Keeping Neutrality Through Needed ISP Reform

Over the past several weeks, the discussion around net neutrality and the FCC’s recent plans to “restore internet freedom” have reached a critical mass. Protesters are even taking to the streets in an effort to protect the guiding principle that the internet is based on.

Serving as a baseline ethos for the internet at large, net neutrality dictates that ISPs treat all data delivered to customers equally. This means they can’t block, throttle, or speed up content for companies that pay a premium for faster delivery to end users. At its core, net neutrality puts all content delivered on the internet on a level playing field.

A prime example of the safeguarding effect of net neutrality would be that Netflix can’t get an advantage over Amazon’s Prime Video by paying ISPs to stream their videos at a faster rate, keeping the scales for streaming video services even.

Central to the current debate, however, is not a bill against net neutrality, but the Title II of the Communications Act of 1934. Title II is the legal foundation on which the FCC enacted the Open Internet Order of 2015, which established rules for ISPs regarding the concept of net neutrality.

Title II of the Communications Act revolves around the idea of common carriers, similar to utilities like phone landlines and electricity. 2015’s Open Internet Order reclassified broadband internet service under a Title II classification (it was previously classified under Title I as an “information service), which provides a legal baseline in which the FCC to enforce net neutrality rules.
Title II doesn’t just include regulations regarding ISPs, but under a process known as forbearance, the government can selectively choose not to enforce sections of Title II that don’t apply to broadband. These light-touch regulations on ISPs excluded around 700 regulations under Title II,  including things like the inability to unbundle last-mile facilities, tariffing, rate regulation, and cost accounting rules. Essentially this is the version of Title II that has been tailored for the 21st century.

Through the regulations of the FCC’s net neutrality and its the authority under Title II, ISPs are forbidden from blocking or throttling data, and from allowing paid prioritization offerings. Paid prioritization flips net neutrality by allowing ISPs to discriminate between websites’ data. If allowed, ISPs could charge content providers to deliver data to customers through an internet fast lane – think back to the Netflix example from earlier.

Blocking, throttling, and paid prioritization would not have legal precedence to be enforced given provider’s classification of common carriers under Title II.

One of the most popularly cited cases of this misrepresentation of Title II compliance was Comcast’s attempts to throttle BitTorrent in 2007.

Despite the software having legitimate uses, the most popular application was piracy. These pirate networks generally required users to upload as much content as they downloaded, resulting in significant burdens on Comcast’s network. The FCC ordered Comcast to stop in 2008, but a federal court ruled that the FCC lacked the statutory authority given that ISPs were Title I providers (not Title II).

What’s important to note is that even before the Court ruled, Comcast had already removed its restrictions by making technical changes to its network to better handle BitTorrent traffic. This lends credence to Comcast’s arguments that the initial restrictions were about overall network management, not necessarily content discrimination.

In this case, BitTorrent users were essentially free-loaders, using massively more bandwidth than the majority of other customers. It’s cases like this in which what is best for end users isn’t as cut and dry as net neutrality advocates are preaching.

The question then becomes “What will happen if the FCC overturns Title II reclassification?”

The simplest answer is that no one knows. It’s the possibilities that people are most concerned with.

The most drastic consequence is that ISPs begin offering tiered internet service that limits customers’ access to content, not just to faster service. In other words, your ISP charges you extra to access additional websites and services. This graphic, showing a Portuguese internet content plan, gives some context to what that might look like.

Over the last 30 years, the Internet has been the single most important driver of both economic growth and consumer welfare. Given that all that dynamism has been achieved with minimal regulatory oversight, it stands to reason that maintaining limited government oversight should be the primary position of anyone concerned with its future.

Regulation has always had a much greater cost than what is currently visible at the moment. The far-reaching and systematic framework that any reform on this level will have dictates the trajectory of this tool that has driven so much innovation and growth over the past 30 years.

The question remains, however, that given the current state of regulatory oversight could there be opportunities we’re missing out on?

To put it another way, given the table stakes related to this incredibly valuable resource, the potential benefits derived from this updated regulation must be as massive as the growth already driven, which is why the net neutrality paired with needed ISP reform framing is so powerful.

Stories about throttling, fast lanes, and a general monopolistic control of one of the greatest new resources of our generation are easy to fall prey to. The question is: does this come at the expense of ventures that haven’t been built yet?

Obviously, this line of thinking is inherently backward. Regulations generally stifle opportunity costs. Ironically, the entire debate of net neutrality as it stands is somewhat backward as well. Those in favor of regulation are adopting the arguments of anti-regulators, raving about future harms and foregone opportunities, while pursuing a regulatory approach that can only be justified in the face of actual misappropriation.

There is limited proof that systematic harm exists in a form that justifies heavily regulating ISPs. The argument could be made that current regulations are well equipped to handle the “bad apples” just fine. The bigger fear that should exist is giving up on discoveries and improvements that we could be missing out on in favor of the current system.

All this to say – net neutrality cannot be a black and white discussion. The thesis needs to shift from “Are you for net neutrality?” to “How do you keep net neutrality, while not stifling reform that will inevitably lead to innovation?”

Given the implications, it makes the most sense for Congress to pass a law explicitly banning ISPs from restricting content, but for everything else, taking a wait and see approach. In theory, we are likely to see new products and services as the previous guard is changing. As the landscape shifts to this new future and the evidence changes, legislation can and should be revisited.