The D.C. Circuit’s Net Neutrality Decision Is Bad For Consumers

by Andrew D. Selbst, guest blogger

Yesterday, the D.C. Circuit decided Verizon v. FCC, overturning part of the Federal Communications Commission’s Open Internet Order, and holding that the FCC lacked the authority under its current regulatory scheme to require broadband providers to comply with net neutrality. This decision, while entirely predictable, and probably legally correct, is terrible for consumers, and could have been avoided.

 The decision takes a deep dive into the history of the FCC’s regulation, but the important result is this: In 2002, the FCC classified cable broadband as an “information service” rather than a “telecommunications service.” In 2005, after the Supreme Court upheld this classification as a rational interpretation of the statute, the FCC classified the rest of broadband similarly. Under the Telecommunications Act of 1996, different regulatory schemes apply to the two classifications. Information services, such as blogs, news, entertainment, or cloud storage cannot be subject to so-called “common carrier” regulations. Telecommunications services, like telephone lines, are. Net neutrality is a common carrier regulation. Thus, the court decided, because broadband ISPs are classified as “information services,” the FCC cannot impose net neutrality on them.


 Common carrier regulations are a century-old concept that has been applied to telecom services from its early days. The concept originates from travel: If you are a bus operator, you must allow anyone with a ticket to board and ride. Applied to telephones, common carrier obligations are the reason that your phone company cannot first listen to your conversations, and then when you discuss switching carriers or call a competitor to sign up, kill your connection or make it so full of static that you cannot hear. If the idea of a telephone company doing that seem preposterous, it is only because common carrier obligations on telephones are so ingrained into our expectations. In terms of the internet, net neutrality simply requires that the ISPs treat each bit of data identically, and send it where it needs to go at the same rate of speed, regardless of its source (subject to legitimate network management concerns). Net neutrality merely regulates the “paved road,” and not the “cars,” in the old metaphor of the “information superhighway.” We would not expect the operators of the road to choose speeds that a car can travel, depending on where it comes from or who is in it.

 Without net neutrality rules there is nothing stopping ISPs from simply blocking websites and media they don’t like because the websites and media compete with their offerings or haven’t specifically paid them off. This is not just a scary hypothetical. AT&T recently released a plan called “Sponsored Data” that works as follows: AT&T has already set an artificial data cap on its consumers (itself a policy design solely to extract the most profit out of them). Now, AT&T will allow a provider, like Netflix, pay them for the privilege to reach the user without affecting the user’s cap. Thus, other competing sites become comparatively more expensive since they will run through the user’s data limit. To take another example, Comcast and Time Warner both have online TV services, which allow customers to watch cable programming on their computers or mobile devices. The cable companies’ online TV services don’t count as data under their artificial caps either, so that the home-grown online TV service is preferable to Netflix, a competitor. Then as cable prices get ever higher, the ISPs can point to all the “free” new online TV services they’re offering as justification for higher prices.

 Worse yet, the internet equivalent to increasing static on the phone line—as opposed to disconnecting the line—is slowing traffic so a page takes forever to load or a piece of media becomes impossible to stream. People would not generally suspect that the ISP is deliberately obstructing traffic from a website. Rather, consumers would generally assume the website is down and move on to the next part of their days, never the wiser. Thus the ISP would face no repercussions. This is all possible without net neutrality.

 Back in 2009, a redditor nicknamed “qwink” created my favorite graphic to describe the worst case scenario without net neutrality:

The ISPs want the Internet to look more like cable, where they can both charge a consumer more for each application and charge the application provider more to reach the consumer on a lower tier of service. And though something this extreme (and transparent) seems unlikely, there is nothing right now stopping the ISPs from doing so if they decided it would be profitable.

             There are a few a silver linings from the decision. First, and most importantly, the court’s holding means that the FCC has the power to fix this without going back to Congress. The decision rests entirely on the FCC’s classification. If the FCC reclassifies broadband providers as telecommunications services, then it will have the power to regulate them because the regulation will no longer directly contradict the statute. Thus making the change comes down to using public pressure to resist the obscene amounts of lobbying money the ISPs throw in the FCC’s direction every year.

 Second, the court found that the FCC had broad authority under another section of the Act to regulate broadband generally, but just not in ways that contradict the statute – so basically anything but common carriage. Subjecting information services to common carrier regulations directly contradicted the statute, so it was unacceptable. For example, the court upheld the transparency requirements of the Open Internet Order, requiring ISPs to disclose their network management practices (so that consumers can argue against the necessity of things like data caps).

 Third, the court declined to reach the awful First Amendment argument that Verizon put forward, that net neutrality interferes with their editorial prerogatives as an information provider. Verizon’s argument makes sense if you think Verizon’s role is to essentially edit the Internet. But it’s not: an ISP just connects consumers to the Internet so that consumers can find what interests them. Allowing Verizon to edit the Internet is the worst case scenario for net neutrality, not the ISP’s First Amendment right. But stay tuned; this argument will surely find its way to a court again soon.

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