Network Neutrality

Recently, Verizon was caught and subsequently admitted to throttling all video traffic on its network. July 25, the company is finally addressing the potential network neutrality issue. Verizon said that its actions represented “reasonable network management,” which is an exception carved out under the 2015 net neutrality rules. "Video optimization is a non-discriminatory network management practice designed to ensure a high quality customer experience for all customers accessing the shared resources of our wireless network,” a spokesperson said.

It’s pretty expected that Verizon would argue this. It said last week that its video throttling was a matter of “network testing” that would be “completed shortly,” and speeds since appear to have returned to normal. The trouble is, the order is a little vague on what constitutes “reasonable network management,” since the commission assumed it might take many different forms. But it has a handful of guidelines of what might and might not violate the exception. One important limitation: the practice must be “primarily motivated by a technical network management justification rather than other business justifications.”

The House Commerce Committee’s Communications and Technology Subcommittee held a hearing on July 25, 2017. Lawmakers came to talk Federal Communications Commission oversight; they came to talk FCC oversight; but as with most telecommunications policy discussions these days, network neutrality grabbed the headlines.

Full Committee Chairman Greg Walden (R-OR) announced that he will hold a hearing on September 7 entitled “Ground Rules for the Internet Ecosystem.” He sent invitations to CEOs of leading tech companies -- including Facebook, Alphabet, Amazon, and Netflix -- and broadband providers -- including Comcast, Verizon, AT&T, and Charter Communications -- requesting they testify.

“A strong consensus is forming across party lines and across industries that it’s time for Congress to call a halt on the back-and-forth and set clear net neutrality ground rules for the internet,” said Chairman Walden. “In some form or another, we have been working for at least 20 years on the intertwined goals of incentivizing the huge investments needed to connect Americans, while keeping the internet open and protecting consumer privacy. With almost everyone in agreement about fundamental principles to prevent anti-competitive behavior such as throttling and blocking, I think we are closer than ever to achieving a lasting resolution. The time has come to get everyone to the table and get this figured out.”

In a letter requesting their appearance, Chairman Walden said the open internet rules put in place during the Obama administration — which subject broadband providers to utility-like regulation — “disrupted the longstanding regulatory balance that for years allowed the internet to grow and thrive.” He added, “With your help, I know we can craft a fair, predictable and sustainable solution that not only benefits edge providers and internet service providers, but also the billions of consumers worldwide that deserve a free and open internet.”

Chairman Walden is joined by his counterpart in the Senate, Commerce Committee Chairman John Thune, in a desire to adopt legislation that will end the net neutrality debate.

But these lawmakers so far have offered few specifics, and for the moment, they don’t have much Democratic support. Many in that party have rallied to save the FCC’s existing rules, preferring the Obama administration’s approach. Sen Cory Booker (D-NJ), for example, fears that any attempt to tackle net neutrality with Republicans in charge of the White House and Congress will result in rules that are too weak — and give broadband internet access service providers too much power to tamper with internet traffic.

In her opening remarks at the hearing, Subcommittee Chairman Marsha Blackburn (R-TN) bristled at the suggestion that Republicans are opposed to network neutrality. "Let me be clear. Republicans have always supported a free and open internet." We are trying to "restore the culture of humility lacking under the regulatory cloud left” by former-FCC Chairman Tom Wheeler. She said it was time to move past partisan rhetoric and pass legislation clarifying net neutrality oversight. Subcommittee Vice Chairman Rep. Leonard Lance (R-NJ) agreed and said there was common ground on the need for net neutrality and added that a light-touch approach has strong support.

Subcommittee Ranking Member Mike Doyle (D-PA) pointed to the over 12 million net neutrality comments in the FCC's public file as evidence that there was nothing wrong with the FCC's current net neutrality rules. He said the rules are working and to roll them back would hurt small business and "regular people." Rep Anna Eshoo (D-CA) agreed and said the FCC is barreling down the road toward eliminating critical protections and making it clear that start-ups and small business input is not as valued as special interests. “If the FCC moves ahead with its net neutrality plan the consequences will be severe,” said Rep. Frank Pallone (D-NJ), the ranking member of the full House Commerce Committee. “Their plan will have a chilling influence on our democracy, cut away at our connections with each other, and limit economic opportunities for the future.”

Morning Consult reports that the key takeaway from the hearing is that Democratic and Republican members of Congress both support net neutrality — they just have different definitions for the term.

Chairman Walden asked all the FCC commissioners if they support net neutrality. Chairman Pai said he favors “a free and open internet.” But Rep. Anna Eshoo (D-CA) took issue, telling him that his chairmanship “rests on the altar of dismantling net neutrality as we know it.”

“With all due respect to you, I don’t think it’s a credible statement to say that you support it,” she added.

FCC Commissioner Mignon Clyburn said that maintaining classification of broadband services under Title II of the Communications Act will ensure competition and drive greater service availability. “Taking away Title II for broadband undercuts our ability to ensure universal service for broadband by taking away our clearest source of authority to make sure all Americans are connected,” Commissioner Clyburn said. “Undoing our classification of broadband as a Title II service also harms the FCC’s ability to enable competition. There is specific authority in sections 224 and 253 of the Communications Act that allows the FCC to enable competitive access to monopoly infrastructure, and to remove other barriers to competition. Without Title II, it will be far more difficult for the Commission to enact policies to enable competition.” Commissioner Clyburn also pointed to how Title II helps to ensure privacy.

“We adopted rules of the road for broadband privacy last October and they were stripped away earlier this year with the passage of the Congressional Review Act (CRA) resolution of disapproval which means today, there are no comprehensive rules on the books protecting broadband consumer privacy for Americans,” Commissioner Clyburn said.

But FCC Commissioner Michael O'Rielly said “the term net neutrality means so many different things these days than it once did.”

GOP lawmakers presented themselves as advocates of the concept of net neutrality, while simultaneously targeting the 2015 Open Internet Order which reclassified broadband Internet access service as a Title II service. Chairman Blackburn, for example was drawing a distinction between supporting a rollback of the net neutrality protections and the idea that such a move would limit internet access for users, saying that “Republicans have always supported a free and open internet.” Republicans say net neutrality limits investment and growth of internet service providers, while advocates say a rollback of the Obama-era regulation would allow ISPs to throttle, block or slow connectivity. Their argument echoed one that has been used by ISPs like Comcast and Verizon.

“Everybody says they’re for an open internet,” said Rep. Peter Welch (D-VT). “The question I have is: Why change the existing regime where everyone agrees that there is an open internet?”

Past network neutrality, the hearing considered a discussion draft reflecting, among other things, the Commerce Committee’s ongoing efforts to improve the FCC’s process and transparency. Here’s some quick notes:

1. Chairman Pallone questioned Chairman Pai about decisions that have favored Sinclair Broadcast Group. He asked if the Trump Administration has tried to influence these actions. Chairman Pai answered that the White House has not contacted him about the proposed merger of Sinclair and Tribune or the FCC's decision to restore the UHF discount, which helped pave the way for that deal.
2. Commissioner Clyburn criticized FCC Chairman Ajit’s Pai decision to allow Sinclair to purchase of Bonten's seven stations. She told the subcommittee that she was kept in the dark about the bureau-level decision, which, she suggested, was hardly in keeping with Chairman Pai's promise for more transparency.
3. Chairman Pai warned the subcommittee that unless Congress authorizes more money, broadcasters will have to pay some portion of their post-incentive auction repack expenses. FCC Commissioner Michael O’Rielly testified that it may be a little early to declare the $1.75 billion post-auction repack fund insufficient.
4. Chairman Pai said that if the facts warrant and the law allows it, the FCC will be aggressive about freeing up TV band white spaces for rural broadband.

The groups behind the July 12 internet Day of Action have launched "Team Internet," the next phase of their protest against the proposed reversal of the Federal Communications Commission's common carrier (Title II) classification of internet access. Taking a page from the "distributed organization" model of Bernie Sanders' presidential campaign, the groups say that next phase will include speaking out at meetings and town halls and pressing local officeholders. The Day of Action was targeted to Washington—both the FCC and Congress—and that remains the focus, but through coordinated self-organizing that enlists "neighbors, colleagues, family and friends," to expand their protest footprint.Coordinating Team Internet is the pro-Title II team of Demand Progress, Fight for the Future and Free Press Action Fund. They are looking to tap into what they say was the nearly half a million participants in the Day of Action.

In a recent paper published by the Internet Association, a trade group representing Internet edge companies, Dr. Christopher Hooton commented on my earlier work on the investment effects of the Federal Communications Commission’s Open Internet regulations. In addition, Dr. Hooton presents his own empirical study of investment effects, concluding that his analysis indicates “no (negative) impact from either the 2010 or 2015 [Net Neutrality] actions.”

Dr. Hooton’s conclusions differ materially from my research, which finds large negative impacts on telecommunications infrastructure investment following the FCC’s regulatory actions in 2010 and 2015. As for Dr. Hooton’s criticism of my work, I demonstrate why they are invalid. Moreover, I will consider Dr. Hooton’s own empirical contribution on the investment effects of Net Neutrality regulation. While Dr. Hooton’s analysis is fatally flawed (as he admits), his work is important in a few respects.

Verizon acknowledged using a new video optimization system but said it is part of a temporary test and that it did not affect the actual quality of video. The video optimization appears to apply both to unlimited and limited mobile plans. But some YouTube users are reporting degraded video, saying that using a VPN service can bypass the Verizon throttling. The Federal Communications Commission generally allows mobile carriers to limit video quality as long as the limitations are imposed equally across different video services despite network neutrality rules that outlaw throttling. The net neutrality rules have exceptions for network management. "We've been doing network testing over the past few days to optimize the performance of video applications on our network," said a Verizon spokesperson. "The testing should be completed shortly. The customer video experience was not affected."

With net neutrality fresh on the minds of many in the United States, it seems that the data speeds at which Verizon Wireless customers can stream Netflix videos have quietly been capped in some instances. Until one or both companies provide clarification, it’s a bit early to point the finger at Verizon. Verizon rivals AT&T and T-Mobile include some level of video “optimization” (better described as throttling) as part of their base unlimited data plans. Sprint does not, and Verizon has never given any indication that it would put a limit on video streaming speeds for unlimited customers.

The Supreme Court has agreed to give Internet service providers more time to decide whether to appeal a DC Court's ruling upholding the Federal Communications Commission's Title II Open Internet order. The court granted a petition by USTelecom and others to extend the deadline for appeal (filing a writ of certiorari) from July 30 to Sept. 28.

ISPs pointed out that the new FCC might have mooted that appeal by September—if it has voted on a proposal from FCC Chairman Ajit Pai to reverse the Title II classification and review the rules. Seeking the extension in addition to USTelecom were NCTA–The Internet & Television Association, CTIA–The Wireless Association, the American Cable Association, AT&T, CenturyLink, Alamo Broadband, TechFreedom and various individuals including VoIP pioneer Daniel Berninger. The FCC has sought comment on the proposal by the Republican FCC majority under chairman Ajit Pai to reclassify internet access—wired and wireless, fixed and mobile, customer facing and interconnections—as an information service not subject to Title II and to review whether rules against blocking, throttling and paid prioritization are necessary.

Big technology companies and their longtime allies on the grassroots left are at odds over how to deal with network neutrality — and the fight is getting nasty.

The companies, especially large ones, while supportive of the net neutrality rules, have been far more open to a legislative compromise to finally end the net neutrality bickering. Many activists, though, are taking a harder line against any movement from the current regulations. That tension has been simmering for months and is boiling over at a crucial point in the lobbying battle. "The public interest community is more skeptical that you can preserve all the protections you want if you move away from the old legal framework," said Gene Kimmelman, who leads Public Knowledge, which doesn't oppose all legislation but doesn't like past proposals. "And then tech companies are probably looking for some version of net neutrality that preserves that principal regardless of whether it's called Title II or something else."

Federal Trade Commission member Terrell McSweeny has doubts that the agency's consumer protection authority is sufficient to discipline the actions of broadband internet access service (BIAS) providers if Title II is rolled back and the FTC regains BIAS oversight.

In comments to the Federal Communications Commission, she said reversing Title II would harm consumers, and that the push to have the FTC regulate both edge providers (as it does now) and ISPs (as it once did) "mistakenly establishes a false equivalence between the static [and largely noncompetitive, she argues] broadband service provider marketplace on the one hand and the dynamic competition offered on the 'edge.' "The FTC is a highly expert consumer protection and competition enforcement agency, but there are limits to the effectiveness of our tools in policing nondiscrimination on networks and protecting competition in markets that are already highly concentrated," Commissioner McSweeny added. She also said antitrust laws may not cover the public-interest issues associated with consumers' ability to access content or express themselves online.

The US government has received more than 9 million public comments on rolling back network neutrality regulations, a record response to this hot-button issue that both sides argue plays an essential role in who gets Internet access. The first public comment period ended July 17, and now a one-month rebuttal period is underway. Already, about another million additional comments have been submitted. Those totals were boosted by July 12's online 'Day of Action' conducted by tech companies and liberal privacy rights organizations that support the net neutrality regulations, as well as opposing comments from those in favor of overturning the rules.