In the Washington Post, Larry Downes completely dismantles the argument made by those pushing for regulating broadband under Title II. An excerpt:
So why the hysteria? Many of the groups involved in what became a very personal campaign against Wheeler have long sought to turn the Internet into a regulated utility or even to nationalize it outright. Any real or perceived threat to “the Internet as we know it,” even a manufactured crisis, is simply another opportunity to push an agenda Congress wisely rejected in 1996.
The extremists don’t want the FCC to adopt any rules. They want the agency, instead, to take over. That’s the hammer; net neutrality is just a convenient nail.
Yet much of the mainstream media, including The New York Times and US News, continue to validate the non-conspiracy. They continue to accept, for example, that Wheeler is proposing to “authorize” practices dangerous to the Internet (again, the rules only prohibit practices), to “end” existing net neutrality rules (there are none), and even to allow ISPs to “block” content at their discretion (the no-blocking rule explicitly prohibits this, as does antitrust law).
If you care about the future of the Internet, Downes column is required reading.
At Tech Policy Daily, Babette Boliek clears up some confusion about Title II regulations:
So I say to you NYT, and others under the same misted view of Title II, “I do not think it means what you think it means.” Title II treats telephone services as a common carrier. It is not about content, it is about prices – namely the regulation of prices. The “unjust and unreasonable” language the NYT points to is about prices. For example, if the post office (the quintessential common carrier) offers shipping services to a beef producer, they have to make those services available to other beef producers. Title II does not speak to the instance where beef producers are not offered delivery services (or, by analogy, certain content not allowed), and it does not prohibit the beef producer from asking for special treatment of her beef – like refrigeration or overnight delivery.
Given all the faulty information being tossed around about regulating broadband under Title II, Patrick Brogan of US Telecom has posted a blog correcting inaccuracies being spread by some of the biggest interest groups. An excerpt:
In comments filed at the Federal Communications Commission (FCC) and in an earlier blog, net neutrality proponent Free Press, is making a puzzling and questionable claim that broadband investment will not be harmed by reclassification to common carrier regulation under Title II of the Communications Act. In fact, Free Press makes the incorrect claim that “Title II is good for the economy” and actually promotes broadband investment.
On the contrary, a reclassification to Title II would create unambiguously negative pressures on broadband provider investment that would not exist absent reclassification. The question is one of degree and the relative weight compared to opposing forces, like demand and competition. At a minimum, Title II reclassification seems unnecessarily risky and potentially counterproductive for policy goals dependent on more investment, such as expanding deployment to all parts of the country and enhancing U.S. global competitiveness.
Over at The Grio, our Co-Chairman Jamal Simmons has penned an op-ed on the perils of reclassifying broadband under Title II. An excerpt:
Government should help set standards for business, such as a worthwhile minimum wage for workers. Defining the boundaries of acceptable behavior like emission standards is good too, but it doesn’t make much sense to have regulators in the middle of each team’s huddle signing off on plays. The market requires more flexibility than that. Uncle Sam should mostly get out of the way to let businesses compete.
Those in support of Title II argue that the fears of many business owners can be allayed by the FCC’s power to “forbear” from enforcing some of the Title II provisions. That exercise of restraint, however, doesn’t bind future commissions from rescinding that grant of forbearance.
Once the regulatory bear is out of its cage, there is no telling where it would stop. Some companies have proposed having wireless broadband service come under the umbrella of Title II also. Until now, the FCC has kept those services in a separate category that allows innovation and investment to flourish.
Last week, our Co-Chairman Larry Irving appeared on Government Matters to discuss Title II and the very real risks it could have on investment, innovation, and the entire Internet ecosystem. Check it out.
Tomorrow morning at 10 a.m., at the Mandarin Oriental Hotel in Washington D.C., IIA is holding a telecommunications forum on Title II regulation and its potential impact on deployment of 21st century broadband networks and services.
The Keynote Speaker for the event is FCC Commissioner Ajit Pai.
Also participating are Fred Campbell, Director of the Center for Boundless Innovation in Technology; George Reed-Dellinger, Senior Vice President and TeleMedia/Internet Analyst for Washington Analysis; Anna-Maria Kovacs, Visiting Senior Policy Scholar at the Georgetown Center for Business and Public Policy; and Roslyn Layton, Ph.D. fellow in Internet Economics at the Center for Communication, Media and Information Technologies at Aalborg University in Denmark.
Our own Co-Chairman Bruce Mehlman will be moderating what promises to be a lively and informative discussion about the future of technology. More information, including how to watch the forum via livestream, is available here.
This is the second installment of our “Let’s Get Nerdy!” series, where we take tech policy issues that are currently top of mind in our nation’s capital and explain how they are relevant to Americans across the map.
In this installment, our Co-Chairman Larry Irving discusses the effect reclassifying Internet service under Title II of the 1934 Communications Act will have on investment and innovation.
Ready to get nerdy? Let’s go!
How could Title II affect investment?
Could Title II regulations impact the Internet ecosystem on a large scale?
What is the best path for the Federal Communications Commission (FCC) to take in terms of net neutrality?
Our thanks to Irving for sharing his thoughts. Check out the previousepisodes of “Let’s Get Nerdy.”
In a must-read piece for GigaOm, Richard Bennett, the co-inventor of Wi-Fi, argues that Title II would do much more harm than good to the Internet. An excerpt:
Technology regulators must be humble, only intervening in commercial squabbles as a last resort. For all its warts, the permissive broadband approach to internet regulation is the better way forward. The FCC should free broadband networks from the specter of telephone-era regulations and nudge them in the direction of even higher performance, including expedited delivery services for applications that need them, such as immersive video conferencing, HD voice, and other real-time applications.
We’ll find out soon enough whether the U.S. soccer team can survive the World Cup’s “Group of Death” with two strong European competitors (England and Germany). But for broadband, it’s clear who’s winning: the U.S.
It’s basic economics that if we as a society want less of something—for instance, smoking—we will impose a tax on it or restrict it by regulation, and consumption will fall. The opposite is also true: if we want more of something, deregulation and lower taxes will, by the operation of markets, lead to more of it.
The price, availability and quality of broadband follows the same rules. If we want more and faster broadband—and we do—then excessive and inappropriate regulation of broadband, such as some activists’ proposals for “Title II” common carrier regulation, is the wrong way to go. On top of all the legal and technological problems Title II would bring, we can confidently predict that it would sharply inhibit broadband investment.
A new paper from Christopher Yoo of Penn Law School’s Center for Technology Innovation and Competition takes a fresh look at the data and shows that the US is far ahead of Europe on virtually every relevant metric of broadband deployment. The reason, not surprisingly, is that the US regulates broadband lightly while European countries impose investment crippling wholesale unbundling requirements on broadband providers.
Res ipsa loquitur, the lawyers like to say, and Yoo says exactly that: “The data speak for themselves, and the empirical evidence confirms that the United States is performing much better than Europe in the high-speed broadband race[.]”
Look at the data from different angles (as CTIC’s interactive micro-site permits), and it tells the same story: access to next-generation networks (over 25 Mbps), the U.S. leads 82% to 54%; access to next-generation networks in rural areas, 48% to 12%; and LTE coverage, 86% to 27%. Unsurprisingly given these figures, the U.S. (meaning U.S. network operators) invests more than twice as much per household as Europe does—$562 vs. $244. Better service, with less packet loss in the U.S.. And entry-level broadband prices are lower here, too.
Why is the U.S. winning? It all comes down to fundamentally different models of regulation and the incentives each provides for investment: Europe relies on regulations that treat broadband as a public utility and foster competition among multiple leased access providers on incumbent provider platforms. New entrants lease incumbents’ facilities at wholesale cost (also known as unbundling). The U.S. regulatory light- touch has generally left buildout, maintenance, operation and modernization of Internet infrastructure to private companies and focuses on promoting facilities-based competition, in which new entrants are expected to construct their own networks.
The regulatory structure government chooses directly affects broadband availability, quality and price.
Focus on that investment statistic for a minute: there’s over twice as much investment per household in the U.S. as in Europe, which leads to more coverage.
We’ve already had a glimpse of what can happen if the U.S. government tries a different path, that of Title II regulation. When the FCC announced in 2010 that it was considering Title II reclassification of broadband as a possible approach to ensuring network neutrality, there was an immediate negative effect on the stock prices of the network operators who were deploying broadband across the country. On average, the market capitalization of the four largest ISPs in the United States lost a combined $18 billion and the market value of one of those entities dropped 15% overnight. The ability of these companies to acquire the financing necessary for aggressive broadband deployment diminishes as their value in the market declines. This was but one early sign of the kinds of problems that broadband providers will encounter in continuing their world leading broadband deployment performance if the FCC turns to Title II regulation.
So the light regulatory model of the U.S. brings greater adoption, more investment, and faster speeds, while due to the heavy-handed leased access regime on which Europe built its policies, the continent is now lagging far behind.
None of this is surprising to anyone who knows a bit of economics, but it’s a useful reminder as the FCC considers what sort of rules would best achieve our nation’s broadband goals. We can ill afford to neglect history and economics by imposing telephone-era, public utility regulation that will dampen investment at precisely the moment when carriers will have to undertake even greater expenditures to acquire spectrum in the upcoming incentive auction and then spend more to deploy facilities to bring wireless broadband to the entire US population at 4G levels. As Yoo writes, “we have a real-world basis for assessing the impact of imposing telephone-style regulation on the Internet[.] As regulators in the United States contemplate rules for next-generation networks, it would be wise to consider how going down the path of stiff telephone-era regulation has fared elsewhere.”
Because whatever happens in Brazil, the U.S. has already beaten Europe in the broadband competition for economic growth.
With the net neutrality debate once again on the front burner, AT&T Senior Executive Vice President Jim Cicconi has penned a lengthy post at the company’s Public Policy Blog to break down how reclassifying broadband service under Title II is a bad idea for just about everyone with a stake in the open Internet. An excerpt:
Title II would not prohibit the creation of fast lanes and slow lanes on the Internet — that is clear in the plain language of the law, not to mention 80 years of FCC precedent and court decisions. Arguments to the contrary are pure fantasy. At a minimum, Title II supporters have to concede that their argument depends on the bank shot that an appellate court will agree (a) that the FCC can change its mind about how the Internet works after the Supreme Court has validated its prior decision; and (b) the FCC can then ignore the plain language of the statute and 80 years of precedent to determine that the prohibition of “unjust and unreasonable” discrimination actually means it can prohibit any discrimination. And think of all the additional proceedings that will be needed to unpack where we draw the lines between information services “haves” and telecommunications services “have nots.” If that is the road we choose to travel, the investment uncertainty alone will have a massive negative impact on American broadband deployment for years to come.
There’s another important argument against Title II — invoking it would risk massive collateral damage to many, if not most, U.S. Internet companies. Title II could turn every edge or content company into a common carrier for at least part, if not all, of their services.
Cicconi goes on to argue that FCC Chairman Tom Wheeler already has a way to ensure an open Internet without the regulatory hammer of Title II:
Section 706, as interpreted by the court and explained by Chairman Wheeler, does provide a path. It’s a path AT&T supports. For one, it has already been blessed as a valid source of jurisdiction to address the kinds of concerns articulated by Chairman Wheeler and others throughout the current debate. In upholding Section 706 authority, the Verizon court gave the FCC wide latitude to prohibit conduct that would deter broadband investment. And the approach that Chairman Wheeler has proposed would clearly prevent practices like paid prioritization that we feel would change the fundamental nature of the Internet.
The latest flare up in the never-ending net neutrality debate involves the possibility that the FCC could regulate Internet service under Title II. At The Hill, Kate Tummarello reports the very idea of Title II has already inspired work on a bill from House Republicans:
A new House Republican bill would prevent the Federal Communications Commission (FCC) from going forward with a proposal for stronger regulations on Internet service providers.
Late Wednesday, Rep. Bob Latta (R-Ohio) — vice chairman of the House Commerce subcommittee on communications — introduced a bill that would keep the FCC from reclassifying Internet providers to treat them more like traditional phone companies, which are heavily regulated.
“The Internet has remained open and continues to be a powerful engine fueling private enterprise, economic growth and innovation absent government interference and obstruction,” Latta said in a statement announcing his bill.
There were some fireworks during yesterday’s appearance of the full FCC before the House Energy and Commerce’s subcommittee on Communications and Technology, Brendan Sasso of The Hillreports:
Republican lawmakers on Tuesday accused Federal Communications Commission (FCC) Chairman Julius Genachowski of hypocrisy for opposing international efforts to regulate the Internet but leaving his own agency the power to do so.
At a hearing of the House Energy and Commerce’s subcommittee on Communications and Technology, Rep. John Shimkus (R-Ill.) pressed Genachowksi on whether he will close the commission’s docket to re-classify the Internet as a “telecommunications service” under Title II of the Communications Act. Currently, the FCC considers the Internet an “information service,” but the agency has much broader authority to regulate the telecommunications industry.
The FCC’s docket on whether to re-classify the Internet has been open since 2009, but the agency has not taken any action.
According to Sasso, Chairman Genachowski responded the Commission was still in the process of gathering public comments about the re-classification docket.
While most analysts and pundits believe efforts in Congress to repeal the FCC’s net neutrality regulations is a non-starter (since any repeal would surely be met by President Obama’s veto pen), the current challenges to the rules in court are another matter. As Sara Jerome of The Hill reports, at least one Republican in Congress, Rep. Greg Walden of Oregon, is worried that should the rules be struck down, the FCC will turn its attention back to Title II regulations.
Looks like FCC Commissioner Michael Copps, who has long been one of the loudest advocates for strict regulations on broadband providers, will be a hard vote for Chairman Julius Genachowski to wrangle for his latest net neutrality proposal. As Fierce Wireless reports:
“These rules must be put on the most solid possible legal foundation and be quickly and effectively enforceable,” Copps said during a speech at Columbia University’s School of Journalism. “If this requires reclassifying advanced telecommunications as Title II telecommunications—and I continue to believe this is the best way to go—we should just do it and get it over with.”
With fellow Commissioners Robert McDowell and Meredith Baker already coming out against net neutrality, and Mignon Clyburn likely — if more quietly — in Copps’ camp, it’s possible that on December 21 the only yea vote for net neutrality may be Genachowski himself.
Translation: the net neutrality gridlock could be perpetuated — and the National Broadband Plan would continue to lack the attention it deserves.
Yesterday, the FCC announced it was pushing back its December meeting by one week to December 21. Popular opinion is that the move has been made in anticipation of the Commission taking up net neutrality regulations. As the Washington Post’s Cecilia Kang reports:
FCC Chairman Julius Genachowski is expected to introduce a proposal that would be under its questionable legal jurisdiction over broadband service providers, according to Stifel Nicholaus analyst Rebecca Arbogast. And the chairman is in the difficult position of now having to convince two Democratic commissioners who have pushed him to reassert authority over broadband services so he can implement rules against discrimination of content on Internet networks.
Analysts said the delay was probably created so Genachowski could garner support for a majority 3 to 2 vote on a final rule.
“We suspect the Democrats could ultimately support a Title I order, but they may seek some sort of concessions on this or other matters,” Arbogast wrote in a research note Tuesday.
Meanwhile, Sara Jerome of The Hill reports that Free Press — the advocacy group that has long pushed for the strictest of regulations on broadband providers — may be warming to the tamer Title I order as well:
[W]ith Genachowski attempting what appears to be a renewed effort to create net-neutrality rules, analysts are predicting he will use the weaker Title I, rather than Title II, to stake the agency’s authority.
Free Press is nevertheless open to backing the potential proposal, even if it is not accompanied by an attempt to place broadband services under Title II.
“The most important component to get correct is the actual policy itself — the actual policy that will govern the rules of the road and determine if there’s discrimination over the Internet,” [Free Press political advisor John] Kelsey said.
The FCC is now scheduled to release the agenda of its December meeting on November 30.
(Note: Stifel Nicholaus analyst Rebecca Arbogast, mentioned in the Washington Post article excerpted above, will be a speak at our next symposium event on December 7. For more information on the event, visit our Symposium Page.)
Sara Jerome at The Hill reports that, on the heels of yesterday’s meeting between telecom and cable providers with the FCC, net neutrality advocates will be sitting down with the Commission sometime this week.
Talks about a legislative fix for network neutrality began at the FCC before moving outside the building after a Google/Verizon side agreement threw a monkey wrench into those, then over to Capitol Hill where the bill collapsed under the weight of Republican opposition. The goal now would be voting something out by the end of the year, pinned to the FCC’s existing Title I regime for overseeing broadband rather than reclassifying under Title II, which got strong pushback from some House Democrats as well as virtually all the Republicans.
Kim Hart of Politico reports that FCC Chairman Julius Genachowski may move to impose net neutrality regulations on broadband providers next week — after many in Congress have already headed home for Thanksgiving:
It now appears Genachowski, after receiving significant pressure from net neutrality advocates and public interest groups to take action after congressional efforts failed, is picking up where Waxman left off.
“We haven’t circulated the December agenda,” said Jen Howard, spokeswoman for the FCC chairman’s office. “These rumors from outside, uniformed sources are pure speculation at best.”
Sources say Genachowski and his staff are exploring adding a wireless component to the Waxman proposal, though it is unclear how much farther beyond Waxman’s bill the chairman’s office will go.
The inclusion of wireless broadband — which even longtime net neutrality advocate Google warned was a bad idea when it announced its regulation agreement with Verizon — is sure to start a major fight on Capitol Hill.
Speaking at the Web 2.0 Summit in San Francisco yesterday, FCC Chairman Julius Genachowski reaffirmed the commission’s commitment to net neutrality legislation. And, as the Financial Times reports, he also had some things to say about the Google-Verizon proposal from earlier this year:
“I would have preferred if they hadn’t done exactly what they did when they did,” Mr Genachowski said, adding that it “slowed down” his attempt to get web companies and carriers to agree to a policy outline that presumably would have given stronger protection to internet traffic.
Whether the FCC will make a move with its propsed “Third Way” Title II reclassification or attempt net neutrality regulations via Title I is still up in the air.
Our Co-Chairs Bruce Mehlman and David Sutphen recently chatted with Andrew Keen from TechCrunch about last week’s election, the road ahead for the FCC, and how President Obama can “win back Silicon Valley.” The conversations have been broken up into a series, and TechCrunch has been kind enough to allow us to post them here throughout the week.
Here’s part seven, on how to solve the net neutrality debate:
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