Tag: net neutrality

Predicting the Return of ‘The Final Frontier’

It’s not often that a regulatory policy analyst correctly predicts a pop culture development a decade out, so…

Back in the spring of 2005, law professor Christopher Yoo (then at Vanderbilt, now at Penn) argued in Regulation that the Federal Communications Commission should liberalize its “structural regulations”—controls on such things as how the broadcast spectrum can be used, cable TV rates, ownership of different media outlets in a geograpic market, etc. He explained that those controls limit the diversity of voices and programming in mass media, making it mainstream-directed, because such programming is most profitable under those rules.

About the time his article appeared, the now-defunct UPN Network announced its cancellation of the series Star Trek: Enterprise, the most recent TV installment of the Star Trek franchise. The reason was low ratings; Trek fans are fervant and typically middle to upper class, but they were not a big enough market segment for UPN and its desired advertisers. However, those characteristics made the fans an ideal market for a paying-subscriber-supported Star Trek—something that Yoo’s reforms would have allowed, but FCC regulations prohibit.

Seeing the news hook, Yoo and I wrote an op-ed for the San Francisco Examiner explaining all this and concluding

Hopefully, if the “Star Trek” series gets yet another revival, it will be in a mass communications environment where niche shows have a better chance to live long and prosper.

Unfortunately, the FCC hasn’t adopted the reforms we envisioned (if anything, going in the opposite direction). But human innovation—both in technology and business—often finds ways around government barriers.

This week, the CBS Network announced that a new Star Trek series will launch in January 2017, exclusively on CBS’s Internet-delivered subscriber service All Access. The move will attempt to do exactly what Yoo and I foresaw: tap the Trek fanbase to see if it is a viable market for the show.

It can’t be said that CBS is boldly going where no one has gone before. Cable and satellite services, premium channels like HBO and Starz, and streaming services like Hulu and Netflix have already entered the final frontier of subscriber-supported content, delivering high-quality but niche-audience new programming such as original series Game of Thrones and House of Cards, reboots like Battlestar Galactica, and network-cancelled series like The Mindy Project. They can do this, in part, because they can escape many of the FCC’s diversity-dampening regulations—for now at least. 

Unfortunately, the FCC hovers as menacingly as a Romulan starship, as evidenced by the recently adopted net neutrality regulations. Still, let’s hope that CBS’s new venture lives long and prospers.

Net Neutrality — or Destroying Internet Innovation and Investment?

The Sunlight Foundation reports that the Federal Communications Commission has received more than 800,000 public comments on the topic of “net neutrality,” more than 60 percent of them form letters written by organized campaigns and more than 200 from law firms on behalf of themselves or their clients. That’s an impressive outpouring of public comments. 

But Berin Szoka, a long-ago Cato intern who now runs TechFreedom, argues, “This debate is no longer about net neutrality. A radical fringe has hijacked the conversation in an attempt to undo two decades of bipartisan consensus against heavy-handed government control of the Internet.” TechFreedom has just launched DontBreakThe.Net, a web-based campaign to expose the danger facing the internet from well-meaning demands for something called “net neutrality.” In an open letter to FCC chairman Tom Wheeler, Szoka says:

Subjecting broadband to Title II of the 1996 Telecom Act would trigger endless litigation, cripple investment, slow broadband deployment and upgrades, and thus harm underserved communities. Al Gore may not have exactly ‘invented the Internet,’ but President Clinton’s FCC chairman Bill Kennard deserves much credit for choosing not to embroil the Internet in what he called the ‘morass’ of Title II. Kennard’s approach of ‘vigilant restraint’ unleashed over $1 trillion in private investment, which built the broadband networks everyone takes for granted today. Abandoning that approach would truly break the Internet.

Net Neutrality supporters such as Google, Facebook, and the NAACP haven’t jumped on the Title II bandwagon because they understand that Title II would threaten the entire Internet. Title II proponents claim the FCC can simply ‘reclassify’ broadband, but in truth, there’s no such thing as reclassification, only re-interpretation of the key definitions of the 1996 Telecom Act. If the FCC re-opens that Pandora’s Box, the bright line Chairman Kennard drew between Title II and the Internet will disappear forever. Startups and edge/content providers will inevitably be caught in the fray. And besides, the FCC has a long history of overstepping its bounds.

Invoking Title II would trigger years of litigation. It’s not clear the FCC could ultimately ‘reclassify’ broadband at all, and even less clear the FCC could, or actually would, follow through on talk of paring back Title II’s most burdensome rules, like retail price controls. Even if ‘reclassification’ stood up in court, the FCC still couldn’t do what net neutrality hardliners want: banning prioritization. The FCC would succeed only in creating a dark cloud of legal uncertainty. That would slow broadband upgrades and discourage new entrants, such as Google Fiber, from entering the market at all.

The best policy would be to maintain the ‘Hands off the Net’ approach that has otherwise prevailed for 20 years. Innovation could thrive, and regulators could still keep a watchful eye, intervening only where there is clear evidence of actual harm, not just abstract fears. As former FCC Chairman Bill Kennard put it, ‘I don’t want to dump the whole morass of Title II regulation on the cable pipe.’ If we want to maintain a free and open Internet, and encourage broadband competition, the FCC would do well to heed his advice.

TechFreedom created this catchy graphic for its campaign to encourage more people to understand what’s at stake in the so-called “net neutrality” fight.

Don't Break the Net 

FCC to Make Internet Service a Public Utility

Do you want your Internet service provider to operate like the water company or the electric company? Internet access services will be more like these leaden public utilities if the Federal Communications Commission tries one of the more likely workarounds to a D.C. Circuit Court decision today that restricts its authority to regulate.

The story is long and involved—read it in the court’s opinion if you like—but the FCC has sought for years now to regulate broadband Internet service providers something like it used to regulate AT&T, with government mandated terms of service if not tarriffs and price controls. This doesn’t fit the technical environment of the Internet, which allows for diverse business models. Companies that experiment with network management, pricing, internal subsidy, and so on can find the configurations that serve widely varying consumers and their differing Internet needs the best. If government believes in fast lanes and slow lanes, surely Internet service providers could optimize service for movie delivery, video calling, and such, while email arrives a little less speedily.

The court found that the FCC’s plans don’t fit with its classification some years ago of broadband as an “information service,” subject to the light-touch regulation under Title I of the Communications Act. Title II, which applies to “telecommunications carriers,” allows common carrier regulation of the type the FCC is trying to impose. So watch for the FCC to conveniently change its mind and begin pushing for treatment of broadband once again as a “telecommunications service.” This is so it can have more control over the business decisions made by Internet service providers.

We made the case more than five years ago that “ ‘Net neutrality” is a good engineering principle, but it shouldn’t be a legal mandate. Technology and markets surpassed any need for command-and-control regulation in this area long ago. But regulators don’t give up power without a fight. To maintain power, the FCC may try to make Internet service a public utility.

Obama on Record: Supports Internet Regulation

I’m perplexed by the challenge of referring neutrally to legislation moving through Congress dealing with whether or not the government should regulate Internet service. Work with me as I untangle the Standard Federal Obfuscation™ involved here.

The White House has issued a “Statement of Administration Policy” that deals with S.J. Res. 6 (House companion H.J. Res. 37 passed in April.) The bill is a “resolution of disapproval” under the Congressional Review Act. The CRA allows Congress to reject federal regulations for a period of time after they have been finalized. Resolutions like this enjoy expedited procedures in the Senate, making it harder for Senate leadership to stop them moving.

The Federal Communications Commission voted in December to apply public-utility-style regulation to the provision of Internet service. Congress is moving to reject the FCC’s claim of authority using the CRA, and the president has now said he will veto Congress’ resolution that does that.

Well—the obfuscation continues—actually, the Statement of Administration Policy says “[t]he administration” opposes S.J. Res. 6, and, “If the President is presented with S.J. Res. 6, which would not safeguard the free and open Internet, his senior advisers would recommend that he veto the Resolution.”

At some point, it may be an important detail that the president hasn’t promised a veto yet. His advisers have promised to advise him to veto. OK. Whatever. They work for him. It’s a veto threat.

But, but,… Would these regulations safeguard a “free and open Internet”? The statement says, “Federal policy has consistently promoted an Internet that is open and facilitates innovation and investment, protects consumer choice, and enables free speech.” In a sense, that’s true: When the engineers at the Defense Advanced Research Projects Agency created the Internet protocol and when federal policy opened the Internet to commercial use, this made for the open Internet we enjoy today.

But it’s not federal policy driving these values today. It’s the Internet itself—all of us. Tim Lee ably pointed this out some years ago in his paper, “The Durable Internet: Preserving Network Neutrality without Regulation.” The marketplace demands an open Internet. If there are deviations from the “end-to-end principle” that serve the public better, the market will permit them. The Internet is not the government’s to regulate.

Now, some news reporting has things a little backward. Wired’s Threat Level blog, for example, carries the headline, “Obama Pledges to Veto Anti-Net Neutrality Legislation.” Headlines need to be short, but it could just as easily and accurately read “Obama Pledges to Veto Anti-Regulation Legislation” because the question is not whether the Internet should be open and neutral, but who should ensure that openness and neutrality. Should neutrality be ensured by market forces—ISPs responding to their customers—or by lawyers and bureaucrats in Washington, D.C.?

S.J. Res. 6 would reject the FCC’s claim to regulate the Internet in the name of neutrality. It says nothing about whether or not the Internet should neutral, open, and free. Again, that’s not the government’s call.

Did you follow all that? If you didn’t, you don’t need to. Here’s the summary: President Obama has gone on the record: He supports Internet regulation.

Government Control of Language and Other Protocols

It might be tempting to laugh at France’s ban on words like “Facebook” and Twitter” in the media. France’s Conseil Supérieur de l’Audiovisuel recently ruled that specific references to these sites (in stories not about them) would violate a 1992 law banning “secret” advertising. The council was created in 1989 to ensure fairness in French audiovisual communications, such as in allocation of television time to political candidates, and to protect children from some types of programming.

Sure, laugh at the French. But not for too long. The United States has similarly busy-bodied regulators, who, for example, have primly regulated such advertising themselves. American regulators carefully oversee non-secret advertising, too. Our government nannies equal the French in usurping parents’ decisions about children’s access to media. And the Federal Communications Commission endlessly plays footsie with speech regulation.

In the United States, banning words seems too blatant an affront to our First Amendment, but the United States has a fairly lively “English only” movement. Somehow, regulating an entire communications protocol doesn’t have the same censorious stink.

So it is that our Federal Communications Commission asserts a right to regulate the delivery of Internet service. The protocols on which the Internet runs are communications protocols, remember. Withdraw private control of them and you’ve got a more thoroughgoing and insidious form of speech control: it may look like speech rights remain with the people, but government controls the medium over which the speech travels.

The government has sought to control protocols in the past and will continue to do so in the future. The “crypto wars,” in which government tried to control secure communications protocols, merely presage struggles of the future. Perhaps the next battle will be over BitCoin, an online currency that is resistant to surveillance and confiscation. In BitCoin, communications and value transfer are melded together. To protect us from the scourge of illegal drugs and the recently manufactured crime of “money laundering,” governments will almost certainly seek to bar us from trading with one another and transferring our wealth securely and privately.

So laugh at France. But don’t laugh too hard. Leave the smugness to them.

Google under Siege in the Corporate State

“Google is under siege in Washington like never before,” Politico reports.

In an interview with POLITICO, a Google spokesman argued that a cabal of antitrust lawyers, lobbyists and public relations firms is conspiring against the Internet search giant. The mastermind? Google says it’s Microsoft.

Maybe it’s irony, or maybe it’s payback.

In the 1990s, Microsoft was the tech industry wunderkind that got too big for its britches — and Google CEO Eric Schmidt, then an executive at Sun Microsystems and later Novell, helped knock the software titan down a peg by providing evidence in the government’s antitrust case against it… .

But there are also increasing calls from some Silicon Valley competitors and Washington-based public interest groups for the Justice Department to launch a sweeping antitrust probe of Google. The European Union and the state of Texas have reviews under way.

Google says its rivals are fueling the attacks.

You could have read it here first. In the November-December 2010 issue (pdf) of Cato Policy Report, Adam Thierer wrote, “The high-tech policy scene within the Beltway has become a cesspool of backstabbing politics, hypocritical policy positions, shameful PR tactics, and bloated lobbying budgets.” The telcos, the broadcasters, the wireless industry, the entertainment industry – they all want the federal government to crush their competitors. And, he said, “Everybody — and I do mean everybody — wants Google dead, right now. Google currently serves as the Great Satan in this drama — taking over the role Microsoft filled a decade ago — as just about everyone views it with a combination of envy and enmity.” But then:

Of course, in a sense, Google had it coming. The company has been the biggest cheerleader in the push to impose “Net neutrality” regulation on the Internet’s physical infrastructure providers, which would let the FCC toss property rights out the window and regulate broadband networks to their heart’s content.

Meanwhile, along with Skype and others, Google wants the FCC to impose “openness” mandates on wireless networks that would allow the agency to dictate terms of service. It’s no surprise, then, that the cable, telco, and wireless crowd are firing back and now hinting we need “search neutrality” to constrain the search giant’s growing market power. File it under “mutually assured destruction” for the Information Age.

Google had it coming in another sense, having joined the decade-long effort by myriad Silicon Valley actors to hobble Microsoft through incessant antitrust harassment.Google has hammered Microsoft in countless legal and political proceedings here and abroad.

Thierer also noted that you could have predicted all this by reading Cato publications a decade earlier, such as Cypress semiconductor CEO T. J. Rodgers’s 2000 manifesto, “Why Silicon Valley Should Not Normalize Relations with Washington, D.C.” (pdf). Or indeed Milton Friedman’s 1999 speech on “The Business Community’s Suicidal Impulse”: “You will rue the day when you called in the government. From now on the computer industry, which has been very fortunate in that it has been relatively free of government intrusion, will experience a continuous increase in government regulation.”

You (could have) read it here first.

More Net Neutrality Violations That Aren’t

I see ACLU’s Jay Stanley has penned a reply to my post from a couple weeks back on the civil liberties group’s report arguing for the urgency of net neutrality regulation. The main thrust of my post was that many of the examples advanced to show there’s an imminent threat to the open Internet, requiring regulatory action on the double, don’t really show anything of the sort. Stanley allows that some of their examples are “not violations of Internet network neutrality in the strictest sense” but that they “speak to the motives, intent, and trustworthiness of major telecommunications firms in treating the speech of their customers fairly.” But I’m not sure they really show that either. In fact, if I can be forgiven a little digression, two more egregious corporate offenses against net neutrality that turn out not to be.

First, one I’d missed from the ACLU report: Vague terms of service agreements. Apparently, AT&T’s terms of service had a list of grounds for suspension of service that ended with the rather nebulous provision bolded below:

AT&T may immediately terminate or suspend all or a portion of your Service, any Member ID, electronic mail address, IP address, Universal Resource Locator or domain name used by you, without notice, for conduct that AT&T believes (a) violates the Acceptable Use Policy; (b) constitutes a violation of any law, regulation or tariff (including, without limitation, copyright and intellectual property laws) or a violation of these TOS, or any applicable policies or guidelines, or (c) tends to damage the name or reputation of AT&T, or its parents, affiliates and subsidiaries.

Based on the company’s explanation, it sounds like they intended this as a sort of catch-all for behavior that wasn’t covered by their policy or the law, but was sufficiently clearly abusive to damage the reputation of a provider who allowed it. But you can certainly understand why people read it as reserving the right to disconnect people who criticize the company, and in any event, it does seem way too vague: Who wants to risk losing their service based on such ill-defined criteria? Significantly, though, I don’t see anybody claiming that AT&T or Verizon (which had similar language) ever actually did suspend a user’s account for this reason. It appears to have been one more overbroad bit of legal boilerplate drafted by a lawyer paid to shield the company from liability in as many contingencies as possible, and promptly changed when users complained. More importantly, and at the risk of stating the obvious, this isn’t really a question of network architecture. Such a broad provision could surely be enforced in a way that was contrary to the spirit of the open Internet, but it’s ultimately a provision about how AT&T treats its customers, not about how routers treat packets. Many things might be wrong with it, but violating the end-to-end principle embodied in the TCP/IP protocol isn’t one of them. Indeed, there’s nothing really Internet specific about this at all: An offline business could attempt to refuse service to people who publicly criticize the company in the newspapers. Mercifully, such behavior seems rare, but if you’re worried about the potential for a certain class of abusive contracts aimed at squelching speech isn’t that where the remedy should aim?

Second (via Seton Motley), there’s the ongoing scuffle between Cablevision and Fox. Presumably in hopes that Cablevision would be under more pressure to cut a deal for Fox cable channels if their subscribers couldn’t just get Fox content online, Fox blocked access to their Internet video content for Cablevision subscribers, prompting Art Brodsky of Public Knowledge to fret about the danger to the open Internet. He acknowledges that normally, folks worried about neutrality have focused on the threat of ISPs leveraging access over the pipes to control content, but asserts that “it shouldn’t matter who is keeping consumers away from the lawful content.”

This is just weird. Media companies “keep consumers away from lawful content” all the time! Netflix won’t let me stream their movies unless my subscription is paid up. If I try to access academic articles on JSTOR from home, whoops, I’m blocked! I have to be visiting from an IP address at Cato or some other academic institution that’s made a deal with JSTOR for access. BBC won’t let me watch Sherlock or Doctor Who on their Web site, because they’ve sold the U.S. rights to PBS and SyFy, respectively. “Net Neutrality” and “Open Internet” have a dizzying array of different definitions, but even so, the idea that either obligates content providers to make their content equally available, for free, to every user is… novel.

I harp on this because I think it indicates how muddled a lot of the debate over “neutrality” has gotten. People have a whole welter of heterogeneous concerns about the future of the Internet that increasingly seem to be lumped under the rubric of “non-neutrality” or “network discrimination,” which both obscures the plurality of potential problems and begs the question of whether, assuming a policy remedy is necessary, “neutrality” regulation is actually the ideal silver bullet response to all these diverse concerns. If there were no downside to mandated neutrality—if there were no risk of opening the door to regulatory gamesmanship, and if every imaginable deviation from neutrality were plainly harmful—then this might not be such a big deal. If there are potential downsides, though, it behooves us to get a little more granular and look specifically at what we’re concerned about, and whether there are less sweeping mechanisms that would work to address the problem.

The ACLU puts the threat of content-based restriction of expression at the forefront of their argument, but this also seems like the concern with the weakest empirical basis, even in a relatively oligopolistic broadband market. First, to the extent that content-based filtering would be executed by means of Deep Packet Inspection, it would almost certainly run afoul of the Electronic Communications Privacy Act, which permits carriers to “intercept” the contents of a communication only when this is a “necessary incident” to the provision of their service. As my colleague Tim Lee lays out at greater length in his excellent paper “The Durable Internet,” there is ample evidence that consumers will react with enormous hostility to efforts to literally cut off their access to the sites they want to visit.

If we’re worried about wholesale blocking of domains, then, I think transparency-based regulation should be sufficient. That is, an ISP claiming to offer “Internet access” shouldn’t be able to restrict access to a site while making it look as though it’s the result of some kind of technical problem—perhaps even the blocked site’s fault. On the other hand, if Comcast wants to openly and transparently offer the option of a whitelisted “family plan” to conservative parents who don’t feel up to fussing with client-based blocking software, that strikes me as the sort of limitation on “expression” that is neither a serious threat to the larger Internet architecture—the effect is only to substitute for filtering the parents would do client-side were they more tech savvy—nor a proper civil liberties concern. Again, I expect a transparency requirement would be sufficient to preclude misbehavior on this front precisely because most consumers don’t want their carrier deciding what sites they’re allowed to access, and this, more than the fear of pressure from advocacy groups or even the FCC, will tend to make ISPs hesitant to do so if they can’t do it covertly. At the very least, again, if there are potential downsides to neutrality regulation, I can’t fathom why you wouldn’t try this more modest step first and watch to see if some more radical remedy is necessary.

Of course, consumer pressure is more effective in competitive markets, and as Stanley notes, if you focus on wireline broadband, the picture is not that encouraging in much of the United States. But the fact that wireline may have the characteristics of a natural monopoly doesn’t mean that last-mile broadband necessarily does: What sectors are “natural” monopolies turns out to be highly contingent on the available technology. As 4G wireless networks roll out, and as users consider the appeal of cutting the cord, the stranglehold of the incumbent monopolists and duopolists is attenuated. Wireless broadband, of course, is not a perfect substitute—fiber will probably always have a significant speed advantage—but imperfect substitutes can exercise competitive pressure too. Rail is a natural monopoly, but Amtrak still has to worry that dissatisfied consumers will drive, fly, or take Bolt Bus—even though these alternatives differ from train travel along multiple dimensions.

Moreover, specific deviations from neutrality that respond to consumer demand may themselves help secure the very competition Stanley and I both agree will help discipline carriers and keep deviations from neutrality limited to those that serve genuine consumer interests. So—and consider this a strictly illustrative hypothetical, please—Netflix now accounts for something like 20 percent of downstream bandwidth at peak home use times. Probably there are no small number of people who’d find it appealing to cut the cord if they were assured they could come home to a movie or an episode of Firefly streaming smoothly in HD. Their cable provider, of course, can guarantee this by bundling your Internet with a dedicated video service running over the same pipes—and, of course, no pretense that there’s any parity of treatment between those two types of “traffic.” It’s at least conceivable that permitting similar bundling and cross-subsidy between wireless broadband and Netflix could hasten the demise of the effective wireline duopoly that exists in many markets, eroding the very conditions that undergird the argument for fearing non-neutral routing could be anti-consumer.

Now, to be sure, you can paint a doomsday scenario based on extrapolation from this model that I find every bit as unappealing as Stanley does: A Balkanized Internet on which every ISP has exclusive deals within one player in each online service category to provide high-bandwidth routing, while the rest of the Net limps along at speeds too slow to make innovative services viable unless backed by big corporate money. (Though this would really be a concern about innovation, not free expression: There’s actually very little reason to fear that deliberate viewpoint discrimination by ISPs under transparency rules is either likely or, more to the point, feasible.) If this were to start to happen on a larger scale—despite the demonstrable preference of most consumers for an open Internet over such a curated walled-garden model, it would be worth revisiting the question. But to impose architectural mandates in advance of such experimentation—to assume a priori that any and all deviations from neutrality would impose such great costs to expression and innovation as to trump any possible consumer gains in price or quality of service—seems very much contrary to the spirit of end-to-end.