The president and CEO of the trade group that lobbies for the ISPs that are trying to end net neutrality would like everyone to just chill. In an op-ed published at Recode, former FCC chairman and NCTA head Michael Powell argues that things will be just fine “no matter what happens to net neutrality.”
It’s disappointing to see such easily refuted arguments being made by current and former FCC chairmen, but I’m always ready to address them. Let’s take a stroll through Powell’s editorial.
Tomorrow, the Federal Communications Commission will vote to restore light-touch regulation and promote investment in internet networks. Opponents of this action have responded with hyperbole, demagoguery and even personal threats. New-age Nostradamuses predict the internet will stop working, democracy will collapse, plague will ensue and locusts will cover the land.
This sounds familiar, because it’s what the ISPs also say about net neutrality advocacy. Comcast said people with legitimate grievances were creating “hysteria.” Kicking things off by accusing your opponents of demagoguery isn’t a great sign that you’re about to show intellectual charity.
Also, I enjoyed the part where Powell accuses his opponents of “hyperbole” in one sentence, and then calls them “New-age Nostradamuses” who are predicting biblical plagues in the next.
The vibrant and open internet that Americans cherish isn’t going anywhere. In the days, weeks and years following this vote, Americans will be merrily shopping online for the holidays, posting pictures on Instagram, vigorously voicing political views on Facebook and asking Alexa the score of the game. Startups and small business will continue to hatch and flourish, and students will be online, studiously taking courses. Time will prove that the FCC did not destroy the internet, and our digital lives will go on just as they have for years.
Yes, it’s true that the internet will continue to exist, and that people will shop online and talk to their robots. But Powell misses the point out of the gate: nobody is predicting that commerce is going to disappear, or that internet giants like Amazon won’t be able to afford whatever byzantine backroom deals the ISPs come up with that shave more money off the bottom lines of companies that use the network.
More importantly, net neutrality isn’t just a commerce issue; it’s a broader speech issue. I don’t think net neutrality advocates are predicting the internet will literally disappear. The issue is giving ISPs the power to shape the flow of speech on the internet. They will do that by pricing traffic in a discriminatory way, and we know they will do this because they’re already doing it.
A network company makes the most money when its pipe is full with activity. The more consumers use, the more profitable the business. With new, compelling services, consumer demand rises for higher speeds. Degrading the internet, blocking speech and trampling what consumers now have come to expect would not be profitable, and the public backlash would be unbearable. Economic self-interest and the pursuit of profits tilts decidedly toward an open internet.
I don’t know what economic analysis Powell is referring to here that suggests ISPs make the most money when their pipes are full with activity, but I don’t think it exists. If it were the case that more traffic equals more money, companies like Comcast wouldn’t impose data caps on their customers, and they wouldn’t resist making their services faster and better. Before Google Fiber forced them to compete, Comcast and Time Warner Cable laughed at gigabit internet speeds. Comcast said customers don’t need it, and Time Warner told people they don’t really want it.
Powell also ignores the actual economic forces at play. ISPs effectively enjoy monopoly power in many of their markets, which makes it economically rational for them to keep prices artificially high. There is no reason to compete when you have no competitors.
Oh, and there’s a mountain of evidence that suggests ISPs are tilted in the opposite direction of openness. They’ve deliberately throttled internet traffic, lied about throttling it, squeezed customers with arbitrary caps, misled them about the meaning of “unlimited,” discriminated against content from companies they don’t own, spent millions to prevent cities from developing their own high-speed internet, sought to covertly sell customer data, and have fought at every opportunity to prevent competition. But yes, let’s just trust that they will do the right thing!
Invoking Title II permits the FCC to set prices, approve or disapprove of new innovations, and dictate the terms and conditions of offering service. The well-founded fear is that such heavy-handed regulation of the network will raise costs (and ultimately consumer prices) and slow the pace of investing to improve the network.
This sounds a lot like FCC chairman Ajit Pai’s false claim that Title II regulation has led to disinvestment in networks. This narrative relies on cherry-picked data. It also ignores the ISPs’ own statements to their investors about network expansion. (Even if you threaten not to expand publicly, you can’t lie to your investors!) In 2014, Verizon said Title II classification wouldn’t change anything. “To be real clear, I mean this does not influence the way we invest,” Verizon CFO Fran Shammo said. That doesn’t sound like a “well-founded fear” to me.
Rural communities wait longer for broadband to arrive and current users wait longer for improvements in speed and quality. Not good.
Actually, when we talked to small rural ISPs, they mostly described Title II as a temporary hassle. It’s not a real threat to business or expansion. Let’s stop feigning surprise that regulation imposes some extra work.
If you want to see the debilitating impact of utility-style regulation on investment and innovation, just look at our crumbling roads, bridges and electric grid and imagine what that kind of chronic underinvestment will do over time to the future of the internet.
Congress routinely blocks efforts to invest in infrastructure for political reasons that have nothing to do with “utility-style regulation.” Republicans blocked several efforts to invest in infrastructure under Obama, and even Trump’s infrastructure spending plans scare them.
“Utility-style regulation” is ultimately a disingenuous metaphor here for what Title II regulation actually accomplishes. It is the legal foundation that allows the FCC to impose open internet rules on ISPs. The FCC tried other, weaker means, and got destroyed in court by Verizon for over a decade.
The court that handed Verizon a victory didn’t do it gladly: Judge David Tatel declared that “broadband providers represent a threat to internet openness.”
Net neutrality regulation has absolutely nothing to do with hampering competition. When companies like Comcast decide they don’t want to compete, the government lets them. That’s not “utility-style regulation,” it’s the absence of regulation.
The biggest threat to Silicon Valley innovation and improving consumer experiences is not net neutrality, it is an internet that stalls and does not get better. Tech innovation and network innovation are symbiotic. Each depends on the other to keep up.
Internet service providers are not the internet. People and companies that use the internet to deliver services are the internet. And they’re doing fine with net neutrality. The only thing ISPs should care about is providing the fastest service at the best possible price. That’s how they can make the internet better.
I actually don’t know what ISP “innovation” looks like outside of making the internet faster and cheaper. I think it means letting companies like AT&T buy DirecTV and then make DirecTV free to stream on their network. Real innovation would just be making the fastest and best network that can stream any video service without limitations.
The FCC’s approach is a sound one. It eliminates the old, common carrier model that places a drag on Internet growth, while adopting a nimbler mechanism for policing potentially harmful behavior.
The FCC’s “nimbler mechanism” for policing harmful behavior is actually a plan to not police that behavior. Seriously.
The FCC plan to restore light-touch regulation is an important move to get the government out of micromanaging the internet, and an opportunity to start a new conversation about internet policy that reflects actual marketplace dynamics. Instead of letting the doomsayers win the day, let’s focus on crafting sound policy that continues our progress of building the best broadband infrastructure for America.
Saying that the government “micromanages the internet” is just a lie. I’ve said this before: net neutrality is the exact opposite of government micromanagement. In fact, it was the de facto operating agreement of the internet, before ISPs started to mess with it and provoke regulation in the first place.
The only doomsaying here is the claim that the internet will get worse if ISPs aren’t allowed to divide it up for their own benefit. Companies like Comcast, Verizon, and AT&T act like Title II is the end of the world, even though they keep investing in their networks and conducting business as usual. Maybe they should just calm down.