The FCC’s “Facts” vs. Reality on Net Neutrality

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Ahead of the Federal Communications Commission’s vote late last week to dismantle 2015 net neutrality rules — which prevented ISPs from blocking or slowing access to certain websites — FCC Chairman Ajit Pai continued to misrepresent his plan as a boon to innovators and Internet users across the country instead of the ISP industry sell out it really is.

“We are helping consumers and promoting competition,” he said of the agency’s work to deregulate ISPs. Repealing the rules will provide “more ways that startups and tech giants alike can deliver applications and content to more users,” he continued. “In short, it is a freer and more open Internet.”

Pai’s misinformation on his net neutrality proposal has been extensive over the last few months as the agency prepared for last week’s vote. But that misinformation is nowhere as apparent as in the “Myth vs. Fact” document the agency released along with Pai’s proposal late last month. To show the faulty logic and incorrect assumptions that led to Thursday’s vote to repeal net neutrality rules, we’ve debunked Pai’s “Myth vs. Fact” sheet below, interjecting some reality into the conversation.

MYTH: This is the end of the Internet as we know it.
FACT: The Internet was free and open before the Obama Administration’s 2015 heavy-handed Title II Internet regulations, and it will be free and open after they are repealed.

REALITY: Since the terms “free and open” don’t have any fixed definition as they apply to the Internet, neither the “myth” nor purported “fact’ actually says anything about Pai’s plan. The reality is that Pai’s plan does make drastic — and entirely new — changes to the basic functioning of the Internet. For one, ISPs are now legally permitted to charge websites for access to users and block those that do not or cannot pay. This has never been a part of how the Internet works. Contrary to Pai’s suggestion, before the Title II-based 2015 Open Internet Order, the FCC had rules in place preventing ISPs from blocking access to particular websites. That is no longer the case, and it is reasonable to suggest that this shift in policy alone is such a huge departure from how the Internet has always functioned that it is indeed “the end of the Internet as we know it.”

MYTH: Startups will not be able to compete without Title II regulations.
FACT: Entrepreneurs starting new businesses online thrived long before Title II regulations, and they will continue to flourish with more opportunities to innovate once those regulations are repealed. Indeed, companies like Google, Facebook, Netflix, and Twitter all started and experienced tremendous growth under the previous light-touch rules.

REALITY: He’s inappropriately conflating Title II and net neutrality rules. Title I and Title II are sources of authority — they don’t by themselves amount to net neutrality rules. As an independent agency, the FCC can only create regulations to the extent that Congress allows it to. In order to legally pass net neutrality rules that ban things like ISP throttling, blocking, and paid prioritization, the FCC must show that Congress has given it the power to do so.

Entrepreneurs thrived before Title II regulations, but there were still net neutrality protections in place. The legal landscape has evolved such that those protections had to be under Title II. Pai may act like he’s just returning the Internet to the days of yore where Title II regulations weren’t necessary and entrepreneurship thrived, but he’s ignoring the technical and legal context that brought us to a place where Title II is needed to enforce meaningful net neutrality protections.

MYTH: Internet service providers will block you from visiting the websites you want to visit.
FACT: Internet service providers didn’t block websites before the Obama Administration’s heavy-handed 2015 Internet regulations and won’t after they are repealed. Any Internet service provider would be required to publicly disclose this practice and would face fierce consumer backlash as well as scrutiny from the Federal Trade Commission, which will have renewed authority to police unfair, deceptive, and anticompetitive practices.

REALITY: Again, Pai is misrepresenting history. ISPs didn’t block websites before the 2015 rules because before the 2015 rules, the FCC had a different set of rules preventing ISPs from blocking websites. Pai’s plan, however, eliminates all of those rules and gives ISPs — for the first time — the ability to block websites without any FCC oversight.

Clear rules preventing ISPs from blocking websites are likely the only thing preventing them from doing so. As anyone with a frustrating customer service call experience will tell you, ISPs have proven time and time again that they’re immune to consumer backlash. Because most U.S. households have one choice for high speed Internet access, ISPs know their customers can’t go anywhere and are under no pressure to improve their products or customer service. Under Pai’s plan, ISPs may be required to disclose when they’re blocking or throttling websites, but consumer backlash has yet to change their business practices, and the FTC can only intervene when the behavior is anticompetitive.

Also, there is legal uncertainty around whether the FTC can regulate companies like AT&T and Verizon at all, thanks to a recent ruling out of the Ninth Circuit that said any company that offers a Title II service, such as phone service, is considered to be classified under Title II and therefore exempt from FTC jurisdiction. While that decision is being appealed, the ability of the FTC to regulate ISPs that also offer phone services remains in legal limbo, and Pai’s plan to switch ISPs to Title I services would leave companies like AT&T and Verizon with no federal regulator.

MYTH: Investment has flourished under the current regulatory framework.
FACT: Following the adoption of the Obama Administration’s 2015 heavy-handed Internet regulations, broadband investment has fallen for two years in a row — the first time that’s happened outside of a recession in the Internet era.

REALITY: Broadband investment figures have been somewhat of a Rorschach test in the net neutrality debate. With a project as large as broadband investment and a time table as short as two years since the rules were enacted, it’s as easy to find numbers saying the Title II net neutrality rules hurt broadband investment as it is to say the rules helped broadband investment. The best window into how net neutrality rules impact broadband investment is what ISP executives tell shareholders, which is that Title II net neutrality rules haven’t impacted their companies.

Regardless, broadband infrastructure investment figures don’t paint the whole picture. As venture capitalists told the FCC in a letter earlier this year, investors have funnelled billions of dollars into startups over the last seven years, in part because of the confidence provided by the net neutrality rules that the Internet is an open, level playing field for even the smallest, youngest, and least funded companies.

MYTH: Broadband providers will charge you a premium if you want to reach certain online content.
FACT: This didn’t happen before the Obama Administration’s 2015 heavy-handed Internet regulations, and it won’t happen after they are repealed.

REALITY: Again, the timeline of Internet policy shouldn’t be broken down into “before the 2015 rules” and “after the 2015 rules.” Net neutrality protections have been in place long before the 2015 rules codified them under the FCC’s Title II authority, so ISPs haven’t been able to charge for premium content. Only now, under Pai’s new plan, will ISPs be allowed to do so.

MYTH: The current regulatory framework is good for competition.
FACT: Title II regulations are bad for competition. They disproportionately burden the small Internet service providers and new entrants that are best positioned to introduce more competition into the broadband marketplace.

REALITY: Just like Pai’s claims that repealing the rules will help startups, contrary to what startups have told the FCC, the claim that repealing the rules will help small ISPs is exactly the opposite of what many small ISPs have told the FCC. Competition in the broadband space is constricted by, among other things, behavior by the major incumbents, not by net neutrality rules.

MYTH: This will result in “fast lanes” and “slow lanes” on the Internet that will worsen consumers’ online experience.
FACT: Restoring Internet freedom will lead to better, faster, and cheaper broadband for consumers and give startups that need priority access (such as telehealth applications) the chance to offer new services to consumers.

REALITY: If an ISP is taking payment from one company to deliver that company’s content to consumers faster — as Pai’s plan expressly allows — it will necessarily have to slow down traffic coming from other companies. Even in the ideal world where ISPs reinvest the profits from paid prioritization into improving broadband speed for all websites and online services (instead of just lining their own pockets), paid prioritization will still let some websites and services pay to have their content delivered to users faster relative to the speed with which other content is delivered. The idea that startups will be able to outbid wealthy incumbents for this priority access is simply preposterous.

MYTH: Internet service will be provided in bundles like cable television as has happened in Portugal.
FACT: The Obama FCC itself made clear that the current rules in the United States permit bundled offerings — or “curated” services, as they called it. So the law regarding bundled services will not change. Furthermore, the Portugal comparison is false; Portugal has net neutrality rules, yet plans are still offered there that allow consumers to supplement their mobile data plans with additional data packages containing specific bundles of apps.

REALITY: The 2015 rules gave the FCC the authority to regulate so-called “zero rating” programs for compliance with net neutrality principles on a case-by-case basis. So while “bundles” may have been possible, they were subject to FCC scrutiny. Pai’s plan completely eliminates the FCC’s authority to review such plans. If ISP packages appear to give wealthy incumbents a competitive advantage over startups based solely on capacity to pay — as it appears the Portuguese data plans are — the FCC is powerless to stop those practices, and innovation will suffer.

MYTH: Title II regulations are good for innovation.
FACT: President Obama’s 2015 heavy-handed Internet regulations have deterred companies from introducing new services and features. For instance, one major Internet service provider has stated that it put on hold its plans to build out its out-of-home Wi-Fi network because of the uncertainty surrounding the rules.

REALITY: Innovation by which companies? The ISPs — with no competitive pressure thanks to carefully carved-out markets — are not the innovators in the U.S. economy. If they are allowed to charge websites and online services for better access to users, it is the real innovators of the U.S. economy — startups — who will suffer. Allowing ISPs to charge for priority access to end users will benefit large companies and hurt innovators.

MYTH: Reversing Title II regulations will compromise consumers’ online privacy.
FACT: Repealing the Obama Administration’s heavy-handed Internet regulations will promote consumers’ online privacy. Those regulations stripped the Federal Trade Commission of authority to protect Americans’ broadband privacy. The plan to restore Internet freedom, by contrast, will put the federal government’s most experienced privacy cop back on the beat.

REALITY: When the FCC reclassified broadband as a Title II service, it did take away the FTC’s ability to regulate ISPs. But the FCC compensated for that by coming up with robust privacy rules to replace the FTC’s case-by-case privacy enforcement. The FCC’s rules were repealed by Congress earlier this year. The federal government already erred once by repealing the FCC’s privacy rules. Further deregulation of the broadband industry will harm consumers even more.

MYTH: Repealing Title II regulations will make it harder for disadvantaged Americans to get online.
FACT: Restoring Internet freedom will lead to greater investment in building and expanding broadband networks in rural and low-income areas as well as additional competition — leading to better, faster, cheaper Internet access for all Americans, including those on the wrong side of the digital divide.

REALITY: Repealing Title II regulations will make it harder for all Americans, including disadvantaged, to access the content they want to see online. This statement reveals a logical inconsistency in Pai’s plan: if he believes that allowing ISPs to charge websites for access to end users will generate enough money to prompt ISPs that already earn billions in quarterly revenue to finally invest in rural areas, then the prices ISPs charge websites will be too expensive for all but the wealthiest companies in the world. The Internet that disadvantaged Americans would have access to wouldn’t look much like the Internet today.

MYTH: The Federal Trade Commission is not well equipped and has far fewer powers to protect consumers from misconduct by Internet service providers.
FACT: The Federal Trade Commission has broad authority to police unfair, deceptive, and anticompetitive practices online and has brought over 500 enforcement actions to protect consumers online, including actions against Internet service providers and some of the biggest companies in the online ecosystem. And unlike the FCC, the Federal Trade Commission can order consumer redress (such as refunds) for violations of federal law.

REALITY: The Federal Trade Commission is not a rulemaking agency. The FTC can only punish a company once it can make the case that the company has already done something unfair, deceptive, or anticompetitive. Most startups don’t have the resources to bring a complaint to the FTC, let alone wait out the lengthy process to see an ISP brought to justice. And that’s only if an ISP has behaved in an anticompetitive way, which is a narrow . As the FCC’s chief technology officer wrote himself, “If the ISP is transparent about blocking legal content, there is nothing the [Federal Trade Commission] can do about it unless the FTC determines it was done for anti-competitive reasons.”

Add to that the legal uncertainty around the FTC’s jurisdiction over companies like AT&T and Verizon, and it’s clear that Pai’s plan leaves the FTC with little in the way of meaningful oversight.

MYTH: More than 22 million people have filed comments with the agency. They overwhelmingly want the FCC to preserve and protect net neutrality.
FACT: The commenting process is not an opinion poll — and for good reason. For example, one third of all comments consist of a single, pro-Title II sentence: “I am in favor of strong net neutrality under Title II of the Telecommunications Act.” These 7,568,949 identical comments, however, are associated with only 50,508 unique names and street addresses. Indeed, 7,562,080 of these comments come from 45,001 “individuals” using email addresses from fakemailgenerator.com and submitting the same comment more than 90 times each. In another example, over 400,000 comments supporting Title II purport to come from “individuals” residing at the same address in Russia. In any case, as required by federal law, the Chairman’s plan is based on the facts and the law rather than the quantity of comments. You can see this for yourself at http://transition.fcc.gov/Daily_Releases/Daily_Business/2017/db1122/DOC-347927A1.pdf.

REALITY: The FCC commenting process may not be an opinion poll, but the agency has a comment process for a reason. On its own website, the FCC says it “considers the public’s input when developing rules and policies,” and that, “by submitting comments, the public can take part in developing policies that affect telecommunications and broadcast issues.” Pai’s decision to totally disregard the public comments flies in the face of the FCC’s pledge to consider public input.

If we’re talking about distortion of the public comment process — which Pai is doing to distract from the fact that most people support Title II — it’s irresponsible to leave out the fact that a large portion of the identical comments were in favor of repealing the rules, meaning that anti-Title II forces diluted the comment process. According to one analysis of the comments, seven identical comments make up 38 percent of the total comments submitted, but six of those seven were opposed to the Title II net neutrality rules. Of unique comments, 98.5 percent oppose Pai’s plan.

MYTH: You can’t abandon the court-approved Title II rules without a change in circumstances.
FACT: The Supreme Court has reviewed and upheld only one framework for the Internet — the light-touch framework that the FCC is returning to. And court precedent makes clear that the FCC can return to that framework without any change in circumstances.

REALITY: In the twelve-year-old Brand X decision, the Supreme Court upheld the FCC’s Title I classification for broadband as a reasonable framework for regulating ISPs, but the court by no means said Title I was the only — or even the best — classification. Indeed, three of the six Supreme Court justices held that the only plausible classification for cable Internet service is under Title II. Since then, federal judges have upheld the existing Title II framework as the most solid legal ground to enact meaningful net neutrality protections. No other case has made it as far as the Supreme Court. It remains to be seen if Pai’s plan to abandon the 2015 rules will survive a legal challenge.

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