at this than smaller companies, and the big internet providers are really big. "It's not clear to me that Title II will be bad for any companies in particular," he said. This is a mirror of the argument made by net neutrality advocates, who argue that Google or Netflix have little to lose in a non-neutral web, where they can use their resources to cut deals that smaller competitors can't.

Does this whole story end with the FCC? Unlikely. Abigail Slater, general counsel for the Internet Association, questioned whether the FCC is justified in reversing its previous rules, something federal agencies aren't supposed to do if circumstances haven't changed significantly. Slater argued that the basic contours of the internet industry are the same now as they were two years ago, and a legal challenge could be justified. "We don't want to predict the future too much, but if you look at the 2015 order, it was voted out and immediately challenged by opponents of the order," she said. "We might expect to see the same thing happen here."

-- Bloomberg News

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