Lambert Strether of Corrente
In all likelihood, the FCC will vote in favor of Chair Ajit Pai’s — “My name is Pai. It rhymes with pay” — Restoring Internet Freedom Order (RIFO), abolishing net neutrality, on December 14. The battle will then move to the courts. Today I want to do a round-up on three net neutrality-related topics: Public support for net neutrality, “light touch” regulation, and the court challenges to RIFO that will shortly be launched.
Public Support for Net Neutrality
Net neutrality has (reasonably) strong public support. Impressively, there were over 700 “home-grown” street protests against RIFO and for net neutrality at Verizon stores nationwide on December 7 (handy map) — and at the annual FCC chair’s dinner — but I want to focus on a different topic. In doing the research for this piece, I was struck by the number of staff-written stories and letters to the editor; the newspapers, unusually these days, weren’t just ripping copy from the wire. Here is a sampling, in no particular order. From the Argus Leader (South Dakota):
For Will Howes [(16)], net neutrality is worth standing out in the freezing weather on a busy intersection along 41st Street during rush hour.
“They can throttle your Netflix, they can change your Google results,” Howes said. “The right to access information online is threatened.”
About two dozen people waved signs near the Verizon store at 2000 W. 41st St., whooping as cars honked and revved engines in a show of support.
He considers himself a techie and said he follows tech industry news closely. Howes organized the Sioux Falls protest just a few days after Pai announced the upcoming vote. Hopefully, the national movement will get more people interested in net neutrality and help them understand its importance, Howes said.
“It’s not just going to be the tech nerds at home like me,” Howes said.
Park Rapids Enterprise (Minnesota):
Brandon Medenwald [Will Howes five years from now, eh?] grew annoyed by dismal office “in and out” boards – so annoyed that he decided to build a smartphone application to better track people as they came and went from the workplace.
In collaboration with a couple of friends, he developed an app called Simple In/Out, which they made available free over the internet. Over time, users flocked to the app, and many were willing to pay for a version with more features.
A small company was born, Simply Made Apps, based in downtown Fargo with Medenwald as its co-founder and web developer. Now, six years later, Medenwald worries that the firm might die in the face of regulatory changes he believes could drastically alter the way people experience the internet.
Brandenton-Herald (Florida); a letter to the editor:
We may find that certain carriers will attach themselves to certain apps. You may have to change from Verizon to AT&T if you really want to use Snapchat or get your candy crush fix. Certain sites that employ people and bring enjoyment to people everywhere may become obsolete. Spotify may contract with your carrier so that it doesn’t use data to stream. Bye, bye Pandora. I can’t help but think the larger companies get larger and our local small business will find it even more difficult to reach consumers or advertise.
[Colin] Garfield spent 13 years as a geographic information systems cartographer before turning his focus to activism on behalf of municipal broadband.
Garfield explained that to repeal net neutrality would lend internet providers the ability to block websites of their choosing from the view of browsers, unless the owners of the sites paid fees for their content to be displayed — bad news for small businesses trying to get off the ground.
“This repeal could end up trickling down to the average person by increasing subscription costs, buffer costs, and cause a decrease in overall service from Netflix and other content delivery services,” Garfield said. “If (a site is) loading slowly because (the business) didn’t pay a fee, people are going to, within a few seconds, say, ‘I’m done with this,’ and move on to somebody like Amazon.”
And Engadget, of Michigan:
Frustrated by a lack of attention for heavy metal in Michigan, Jen Lorenski launched MoshPitNation, an online network that connects Michigan metalheads with the music they love. Lorenski also works as a digital marketer and is one of the driving forces behind TaxFormGals, a women-owned small business that, as the name suggests, supplies other small businesses with necessary tax forms, among other services. “The openness of the internet has been crucial for small businesses like mine,” she said. “If the costs of being online become too steep, I could see a point where other small businesses scale back their investment” and cause her to lose money.
I didn’t cherry-pick flyover states; these are the links that came up in search (presumably because big blue cities don’t have to worry so much about connectivity). In other words, not everybody has to move to the big city to make a living or be technical; net neutrality puts Will Howes, Brandon Medenwald, and Colin Garfield on the same plane as everybody else, no matter where they are. And their experience chimes with my own; one of the very few ways to make a living in Maine is to bring in money from out-of-state, which I have done through blogging (and a smidge of software development, until I figured discovered I wasn’t any good at because I hated having clients). But I’m not the only one: I can think of three others in my own social circle, at least, who have done the same thing, through online retail, music, and film, all requiring that “lower tier” Internet that the ISPs serviced by Pai want to block and throttle. (Of course, if the Democrats cared about rural votes and were a truly national party, they’d be all over this, but they don’t, so they aren’t.)
The “Light Touch” Regulation Talking Point
Somehow, Pai and his minions and allies have fastened on “light touch” as an appropriate branding for their approach to Internet regulation. Reuters:
“[PAI:] So when you get past the wild accusations, fear mongering and hysteria, here’s the boring bottom line. The plan to restore internet freedom would return us to the light touch, market-based approach under which the internet thrived.
I can only imagine that “light touch” emerged into the light from some conservative fever swamp without having been tested for its ability to adapt to conditions on land, because the last I heard of “light touch” was in the U.K., and “light touch” was what the regulatory regime that led to the 2008 banking debacle was called (I believe by Tony Blair (of course)). So who on earth signed off on that branding? Anyhow, from the Financial Times:
The City watchdog on Wednesday announced a sweeping overhaul of the UK’s financial regulatory regime, marking a definitive break with its previous “light-touch” approach and attempting to set a new global standard for the post-crisis world.
[Lord Turner] pledged to scrutinise any institution that could threaten the stability of the financial system.
Lord Turner is attempting to re-establish the status the FSA enjoyed before its reputation was tarnished by the banking crisis that triggered the collapse of Northern Rock and the government rescues of HBOS and Royal Bank of Scotland. “This is a very clear bid to say, ‘We have learned our lessons from the past and this is how we plan to tackle the crisis,’ ” said John Tattersall, a partner at PwC.
As for what “light touch” really meant, or was, ideologically, said to be, we can turn to Turner’s report from 2009, “The Turner Review: A regulatory response to the global banking crisis” (PDF). After some throat-clearing to the effect that the touch wasn’t all that light, the two salient bullet points (page 87):
[T]he FSA’s [“light touch”] regulatory and supervisory approach, before the current crisis, was based on a sometimes implicit but at times quite overt philosophy which believed that:
• [(1)] Markets are in general self correcting, with market discipline a more effective tool than regulation or supervisory oversight through which to ensure that firms’ strategies are sound and risks contained….
• [(2)] Customer protection is best ensured not by product regulation or direct intervention in markets, but by ensuring that wholesale markets are as unfettered and transparent as possible, and that the way in which firms conduct business (e.g. the definition and execution of sales processes) is appropriate.
Laying this alongside the text of RIFO (PDF), we find:
[(1)] We believe that applying Title II to Internet traffic exchange arrangements was unnecessary and is likely to inhibit competition and innovation. We find that freeing Internet traffic exchange arrangements from burdensome government regulation, and allowing market forces to discipline this emerging market is the better course (page 26, footnote 167)
[(2)] Next, we require ISPs to be transparent. Disclosure of network management practices, performance, and commercial terms of service is important for Internet freedom because it helps consumers choose what works best for them and enables entrepreneurs and other small businesses to get technical information needed to innovate. Individual consumers, not the government, decide what Internet access service best meets their individualized needs (page 4).
Shorter: Pai’s “light touch” regulation is the same neoliberal “because markets” claptrap that Tony Blair, bless his heart, was peddling before everything went so very pear-shaped.
In any case, the wee problem is that the ISP market is broken, and therefore “transparency” is no remedy. FCC Commissioner Jessica Rosenworcel in Recode:
“Ideally, in a competitive market, you pick up your service and you go elsewhere,” Rosenworcel said. “The great challenge for net neutrality right now is that, according to FCC data, more than half the households in this country don’t have a choice of broadband provider. Transparency only serves you well if your market is fully competitive.”
Prabhudev Konana of the McCombs School of Business at the University of Texas confirms the 50% figure, but data isn’t necessarily current or sufficiently granular (e.g. census tracts vs. households) or current. From Ars Technica in 2016:
FCC reports have found that about three-quarters of the country’s developed census blocks lack any high-speed broadband choice. The household analysis found a slightly better, but still troubling, situation, with nearly half of the 118 million US households lacking any wired Internet choice at the FCC’s broadband standard of 25Mbps. (One caveat: this new analysis examined only download speeds, whereas FCC reports define broadband as services offering both 25Mbps download speeds and at least 3Mbps uploads.)
The FCC provides this chart:
So, handing over half of US households to the tender mercies of an ISP monopoly is transparent, alright, but not, I think, in the way that Pai means. I’m sure the populist farmers and Grangers of Minnesota or South Dakota who had to ship their grain to market over one railroad in the 1880s would find RIFO oddly familiar. “Freedom for whom?” they might ask. Agence France Presse:
“Why would they spend millions of dollars lobbying if they are going to treat everybody equally and not extract monopoly rents?” asked Ed Black, president of the Computer & Communications Industry Association, which represents major tech firms
Why indeed? And “major tech firms” know a thing or two about “extracting monopoly rents” so best listen to them!
Let’s start with the good news: RIFO will be challenged, and won’t go into effect immediately:
In reality, the net neutrality fight is merely migrating to a different theater, namely, the US Courts of Appeals. And excluding the possibility of a Supreme Court challenge, the outcome may very well drag on for another year and a half or more.
And it’s reasonable to expect “or more”:
We run into this kind of story most often with the Environmental Protection Agency. Any new rule the agency puts forth — whether more pro-environment in the case of Democratic administrations, or more pro-industry in the case of Republican ones — faces months or even years of legal challenges from anyone with a stake. And in the case of net neutrality and FCC, everyone who uses the internet, plus giant companies like Amazon and Google that have every reason to stand against Pai’s proposal, would have a stake in keeping net neutrality tied up in the courts for as along as possible.
(Although one wonders if the billions Amazon, Facebook, and Google will collect from tax “reform” might make them more willing to accept the administration’s views on net neutrality; I’m guessing no, because that would imply they thought they were making enough.)
(Tim Wu thinks it will take until 2020.) Details of the legal process aside, there seems to be one major issue where the lawyers are taking sides: By what authority does Pai make RIFO policy change? The liberal view is that change requires “a fact-based docket”:
“In order to change the rules, Pai needs a fact-based docket to show that something has changed from two years ago,” Sen. Richard Blumenthal, D-Conn., told reporters at the time, “and nothing has changed.”
“Court challenges to the FCC’s proposal to undo net neutrality will be powerful and compelling — on both law and facts,” he said in a statement to the Washington Examiner. “The Open Internet Order was based on well-established law and 10 years of evidence strongly supported in a fact-based docket. Chairman Pai is recklessly repealing those rules, without demonstrating a significant and substantial change in factual circumstances as the statute requires.”
A second view is that all change requires is a new administration. One conservative view from the American Enterprise Institute:
The reality is that this is how administrative law — the area of law that governs how federal agencies do their jobs — works. It is, under prevailing understanding, exceptionally deferential to agencies on questions of both fact and law. As the DC Circuit reminded us in its opinion affirming the 2015 OIO, courts do not “inquire as to whether the agency’s decision is wise as a policy matter.” The courts expressly accept that agencies will change their policies and interpretations of the law and even that an agency’s “conscious change of course adequately indicates” that a changed policy is better than the previous one. Indeed, an agency “must consider varying interpretations and the wisdom of its policy on a continuing basis, for example, in response to changed factual circumstances, or a change in administrations.”
That last part is important to highlight: The Supreme Court has consistently said for more than 30 years that a change of administration is sufficient reason for an agency to change between otherwise permissible policy interpretations. The courts, having previously blessed the basic legal and policy structure of the RIFO, are exceptionally likely to find that the recent change in administration alone would be sufficient basis to adopt the RIFO.
“A mere change in F.C.C. ideology isn’t enough,” writes Tim Wu, the man who came up with the term “Network Neutrality.”
I’m not a lawyer, so I’ll leave it at that, except to say that it’s hard to imagine that business, especially big business, would welcome election cycle-driven regulatory regimes. Although I suppose they could always purchase stability, or try to.
Shortly after December 14, we’ll see the court challenges, and what the various theories of the case are. And hopefully the challenges will take a nice, long time. Like several election cycles. Oh, and be sure to write letters to the editor and to your Congress Critters! And plant stories in your local paper if you can.
 However, a late November poll from Morning Consult/Politico “indicate[s] an 8-point decline in support for the rules since the pollsters’ survey in June, when 60 percent approved net neutrality. That survey found that 17 percent opposed the regulations.” And: “[O]nly 46 percent of Americans ‘say they have heard a lot or some about net neutrality recently,’ compared with 67 percent for tax reform. Seven in 10 said they have heard about sexual misconduct allegations against Alabama GOP Senate candidate Roy Moore or Minnesota Sen. Al Franken.” Interestingly, “among registered voters, 55 percent of Democrats and 53 percent of Republicans said in the latest survey that they support net neutrality,” so thanks to both parties for screwing up a genuinely bipartisan issue.
 Or, as Jerry Ellig, chief economist of the FCC, writes: “In contrast, Pai’s draft order returning to a light-touch framework (or Title I, as we say) is well-grounded in economic research on public utility and network economics. By my count, the draft order cites 35 peer-reviewed economics journal articles, versus just six in the 2015 order.” Like I said. And I’m certain that Tony Blair would have been able to site just as many peer-reviewed articles for his “light touch” approach. I mean, that’s what neoliberal economics departments are for.
 A second potential wee problem is that Pai may also be gutting reporting requirements: “We asked Pai’s office whether he thinks consumers are also confused by the soon-to-be-eliminated disclosures about hidden fees and the consequences of going over data caps. We haven’t received an answer.”
 Gizmodo has an excellent summary. It seems it’s going to take a clever lawyer to go shopping for the right judge. And Boing Boing has some reassuring words on judges, even conservative ones: “serving judges, because working your way up through the federal courts requires a showing of adherence to the Constitution, which, overall, favors policies at odds with the right-wing agenda. This means that when Pai’s plan gets to the courts, it stands a good chance of being struck down.”
 Oddly, the first time net neutrality was fought out — I remember Glenn Greenwald’s strange bedfellows coalition — the right was all for net neutrality, even or perhaps especially the Christian right. I’m not sure what’s changed.
 It may be that the FCC’s refusal to look at the (hacked) comments will loom large; we just don’t know.