Everything You've Wanted To Know About Net Neutrality But Were Afraid To Ask
from the let's-do-this dept
Okay, ever since our big Net Neutrality Crowdfunding, we’ve had some new readers who aren’t as familiar with the details and issues — yet we’ve been mostly writing as if everyone is informed of the basics. So, we figured it only made sense to take a step back and do a bit of an explainer about net neutrality.
What is net neutrality?
This is not an easy answer, actually, which, at times, is a part of the problem. The phrase, first coined by law professor Tim Wu, referred originally to the concept of the end-to-end principle of the internet, in that anyone online could request a webpage or information from any online service, and the internet access provider (usually called internet service providers or ISPs) in the middle would deliver that information. At the time, the ISPs were starting to make noises about how they wanted to “charge” service providers to reach end users, effectively setting up toll booths on the internet. This kicked off in earnest in October of 2005, when SBC (which became AT&T) CEO Ed Whitacre declared that internet companies were using “his pipes for free.”
The phrase has been warped and twisted in various directions over the years, but the simplest way to think about it is basically whether or not your ISP — the company you pay for your internet access (usually cable, DSL or fiber, but also wireless, satellite and a few others) — can pick winners and losers by requiring certain companies to pay the ISP more just to be available to you (or available to you in a “better” way). John Oliver probably summarized it best by arguing that it’s about “preventing cable company fuckery” (though, to be clear, it goes beyond just cable companies).
The internet access providers claim that service providers, like Netflix and Google, are getting a “free ride” on their network, since those services are popular with their users, and they’d like to get those (very successful) companies to pay.
Wait, so internet companies don’t pay for bandwidth?
They absolutely do pay for their bandwidth. And here’s the tricky part of this whole thing. Everyone already pays for their own bandwidth. You pay your access provider, and the big internet companies pay for their bandwidth as well. And what you pay for is your ability to reach all those sites on the internet. What the internet access providers are trying to do is to get everyone to pay twice. That is, you pay for your bandwidth, and then they want, say, Netflix, to pay again for the bandwidth you already paid for, so that Netflix can reach you. This is under the false belief that when you buy internet service from your internet access provider, you haven’t bought with it the ability to reach sites on the internet. The big telcos and cable companies want to pretend you’ve only bought access to the edge of their network, and then internet sites should have to pay extra to become available to you. In fact, they’ve been rather explicit about this. Back in 2006, AT&T’s Ed Whitacre stated it clearly: “I think the content providers should be paying for the use of the network – obviously not the piece for the customer to the network, which has already been paid for by the customer in internet access fees, but for accessing the so-called internet cloud.” In short, the broadband players would like to believe that when you pay your bandwidth, you’re only paying from your access point to their router. It’s a ridiculous view of the world, somewhat akin to pretending the earth is still flat and at the center of the universe, but in this case, the broadband players pretend that they’re at the center of the universe.
Why is this suddenly big news again? Haven’t people been fighting about this for years?
After the last fight over this issue, the FCC issued some pretty weak “open internet” rules, in an attempt to try to appease everyone by effectively creating a “compromise” based, in part, on an agreement negotiated by Verizon, AT&T and Google. Rather than putting in place strong rules to protect an open internet, the FCC’s rules were fairly limited and sought to block more egregious forms of discrimination while increasing transparency. However, the rules did not even apply to wireless access and left a bunch of other loopholes — for example, as long as the broadband players could make a halfway credible claim that what they were doing was for “the security and integrity of the network,” it would be allowed. Even though it was part of the negotiations for the rules, once in place, Verizon sued, claiming that the FCC had gone beyond its mandate in issuing the rules.
Following a long court battle, in February of this year, the appeals court ruled that, indeed, the FCC had overstepped its boundaries, and the open internet rules were not enforceable. The ruling effectively said that the part of the law that the FCC had used as the basis for its compromised open internet rules, Section 706 of the Telecommunications Act of 1996, did not allow for the rules it presented. It did, however, suggest that Section 706 gave the FCC some fairly broad powers that might be used instead.
In the following months, the FCC’s Chair, Tom Wheeler, tried to craft a new set of rules, basically looking to rewrite the existing (already weak) rules with the guidance the court gave. The big problem is that based on the February ruling and Section 706, Wheeler basically had to replace a block on “unreasonable discrimination” with an argument saying that any priority efforts had to be “commercially reasonable.”
A switch from “unreasonable discrimination” being forbidden to “commercially unreasonable discrimination” being forbidden doesn’t sound like that big of a difference.
Well, remember that the original rules weren’t very strong in the first place. Secondly, the term “commercially reasonable” means something fairly specific, and it makes it much more difficult for the FCC to prevent internet access providers (big cable and telcos) from picking winners and losers. In short, under these new rules, the cable and telco companies can put in place restrictions on internet companies, and then only after that happens, those companies can go to the FCC and challenge them as being “commercially unreasonable.” This is a long, difficult and expensive process. And, rest assured, the cable and telco companies have some of the best and most experienced lawyers around when it comes to appearing before the FCC (or, later, facing off with the FCC in court). A small startup would have to basically go broke arguing before the FCC that certain rules are commercially unreasonable, and there’s a decent chance it would still lose to much more powerful lawyers with much more experience. Even if a startup could win in such a fight, it would be a huge time and money waster.
What’s all this stuff about “Title II”
What many net neutrality advocates are asking the FCC to do is to “reclassify” broadband under Title II of the Telecommunications Act of 1934, effectively classifying broadband providers as “common carriers,” which would allow the FCC to (1) have more power over them and (2) have more of a mandate towards rules and regulations that would stop those services from picking winners and losers among internet-based services. In short, Title II would give the FCC more power to “prevent cable company fuckery.”
Why are some people so opposed to Title II?
There are a bunch of reasons — some of which are more reasonable than others. They range from things like the simple idea that it’s crazy to try to regulate modern communications systems under a law from 1934, to concerns about too much regulation “chilling investment” in broadband, to fears about lawsuits that will come about concerning the whole reclassification process.
Wait, why aren’t broadband providers already considered “common carriers” — it seems obvious that they should be?
Well, not everything is obvious. A decade ago, there were questions about whether or not cable broadband providers were technically “telecommunications” services (classified as common carriers under Title II) or if they were providing an “information service” (not under Title II and not a common carrier). The FCC (as always, under tremendous lobbying pressure from the cable companies) claimed that cable modem service should be exempt from Title II regulations. This was challenged, but the Supreme Court sided with the cable companies (and the FCC) in saying that this ruling made sense. Soon after that, as people questioned whether or not such a rule also applied to DSL lines, the FCC also reclassified DSL outside of Title II.
If the Supreme Court already said that, can the FCC switch back now?
Yes, though it is a somewhat complicated process (though not nearly as complicated as the telcos and cable companies would have you believe). It will also almost certainly be fought in court and it will be a few years before a final ruling is made as well. It is certainly doable, however.
Do we really want a law from 1934 ruling over modern internet access systems?
In an ideal world, probably not. But this isn’t an ideal world. If we lived in a better world, Congress would update the Telecommunications Act to take into account what’s actually happening online. But we all know about how well Congress works (i.e., it doesn’t). And when it comes to political hot potatoes like telco policy, where there are tremendous lobbying dollars at stake, not only would it be nearly impossible to get anything through Congress, there’s a better than decent chance that anything that did get through would be… messy and potentially even worse.
I’ve heard that reclassifying will lead to internet companies like Google also being required to live under Title II rules including antiquated issues like tariffs and having rate settings.
This is a little myth that the telcos and cable companies have been spreading. Yes, there’s a ton of unrelated crap under Title II (again, why it’s not ideal, but the best of a terrible list of options). But there’s a (mandatory) process under the law by which the FCC must “forbear” from applying regulations that the FCC determines are not necessary for protecting consumers and thus would not be in the public interest. The forbearance process has been used numerous times, and most of the people advocating for reclassification under Title II are also doing so in combination with recommending forbearance against those obsolete and unrelated parts of Title II, beyond the narrow issue of stopping the internet access providers from picking winners and losers on the network.
Should we be afraid that reclassification will create a massive legal battle that leaves everyone uncertain for years?
No. First of all, no matter which way the FCC goes, there’s likely to be a big legal battle that will go on for years. While Comcast and AT&T have more or less said that they would accept the rules under 706, Verizon has made it pretty clear that it would challenge them, just as it challenged the original open internet rules. Second, we already went through a big legal battle over the original rules for the last four years, and there was little indication that that legal battle had any impact one way or the other on broadband deployment or any other innovation.
Won’t Title II reclassification cause the big broadband providers to give up all hope, stop investing in broadband and destroy all that is good and holy about broadband in the US?
Uh, no, though that’s the story that the companies will tell you. They’ll also leave out the fact that they actually really, really like to be classified under Title II when it comes to getting tax breaks, subsidies and rights of way for installing their lines in the first place. Also, the largest period of investment in broadband infrastructure happened before the big Brand X Supreme Court decision, when broadband was still considered to be under Title II. Other areas of telecommunications, including mobile phone service, are still classified under Title II, and there’s a ton of investment going on in that space. The claims that Title II will chill investment have little basis in reality.
Even so, shouldn’t we be at least a little uncomfortable about “regulating the internet”?
Yes, we should always be somewhat concerned about internet regulations, but this part of the internet is already heavily regulated. Remember how Verizon begged to be classified under Title II to install its lines? Installing cable, fiber and other broadband infrastructure already involves tremendous regulatory systems, in which local governments are granting all sorts of subsidies, rebates, tax breaks and allocating spectrum to these companies — basically having the public pay. And all of this is heavily regulated. The real question here is under which regulations this will happen. It’s not about suddenly “taking over” the internet or “regulating the internet,” it’s about which laws will be used for a process that is already highly regulated.
What about all this stuff with Netflix being slowed down by Comcast, Verizon and AT&T and paying to be sped up?
That’s a related issue, but slightly different. That concerns “interconnection.” Historically, net neutrality was just about “the last mile” — the connection point between you as an end user and your internet access provider’s router. However, there are many other issues happening beyond that, including interconnections between giant companies moving lots of traffic back and forth across the internet. Sometimes this happens via transit agreements and sometimes via peering arrangements (which are usually free). In the last year or so, the biggest broadband players — Comcast, Verizon and AT&T — appeared to be letting their connections to Netflix clog up at their border router, slowing down the delivery to end users.
Effectively, these big broadband providers had figured out a different way to accomplish the same result: getting big internet companies to pay extra to reach you efficiently. By letting their ports clog, they’ve really just moved the problem upstream to another point they control, and getting Netflix (for now, but soon others) to pay up, even though there’s plenty of bandwidth on all sides. All the broadband players need to do is connect a few cables to turn on a few more ports, a trivial and inexpensive process.
Historically, most people following this space never expected interconnection to be a problem, because what kind of sick broadband company would purposely let its own ports clog up and deliver such a crappy experience to consumers? The answer, apparently, is Comcast, Verizon and AT&T, once they realized that they’re basically the only game in town and that they could squeeze a lot of money out of internet companies.
So, in the end, while interconnection wasn’t originally considered a “net neutrality” issue, it is. It’s the same basic concept concerning “broadband company fuckery” in picking winners and losers and harming your internet connection.
Unfortunately, however, FCC boss Tom Wheeler has said he doesn’t yet consider it a net neutrality issue (even if he did instruct the FCC to begin investigating these agreements). Thus, even if the FCC reclassifies broadband under Title II, the interconnection loophole may still be a powerful tool for broadband fuckery.
But I’ve heard that Comcast supports net neutrality? It’s been running all these ads saying that.
The company is lying. Or, at the very least, it’s being incredibly misleading. What it supports is Chairman Wheeler’s proposal to use Section 706, which we already explained earlier is the path by which net neutrality dies. Furthermore, Comcast is effectively “required” to abide by the old net neutrality rules as a condition of its merger with NBC Universal a few years ago — and it was the one that proposed the condition, knowing full well that it didn’t really limit the company and its plans for setting up toll booths.
But is the internet really neutral already? Don’t some companies already have faster access than others?
This is another misleading argument made by the broadband companies and their supporters. Yes, big companies will often have faster connections or more use of content delivery networks that cache content and make it available closer to the end points so that it’s faster to access. But that’s about improving access for everyone online, not about a particular broadband company charging the companies to better reach its users. Again, it goes back to the question of whether or not the broadband providers are picking winners and losers.
If you don’t like what your broadband provider is doing, why don’t you just switch to a competitor?
That would require real competition, which there is very little of in the US. While broadband providers like to point to things like mobile data offerings or Google Fiber as proof of competition, the truth is that there is very little real competition in the US for broadband services, when broadband is properly defined. Most places have one cable option and one DSL/fiber option, mostly from the large players mentioned above. Basically as you get into true broadband speed ranges, competition almost entirely disappears. And, even where there is competition, it may be getting even weaker, as Verizon is basically pushing its own users to cable, and has effectively stopped expanding its fiber offering. Verizon has made it clear that it wants to focus on wireless.
So what about wireless? Isn’t that competition?
Not really. Most mobile data offerings are incredibly limited, slow and much more expensive than DSL/fiber/cable. They tend to have ridiculously low caps (usually on the order of 5GB) and restrictions on things like streaming. Many have terms that effectively bar you from using it as a home broadband replacement. Is it possible that these wireless offerings will eventually be true competition? Maybe, but it’s still a long way out. Besides, as currently in place, the open internet rules don’t even apply to wireless data anyway, and the largest players in the space are… Verizon and AT&T already. So, wait, how is wireless a real competitor?
Google Fiber! Doesn’t that prove there’s competition?
Google Fiber is a really interesting experiment, but it’s only in a very few locations and expanding pretty slowly. There’s little indication that there are any plans to make it a nationwide or even widespread offering. Besides, Google has also backed away from its early promise to allow competing networks to use its infrastructure.
Do we need more competition in broadband?
Hell yes. For basically a decade we’ve been saying that the risk of losing net neutrality is more of a symptom of a lack of competition. And, in fact, we’ve seen that when things like Google Fiber do show up, offering viable competition, the incumbents suddenly start ramping up their own offerings. Funny how that happens.
Okay, then how do we get more competition?
There are a bunch of possible options, though none are particularly easy or definite at this point. One idea is to encourage open access networks instead of just facilities-based competition. Under such a system, the broadband infrastructure players would wholesale their internet services to third-party service providers who could then offer service directly. The internet world used to work this way, prior to the original broadband reclassifications. There’s little indication that the FCC is even considering pushing the big broadband providers to go back to wholesaling their connections, but it’s an idea that has some amount of merit. Australia started down this path years ago, but that’s been tied up in politics. There have been some other ideas designed around encouraging similar infrastructure competition, such as the “homes with tails” idea, where individuals would own the connection from their home to a network where services could compete.
The basic thinking here is that the core infrastructure is costly to install and inefficient to do multiple times in multiple ways (which is part of the reason why we have so little competition). Thus, rather than focusing on competition at the infrastructure level, you can put the competition at the service level and have multiple providers on the same network. It’s effectively a “natural monopoly” argument, akin to the highway infrastructure. You don’t want “competing” highways, because that’s wasteful and inefficient. So you build one (massive, super fast) infrastructure, and then wholesale it out to lots of competitors. For now, this idea seems to have almost no support at the policy level, however.
Much more focus these days is on municipal networks and their ability to offer local competition. I’ll expand this a bit to suggest that some local private networks (including Google fiber) are in the same camp. Allowing more local area competitors has long been shown to improve all connections as the incumbents freak out and realize they really have to compete. Many muni-broadband providers get a bad rap because they’re derided as “government-run” or “local utilities.” And, indeed, some attempts at municipal broadband have failed badly (often due to bureaucratic incompetence). That said, there are a growing number of successful muni-broadband implementations that offer real competition — and often better services at a lower price.
Great! So let’s get muni-broadband competitors everywhere!
Not so fast, sparky. The big broadband providers (them again!?) have been able to pass laws in about 20 states that either ban outright or severely limit the ability of local municipalities to offer such broadband to residents. The big broadband providers have done little to hide the fact that these bills were written by the broadband companies themselves and designed solely to limit this kind of competition. While Tom Wheeler did make a statement earlier this year claiming that he would use the FCC’s power to preempt such laws if they were blocking competition, this caused the big broadband players and their friends to freak out. Congress is now trying to stop the FCC from being able to move forward on such plans.
The claims by supporters of such bans are ridiculous. They usually argue that states have the right to “make their own choice” about these kinds of laws without federal interference. However, they are then leaving out the fact that the states tend to be blocking cities from making their own choices to create municipal broadband competitors.
The simple fact is that this is a messy front in the broadband players’ war against competitors. In an ideal world, cities and states would actually be making it easier to enable competition (whether private or muni-) and then get out of the way. Once again, we don’t live in an ideal world.
What about other forms of competition?
For years the FCC has been holding out for some miraculous new broadband method, and it’s failed to show up. Under Michael Powell, the FCC insisted that “broadband over powerlines” would present a “third pipe” into the home to compete with phone and cable lines. This was despite multiple reports noting that broadband over powerlines was not a particularly good way to do broadband (especially with the way the US sets up its electrical grid). We already discussed wireless competition above. There is the potential that if there were much more spectrum made available, new competition might spring up, but the FCC (them again?) hasn’t been able to make that much spectrum available (a whole different issue for a whole different day). There’s also satellite broadband which has gotten much better in the past few years, but is still limited by reliability problems and crappy latency. For years, we’ve made fun of the claims of satellite broadband providers for never living up to their promises. There may be some promise there, however, especially as satellites and space launches are getting much cheaper. There may be some exciting developments there in the future, but it’s still a ways off.
And what’s this I’ve been hearing about data caps?
Another somewhat related issue (which the FCC insists is not a net neutrality issue, but certainly does fall under the “broadband company fuckery” label), is that broadband companies are increasingly interested in putting data caps on your broadband usage, trying to get end users to pay more. This has taken a variety of forms — some more draconian than others — but the broadband providers have made it clear they’d like to use it as a way to get more money out of users. Yes, they always pretend it’s about getting low bandwidth users to pay less, but there’s little actual focus on that, because why would they, other than for PR reasons?
So what’s going to happen now?
Well, chances are that before the end of the year, the FCC will officially announce the new rules that it wants. If there’s enough public and political support for it, they might actually vote to reclassify internet access under Title II, but so far Tom Wheeler has been afraid to go there. If Wheeler chickens out (as is more likely), they’ll stick with the plan using Section 706, opening up “commercially reasonable” fuckery. Either way, there are likely to be lawsuits (with Verizon leading the charge), and nothing will be determined finally for a few years. Congress could act, but won’t.
The public pretty clearly wants reclassification under Title II. So do many, many internet companies who know they’d be targets (or wouldn’t even be able to exist at all) under a system where the broadband access providers get to set up tollbooths. But, tragically, things in DC don’t happen just because the public wants something. Reclassifying would also lead to a political fight in Congress.
Why is Congress so messed up on this?
For reasons that still don’t make much sense, sometime around 2006, net neutrality went from a wonky issue that wasn’t particularly partisan, to a stupid partisan issue in which Republicans decided it was “regulating the internet,” and Democrats deciding that it was about free speech. Neither is entirely accurate, though the Democrats are much more accurate. As stated above, the internet is already regulated. The reality is that the Republicans arguing against net neutrality tend to be those who often (you guessed it) receive the most money from the big broadband players. It’s unfortunate and silly that Republicans — who claim to be the party of business and innovation — haven’t yet realized that startups and innovators are actually helped by a neutral internet with real competition.
So what should I be doing?
Make some noise. Join the effort to send comments to the FCC. While many have argued the process is a foregone conclusion, it’s not. If there really is enough support for reclassifying, it can absolutely happen. Not helping because you don’t think it will make a difference is only a self-fulfilling prophecy. You can be cynical, right and end up with a limited internet… or you can be idealistic, right and have a chance at creating real change with a more competitive, open internet. Your choice.
That’s about it for now, but feel free to submit more questions in the comments. Also, special thanks to everyone who supported our net neutrality reporting crowdfunding effort, which has helped make posts like this possible.