Follow Up: Why I Support Net Neutrality
Allow me to pre-face this a bit. I apologize for this being such a large article, as there is a lot to discuss.
The Internet is a marvelous thing isn’t it? I have had the privilege of being raised in a household which was filled with computers. Even in the 1990’s, I remember at 9 years old my father putting a Compaq PC in my room with Windows 98 and an ATI Radeon graphics card, so I could play video games. My house was wired with CAT 5E Ethernet as well, an extreme rarity as only businesses at the time had it, with my father and I bouncing room to room with our IBM X20 laptops on Windows 2000 with PCMCIA expansion cards, as wireless wasn’t up to snuff yet, dangling ethernet cords from our laptops. I grew up in the age where I remember when first getting a business class DSL line installed in the house to connect on the internet I yelled, “Don’t get on the phone, I’m using the internet.” At which point my father, a fellow geek, promptly responded “DSL is different! We don’t do that anymore.” I remember hopping on the internet at a blazing fast 256Kbps, having gone from a dial-up modem prior. It was a complete game changer, and over the years the internet has grown faster, to the point I am currently operating my home with a 300Mbps download and 20Mbps upload connection.
Looking back, however, it seems competition has not grown in the USA. In fact, competition has declined due to companies consolidating. I am usually the one out of my friends to say the free market would fix all problems, but we need to face the reality of the current ISP (internet service provider) market. It is anything but a free market. In many market places there is such rampant crony capitalism that they only allow one or two providers in a geographical area. In fact, the last statistic I had read is that less than 4 in 10 had multiple quality ISP choices, with 96% of Americans having two or less ISP choices, and 50 million Americans having only one ISP capable of 25Mbps+. It seems that most people are merely looking at the issue of net neutrality as “It’s the FCC, a government agency, therefore it must be bad.” I generally don’t like to think that way and will say that just because it is from a particular entity doesn’t mean the idea is bad or evil. In fact, I am not a fan of Microsoft or Google, but as the staff at Being Libertarian will note, I will praise both when deserving of praise, even if it means I must wash my mouth out with soap, and take a hot shower, as I feel disgusting from it.
So, what’s the deal with net neutrality? net neutrality is the idea that all data is to be treated equally, regardless of the content or type of data. So, an ISP can’t throttle or block data to a new startup, or a website with views on how we need small government – like Being Libertarian. And no matter what the type of data or content of the website, short of it being a legal one, such as pedophilia and the like, we can access it as fast as we pay for our current connection. For example, I have a 300Mbps internet connection, so I should have the capability to access any and all of my data up to 300Mbps regardless of what I am doing as long as the source provider allows for it, and my ISP can’t do anything to alter, block, or throttle it.
Essentially, we are asking ISPs to leave their equipment in the default state for the most part, and to allow the connections at a particular speed and nothing more. However, upon the release of my last article regarding net neutrality, it seems as if I hadn’t clarified all of the points as to why I believe net neutrality is a necessity. I will say it was rather hilarious to see people claim I was not a libertarian for merely holding one position that many held. My position is that competition is key, but that we have a fractured infrastructure with little-to-no competition and we have seen multiple attempts from ISPs to throttle or block certain parts of the internet. I hold that we need net neutrality now until we can fight the local regulation plaguing the current ISP market. It is true competition is key to improving the internet. In fact, I remember for quite some time Internet speeds had stagnated around the 6-24Mbps speeds in residences, until Google Fiber was announced and began offering 15Mbps free, and up to 1Gbps for a mere $70 a month in many areas around the country. This was a game changer and suddenly I began seeing ISPs around me and across the USA, such as AT&T and Time Warner Cable (Now Spectrum), kicking up their speeds and announcing their own plans for service to match the speeds of Google. This is an example of where competition works. However, Google is having to expense a lot of money on legal battles, not technological ones, to challenge monopoly and duopoly situations of most of the markets they are breaking into. AT&T has sued Nashville to stall Google Fiber deployments, and they’ve also sued Louisville, Kentucky, but luckily Google won there. While AT&T and Comcast teamed up to nullify laws to increase a city’s broadband competition. Imagine if a multibillion dollar company, such as Google, is having immense trouble to deploy as fast as they want, what chance do small ISPs have? I even detailed a case in which Comcast directly destroyed a smaller ISP who refused to be bought out in my last article regarding net neutrality.
Many of the ISPs and my fellow libertarians cite the issue that ISPs say it will slow down investment of new technology and into new markets. There is no evidence that net neutrality has actually caused this, but we do know it has stopped ISPs’ attempts at throttling various things, which I will detail later on. In fact, the ISPs themselves have stated it hasn’t hurt network investment at all., saying that:
“AT&T’s capital spending declined by $1.4 billion from 2014 to 2015. But the company’s spending grew by about $1.5 billion from 2015 to 2016. Overall capital expenditures for the twelve companies rose from $62.4 billion in 2014 to $70.2 billion in 2016…”
Many ISPs mentioned the Title II order in their annual reports as having a potential impact on capital spending. But they also mentioned a plethora of other factors: weather, financial conditions such as interest rates, mergers and acquisitions and the need to modernize aging equipment. Perhaps most telling, no ISP said in a securities filing this year that the 2015 FCC order had caused them to spend less on infrastructure. Several ISPs said that “may” or “might” happen. None said it actually did. Several ISPs said, in fact, that the FCC order could cause them to increase capital spending, while warning that it could also increase their costs, limit profits, drive the choice of the products they offer, or affect operations in other ways.
Top ISP executives have also made conflicting statements about the impact of the net neutrality order. Several times, they have said the FCC order will hurt capital spending, as AT&T CEO Randall Stephenson did in 2014, saying the company would forgo deployment of fiber optic cable in 100 cities because of the regulatory uncertainty around net neutrality. Other times, they have said it doesn’t much matter.
“This does not influence the way we invest. We’re going to continue to invest in our networks and our platforms, both in Wireless and Wireline [fiber optic services] where we need to,’ Verizon’s chief financial officer, Francis Shammo, said in 2014. ‘I mean if you think about it … we were born out of a highly regulated company, so we know how this operates.’” – mlex Market Insight article (referenced above).
The reality is that Comcast, AT&T, Verizon, and the National Cable & Telecommunications Association have spent $572+ million dollars since 2008 to influence the FCC and stop any and all attempts at net neutrality, or about $100 for every comment on net neutrality on the official FCC site for commenting on the matter with ludicrous statements from the FCC, such as that merely one ISP counts as “competition” in an area. In fact, small ISPs dispute the FCC’s claim that net neutrality hurts their business, as stated by Dane Jasper, CEO of Sonic, in an exchange with Fast Company:
“No, this doesn’t align with our experience. We haven’t experienced any material cost related to compliance with the Open Internet Order.”
Sonic has about 100,000 customers and is expanding in cities like San Francisco, challenging big ISPs for market share. So it’s not surprising that the ISP isn’t chummy with the likes of AT&T, Comcast, or Verizon on political issues. Sonic is also touting net neutrality as a differentiator and has aligned itself with activists who support regulation.
Jasper claims that growing customer appetite for video, not regulations, is what’s hurting some ISPs—especially the wireless ISPs that operate in rural areas where it isn’t economical to string cable or fiber. They don’t want to invest in upgrades, he claims.
“I personally know a number of WISPs that use equipment… to throttle Netflix. They say without doing this, they’d have to upgrade sectors and backhaul radios, as well as upstream connections,” says Jasper. “I say it’s disingenuous at best to sell consumers ’15Mbps,’ but then to de-prioritize and throttle some types of traffic because the uplink is full. That’s a fundamental neutrality violation, and I believe it is the reason for the large number of WISPs who have supported Pai’s efforts to overturn consumer protections.”
One argument I and others have heard regarding the repeal of net neutrality is that it is returning to the “status quo,” which Ernesto Falcon, a legislative counselor to the Electronic Frontier Foundation, has best summed up in his tweets that can be found here, which shows there is no status quo in this issue.
Assertions that the FCC is “returning to the status quo” drive me nuts. It is wrong as a legal matter. Here is a real short and hopefully digestible summary of the legal status of ISPs (I have had to write this many times because many anti-NN people are intentionally wrong).
At the birth of the commercial Internet, everyone was a Title II common carrier. Every ISP was a Title II carrier and Congress did not feel the need to upset that in 1996. Your dial up ISP and your DSL broadband service were Title II. Then, in 2002, the FCC makes a call as to what to call those crazy cable modems that come from your cable television provider. They decide they are “information services” or Title I carriers subject to “ancillary jurisdiction” regulation. This launches the Supreme Court case, Brand X litigation, which ends in 2005. DSL is still a Title II service up until this point, and broadband from telephone was still a common carrier service. One of the most noteworthy dissents in the telecom space is Justice Scalia’s dissent here. He says ISPs are common carriers and the FCC is really contorting the law to say they are Title I carriers. After Brand X, the FCC then moves forward and classifies DSL as an “information service.”
Most noteworthy as to what people thought:
“As the FCC classifies services as Title I information services, not subject to Title II regulation, it is also assigning, piece by piece, under “ancillary” jurisdiction, regulatory burdens to Title I information services.”
This is why FCC Chairman, Kevin Martin, believed he had the power to go after Comcast when Bit Torrent happened. However, Comcast defeated the FCC in court and struck a blow at its “ancillary jurisdiction” theory in 2010.
At the end of 2010, AT&T and NCTA were successful in convincing President Obama’s FCC Chairman, Julius Genachowski, that “ancillary jurisdiction” still has a lot of regulatory life and to stick with the authority in the 2010 “net neutrality” rules. AT&T gladly endorsed the 2010 rules, since they basically helped write them.
Verizon then sues the FCC to put the nail in the coffin in “ancillary jurisdiction” regulatory power under Title I (since it is still argued that it exists), which Verizon wins in 2014. It is at this point, one year before the Title II Network Neutrality Order, that any pretense or assertion that the FCC has authority over ISPs under Title I of the Communications Act is laughable. The most they can do is require transparency per the courts’ rulings. And that is what makes this draft order the FCC is circulating a significant departure. Republican and Democratic FCC’s have tried to protect net neutrality until today. This is not returning to the status quo, it is uncharted territory. Because, now it is undisputed that Title I authority of the FCC is basically zero authority. It took until 2014 to reach that conclusion. There is no 20-year status quo, since it was an active debate and constantly litigated.
Some people, like Ajit Pai, say that net neutrality is a problem looking for a solution. But they neglect to mention that data throttling and blocking traffic was a very big reality within the past decade. For example, AT&T banned Facetime on it’s cellular networks, Verizon banned Google Wallet on its network, and Comcast performed packet forgery to throttle and block Bittorrent traffic for users such as Linux distribution downloads. Not to mention game downloads like the popular way Blizzard software distributes games, or how Netflix was basically blackmailed into paying Comcast and throttled to back in 2014. My stance is simple, and one of the reasons why I stick to my ISP Wide Open West. When I pay for my 300Mbps connection, I am to get 300Mbps, regardless of what kind of traffic I am performing. Whether it be pulling Linux distributions to download, apt-get update, bittorrent downloading Overwatch or LibreOffice. Net neutrality is something that is standard throughout Europe and South Korea where there is tons of competition, and data caps are not something many have heard of in my travels. They are something rather unique to America in terms of internet providers to businesses and residences.
So, what is the current solution? Competition, of course, whilst keeping net neutrality in place. If we have more grassroots groups confronting their local governments as I do myself, we can kill the monopolies and duopolies which keep any competition from shaking up their control and market shares. Because Google is a multibillion dollar entity and they have the resources to do it, but smaller ISPs don’t, and rely upon people like you and I to get the job done. When I had moved from my old house, I found out the ISP I loved couldn’t serve my area, and I went to Columbus and Whitehall forums in person to address this major issue and made enough noise with a group of people that Wide Open West, along with others, were able to serve the area. Now, as of this writing, my city is an extreme rarity and has four ISP choices at a time when you are lucky to even have two choices in many parts of America. So, stand up for net neutrality, and remember to focus on local politics just as much as federal, because I am betting it is the local ones that are impacting you far more than a federal issue.