Net Neutrality: Former FCC Chairman and Literal Industry Shill Claims Threats Don’t Exist

When the FCC passed net neutrality rules in February 2015 under Tom Wheeler, the tech industry and individual users hailed them as a huge win for citizens and the open internet. By refusing to allow ISPs to establish so-called ‘fast lanes’ for certain kinds of traffic (and charging for the privilege), the FCC had helped ensure the internet wouldn’t bifurcate into a digital haves-vs-have-nots. The FCC under Ajit Pai is going to undo those rules today, despite widespread opposition from citizens, the tech industry, 18 state attorney generals, and calls from Congress to refrain from doing so. And according to former FCC chairman Michael Powell, now the president of The Internet Television Association (a lobbying group), all the concern about killing net neutrality is nothing but hyperbolic whining.

In an opinion piece published by Recode, Powell begins blatantly distorting the arguments used by those who favor net neutrality, calling such individuals “New-age Nostradamuses,” and literally claiming net neutrality advocates believe a lack of net neutrality will kill the internet, destroy democracy, cause rampant plagues, and result in a storm of locusts covering the land. This kind of absurd straw man always bodes well for a thoughtful discussion of the issues.

“It’s literally the end of world!” said no net neutrality advocate, ever.

Having constructed such an excellent caricature, Powell starts taking shots at it. He informs us the internet will still exist the day after net neutrality passes and claims ISPs “highly value” the open internet. He then asserts:

• “A network company makes the most money when its pipe is full with activity.”
• “Degrading the internet, blocking speech and trampling what consumers now have come to expect would not be profitable.”
• ISPs object to the regulation of “every facet of the internet.”

The Only Problem With These Arguments Is They’re All Wrong

Let’s start with the first allegation, that ISPs make the most money when pipes are full. It’s true a network company makes money when it has subscribers and subscribers contribute to keeping pipes full. There are fixed costs associated with running a network and per-user costs related to providing each costumer another GB of data. As long as the per-user revenue exceeds the cost of adding another customer (due to bandwidth congestion), yes, it’s better to be growing and carrying traffic. But there’s a fundamental problem with how Powell frames his argument: ISPs don’t charge by the bit.

Because they don’t, trying to link full pipes directly to earnings isn’t accurate. Customers generate revenue and traffic, but ISPs don’t get paid for the amount of traffic they deliver. In fact, the best situation for an ISP would be for everyone to pay for service and nobody actually use it. Obviously that’s not going to happen, but it makes the point: ISPs earn the largest amount of money when they have the highest subscriber base and the least network usage.

Creating fast lanes through paid prioritization isn’t about keeping pipes full or empty. It’s about creating an environment where users pay more money for the same data services that previously would’ve cost them less. The transit price for 1GB of data has dropped like a rock for decades. The point of paid prioritization isn’t to improve performance for users; it’s to create additional revenue streams for the ISP in question.

The cost to deliver 1GB of data, graphed over time.

When Google Fiber started rolling out, other telcos suddenly discovered they could offer service at an affordable price — but only in Google Fiber’s markets. Comcast has floated the idea of charging more to keep your user data private, while ATT offered discounts to anyone willing to let the company spy on them.

Remember the common carriage disputes between various companies and ISPs, all of which boiled down to the ISPs wanting more money for providing an identical service? How about the time a Comcast executive admitted there was no business case for its data caps, or when the company started blocking HBO Go on the PS4?  Other wireless ISPs have made changes to their data plans that could now be rolled back as well.

The world according to Verizon. Note the red bar. This is what we’re getting back — a time when ISPs could throttle any traffic they liked, as long as they liked.

ATT, for example, used to start throttling unlimited data once you went over 5GB of usage. As one of the few remaining customers with a truly unlimited data plan, I was told that after 5GB, I would be throttled, period. After a protracted battle with the FCC, ATT decided it would throttle after 22GB of data, as the FCC recognized these policies were a blatant attempt to shove users into paying more per GB. Other wireless providers have enacted similar, 20GB+ throttling policies. All of these agreements were baked into or accompanied the Open Internet Order Ajit Pai is about to eviscerate.

This ties into the next point. Carriers aren’t going to “degrade” the internet by knocking people offline and refusing to connect them. It’ll be more subtle. Maybe 720p YouTube video runs normally, but 1080p has to squeeze through a tighter pipe unless you pay. Companies could adopt similar policies either regarding certain providers, like Netflix, or certain types of content, like gaming. ISPs used to pull precisely these tricks to force customers into paying more, which is why we once wrote about how using a VPN could improve your Netflix experience. With the majority of the United States stuck with 1-2 providers at most, most people will have precious little option if carriers start pulling these shenanigans. Smart carriers will attempt to bill it as an improvement at introductory prices (for example, a speed upgrade combined with low latencies). Now that the FCC is rolling back rules that required your ISP to divulge its special fees or the long-term cost of a special offer, expect these issues to get worse, not better.

Finally, there’s the argument that the FCC could use Title II to regulate every facet of an ISPs existence, including the claim that ISPs can’t charge more without getting clearance from the FCC first. This is a lie. When the net neutrality rules were written, the FCC sharply limited its own authority — and said so. From the Open Internet Report and Order on Remand: “Moreover, we concurrently exercise the Commission’s forbearance authority to forbear from application of 27 provisions of Title II of the Communications Act, and over 700 Commission rules and regulations.” At no point under Tom Wheeler did the FCC evaluate whether ISPs had the right to increase prices that we’re aware of, much less rule against it.

Contrary to what Powell claims, the Open Internet Order was not written as a massive power grab. In fact, the FCC carefully circumscribed its own behavior and clearly delineated what it did and did not consider to be applicable. There’s nothing wrong with Powell claiming these restrictions are too onerous, but trying to frame the situation as if the FCC had made some enormous power play is false. The only reason this rule system was created is because Verizon sued to block the less-onerous variant years ago. ISP’s don’t object to the regulation of “every facet” of the internet. They object to the regulation of any facet of the internet. And claims the FTC will be able to take over this role from the FCC are, at best, made in bad faith. There’s a lawsuit against the FTC in front of the 9th Circuit right now, in which ATT argues the FTC has no authority to regulate the internet at all. Should the case be decided in favor of ATT, it’ll open up a regulatory gap in which the entire broadband industry neatly fits.

The rest of his argument boils down to lying about ISP investment levels. (Powell blames a nonexistent investment decline on ‘heavy handed regulation,’ and then implies rural customers were somehow harmed by net neutrality without offering the slightest bit of evidence this is so.) While small ISPs did have concerns about net neutrality (and some still do), those concerns were rooted more in the cost of proving to the FCC that net neutrality obligations are being met (waived for all ISPs with less than 250K subscribers) and communicating with the FCC about alleged violations. None, in other words, related to net neutrality traffic obligations or investment levels. But that’s of little concern to Powell’s organization, which prides itself on distorting data. The FTC’s own Chief Technology Officer opposes these changes, but Aji Pai doesn’t care. In fact, he blames Cher and the Hulk for drumming up net neutrality support.

“If I could turn back SMASH!“

We’ve arrived at a point in history where the people making policy feel no obligation whatsoever to rely on factual data. But the most offensive part of Powell’s opinion isn’t his idea that net neutrality constitutes burdensome regulation — it’s framing the argument as if we’ve all forgotten how ISPs used their market position to shaft consumers. Net neutrality law in the US isn’t perfect, but there’s a reason why so many of our stories on this topic date to 2015 and 2014, before net neutrality became law. On one side, we have factual examples of bad behavior too numerous to count. On the other, we have unproven claims about nonexistent problems and bad faith arguments. As of this writing, bad faith looks set to win.

Top image credit: Flickr/Robin Ellis