The Fight Over The Open Internet Rules: Empire Strikes Back?

On September 28, 2017, AT&T, the cable industry group NCTA, and CenturyLink filed separate appeals to take the fight over the Obama-era net neutrality rules, the 2015 Open Internet Order, to the United States Supreme Court. Previously, the D.C. Circuit Court of Appeals fully upheld the 2015 Open Internet Order last year. The D.C. Circuit delivered a slam-dunk victory to the Federal Communications Commission (“FCC”) as it rejected the petition filed by telecommunication, cable, and wireless industry associations alongside AT&T, CenturyLink, and several smaller providers. The Court also declined to rehear the case en banc.

In May 2002, a sparkling memo from Tim Wu, “A Proposal for Network Neutrality,” that asked:

“What principle can balance the legitimate interests of broadband carriers in administering their networks with the danger of harm to new application markets? And how can such a principle be translated into both clear legal guidelines and the practice of network design?”

The answer was in the title: a new creation called network neutrality. It is essentially this: The cable and telephone companies that control important parts of the plumbing of the Internet shouldn’t restrict how the rest of us use it.

According to the classic Chinese novel “The Romance of the Three Kingdoms,” “An empire long united must divide; an empire long divided must unite.” But when this process takes place in the modern world with media and telecommunication empires, Mr. Wu says, government regulators must protect the public interest to achieve the net social benefit.

After its first proposal for regulating net neutrality was blocked by the courts, the FCC turned in 2015 to a set of rules, known as Title II, that was originally designed for monopoly telecommunication companies. After a months-long rule-making process, the FCC voted 3-2 along party lines to adopt these rules, which will apply equally to both fixed and mobile broadband providers, prohibit blocking, throttling, and paid prioritization, require enhanced transparency, and govern future conduct by broadband providers. The FCC also reclassified broadband Internet access service as a telecommunication service under Title II of the Communications Act and further declared mobile broadband to be a commercial mobile service. In summary, the FCC has reclassified broadband as a so-called Title II telecommunication service under the 1934 Communications Act. That reclassification places broadband providers under the same strict regulations that govern telephone networks.

Even though most people agree with the basic premise of net neutrality, the FCC’s rules have become a lightning rod for controversy. Critics said these would be too heavy-handed and would potentially give regulators the power to set a pricing regime for companies using the internet or exert censorship over content. Broadband providers, like AT&T and Comcast, say Title II allows the FCC to impose higher rates and will discourage them from building or upgrading their networks.

The FCC has prepared to roll back the controversial rules. Under Chairman Ajit Pai’s leadership, the FCC has proposed returning to the longstanding light-touch regulatory framework for the Internet and restoring the market-based policies necessary to preserve the future of Internet Freedom. Many companies, including content providers like Netflix and Yahoo; social media sites like Facebook, Twitter and Reddit; search engines like Google and Microsoft’s Bing; and e-commerce companies like Amazon, say they worry that the FCC might give “broadband gatekeepers” control. Millions of citizens flooded the FCC with comments in favor of the net neutrality framework.

The Internet has become a basic need, increasingly crucial to the economy, society, and the political system. It also fuels economic growth when new industries have been disrupted, and new business models have emerged. Free markets deal exceptionally well in the process of “creative destruction” championed by economist Joseph Shumpeter as the mode by which society raises its standard of living.

Internet’s openness to all comers needs to be enforced by the FCC, which should invoke its full authority under Title II. If big companies were allowed to buy priority service on the internet, “it will be harder for two guys in a garage with a great idea to innovate and get their ideas out and compete,” cautioned by Andrew McLaughlin, an adviser to President Obama.