Research Notes

Many claim that the American telecom regulator FCC killed net neutrality on June 11, 2018. Is it true?

Journalists around the world read stories from the American media on neutrality and internet regulation. Some copy-paste the stories into Google Translate to make an article for their local language publication. Some journalists consider this “reporting” and don’t read the official source documents. As a result, what actually happened in the United States gets lost in translation. Strand Consult has followed this issue closely in the United States for years. What the Federal Communications Commission (FCC) has done is the following:

1. Restored the policy framework that governed the Internet from 1996-2015 in which the Federal Trade Commission takes action against Internet service providers (ISPs) for anticompetitive acts or unfair and deceptive practices. Importantly, the harmful blocking and throttling of internet content is illegal today just as it was in 2015.

2. Increased the transparency requirements of Internet Service Providers such that they must publicly disclose information regarding their network management practices, performance, and commercial terms of service.

3. Created an agreement in which the FCC and FTC work together to coordinate on consumer protection, giving consumers two cops of the beat

4. Returned the Internet to a “Title I” information service classification as directed by Congress in 1996, undoing the 2015 FCC’s controversial and likely illegal designation as a “Title II” telecommunications service. This undoes the arbitrary price controls which favored Silicon Valley over consumers. It also removes telephone regulation on Internet service providers which the FCC demonstrated reduced network investment by 5.6 percent.

Importantly, seven lawsuits against the 2015 FCC imposition of Open Internet Order are pending in the US Supreme Court, with a response from the FCC expected later this year. Lawsuits contend that Congress never gave the FCC the authority to regulate the Internet. Some US states are attempting to make their own internet regulation as a show of symbolic politics during an election year, but the US Constitution and its Communication Act forbids states to make up their own rules to regulate the internet. Only Congress can change this through legislation.

Nevertheless, some believe that removing rules imposed by the 2015 FCC will kill either the Internet, hurt consumers, or put the internet at the mercy of some telco “gatekeeper.” These people forget that the Internet was free and open before the 2015 FCC imposed rules, and it is free and open today. Indeed, all of the major internet companies we know today began before 2015 when the 2015 rules were imposed.

Many of the myths presented in the US media are supported by a number of professional “grassroots” advocates fighting for mega billionaire foundations (Ford and Soros’ Open Society) and big internet companies such as Google, Facebook, Amazon, and Netflix, and their trade associations.  The various policies they advocate under the mantle of “free and open” is all about them getting free use of networks while consumers foot the whole bill, whether they access the content or not.

Strand Consult is a firm which has published much on the topic of internet policy. We have many PhDs on our team, one who earned a PhD at Center for Communication, Media, and Information Technologies at Aalborg University by studying the different regulatory tools used for network neutrality in 53 countries around the world and their impact to innovation ecosystems. Our team members have also trained telecom regulators in these topics and testified about their impacts.

Here are some of the myths perpetuated in the media.

Myth vs. Fact on net neutrality

Myth: There are no rules to protect the internet in the US.

Fact: Harmful blocking and throttling of content is illegal today just as it was in 2015, and ISPs are policed by the FTC, just as they were before. In addition, the FCC’s Restoring Internet Freedom Order increases the transparency requirements on ISPs. Remember that those transparency rules were used to bring a $100 million fine against AT&T Mobility. The suit was first brought by the FTC, and only later copied by the FCC.

Myth: The new FCC rules will make “fast lanes” and “slow lanes” on the Internet.

Fact: Internet speeds have been increasing for everyone and Americans today enjoy more content per capita than any nation on earth. If there was some systematic blocking or throttling as advocates purport, we would see it in the data. The facts point to the opposite: investment and innovation flourish under limited regulation, and consumers get more value all the time. Since 1996, speeds have increased 3000-fold and prices have fallen per unit by more than 90 percent. The fact is that 95% of the Internet traffic today is already delivered on fast-moving freeways called Content Deliver Networks (CDN), which have never been part of network neutrality regulation. With the new rules start-up businesses have more flexibility when they challenge the giants Google, Amazon, Apple, and Netflix. The ability to buy quality of service was made illegal by the FCC. This is precisely what entrants need to challenge established players. Fortunately, the new rules allow this, provided proper disclosure.

In practice, the United States is merely returning the framework which governed the Internet from 1996-2015, during which time the internet was a great success. The Federal Trade Commission, the top for consumer protection is will police the Internet again.  If applied to the EU, it would mean that the authorities at the Director General for Competition would be in charge. If you have any doubts, ask Google and Apple what they think of the EU’s chief of competition Margrethe Vestager.

Myth: ISPs are gatekeepers which can deter a free and open Internet.

Fact: Governments are the greatest threat to a free an open Internet.

It is not telecommunications company that builds and operates networks that are a threat to the Internet. Instead it is governments that want increased power and control for surveillance. Net neutrality is the perfect cover for governments to look like they’re being benevolent while they increase their proximity to users. A review of complaints about blocking and limiting Internet traffic around the world shows that it is governments censoring the internet, not operators. Indeed operators have strong financial incentives to maximize the number of customers and content providers on their networks.  People should be concerned about any government agency claiming they need more power, particularly under the guise of keeping the Internet open and free.

When European Union authorities declare that the EU’s network neutrality rules do not pose a threat to investment and innovation, they are wrong. There is a gap of €150 billion in investment in the EU today, and things have worsened since the imposition of rules in 2015.  The EU can point to no new innovation that has resulted from its rules, as it promised.

Going back to 2009, Denmark, Sweden and Norway had the world’s most successful network neutrality regimes. They were organized under multi-stakeholder models with a voluntary code of conduct. Indeed, Switzerland uses a similar method today.  Indeed, Japan and South Korea also have soft rules. But when it came to making EU-wide rules, the European Parliament and Google-funded lobbyists ignored the track record of success in these countries because they wanted to enshrine rules that would cement the market position of Google and give regulators powers that they did not have before.

If any actor needs transparency, it is the Body of European Regulators for Electronic Communications (BEREC). BEREC epitomizes the lack of transparency in the EU when it comes to net neutrality. Strand Consult has documented how BEREC refuses to disclose its secret proceedings to create an implementation of net neutrality that exceeds the EU law. See Strand Consult’s research notesBEREC’s net neutrality process is a black box. Strand Consult fights for transparency against regulators that like to make net neutrality rules behind closed doors and Documentation: BEREC President Johannes Gungl’s answer to Strand Consult on transparency – 11 simple questions he declines to answer.

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