On April 25, 2024, the Federal Communications Commission (FCC) voted 3-2 in favor of returning Net neutrality principle that internet providers should treat all traffic equally and not throttle or block certain traffic for whatever reasons.
This excerpt is taken from “The War for Net Neutrality,” a chapter from my book Rethinking ComplexITy.
An Internet service provider (ISP) is a company that provides you with access to the Internet, like AT&T, Verizon, T-Mobile and Comcast. Content providers include companies like Netflix and Amazon that create and/or distribute videos and programs.
Net neutrality means that ISPs should treat all data that travels over their networks fairly, without intentionally slowing down certain classes of internet traffic, without blocking or replacing content and without charging more for it.
People have been divided over net neutrality for years, as there are pros and cons to both sides. For those people who argue for net neutrality, they say that it enables freedom of expression, promotes innovation and competition, and gives unblocked access, whereas those who oppose net neutrality argue that there is less network innovation, questionable content thrives, and there is no free internet access.
Sometimes an ISP is also a content provider — and that’s one of the big points of contention. Traditional content companies, which include Google and Facebook, are worried that telecom and cable companies that increasingly own news sites and streaming entertainment services will give preferential benefit to their own subsidiaries. As we will see through examples from the past decade, this concern is not without foundation.
The term Federal Communications Commission (FCC) was created in 1934 as part of the Communications Act of 1934 and refers to an independent U.S. government agency that oversees all interstate and international communications. The FCC maintains standards and consistency among types of media and methods of communication while protecting the interests of consumers and businesses. The agency is accountable to U.S. Congress and its actions are monitored closely by investors.
The agency is headed by a chair, who is one of five commissioners appointed by the president. Each commissioner is confirmed by the Senate and serves a five-year term. The FCC and other government agencies are required by law (the Administrative Procedure Act 1946) to provide the public with an opportunity to participate in the rule-making process by establishing an “notice and comment” procedure. The Agency provides notice to the general public, allowing people to comment, and then takes into account the “relevant matter presented” in those public comments before any rules are established, amended or developed.
Following several legal battles that demonstrated the need for the FCC to clarify that Net Neutrality principles- which have long been the de facto standard of the internet were binding commission standards, the FCC took its first steps toward the current Net Neutrality order in 2010 by proposing an Open Internet order with net neutrality rules that prohibited mobile broadband providers from “block[ing] applications that compete with their voice or video telephony services.” The rule applied except when blocking an application could be justified as “reasonable network management.”
These rules follow the basic principles of open internet established in 2005, but they embody specific language that regulates fixed-line broadband more closely than wireless internet. The reason that “wireless carriers are regulated far more loosely” is because by the virtue of their service, these carriers are much more constrained than fixed-line connections. FCC officials claim that technical limitations of wireless internet necessitate looser regulations.
Let’s look at two examples of how ISPs have understood the term “reasonable network management”.
AT&T blocked Apple’s FaceTime video chat application over cellular on iPhones in 2012 and 2013. AT&T said it would only enable FaceTime on cellular if you bought a “Mobile Share data plan.” If you didn’t have the right data plan, you had to use Wi-Fi for FaceTime. AT&T customers have to pay for a feature we can’t or won’t even use to use a feature we want to use.
A coalition of liberal advocacy groups has announced plans to challenge AT&T’s policy of blocking FaceTime video chat over its cellular network. Three of those groups—Free Press, Public Knowledge, and the New America Foundation’s Open Technology Institute—are planning to make the knee-jerking official with a formal complaint to the Federal Communications Commission. In September 2012, they accused AT&T of violating the no-blocking rule, saying that the reasonable network management exception shouldn’t apply. “There is no technical reason why one data plan should be able to access FaceTime, and another not,” Public Knowledge Senior Staff Attorney John Bergmayer said at the time.
Of course, AT&T disagreed. There is no “blocking issue” because FaceTime is pre-loaded on iPhones, Senior Executive VP Bob Quinn wrote in November 2012:
With the FaceTime app already pre-loaded on tens of millions of AT&T customers’ iPhones, there was no way for our engineers to effectively model usage, and thus to assess network impact.
Free Press countered that “AT&T is inventing words that are not in the FCC’s rules in a weak attempt to justify its blocking of FaceTime.” The word “pre-loaded” did not appear in the FCC’s 2010 net neutrality order. Finally, AT&T lifted all these limitations on pre-loaded video apps in the second half 2013.
In 2014, T-Mobile introduces new initiative it’s calling Music Freedom, a handful of music services will be blessed by the carrier so that they don’t hit subscribers’ monthly data allowances. The list of Music Freedom-compatible services currently includes Pandora, Rhapsody, iHeartRadio, iTunes Radio, Slacker, Spotify, Samsung’s Milk, and Beatport. It’ll also be taking votes from customers through its website and on Twitter for other services to add to the list of exemptions.
T-Mobile has arbitrarily decided that some data traveling through its pipes counts as a restriction, while other data does not. What will prevent T-Mobile from using the data restriction exemption as a punitive measure against content providers who do not have a good relationship with the company? The carrier, naturally, doesn’t feel it’s an issue. “Our position on net neutrality — our regulatory position is that we don’t think this industry needs to be regulated with such a heavy hand,” said T-Mobile’s Senior VP Andrew Sherrard at the time.
In addition to problems with understanding the Open Internet Order by the ISPs, this order was subsequently struck down by the DC Circuit Court of Appeals. In 2014 Verizon v. FCC ruling, the Court of Appeals for the D.C. Circuit vacated portions of the order that the court determined could only be applied to common carriers. The court’s decision emphasized the FCC’s distinction between information services (broadband providers) and telecommunications services, which are treated as common carriers. Because the FCC had previously chosen not to classify broadband providers as a telecommunications service, the court ruled them exempt from treatment as common carriers.
After that verdict, the agency no longer had official authority to protect an open Internet. The broadband providers hold all the tools necessary to deceive consumers, degrade content, or disfavor the content that they don’t like. The 2010 rules helped to deter such conduct while they were in effect. But, as Verizon frankly told the court at oral argument, except for the 2010 rules, it would be exploring agreements to charge certain content providers for priority service. Indeed, the wireless industry had a well-established record of trying to keep applications within a carrier-controlled “walled garden” in the early days of mobile applications. That specific practice ended when Internet Protocol (IP) created the opportunity to leap the wall. But the Commission has continued to hear concerns about other broadband provider practices involving blocking or degrading third-party applications.
The court nonetheless vacated the no blocking and antidiscrimination provisions of the Order as imposing de facto common carrier status on providers of broadband Internet access service in violation of the Commission’s classification of those services as information services.
The court also left open the possibility of the FCC issuing a statutorily justifiable Net Neutrality rule by reclassifying broadband services as “telecommunications services” under title II of the Communications Act. In response, the FCC published a Notice of Proposed Rulemaking (NPRM) in May 2014 that fell short of adopting the reclassification of broadband services as “telecommunication services” but explicitly left open the possibility of doing so in the final rule.
In November 2014, then-President Obama called on the FCC to “reclassify consumer broadband service under Title II of the Communications Act.” After a robust public comment period that generated millions of public comments, the FCC released a final Report and Order in February 2015 that established strong net neutrality protections. In a 3-2 vote, the FCC classified ISPs as utilities or “common carriers” like the traditional landline phone system. The reclassification of broadband into a service akin to telephones and electricity provided the legal foundation for net neutrality rules, including prohibitions on site and app blocking, speed throttling, and paid fast lanes.
The FCC’s Net Neutrality rulemaking process was a true success in two respects.
First, the agency received almost 4 million comments on the proposed rule through the public comment process (mostly in support of FCC’s adoption of Net Neutrality). This is the largest number of comments ever submitted in a federal rulemaking process-something that should be both celebrated and emulated. The notice and comment rulemaking process are predicated upon “democratizing” the way in which government agencies craft rules by encouraging broad and diverse participation from the public through submission of written comments. Done well, notice-and-comment provides a crucial way for government agencies to hear from the public and offsets the influence of powerful industries with developed channels of access to the government.
Second, the Net Neutrality rulemaking constituted an example of a government agency taking feedback from the public seriously, as is their legal requirement under the Administrative Procedure Act, and when appropriate making changes to their rules to respond to that feedback.
It is the kind of responsiveness that should be celebrated by those who worry that public comments are ignored, and notice-and-comment is meaningless because the outcome of the rulemaking is already pre-determined.
The FCC Order concludes that the retail broadband Internet access service available today is best viewed as separately identifiable offers of (1) a broadband Internet access service (BIAS) that is a telecommunications service (including assorted functions and capabilities used for the management and control of that telecommunication service) and (2) various “add-on” applications, content, and services that generally are information services. This finding more than reasonably interprets the ambiguous terms in the Communications Act, best reflects the factual record in this proceeding, and will most effectively permit the implementation of sound policy consistent with statutory objectives, including the adoption of effective open Internet protections.
The FCC make clear that this is response to the Verizon court’s conclusion that broadband providers “furnish a service to edge providers” (and that this service was being treated as common carriage per se). As discussed further below, we make clear that broadband Internet access service encompasses this service to edge providers. Broadband providers sell retail customers the ability to go anywhere (lawful) on the Internet. Their representation that they will transport and deliver traffic to and from all or substantially all Internet endpoints includes the promise to transmit traffic to and from those Internet endpoints back to the user.
The Order establishes that ISPs cannot “unreasonably interfere with or unreasonably disadvantage” the ability of consumers to select, access, and use the lawful content, applications, services, or devices of their choosing; or of edge providers to make lawful content, applications, services, or devices available to consumers. While the FCC’s 2010 Open Internet rules had limited applicability to mobile broadband, the new rules protects consumers no matter how they access the Internet, whether on a desktop computer or a mobile device and grounds open Internet rules in multiple sources of legal authority—including both section 706 of the Telecommunications Act and Title II of the Communications Act.
Viewed properly, the Net Neutrality rule is fundamentally a pro-market and pro-business rule. It removes not only the government control, but also the corporate goliath ISP gatekeepers that, in the absence of the rule, could stifle market competition and consumer freedom and liberty (as can be seen from the two examples mentioned earlier). The opposition to the rule came from a powerful vested interest, the broadband ISPs, but one year’s time since the Order was issued has already dispelled their claims that the rule would impose catastrophic costs on them. In fact, analysts have found that the “Profits and profit margins are at historic, monopoly like levels, and they continue to grow as ISPs exercise market power in an increasingly uncompetitive market.” Broadband ISPs are increasing their capital investment as compared to the period before the rule.
Another battle was over, but the war continued. In January 2017, newly inaugurated president Donald Trump designated Ajit Pai, a former lawyer for Verizon, as FCC chairman. Ajit Pai has aggressively moved to roll back consumer protection regulations created during the Obama presidency. He argued that his predecessor, Tom Wheeler, had rammed through a series of actions beyond the agency’s legal authority and disagreed with the move two years ago to declare broadband a utility. Pai has criticized the current net neutrality regulations as heavy-handed and an overreach of the FCC’s power that has stifled ISP investment in network expansion and faster broadband speeds. Released from the current regulations with more business-friendly rules, ISPs could more freely experiment with new services for customers and expand their networks, says Pai.
From April 27 to Aug. 30, 2017, the FCC allowed members of the public to formally submit comments on the subject. In total, 21.7 million comments were submitted electronically and posted online for review. On December 14, 2017, under a new presidential administration, the FCC reversed its own rules on net neutrality, essentially revoking common carrier status as a requirement for ISPs. The FCC ended utility style regulation of the Internet in favor of the market-based policies necessary to preserve the future of Internet freedom and reversed this misguided and legally flawed approach and restore broadband Internet access service to its Title I information service classification. The FCC concludes that a return to Title I classification will facilitate critical broadband investment and innovation by removing regulatory uncertainty and lowering compliance costs. Furthermore, the agency declines to adopt a ban on paid prioritization and expects that eliminating the ban on paid prioritization will help spur innovation and experimentation, encourage network investment, and better allocate the costs of infrastructure, likely benefiting consumers and competition. The FCC also finds the no-blocking and no-throttling rules are unnecessary to prevent the harms that they were intended to thwart. We find that the transparency rule we adopt today—coupled with our enforcement authority and with FTC enforcement of ISP commitments, antitrust law, consumer expectations, and ISP incentives—will be sufficient to prevent these harms, particularly given the consensus against blocking practices, as reflected in the scarcity of actual cases of such blocking. Ajit Pai pointed out that there are cases today and many more that will develop in time in which the option of a paid prioritization offering would be a necessity based on either technology needs or consumer welfare and he sees great value in the prioritization of telemedicine and autonomous car technology over cat videos.
I would like to quote a part of dissecting statement of commissioner Jessica Rosenworcel because I think that part touches upon the core of the problem:
Net neutrality has deep origins in communications law and history. In the era when communications meant telephony, every call went through, and your phone company could not cut off your call or edit the content of your conversations. This guiding principle of nondiscrimination meant you were in control of the connections you made.
As a result of today’s misguided action, our broadband providers will get extraordinary new power from this agency. They will have the power to block websites, throttle services, and censor online content. They will have the right to discriminate and favor the internet traffic of those companies with whom they have pay-for-play arrangements and the right to consign all others to a slow and bumpy road. Now our broadband providers will tell you they will never do these things. They say just trust us. But know this: they have the technical ability and business incentive to discriminate and manipulate your internet traffic. And now this agency gives them the legal green light to go ahead and do so. This is not good. Not good for consumers. Not good for businesses. Not good for anyone who connects and creates online. Not good for the democratizing force that depends on openness to thrive. Moreover, it is not good for American leadership on the global stage of our new and complex digital world.
Many state attorneys general filed suit against the FCC decision. The US Senate voted 52-47 to approve a resolution to invalidate the decision, however the legislation fell short by 46 votes in the US House of Representatives. The FCC’s removal of net neutrality rules was officially implemented on June 11, 2018.
The stakes were high, and the public comment period attracted a staggering 22 million submissions. In a press release on May 6th, 2021, the New York Attorney General’s office multi-year investigation uncovered the fact that 18 million out of the more than 22 million comments submitted to the Federal Communications Commission (FCC) about 2017’s rollback of net neutrality to repeal its 2017 rules were fake. The NY Attorney General Letitia James outlined that on top of the 18 million fake comments sent to the FCC, 500,000 letters were sent to Congress, and that the U.S.’s largest broadband companies led and funded the fraudulent campaign that generated millions of fake comments. In doing so, these broadband companies managed to get 8.5 million fake comments that impersonated real citizens submitted to the FCC. On top of that, just one 19-year old student created and submitted 7.7 million comments by using an automated system, while the rest were submitted by unknown accounts.
“Americans voices are being drowned out by masses of fake comments and messages being submitted to the government to sway decision-making,” said NY Attorney General Letitia James. “Instead of actually looking for real responses from the American people, marketing companies are luring vulnerable individuals to their websites with freebies, co-opting their identities, and fabricating responses that giant corporations are then using to influence the polices and laws that govern our lives.”
So, the fact that 80 percent of the 22 million submissions to the FCC turned out to be fake is a huge blow to the entire process around net neutrality in the U.S.
For critics who claim that the comment process has been irreparably tainted by the large number of fake comments, Pai says that “this view reflects a lack of understanding about the Administrative Procedure Act. The Administrative Procedure Act requires that the agency consider and respond to all significant comments in the record. Millions of comments that simply say something along the lines of “keep net neutrality” or other colorful language we can’t say in public – whether they are submitted by real people, bots, or honey badgers – have no impact on the decision.“
In Sep. 2018, California passed a net neutrality law and was immediately sued by the Trump Administration Justice Department. On Feb. 8, 2021, the Biden administration Justice Department withdrew the lawsuit against California, and FCC Acting Chairwoman Jessica Rosenworcel indicated support for reinstating net neutrality rules.
According to the National Law Review, as of Mar. 1, 2021, “seven states have adopted net neutrality laws (California, Colorado, Maine, New Jersey, Oregon, Vermont, and Washington), and several other states have introduced some form of net neutrality legislation in the 2021 legislative session (among them Connecticut, Kentucky, Missouri, New York, and South Carolina).”
On May 24, 2021, Brendan Carr, the senior Republican FCC commissioner, wrote an article for Newsweek in which he removes the dust from the old claim from 2005 by former AT&T CEO Ed Whitacre who complained that some people want AT&T to act as a “dumb pipe that just keeps getting bigger and bigger. […] There’s more and more content, and you need more and more bandwidth, and somebody’s got to build it. If you build it, you have to make a return on that. Nobody gets a free ride, that’s all.”
The commissioner explained that the online streaming services provided by just five companies—Netflix, YouTube, Amazon Prime, Disney+ and Microsoft—account for a whopping 75 percent of all traffic on rural broadband networks. The same study shows that 77-94 percent of total network costs are related to adding capacity or otherwise supporting the delivery of those streaming services. Ordinary Americans, not Big Tech, have been footing the bill for those costs. Many consumers are unaware that the federal government collects roughly $9 billion a year through a tax on their monthly bills for traditional telephone service—both wireless and wireline. The FCC then uses that pot of money, known as the Universal Service Fund, to support internet builds in rural areas and on other efforts to close the digital divide. Yet Big Tech derives tremendous value from these high-speed networks. Indeed, Facebook, Apple, Amazon, Netflix, and Google generated nearly $1 trillion in revenues in 2020 alone—an almost 20 percent increase over the prior year. It would take just 0.009 percent of those revenues to eliminate entirely the unsustainable 30 percent tax that currently hits consumers on their monthly bills.
As of June 2021, the commission remained deadlocked, following the resignation of Ajit Pai, who served as chair under then-President Donald Trump. The FCC currently has a 2-2 split of the Republican and Democratic commissioners. A Biden appointee could give Democrats the extra vote as they look to reinstate net neutrality regulations repealed in 2017 under the Trump administration.
Gigi Sohn was nominated by the White House in October 2021, and since then has been in Senate confirmation purgatory for the 16 months thanks to blanket opposition from the Republicans and key Democratic Senators like Mark Kelly (AZ), Catherine Cortez Masto (NV), and Joe Manchin (WV), who kept her from getting the 51 votes needed in a Senate confirmation vote.
Sohn found herself in an unprecedented fight that included three Senate confirmation hearings, a series of ads, op-eds and a billboard criticizing Sohn as “extreme” and “partisan” amid dissection of her social media posts. In the end, Sohn drew the line by announcing her decision to withdraw, pointing directly at the telecom and media industry smear campaign as a major factor:
It is a sad day for our country and our democracy when dominant industries, with assistance from unlimited dark money, get to choose their regulators. And with the help of their friends in the Senate, the powerful cable and media companies have done just that.
It is obvious that the war continues with relentless ferocity. On September 25, 2023, the agency just got its third Democratic commissioner, Anna Gomez. Just one day later, FCC chair Jessica Rosenworcel announced plans to restore the Obama-era policy, saying that the Trump-era repeal of net neutrality “put the agency on the wrong side of history, the wrong side of the law, and the wrong side of the public. It was not good then, but it makes even less sense now.”
In the meantime, Europe is fighting its own battle. On November 29, 2021, the CEOs of leading European telecommunications companies (A1 Telekom Austria Group, Vivacom, Proximus Group, Telenor Group, KPN, Altice Portugal, Deutsche Telekom, BT Group, Telia Company, Telefónica, Vodafone Group, Orange Group and Swisscom ) in a joint letter call on EU policy makers to rebalance the relationship between the global technology giants and the European digital ecosystem.
They wrote:
Large and increasing part of network traffic is generated and monetized by big tech platforms, but it requires continuous, intensive network investment and planning by the telecommunications sector. This model—which enables EU citizens to enjoy the fruits of the digital transformation—can only be sustainable if such big tech platforms also contribute fairly to network costs.
In September of 2022, Commissioner Thierry Breton announced that his office would explore a proposal to make large Internet firms pay their “fair share” of telecommunications infrastructure costs. Several member states, including France and Spain, have endorsed the idea.