Stop Saying That The FCC Is 'Treating Internet As A Utility' — It's Not

from the mythbusting dept

Now that FCC boss Tom Wheeler has made it official that he’s going to present rules to reclassify broadband under Title II for the purpose of implementing stronger net neutrality rules (details still to come…), the opponents to this effort have come out of the woodwork to insist, over and over again, that reclassifying is “treating the internet as a utility.” The cable industry’s main lobbyists, NCTA, decried “Wheeler’s proposal to impose the heavy burden of Title II public utility regulation….” and AT&T screamed about how “these regulations that we’re talking about are public-utility-style regulations…” Former Congressman Rick Boucher, who is now lobbying for AT&T whined that “subjecting broadband to public utility regulation under Title II is unnecessary.”

Hell, even those who are merely reporting on the issue are calling it “treating internet as a utility.” Here’s the Wall Street Journal, NPR, CNET, Engadget and the Associated Press all claiming that the new rules “treat” or “regulate” the “internet as a public utility.”

And they’re all wrong. While there are some “utility” like aspects in Title II, Wheeler actually made it pretty clear he’s not using those sections in the net neutrality rules that he’s putting together (though, again, the details here will matter, and we haven’t seen them yet). What he’s doing here is just using Title II to be able to designate broadband as a common carrier, but just being a “common carrier” is not the same as being a “public utility” — a point that John Bergmeyer at Public Knowledge makes nicely, by highlighting that there are lots of common carriers that aren’t utilities:

Similarly, despite nearly-universal misapprehension on this point, net neutrality is not utility regulation. Net neutrality says that ISPs must, in part, act like common carriers–they must carry traffic in a reasonable and nondiscriminatory way. In some important ways net neutrality falls short of full common carriage, but for these purposes we can concede that net neutrality is common carrier regulation, because even full common carrier regulation is not identical to utility regulation. Lots of things are common carriers–buses, taxis, and delivery services, among other things. While the specifics vary, these services are required to operate in reasonable and nondiscriminatory ways. But no one suggests that the fact that because UPS is a common carrier, it is therefore a utility. Even net neutrality plus a number of the other things mentioned above (universal service, privacy, etc) do not add up to utility regulation.

This misapprehension comes about because the most prominent telecommunications common carriage service of the past–telephone service–also was regulated as a utility. But utility regulation typically carries with it a number of features not present in any current proposals for broadband–most notably, thorough price regulation and detailed local regulation of service quality, customer service responsiveness, and so forth. Public utilities are either publicly-owned, or private companies subject to such public oversight that the distinction between public and private is blurred.

The only reporter I’ve seen who has actually correctly made this distinction (though there could be others that I haven’t seen) is Jon Brodkin at Ars Technica, who actually read what details the FCC did put up and noted that it’s pretty damn clear that these are not “utility-style” regulations. Update: And Sam Gustin over at Vice Motherboard also made this point.

Yes, there are parts of Title II that can be used to regulate things as a utility, but Wheeler has made it clear that his plan is to avoid those. The court ruling from last year that tossed out the old net neutrality rules was pretty clear that if you wanted to treat broadband as a common carrier, you have to do so under Title II, but that doesn’t mean that broadband becomes a utility in any sense of the word.

So, please, stop buying into the FUD (even from some supporters) that these new rules “treat broadband as a utility.” It’s not even close to true.

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Comments on “Stop Saying That The FCC Is 'Treating Internet As A Utility' — It's Not”

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44 Comments
DannyB (profile) says:

Why ISN'T the Internet a Utility?

It seems a fair question.

This is the 21st century. Internet access is approximately as important as a telephone connection. Maybe not quite as important as electrical, gas, water or sewer, or trash collection.

Internet access now is one of the basic ‘utilities’ that nearly every home has in order to be functional.

retrogamer (profile) says:

Re: Why ISN'T the Internet a Utility?

I agree entirely. I live in the southeastern, Appalachian region of Ohio (near WV) and we currently have no cell phone reception, one provider of landline phone, one provider of cable/Internet/VOIP (that being Time Warner), and of course no wireless to go along with no cell phone reception. If they let the POTS network go, we will have to rely on a Time Warner monopoly for all communication. If you’ve ever driven through Appalachia, you’d know satellite is a terrible option due to reception issues with hills and trees.

The point being, it’s almost like there is a reason regulating the old POTS network as a utility worked in the public interest. There are going to be huge swaths of the country left in the dark without more regulation, despite the fact that our energy (coal and natural gas) and agricultural goods are apparently sill valuable and worth subsidizing for the rest of the country.

Timothy Karr (profile) says:

Google it

If you go to Google News and search for “Utility and Neutrality and FCC,” you’ll see hundreds of stories where reporters refer to Net Neutrality rules as a “public utility regulation.” This includes journalists from some of the most credible news organizations in the country. The echo chamber on this is stunning.

Daniel Berninger (profile) says:

Wheeler has made it clear that his plan is to avoid those ...

Mike,

I get that you worry the “utility” label represents problematic messaging, so feel free to call the FCC’s plans anything you like.

The core problem remains that imposing Title II on the Internet destroys (if successful) the “legal protections” not just “Wheeler has made it clear that his plan is to avoid those” entrepreneurs enjoy against FCC regulation.

The presumption of FCC regulatory virtue underlying enthusiasm for Title II (ironically) owes to these legal protections allowing entrepreneurs to ignore the FCC.

I organized an FCC ex parte signed by Mark Cuban, Tim Draper, Charlie Giancarlo, George Gilder, Bryan Martin, and Jeff Pulver on this point folks can review at tinyurl.com/notitlteII

If the FCC succeeds in resurrecting Title II, the ability of entrepreneurs to separate regulated and not regulated activities disappears. The question will require a risk assessment by a regulatory attorney and remain subject to a final determination through FCC proceedings.

The line will be a function of “Wheeler has made it clear that his plan is to avoid those …” and the political calculations of every subsequent President or FCC chairman.

Dan

……………………………………
Daniel Berninger
Founder, Voice Communication Exchange Committee
e: dan@danielberninger.com
tel SD: +1.202.250.3838
SIP HD: dan@danielberninger.com
w: http://www.vcxc.org

retrogamer (profile) says:

Re: Wheeler has made it clear that his plan is to avoid those ...

Dan, I would like to ask you in response, do you feel that the status quo (where your industry ignores the rural and poverty stricken regions of our country due to economic issues) is acceptable, specifically in Appalachia? The products that you claim “owe their existence” to the status quo do not in fact exist for us, and I’m not sure that they ever will without regulation. That status quo is creating an unbreakable cycle of poverty and driving business away from our region, quite frankly.

Anonymous Coward says:

Re: Wheeler has made it clear that his plan is to avoid those ...

You claim to be an expert on VOIP and you probably are, but it’s well apparent that it’s for all the wrong reasons.

If things continue the way they are then what happens to Joe and his family when their house catches on fire? They live out in the middle out in the middle of nowhere and their only connection to the world, a lan line, was recently cut by the Telcos because it was deprecated in favor of VOIP.

They were told they would have to pay $50,000 to have an internet connection setup ,since everyone now uses VOIP, but they can’t afford it so all they can do is try to keep warm by the flames of their burning home.

This is why it needs become a public utility because it needs to be for the PUBLIC and not greedy little conniving jerk-offs like yourself.

Daniel Berninger (profile) says:

Re: Re: Wheeler has made it clear that his plan is to avoid those ...

retrogamer and Anonymous Coward,

What is the connection you have in mind between regulating the Internet via Title II, net neutrality, and broadband deployment in rural areas?

The FCC does not claim imposing Title II on the Internet speeds deployment of broadband in rural areas.

Imposing Title II on the Internet will certainly slow broadband deployment in rural areas, but I am not even advancing the argument.

Dan

Anonymous Coward says:

Re: Re: Re: Wheeler has made it clear that his plan is to avoid those ...

I am saying that Title II doesn’t go far enough, it should be re-classified as a full utility. The fact that you are taking such issue with these petty, insignificant regulations in comparison with the unjust reality on the ground that Wheeler is still allowing to go unaddressed is laughable. Broadband deployment is not happening – at any pace – in my region. Is it possible to slow a process perpetually at rest? I wonder.

Anonymous Coward says:

Re: Re: Re: Wheeler has made it clear that his plan is to avoid those ...

No, Shitty companies will slow rural broadband development. Hell, most major US cities still only have one provider who fits the updated definition of broadband.

Why is that, I wonder? Could be be because of toxic collusive practices by the major telcos? The key connection between Title II, net neutrality principles and braodband deployment in rural areas is how badly the telcos have acted, effectively quadruple-dipping for the same data. IT’s no wonder those five companies often have many billions in revenue, yet are complaining that these things will kill inveatment (that in some cases, hasn’t even been mapped yet, never mind deployed.

Title II is a start on the road, and these thieves and extortionists need to be taken down, through Sherman and RICO suits, if necessary.

art guerrilla (profile) says:

Re: Re: Re: Wheeler has made it clear that his plan is to avoid those ...

bullshit…
in many to most places, Big Media has carved up the states/counties/cities, and there are NO ALTERNATIVES, per-i-fucking-od…

further, it is either literally impossible (due to statutory restrictions), or essentially impossible (due to high cost of entry and/or control of rights-of-way/fiber) to start up any kind of competitive ISP venture…

and -yes- the exceptions DO prove the rule, AND prove that competitors CAN do what Big Media has been promising (AND BEING PAID) to do for decades, and has failed repeatedly…
they have ZERO credibility, such that if Big Media claims the sky is blue, i am almost certain it is grey and i’m getting pissed on…

John Fenderson (profile) says:

Re: Wheeler has made it clear that his plan is to avoid those ...

Your paper is full of things that I take a lot of issue with, so I just selected the most general one:

There exists nothing in the record or daily experience to suggest the need to question the long standing definitions that have left the computing sector, the information technology industry, and the Internet ecosystem beyond the reach of the Communications Act.

Except, of course, for the numerous anticompetitive and antconsumer actions that major ISPs have been, and obviously intend on not just continuing but expanding on.

Things like selectively interfering with specific services, intentionally perpetuating their effective oligopoly that ensures that far too many people have no serious options for where they get their broadband service from, ubiquitous spying and even modification of customer data streams (the UIDH fiasco being just the latest fiasco), and on and on.

Despite the claims of the defenders of the status quo, abuse is widespread. Indeed, if the abuse were rare, there would be no serious popular support for Title II.

Beech says:

Even if true, how is this a problem? Public utilities are arguably one of the best facets of government. They JUST WORK without any BS.
I don’t have the water company trying to charge me more for a bath than a shower.
I don’t get huge fines for going over my arbitrary gas “cap.”
I don’t get a power outage because the power company thinks I’m using too much electricity vacuuming and they think Hoover should pay them because of how many people use their vacuums.
I don’t get denied for phone service because my house is too far from a city, and no one can feel bothered to run the cable to it.

And really, has anyone argued that having any of these services classified as a “utility” has “chilled investment” in them, or “thwarted innovation”? As far as I’m concerned Wheeler can classify the internet as a Chocolate Chip Cookie and regulate it as such if it keeps Comcast from fucking around with it more than they already have.

retrogamer (profile) says:

Re: Re:

By Dan’s logic, the EPA and FDA regulations are REALLY holding back the industries that do consider my region valuable. Surely things would be even better if we just let Duke Energy go back to the pre-regulation days, right? https://www.youtube.com/watch?v=h_1S4Ya3F64 And if our local factory pork farms could just produce sausage onsite without costly and time wasting inspections done in sterile plants, we’d get more great literary output celebrating it like this, right? https://en.wikipedia.org/wiki/The_Jungle

John Simpson says:

Re: Re:

Let’s compare internet to electricity, gas and water. Those utilities charge by consumption (ie. Kilowatt hours, BTUs, etc.). Internet providers do not charge on consumption, they charge for speed. You have unlimited data from your cable company, but pay for a certain speed. What if the water company gave you unlimited water, but charged for water pressure? Wireless providers have data “caps” but only really offer one speed.

The end result of this legislation is higher prices for consumers and data plans similar to wireless phones. I don’t use Netflix, so I would prefer Netflix of the Netflix user pays higher fees. This law ensures its the customer and not the business.

How much innovation do you get from your electric company? Smart grid…no. Renewable energy…no. Coal scrubbing…no. My utility needs a third party for electronic billing and payments. How’s that for innovation.

JWahl says:

Re: Re: Re:

“Let’s compare internet to electricity, gas and water. Those utilities charge by consumption (ie. Kilowatt hours, BTUs, etc.). Internet providers do not charge on consumption, they charge for speed. You have unlimited data from your cable company, but pay for a certain speed. What if the water company gave you unlimited water, but charged for water pressure? Wireless providers have data “caps” but only really offer one speed.

The end result of this legislation is higher prices for consumers and data plans similar to wireless phones. I don’t use Netflix, so I would prefer Netflix of the Netflix user pays higher fees. This law ensures its the customer and not the business.”

The difference, is that unlike water, data packets are not a physical and finite resource. The primary cost for ISPs is installing infrastructure, powering it, and administrating it.

Anonymous Coward says:

I need internet for VOIP. I don’t get cellular reception where I live. I hope internet is regulated like a public utility. I need internet to pay my utility bills, look for jobs, and file for government assistance programs. I don’t have a car and I live way out in the woods with no cellular reception. So the internet is essential to my existence. I hear Verizon refuses to build and maintain copper phone lines, because they consider wireless cellular to be the future.

Wireless cellular might be great for voice calls if you get a signal in your area, but it sucks for broadband internet. Wireless cellular costs like $20 a gigabyte to download stuff on the internet. I can’t stream Netflix on that, I’d go bankrupt in the first month.

Anonymous Coward says:

those who are calling this change into a utility are doing so intentionally, not mistakenly. as most of those concerned are crawling out of the broadband company woodwork, AT&T, Comcast, Verizon etc, it suits them to do so because it gives them the excuse to try to blame someone else for what they have been getting away with for years, ripping people off, and an excuse again to be able to try to sue the FCC! no company likes to be shown up at what it has been getting away with. take the ridiculous charges Verizon still have even though they are dropping some by $10/month (whooppee!!) it, like the others, ought to be made to repay the billions gotten in subsidies when it didn’t complete ANY of the tasks it should have! that would be worth seeing!!

nasch (profile) says:

Re: Common Carrier

If UPS is a common carrier, shouldn’t we regulate how much they charge for package delivery? They charge different prices for overnight vs. standard delivery. That is the same as a fast lane and a slow lane. Same for Fed Ex and other delivery services. Your argument doesn’t hold water.

Are you saying UPS is not a common carrier? I can’t really tell what your point is.

JP Jones (profile) says:

Re: Common Carrier

Apples and oranges. There’s an actual, physical cost to shipping items, a cost difference between shipping quickly and at the standard speed (in opportunity cost and sometimes aircraft), and people pay per package sent. The pricing reflects the realities of the business.

You can’t compare the two situations. It doesn’t make logical sense. It’s sort of like saying that it’s unfair an Ford Focus driver has to pay the same toll as a Ford F-150 driver because the F-150 driver has to spend more on gas. The revenue stream and situation for the gas stations are completely different from the toll road.

We pay a toll to access the internet. And now ISPs are telling us we need to pay a gas fee, even though our gas mileage has little to no affect on their business situation. They also want our car company to pay our gas fee, because they should share the burden.

And for those of us that understand this, we’re left scratching our heads wondering why the heck we’re paying a toll to go on the road if they’re going to charge us for something unrelated to their business expenses. It doesn’t make sense.

mizzyw says:

John Simpson, Feb 7th, 2015 @ 10:16am said:

Re:
“Let’s compare internet to electricity, gas and water. Those utilities charge by consumption (ie. Kilowatt hours, BTUs, etc.). Internet providers do not charge on consumption, they charge for speed.”

They are charging for consumption in certain “test” markets, 300g limit, go over and it’s $10 for every 50g even if you only go over by 2g. So Comcast at least in some areas IS charging on consumption as well as speed.

Known test markets:
Huntsville, Mobile and Tuscaloosa, Alabama; Tucson, Arizona; Little Rock, Arkansas; Fort Lauderdale, the Keys and Miami, Florida; Atlanta, Augusta and Savannah, Georgia; Central Kentucky; Houma, LaPlace and Shreveport, Louisiana; Maine; Jackson and Tupelo, Mississippi; Chattanooga, Greeneville, Johnson City/Gray, Knoxville, Memphis and Nashville, Tennessee; Charleston, South Carolina; and Galax, Virginia.

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