This Tuesday, A District of Columbia court of appeals ruled against certain key elements of “net neutrality.” The court opinion takes a bit of reading, but can be summed up thusly:
That said, even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates. Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the Commission from nonetheless regulating them as such.
Free speech and net neutrality advocates have criticized the decision as a concession to ISPs, and rightfully so. But Wired’s recent article on the subject by think-tank advocates Berin Szoka and Geoffrey Manne argues the real danger lies not in corporate restriction but a more sinister force yet: the tyrannical authority the decision grants to the FCC to regulate the contents of the Internet.
It shouldn’t be surprising, since both Szoka and Manne are leaders for think-tanks (TechFreedom and the International Center for Law and Economics, respectively) fiercely opposed to “inefficient” government regulation. While anyone who’s kept up with recent news knows concerns over government invasion of privacy and freedom of speech are real and pertinent, Manne and Szoka’s arguments rely on questionable, misleading anti-government fear-mongering and free-market evangelism.
The centerpiece of Manne and Szoka’s arguments is the idea that this ruling has expanded the Federal Communications Commission’s purview into an unrestricted control of all communications devices. They envision the tentacles of government snaking not just into Internet providers’ access to content but the functions of washing machines and the prices of tablets. Granting the FCC unrestrained regulatory rights, they argue, is rife for abuse in precisely the same fashion as the recent NSA monitoring scandals.
There’s some merit in these concerns. Privacy advocates have (as Manne and Szoka mentioned) warned that this ruling may “want to build its net neutrality regulations on a rotten legal foundation”. Judge Silberman’s dissenting opinion argued that Section 706 of the Communications Act (the portion of the relevant law the FCC used as the basis for their net neutrality policies) should not be interpreted as blanket regulatory justification, and argued that the majority’s conclusion gave the FCC “virtually unlimited power to regulate the Internet.”
But Manne and Szoka go one further. They proclaim that the decision is not merely a defeat with a silver lining for net neutrality advocates:
Indeed, the court has very nearly given the FCC — and state utility commissions, to boot — carte blanche to regulate the entire internet. And that’s the real story here.
The only real limit is that the FCC can’t overtly treat internet services like common carriers. But this limit may mean little. Indeed, the court’s ruling even lets regulators assert new powers to regulate internet services well beyond broadband… Still, putting that kind of broad power in the hands of government should trouble anyone worried about the abuses of the NSA or the prospect of the International Telecommunications Union taking over internet governance.
Sounds intimidating, doesn’t it? And certainly there’s some room for concern in the ability to assert new powers – but Manne and Szoka’s arguments show that they assume, by definition, that granting a regulatory body its own discretion is inherently hazardous (underlining mine):
To some extent, the FCC’s newfound sense of restraint is required by the court’s decision, which hinged on a provision of the Communications Act barring the Commission from imposing “common carriage” obligations on Title I “information services” like broadband. Instead, the FCC has to leave room for “individualized negotiation” between ISPs and so-called edge providers (Netflix, Google, etc.). But the FCC can still require that, for example, premium carriage agreements be “commercially reasonable” and non-discriminatory — as it did when requiring wireless carriers to provide data roaming to their competitors’ customers (which the D.C. Circuit recently upheld). This would prevent the clearest potential problems (like, say, degrading Netflix just to favor an ISP’s own video service) while still allowing pro-consumer deals (like guaranteeing quality of service for video providers).
In short, the FCC now has vast discretion, and seems unwilling to give that up.
Instead of issuing new rules, Chairman Wheeler has declared the FCC will use its newfound powers “in a common law fashion” (as in 2008). Such case-by-case, learn-as-you-go enforcement would indeed the allow the FCC to strike a better balance. But without any clear underlying principles to guide the agency, piecemeal regulation could actually more restrict innovative deals. The FCC could exceed the “no common carriage” limit, saying no to one deal after another without a court ever getting to question what amounts to de facto common carriage. And that could be a death by a thousand cuts.
And so the real threat to Manne and Szoka presents itself. “Innovative deals” will be restricted by an FCC with discretionary powers.
Innovative deals like this, maybe?
I can’t think of many “innovative deals” from the consumer’s point of view that wouldn’t be “commercially reasonable” and “non-discriminatory” to them – but I can foresee the sorts of “innovation” that spins new opportunities for monetization out of ordinary interactions being in trouble. You know, the same way that you can’t innovate new ways to make money by charging people for the air they breathe.
And, counterintuitively, there’s every reason to think new entrants — the little guys — would benefit most from non-neutrality: Payola (paying radio stations directly for extra airplay), for example, is frequently derided by those who misunderstand it, but it actually helps new artists break through. Sponsored data and other prioritization arrangements on the internet are just a further extension of this. The FCC’s earlier approach would have foreclosed innovative, upstart edge providers from buying the preferential treatment or “premium carriage” they might need to gain recognition and draw users away from well-established incumbents.
Laissez-faire arguments for liberty ignore the cutthroat nature of modern economics. A non-neutral net would not serve “the little guys” because the people who have the most money to pay for prioritized service aren’t little guys.
Look at the ads on this page. Do they look like they’re coming from small developers and minor concerns?
“ISPs may want to charge for access to their users, but, in the end, just like content providers, they profit most by getting subscribers to use more of their service,” Manne and Szoka claim. But nothing could be further from the truth – using more of their service costs an ISP money. In fact, an ISP would rather you use as little of their bandwidth as possible once you’ve paid for the service, placing less of a strain upon their networks. That’s why they attempted to throttle torrenting and instigated the chain of events leading to Verizon v FCC in the first place.
Regulators aren’t here to make the lives of business concerns easier. They’re here to protect the public’s interests, and unlike corporate concerns, the public actually has a say in how the FCC ultimately operates. After all, even in this decision it was clearly stated that although the Court acknowledged the FCC’s theoretical right to regulate the Internet, the law – you know, that thing that we as citizens elect people to pass, review and alter – prohibited the FCC from doing so in this instance without first changing the laws.
Sounds like the opposite of arbitrary discretionary powers.
Manne and Szoka may fly the outward colors of consumers’ rights and privacy protection, but their concern for “innovative deals” makes it clear: they are the standard-bearers of businesses. We can fight the issue of an overreaching FCC, but we shouldn’t ever forget why we have a Federal Communications Commission to begin with: because of “innovative” ways to make money that all too often end up going against the public interest.
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Thanks to reddit user Quink for their image.