Network Neutrality

In “,” Bob Crandall conducts a series of event studies to explore how investors view the effects of the rules on the firms most likely to be affected. Crandall tracks daily equity prices to measure how investors believe the net neutrality regulations will affect Internet service providers (ISPs) and new and traditional media companies (edge companies, or ECs). Overall, Crandall’s analysis identified a limited market response to net neutrality, suggesting that investors did not expect net neutrality regulations to effect significant change in the market. In addition, the small changes in EC equities suggest that investors also believed that net neutrality regulations might not be the boon to EC growth and success that net neutrality proponents expect it to be. This result is particularly notable given the fervor that has developed around this issue. Both proponents and opponents of the FCC’s 2015 Open Internet order argue that regulations or lack thereof will have dire consequences. Crandall’s analysis suggests that the reality may be far more modest.

A Republican effort to reauthorize the Federal Communications Commission for the first time in 27 years has network neutrality advocates nervous as they worry that stronger congressional control over the agency would hamper its oversight of internet providers. In proposing a discussion draft at a hearing in July on the reauthorization of the agency, House Communications Subcommittee Chairman Marsha Blackburn (R-TN), said it was necessary “to restore a culture of humility that was lacking” at the commission under its previous leadership. There have been efforts to reauthorize the agency since 1990, including one in 2016, but none have passed. Now, the reauthorization of the FCC is “at the top of the list” after lawmakers return from the August recess, Senate Commerce Committee Chairman John Thune (R-SD) said.

The most recent move to reauthorize the FCC has net neutrality supporters suspicious. Gigi Sohn, who was counselor to then-FCC Chairman Tom Wheeler, said the draft bill appears to be punishing the FCC for implementing the 2015 Open Internet Order.

The current network neutrality fight is really a wide-ranging power struggle between internet service providers and internet activists, between Republicans and Democrats. The battle is only partly about the ends—a free internet—and much more about the means: potential heavy regulation of ISPs as monopolies. Classifying ISPs as “common carriers,” under Title II of the 1934 Communications Act, means they could be regulated like monopolies.

That could go as far as setting rates for broadband, like public utilities commissions do for electricity, according to ISPs and other critics. Tom Wheeler’s FCC promised not to go this far, by forbearing, or refraining, from utilizing most of Title II. ISPs aren’t buying it. “Even if the FCC decides to forbear from regulating [ISPs] from certain or many provisions of Title II in the near term, the fact that at any time it could implement additional rules under Title II jurisdiction creates uncertainty in the industry,” says Comcast. Verizon and Comcast now advocate Section 706 regulations almost identical to what they fought against because they are so spooked by the prospect of Title II monopoly regulation—and perhaps because they know they can beat it in a lawsuit.

In arguing against the FCC’s net neutrality regulations, ISPs, Republicans in Congress, and the FCC chairman are saying that Title II is overkill. The previous FCC majority’s goal was to set some standards for equal access to the internet. Those who oppose the decision say it went overboard by pulling out a big club used to smash 19th- and 20th-century monopolies, not to nurture and fine-tune modern tech providers. But what if those modern tech providers are, in fact, acting like monopolies from 100 years ago?

[Commentary] The internet is fundamental to economic opportunity, social action and innovation in the modern age. It has the power to democratize information, it allows us to communicate instantly and effectively, and in recent years, it has facilitated innovation and been the catalyst for social justice movements. That’s why the National Association for the Advancement of Colored People (NAACP) supports a free and open internet.

You may be wondering why the NAACP is weighing in on net neutrality. Throughout our 108 year history, the NAACP has always opposed discrimination and has fought for justice and equal opportunity for all. We see the fight for net neutrality as an extension of that mission. In fact, during our 108th annual convention in Baltimore, our board of directors and members unanimously passed a resolution firmly stating our position on net neutrality.

With the fate of net neutrality on the line, the NAACP urges Federal Communications Commission Chairman Ajit Pai to respect the congressional intent behind Title II of the Telecommunications Act, to protect the free flow of information and not jeopardize it by removing high-speed broadband from the equalizing framework of Title II. ISPs should not be able to discriminate against any information, or against any groups of people, based on their profit margins or their whims. Information is power and no one should be allowed to strip that power away—and definitely not on our watch.

[Derrick Johnson is interim president and CEO of the NAACP and founder of One Voice Inc.]

[Commentary] Private businesses can and should have the discretion to block web content they find objectionable. That discretion is, however, precisely the opposite position taken by Google and others in the network neutrality debate at the Federal Communications Commission. Under current FCC rules (47 CFR 8.5), “A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not block lawful content...” If they were broadband Internet access service providers, GoDaddy, Google, and Scaleway would be prohibited by current federal law from blocking access to Daily Stormer. But none of these entities meets the FCC’s technical definition of a “broadband Internet access service provider.” Instead each of these entities has the power and the discretion to block Internet content that it dislikes. That discretion, however, is difficult to exercise.

[Harold Furchtgott-Roth is a senior fellow at the Hudson Institute]

[Commentary] Although the Federal Communications Commission said it intends to alter the Open Internet rules, it won’t fill in specifics until probably this fall, after the comments are analyzed. That makes it hard to pin down precise effects on cost, although that hasn’t prevented predictions.

Tim Wu, a Columbia University law professor who came up with the phrase “net neutrality,” said it’s clear the rule changes would bring price hikes in a betrayal of the populist rhetoric that helped decide the election. “Did Trump voters really vote for higher cable bills?’’ he asked in a New York Times opinion piece the week the FCC announced its review. “Cable costs have gone up year after year, by multiples of the cost of living index,’’ said Michael Copps, a former FCC commissioner and now a special adviser to Common Cause. “The more monopoly power you have, the more prices are going to go up.’’ Opponents of net neutrality say the business model wouldn’t change with the new rules, so rates should remain stable. “I don’t think you would see very much difference,’’ said Daniel Lyons, a professor at Boston College specializing in law and telecommunications.

The more likely outcome, though, is that prices will go up for some, and perhaps down for others, while consumers have more options based on how and how much they use the internet. A key part of the likely change will be “paid-prioritization,’’ which means companies could pay for faster and dedicated bandwidth as well as better positioning for their content – the same way a Google ad goes to the top of your search listing. Those costs are almost certainly going to come back to consumers in one way or another.

[Anders Gyllenhaal is senior editor at McClatchy]

The debate surrounding the repeal of network neutrality has touched on everything from free speech to online innovation and consumer rights. But how will it affect consumers' wallets? The short answer: It depends.

Here's what the experts predict.
Your internet bill. If net neutrality is repealed, and Internet service providers take advantage of the relaxed regulations, some experts predict that you'll see changes to how your monthly internet bill looks and what it includes.
Content providers. Without net neutrality rules in place, some experts foresee content providers, such as Netflix, Hulu and other websites, needing to pay more to have their content travel via a "fast lane" in order to prevent slow loading times and other challenges. Those applications and websites may opt to pass those increased costs to customers.
Online research. For those websites and online applications that don't – or can't – pay for access to the "fast lane," it may be harder to access, load and use their sites.

An advocacy group is launching an ad campaign targeting lawmakers who want to roll back the Federal Communications Commission’s network neutrality rules. Fight For The Future, a pro-net neutrality advocacy group, bought billboards in six states to target Sens John Thune (R-SD) and Roger Wicker (R-MS), as well as Speaker Paul Ryan (R-WI), House Majority Leader Kevin McCarthy (R-CA) and Reps Marsha Blackburn (R-TN) and Tom Graves (R-GA). The billboards show the lawmakers’ faces with text criticizing their stance and urging the public to call their offices.

[Commentary] The front-page story in The Wall Street Journal announced, “Walt Disney Co. just became the biggest cord-cutter Hollywood has ever seen.” The iconic company announced it was starting two online streaming services that will bypass its traditional cable television distribution. Thank you, Open Internet Rule!

The sine qua non that made it all possible was the Federal Communications Commission Open Internet Rule that the cable operators cannot deny, degrade or deprioritize Disney access to their broadband service, even when it is competitive to their cable service. This is the very same rule that the Trump FCC, at the request of the lobbyists for the big broadband companies, has announced an intention to eliminate. And the very same rule that Republican legislators are pushing content providers to help them scuttle. The Open Internet Rule – especially the General Conduct Rule portion – is like Disney’s famous character Jiminy Cricket, who acted as Pinocchio’s conscience. As the Jiminy Cricket of the Internet Age, the Open Internet Rule sits on the shoulder of broadband providers to make sure they do the right thing.

[Tom Wheeler is a visiting fellow with the Governance Studies, Center for Technology Innovation, and former Chairman to the FCC.]

Though they received only a two-week extension to a deadline for public comments on proposed changes to network neutrality rules, rather than the eight weeks they had sought, net neutrality proponents say they remain focused on making sure the Federal Communications Commission continues to hear from the public.

On Aug 11, Daniel Kahn, chief of the Competition Policy Division for the FCC’s Wireline Competition Bureau, announced that the Aug. 16 deadline for comments had been extended until Aug. 30. Ed Black, president and CEO of the Computer & Communications Industry Association, said that while a longer extension would have bolstered net neutrality proponents’ arguments, the most important thing was ensuring the FCC actually listened to the public. “Most of us feel that while we’d like more time to make our arguments better, the truth is what’s most important is if the comments would be heard with an open and fair mind and not presumptively judged ahead of time — which seems to be the signals that are coming out of the leadership of the FCC,” Black said.