It’s All In the Title: Demystifying the Net Neutrality Debate

Much has been written and reported about the looming Net Neutrality Debate, especially in recent months. With the Federal Communications Commission (FCC) set to reach a decision regarding the future of broadband internet regulation later this week, we at CUB are here to help you pull apart the debate, issue by issue, and to offer-up some historical context around which this important national conversation is framed.

What exactly are we talking about? Net neutrality, also known as the “open internet”, is the widely shared belief that internet content providers – such as Google, Netflix, or your run-of-mill household bloggers – should be able to reach consumers without risk or fear of facing discrimination from service providers (e.g. cable companies such as Comcast and CenturyLink or cellular service providers such as Verizon and AT&T). The philosophy holds that consumers of lawful internet content should, in turn, be free to share equal and open access.

The question is: Should companies like Comcast or Verizon be allowed to discriminate between content providers? However, to answer this question, we must first define the internet – because doing so helps us to better understand how it should relate to public policy.

So: Is the internet like cable television? Or is it more like electricity? What about cellular phone or even telegraph service? Let’s explore two examples below:

• Electric utilities don’t govern how consumers use the service they provide. They don’t care to know – or even have the ability to know – for what purpose the electricity they’re delivering is being used. Utilities also don’t offer any incentive, by way of less expensive or more reliable service, for the consumer to use the purchased electricity in a certain way. That is, the utilities themselves don’t manufacture, encourage or enforce a list of “preferred” consumer appliances. Pros: Electricity service is accessible, reliable, and mostly affordable. Service providers are subject to regulation that is (at least in some way) designed to protect consumer interests. Cons: Depending on where consumers live, and unless they can afford what are still costly household upgrades, the service available is the service available, and is subject to ever-fluctuating market forces.
• Cable television and cellular phone services, on the other hand, aren’t subject to the same level of regulatory scrutiny required of electric utilities. Providers offer a confusing arrangement of packages from which the consumer can choose, and the information that’s offered to justify these packages or “bundles” is often difficult for consumers to understand.* Contract or “carriage” disputes between cable providers and television networks are increasingly common, resulting in higher subscription fees for consumers. Pros: Choices, choices, and more choices! Consumers can spend all the live-long day searching for the bundle of services that they believe is just right for them. Cons: Years of industry mergers have consolidated cable television and cellular phone services into only a handful of major providers, making competition among them almost nonexistent. And because of this, consumer education remains low and protections are weak. The cost for reliable cable and cellular phone service remains high because that’s what the market, as it’s constructed, can bear.

How did we get here? In 1887, Congress passed the Interstate Commerce Act in response to longstanding discriminatory railroad industry practices. As the Nation’s first codified legal framework concerning “common carriage” philosophies, the Interstate Commerce Act paved the way for the Communications Act of 1934 and, eventually, the Telecommunications act of 1996 which sought to amend the Communications act. Common carriers – as opposed to “contract carriers” which transport goods or services for specific customers, and can refuse service to anyone else – are intended to benefit the public by providing a regular service without unreasonable discrimination.

Understanding this background is important because up until a landmark decision in 2002 (which is discussed below), under direction of then-Commissioner Michael Powell (who now oversees the chief cable industry lobby), FCC policy had trended toward regulating Internet Service Providers as common carriers of telecommunication services – telecommunication services having long since been described and regulated under Title II of the Communications Act.

The trouble is that in 1996, the FCC began separating “communication services” into two distinct categories: those that are “basic” and those that are “enhanced”. Telephone lines were reclassified as basic telecommunication services and, therefore, regulated under Title II. Broadband, on the other hand, was reclassified as an enhanced information service and subject to much weaker Title I regulation.

So, in 2002, when the FCC chose to designate companies like Verizon, Comcast, AT&T, and others as “Information Service Providers” as opposed to “Telecommunication Carriers”, it stripped itself of any legal footing to impose common carrier rules. Still, in 2005, and again in 2010, the FCC attempted to do just that. And in both instances, the courts responded in more or less the same way:

While we tend to agree that an open and equitable internet is a good thing, the reality with which you, the FCC, must contend is one that is entirely of your own creation. By reclassifying broadband internet as enhanced information, you have long-since stripped yourself of legitimate regulatory authority. Until you reclassify broadband internet access as a telecommunication service, and the providers of this service as telecommunication carriers, any and all attempts at imposing new common carrier rules will be dismissed. [Note: These comments aren’t direct quotes. Rather, they’re this author’s colloquial summary of two court opinions to help readers better understand the outcome of rulings to date.]

This Thursday, after more than a decade of fruitless court proceedings, the FCC will propose new policy guidelines. If they align with Chairman Tom Wheeler’s recent endorsement of new common carrier rules, the major providers are all but certain to object. Only this time, should the FCC come prepared to enforce Title II reclassification, the path forward will be clearer.

In truth, the internet as we know it isn’t quite a utility like electricity or telephone service; nor is it simply pieces of information, or even the infrastructure that carries that information. It’s a democratic platform on which unreasonable discrimination must be condemned and free speech encouraged. To uphold an environment in which content is freely shared and consumers are protected, CUB continues to endorse the strong and answerable regulation of a fair and open internet.

Stay tuned for updates and more commentary from CUB after the FCC vote!

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