Anthony J. Pennings, PhD

WRITINGS ON DIGITAL STRATEGIES, ICT ECONOMICS, AND GLOBAL COMMUNICATIONS

Internet Policy, Part 4: Obama and the Return of Net Neutrality, Temporarily

Posted on | March 26, 2021 | No Comments

The highly competitive Internet services provider (ISP) environment of the 1990s was significantly altered by Federal Communications Commission (FCC) during the Bush Administration. Two Bush appointments to the FCC Chair position guided ISP policies towards a more deregulated environment. The result, however, was a more oligopolistic market structure and less competition in the Internet space. Furthermore, these policies raised concerns that powerful ISPs could influence the flow of data through the Internet and discriminate against competing content providers to the detriment of consumers.

The FCC is an independent commission but can lean in political directions. Under the leadership of Michael Powell (January 22, 2001 – March 17, 2005), Republican from Virginia and son of General Colin Powell, FCC decisions favored cable companies. In the summer of 2005, the FCC now guided by the new FCC Chairman Kevin J. Martin Republican from North Carolina (March 18, 2005 – January 19, 2009) guided decisions that favored telcos. The FCC made cable modem services and broadband services by telecommunications companies Title I unregulated “information services.” This has raised ongoing concerns that powerful ISPs influence the flow and speed of data through the Internet and could discriminate against competing content providers or users to the determent of consumers.[1]

This post examines the Obama administration’s approach to Internet regulation and the issue of net neutrality. This involved reviving “Title II” regulation that works to guarantee the equal treatment of content throughout the Internet. Previously, I examined the legal and regulatory components of common carriage and the emergence of net neutrality as an enabling framework for Internet innovation and growth.

Comedian John Oliver explained net neutrality in his Last Week Tonight Show published on Jun 1, 2014.

The Internet’s political and social impact was becoming more apparent with the social media presidential campaign of Barack Obama in 2008. It was recognized by the Pew Research Center that some 74% of Internet users interacted with election information. Many citizens received news online, communicated with others about elections, and received information from campaigns via email or other online sources.

In 2010, the Obama administration began to write new rules dealing with Internet providers that would require ISPs to treat all traffic equally. In what were called the “Open Internet” rules, FCC Chairman Julius Genachowski, Democratic from Washington, D.C.(June 29, 2009-May 17, 2013) sought to restrict telecom providers from blocking or slowing down specific Internet services. Verizon sued the agency to overturn those rules in a case that was finally decided in early 2014. It determined the FCC didn’t have the power to require ISPs to treat all traffic equally due to their new Title I designations. The judge was sympathetic to the consumer’s plight though, and directed the ISPs to inform subscribers when they slow traffic or block services.

After the appeal by Verizon, the DC circuit court sent the FCC back to the drawing boards. Judge David Tatel said that the FCC did not have the authority under the current regulatory conditions to treat telcos as “common carriers” that must pass data content through their networks without interference or preference. The result of Verizon vs. the FCC was that without a new regulatory classification, the FCC wouldn’t have the authority to actually enforce restricting the big ISPs from banning or blocking legal websites, throttling or degrading traffic on the basis of content, and limiting “paid prioritization” of Internet services. The latter, the so-called “fast lanes” for companies like Google and Netflix were particularly contentious.[2]

So, on November 10, 2014, President Obama went on the offensive and asked the FCC to “implement the strongest possible rules to protect net neutrality” and to stop oligopolistic ISPs from blocking, slowing down, or otherwise discriminating against lawful content. Tom Wheeler, the incoming FCC Chairman, from California (November 4, 2013 – January 20, 2017), sought a new classification from the legacy of the Communications Act of 1934 by invoking Title II “common carrier” distinctions for broadband providers.

To its credit, the FCC had been extremely helpful in creating data communications networks in the past. The FCC’s classification of data services in Computer I as being “online” and not “communications” provided timely benefits. For example, it allowed early PCs with modems to connect to ISPs over telephone lines for hours without paying toll charges to the providers of local telephone service. But with a competitive Internet, opening up the deregulated broadband capabilities to telcos seemed excessive.

“Information services” under Title I is a more deregulatory stance that allows the telcos to impose more control over the Internet. “Information services” under Title I refers to “the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications.” As mentioned previously, under the George W. Bush’s FCC, cable companies in 2002 and then telcos in 2005 were classified as Title I information services. This led to a major consolidation of US broadband service that started to be dominated by large integrated service providers such as AT&T, Comcast, Sprint, and Verizon. These companies began trying to merge with content providers, raising the specter of monolithic companies controlling information and invading privacy.

On February 26, 2015, the FCC’s new “Open Internet” rules went into effect based on Title II of the Communications Act of 1934 and Section 706 of the Telecommunications Act of 1996. The latter gave the FCC authority to regulate broadband networks, including imposing net neutrality rules on Internet service providers. Section 706 directs the FCC and state utility commissions to encourage the deployment of advanced telecommunications capability to all Americans by removing barriers to infrastructure investment and promoting competition in the local telecommunications markets.

But Section 706 authority only kicks in when the FCC finds that “advanced telecommunications capability” is “not being deployed to all Americans in a reasonable and timely fashion.”

In other words, the case needs to made that the US Internet infrastructure is lacking. For example, the FCC established 25 Mbps download/3 Mbps upload as the new standard for “advanced telecommunications capacity” for residential service. This is actually a pretty low benchmark for urban broadband users as only 8% of America’s city dwellers lack access to that level of service. But that still left some 55 million Americans behind as rural areas were largely underserved, especially in tribal lands.

In early 2015, President Obama went began to point attention towards broadband access. Consequently Chairman Wheeler announced that the FCC’s Connect America Fund will disburse $11 billion to support modernizing Internet infrastructure in rural areas. It also reformed the E-rate program to support fiber deployment and Wi-Fi service to the nation’s schools and libraries.[3]

Open Internet rules were meant to protect the free flow of content and promote innovation and investment in America’s broadband networks. It was grounded in multiple sources of authority, including Title II of the Communications Act of 1934 and Section 706 of the Telecommunications Act of 1996. In addition to providing consumer protections by restricting the blocking, throttling, and paid prioritization of Internet services, the FCC strove to promote competition by ensuring that all broadband providers have access to poles and conduits for the physical plant.

They also did not require providers to get the FCC’s permission to offer new rate plans or allow new services. Nor did they require companies to lease access to their networks and monitor interconnection complaints, a key provision that promoted ISP competition. A key dilemma was to promote the ubiquity of the Internet, while exempting broadband customers from universal service fees.

The election of Donald Trump presented new challenges to Net Neutrality and the potential of a new reversal. Tom Wheeler resigned from the FCC, allowing Trump to pick a new Democrat to the FCC and a Republican. The new FCC voted 3-2 to begin eliminating Obama’s net neutrality rules and reclassify home and mobile broadband service providers as Title I information services. A new FCC Chairman, Ajit Pai, argued that the web was too competitive to regulate effectively, and throttling some web applications and services websites might help Internet users. The FCC began seeking comments about eliminating the Title II classification. Replacing the Obama net neutrality rules was put to the vote by the end of the year, and the FCC once again returned to Title I deregulation through a declaratory ruling.

Notes

[1] Ross, B.L. and Shumate, B.A., Rein, W. “Regulating Broadband Under Title II? Not So Fast.” Bloomberg BNA. N.p., 25 June 2014. Web. 18 June 2017.
[2] Finley, Klint. “Internet Providers Insist They Love Net Neutrality. Seriously?” Wired. Conde Nast, 18 May 2017. Web. 18 June 2017.
[3] “What Section 706 Means for Net Neutrality, Municipal Networks, and Universal Broadband.” Benton Foundation, 13 Feb. 2015. Web. 18 June 2017.

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

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    Professor at State University of New York (SUNY) Korea since 2016. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, digital economics, and strategic communications.

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