The FCC Is Using Garbage Lobbyist Data To Defend Its Assault On Net Neutrality

from the garbage-in,-garbage-out dept

By now it should be clear to most Techdirt readers that new FCC Boss Ajit Pai envisions a future where there's little to no oversight of giant telecom duo/monopolies like Comcast. Pai has wasted no time making that dream a reality since taking office, having killed plans for more cable box competition, undermined FCC attempts to stop prison phone monopolies from ripping off inmate families, and paved the way for killing net neutrality. He's made no mystery of his overarching goal: replacing functional FCC oversight of broadband providers with the policy equivalent of wet tissue paper.

If you spend twenty seconds with Pai's voting record (like that time he voted down holding AT&T accountable for actively helping crammers rip off its own customers by making scams harder to detect on customer bills), you'll discover his positions have one consistent beneficiary (tip: it's not you).

You'll also note his arguments are often comically disconnected from the actual facts. Like that time the FCC boss declared that Netflix was the real enemy of net neutrality -- simply because it operates a content delivery network. Or the time he insisted meaningful consumer protections would inspire Iran and North Korea to censor the internet. Or the countless times he's insisted net neutrality killed network investment -- despite that claim not being supported by objective data, SEC filings, quarterly earnings or ISP executive statements.

And while it's one thing to actively disagree on policy, Pai has consistently engaged in countless, easily-debunked falsehoods to justify his positions. Which is ironic, since pretty much every speech Pai makes involves him promising to bring more "sound economic analysis" to FCC policy making. Take this recent speech (pdf) given to the American Enterprise Institute (which takes substantive funding from the large ISPs that benefit directly from Pai's policies):

"I have long been concerned that economists haven’t been systematically incorporated into the FCC’s policy work. Instead, their expertise is typically applied in an ad hoc fashion, and often late in the process. We are taking a major step to correct that. A month ago, I kick-started a process to establish an Office of Economics and Data. This Office will combine economists and other data professionals from around the Commission. I envision it providing economic analysis for rulemakings, transactions, and auctions; managing the Commission’s data resources; and conducting longer-term research on ways to improve the Commission’s policies. My goal is to have the new office up and running by the end of the year. And I’d be remiss if I didn’t acknowledge the prior work done by Jeff Eisenach and others at AEI in providing the intellectual foundation for this office.

Again though, if you track Pai's votes and real-world actions, you'll consistently find a comic disconnect from this breathless, self-professed dedication to sound data and economic policy. In fact the very same day Pai was giving that speech, his Chief of Staff Matthew Berry took to Twitter to proclaim that new data suggests that Title II (the legal underpinnings of net neutrality) has reduced telecom sector investment by $5.6 billion:

The source of that data is the Free State Foundation (FSF), a think tank that takes consistent funding from large broadband providers like AT&T and Comcast (and tries to obfuscate that fact). This isn't objective science. It's farmed data pushed by a lobbying arm of the telecom industry. And when you head over to the methodology of that report you'll note a fairly selective window chosen to support the group's position:

"USTelecom publishes data on broadband capital expenditures (capex) for each year dating back to 1996. Using this historical data, I collected figures on the previous twelve years before the Open Internet Order was adopted in February 2015. I picked 2003 as the first year because the market had just collapsed from the dot-com bubble and total broadband capex was at its lowest point since 1996. I established a trend line from 2003 to 2016, which created a linear pattern over the first 12 years before the Open Internet Order and estimated what we could have expected broadband capex to be in 2015 and 2016 without Title II public utility regulation.

One, the office of a former Verizon lawyer citing an ISP-funded think tank using data from an ISP-funded lobbying organization -- should be nobody's definition of "sound economic analysis." Two, Twitter users were quick to point out that the FSF specifically began tracking CAPEX movement in 2003 to avoid addressing an important point. Namely that large ISPs were under Title II until 2005 without the slightest impact on investment. In fact, as even USTelecom's data shows, it was under former FCC boss turned top cable lobbyist Michael Powell (who professed a similarly disingenuous respect for real data) that Title II was killed.

Perhaps you'll notice something in the data below:

Under Powell (2001-2005), the broadband industry was blindly deregulated and government began effectively letting large ISPs dictate federal internet policy. As a result, you saw less competition and more consolidation than ever before, cementing Comcast's reputation as an apathetic, anti-competitive giant (a monopoly that's currently growing even larger as telcos give up on fixed-line residential broadband). Powell tried to disguise this reality by frequently hyping broadband over powerlines (BPL) as a looming additional competitive option that would work hand-in-hand with sector deregulation to deliver telecom utopia.

This promised utopia never materialized. Powell ironically ignored real-world data showing that BPL was an interference-prone mess. The result? BPL never arrived to save us from the telco/cable duopoly, and things got worse as Powell made it harder than ever to hold ISPs accountable for failed promises and anti-competitive abuses of their power over the broadband last mile. As a result, net neutrality violations (the symptom) became more apparent manifestations of the disease (a lack of competition). Deregulation can benefit competitive industries, but in telecom... it helped create the Comcast we all know and love today.

Yet here we are with an FCC boss suggesting that more of what brought us to this particularly ugly dance is surely the thing that's going to make everything wonderful. After all, data from the very industry supporting the gutting of these consumer protections says so.

It's also worth noting that looking only at CAPEX doesn't really tell the entire story. Like the other piece of farmed think tank "economic analysis" the broadband industry regularly trots out to defend the "net neutrality killed investment" canard, you'll often see these groups ignore how any number of routine investment behaviors (like a cable company wrapping up a new digital set top box deployment) can impact investment numbers. Cherry pick a particular window of time, ignore the massive investments being made in wireless spectrum, and you can massage the data to suggest pretty much whatever you'd like.

But again, if you stopped and listened to candid comments by Sonic, Sprint, Frontier, Cablevision, Charter and even Verizon executives over the years, you'll consistently see them admit that Title II didn't impact investment one way or the other. And that's all supported by easily-perused earnings reports, SEC filings and other publicly-accessible data. And, pretty much like clockwork, every few months a reporter assembles that data to make the case that net neutrality didn't hurt telecom investment. Those same folks are similarly quick to point out that focusing exclusively on investment numbers helps the industry avoid subjects like... competition and high prices:

"If you think that the best way to measure the success of the U.S. broadband market is by the amount of money its biggest private businesses spend on the task of getting people connected, then it looks like we’re still winners, despite Title II. If you think that the best way to measure the success of the U.S. broadband market is in the number of people connected, the available speeds, the prices, the competition, and the customer service, well… We’ve still got quite a way to go to be as great as the ISPs say we always have been."

Only those prioritizing ISP revenues over consumer welfare and the health of the internet still think any of this is even debatable. If folks like Pai were actually interested in hard data and sound economic analysis, they'd cite respected reporters and objective economists untethered to the companies benefiting from these policies. Since those folks have repeatedly told Pai he's wrong, he's instead turned to using cherry picking, ISP-funded stat farms to massage existing data so it fits the overarching narrative that net neutrality has been a telecom investment apocalypse. All while expressing a very post-truth-esque dedication to hard data.

Filed Under: ajit pai, data, fcc, net neutrality
Companies: free state foundation, us telecom

A John Oliver Net Neutrality Rant Has Crippled The FCC Website A Second Time

from the once-more-into-the-breach dept

Back in 2014, you might recall that John Oliver's HBO show "Last Week tonight" aired an outstanding piece on net neutrality. In it, Oliver compared then FCC boss Tom Wheeler to a dingo, explained why a neutral internet was important, and trashed much of the flimsy logic giant ISPs like Comcast use to consistently justify anti-competitive behavior. The piece was so immensely successful at explaining an incredibly complicated and relatively wonky subject, it drove a record number of annoyed consumers to the FCC commenting website -- where they demanded the FCC step up and defend the open internet.

That public outcry was a major reason Wheeler decided to reclassify ISPs as common carriers under Title II of the Communications Act -- and pass real net neutrality rules in 2015.

Fast forward to 2017. New FCC boss Ajit Pai has made it abundantly clear he plans to gut those same rules, resulting in Oliver running a second piece on net neutrality on Sunday night:

In this new video, Oliver notes that he registered the gofccyourself.com domain, making it simpler for annoyed net neutrality supporters to find the relevant FCC proceeding comment section on the agency's website. And, once again, it appears that the FCC's website was crippled by the massive influx of viewers. Shortly after the program aired, the FCC website collapsed under heavy load, and continued to suffer from issues throughout Monday (though there's an alternative way to file your comments to the FCC via this link).

In his piece, Oliver once again urged those that care about an open internet to step up to the plate. And given net neutrality's massive, bipartisan appeal, he suggested that "Donald Trump's internet fans" should lend a hand:

"Every internet group needs to come together like you successfully did three years ago," Oliver declared. "Every subculture must join as one. Gamers, YouTube celebrities, Instagram models, and even Tom from MySpace, if you're still alive." Oliver also implored "Donald Trump's internet fans on sites like 4Chan and Reddit" to join the fight. "This subject is one of the things that we actually really agree on," Oliver said.

Since data shows that satirists often do a better job informing the public than many actual news outlets, net neutrality supporters hope that Oliver's second piece on the subject livens up what has been a fairly tepid and apathetic public reaction to the killing of the rules. ISPs and Pai hope to capitalize on debate fatigue and fractured attention spans when the agency votes to launch a notice of proposed rulemaking on May 18 to begin dismantling the rules. From there, the public commenting period will be extended until a finalizing vote later this year.

Filed Under: ajit pai, fcc, john oliver, net neutrality, title ii

Ted Cruz Doubles Down On Being Wrong: Pushes Yet Another Net Neutrality Killing Bill

from the freedom* dept

Eager to ignore the broad, bipartisan support net neutrality enjoys, nine GOP Senators this week introduced legislation that would kill the FCC's net neutrality rules. Senator Mike Lee's "Restoring Internet Freedom Act" would prohibit the FCC from classifying ISPs as common carriers under Title II of the Communications Act and "from imposing certain regulations on providers of such service." In other words, it's a parallel attempt to kill net neutrality in Congress while FCC boss Ajit Pai tries to kill the rules via FCC process.

Lee didn't release the text of the bill, but it's expected to look very similar to a 2016 bill he introduced during the 114th Congress with the same 8 co-sponsors. Lee tries to argue in a statement over at his website that his bill is necessary to keep "bureaucrats" away from "engineering the internet's infrastructure":

But now this engine of growth is threatened by the Federal Communications Commission’s 2015 Open Internet Order, which would put federal bureaucrats in charge of engineering the Internet’s infrastructure. That is why I am introducing the Restoring Internet Freedom Act, which would nullify Open Internet Order and prohibit the FCC from issuing a similar rule in the future.

You'll likely be shocked to learn that the only "freedoms" being restored here belong to companies like Comcast, Verizon and AT&T. Said companies have spent the better part of a decade and millions of dollars on a quest for zero oversight of one of the least competitive sectors in American industry.

Should the rules die, AT&T will once again have the freedom to block you from using certain services unless you subscribe to a more expensive broadband tier. Comcast can use its unnecessary usage caps and overage fees to make competing services more expensive for its customers to use. Companies like Verizon can get back to intentionally letting peering points congest to make content and transit companies pay them more money than ever for the honor of reaching Verizon subscribers.

Somehow, Lee thinks that gutting the already too-modest rules preventing this kind of behavior will somehow increase "permissionless innovation." That makes zero coherent sense.

These abuses aren't theoretical. They've either already happened or are happening now. And FCC boss Ajit Pai's ingenious "solution" is to eliminate modest and widely supported rules and replace them with "voluntary" guidelines companies like Comcast will ignore. The idea that net neutrality is simply an issue of government "overreach" plays well to knee-jerk partisans that aren't informed on the subject, but it doesn't become any less false with repetition. In reality, the FCC has spent fifteen years turning a blind eye to the problem of limited competition, and the 2015 rules, if anything, didn't go far enough.

A few years ago, when Tom Wheeler began bucking 15 years of bipartisan FCC precedent by actually doing his job, you'll recall that Senator Ted Cruz was widely ridiculed for his claim that net neutrality was "Obamacare for the internet." Despite even Republican engineers informing him this narrative couldn't be more inaccurate, Cruz (a bill co-sponsor) took the opportunity this week to double down. According to Cruz, he was being incredibly and intentionally misleading to "raise awareness":

"My comments (equating net neutrality to "Obamacare") were intended to raise awareness of this unprecedented government power grab, which the Obama administration and its friends at the FCC were attempting to quietly accomplish. I am proud to work with my friend Mike Lee on the Restoring Internet Freedom Act, a bill that rolls back former President Obama's power grab, protects open internet principles, and recognizes the transformative effect that the internet has had on our lives, generating billions of dollars of new economic activity and millions of jobs, largely free of government’s heavy hand. We must preserve a free and open internet, and give stability to the companies and users operating within the internet ecosystem."

Yes, let's "preserve a free and open internet" by letting giant broadband monopolies cap, throttle, restrict and otherwise hamstring the endless startups, entrepreneurs, content companies and consumers that use the internet everyday. You'll notice that folks like Cruz are quick to heap praise on the miracle of the modern internet, but are comically incapable of admitting the threat that limited competition is posing to said miracle. Obviously, if you admit there's a problem, then you might just have to do something about it. And deep-pocketed campaign contributors Comcast, AT&T, and Verizon sure as hell don't want that.

As Mike just got done pointing out, net neutrality opponents have a gameplan you need to understand. Step one is for Ajit Pai to play bad cop and threaten net neutrality via FCC rollback. Step two is for Congress to come to the rescue with a "compromise" bill (actually written by Comcast and friends, of course) that promises to "solve" net neutrality once and for all -- but is packed with so many loopholes, caveats and contingencies to be worse than no rules at all. If this bill doesn't do the trick, giant ISPs will ensure there's a flood of similar proposals waiting in the wings.

Filed Under: ajit pai, congress, fcc, mike lee, net neutrality, ted cruz

Don't Get Fooled: The Plan Is To Kill Net Neutrality While Pretending It's Being Protected

from the pay-attention dept

Back in February, we had former top FCC staffer Gigi Sohn on our podcast and she laid out the likely strategy of Ajit Pai and Congress to kill net neutrality while pretending that they were protecting net neutrality. And so far, it's played out exactly according to plan. Each move, though, seems to be getting reported by most of the tech press as if it's some sort of surprise or unexpected move. It's not. There's a script and it's being followed almost exactly. So, as a reminder, let's go through the exact script:

Step 1: Set fire to old net neutrality rules

New FCC boss Ajit Pai announces that he's going releasing a plan to roll back the Open Internet rules that his predecessor, Tom Wheeler, put in place two years ago. This has been done, and Pai has released what's called an NPRM (a Notice of Proposed Rulemaking) which opens up a comment period. Once the comment period is over, the FCC can release its new rules and vote on them. The problem -- as basically everyone in telco knows (but which almost never gets mentioned in the press coverage) is that the FCC almost certainly will lose in court if it rolls back the rules that Wheeler put in place. This is important. Contrary to what you may have heard, the FCC isn't allowed to just willy nilly flip flop the rules.

Indeed, the FCC is barred by statute from putting in place "arbitrary and capricious" rule changes. Basically, every lawsuit challenging any FCC rulemaking includes claims that they were "arbitrary and capricious." And, to get over that burden, the FCC can't just change the rules willy nilly, but have to lay out clear evidence for why a change in policy is necessary. That's why the Wheeler Open Internet rules have been upheld by the DC Circuit (who shot down previous rules). Wheeler effectively laid out the clear reasons why the market had changed drastically in the decade plus since the FCC had declared broadband to be an "information service" rather than a "telecommunications service" (under Title II).

For Pai to successfully roll back those rules, he'd need to show that there was some major change in the market since the rules were put in place less than two years ago. That's... almost certainly going to fail in court. Again, this is important: Pai can change the rules, but that rule change will almost definitely be shot down in court. While many are assuming that the Pai's new rules are a done deal, they are not. I mean, he's almost certainly going to ignore the public outcry about how rolling back these rules will harm the internet. And he's almost certainly going to continue to blatantly misrepresent reality and (falsely) claim that investment in broadband has dropped because of these rules (despite tons of clear evidence that he's wrong). And, then he will pass new rules. But those rules will be challenged and he will almost certainly lose in court, and the old rules would remain in place.

Again: basically everyone in the FCC (including Pai) and in Congress know this. The press not reporting on this is a shame.

Step 2: Congress to the "rescue"

Congressional net neutrality haters (e.g. those receiving massive campaign contributions from big broadband players...) are well aware that Pai's plans have no chance in court. Yet, they want there to be this kind of uproar over the plans. They want the public to freak out and to say that this is bad for the internet and all that. Because this will allow them to do two things. First, they will fundraise off of this. They will go to the big broadband providers and act wishy washy on their own stance about changing net neutrality rules, and will smile happily as the campaign contributions roll in. It's how the game is played.

The second thing they will do... is come to "the rescue" of net neutrality. That is, they will put forth a bill -- written with the help of broadband lobbyists -- that on its face pretends to protect net neutrality, but in reality absolutely guts net neutrality as well as the FCC's authority to enforce any kind of meaningful consumer protection. We've already seen this with a plan from Senator Thune and this new bill from Senator Mike Lee.

Unfortunately, some reporters will buy this argument and pretend that these bills will "save net neutrality." The article at that link is correct that a change in administrations can lead an FCC to try to flip flop again on net neutrality, but totally ignores that any such attempt would totally flop in court as arbitrary and capricious, without actual evidence of a changed market. The article is also correct that Congress should fix this permanently, but misses two key factors: (1) Congress is way too beholden to broadband lobbyists to come up with anything that actually protects neutrality and (2) the plans presented so far are designed to kill net neutrality while pretending to "protect" it.

This latter point is why Verizon's General Counsel can say with a straight face that no one wants to kill net neutrality. Because he's going to be supporting Congress' plan that pretends to save it. That's because the Congressional plans do put in place a few bright line rules that seem important to net neutrality -- saying that it bars "paid prioritization," throttling and the like. The problem is that those are last decade's net neutrality issues. The big broadband providers have already said they're fine with those kinds of rules because they've found ways around them.

Specifically, the big broadband providers are doing things like deliberately overloading interconnect points to force large companies like Netflix to pay not to be throttled. Or they're putting in place totally arbitrary and low data caps, and then offering to "zero rate" certain services, pretending that this is a "consumer friendly" move. Again, as we've said dozens of times, you're not a hero if you save people from a fire that you set yourself. And that's exactly what zero rating is. Access providers set low data caps themselves and then "save" their customers from having to pay for going over those caps... but, only if you use approved services (often ones owned by the access provider themselves).

And this is the problem. Under the existing Wheeler rules, the FCC was able to adjust and respond to efforts by the telcos to continue to abuse net neutrality and block the open internet, while pretending they were doing something else. The Congressional proposals for "net neutrality" actually take away that authority from the FCC. In other words, they are opening the floodgates for the big broadband access providers to screw over customers, by saying (1) you can't do the obviously bad stuff, but you can do the hidden bad stuff that's effectively creates the same problems and (2) the FCC can no longer stop you from doing this.

That's not a plan to save net neutrality or an open internet. It's a plan to bless the access providers' plans to start walling off the internet and getting to double and triple charge companies for offering services. This is a plan to put tollbooths on the internet, but in ways that are less obvious than people were first worried about.

Step 3: Leverage the Controversy

Meanwhile, everyone who wants to kill net neutrality knows what's going to happen here. They will use the fact that Pai's rules absolutely can't withstand scrutiny in the courts to step up and push for the Congressional "rescue." Even more likely: they'll say that we need Congress to step in to "prevent uncertainty" from the inevitable lawsuits. Believe it or not: they're happy that this will get tied up in courts for years, because that gives Congress extra cover to push through this pretend "compromise." You'll hear lots of tut-tutting about "uncertainty" that has to be stopped. But, like zero rating and the fact that it's not heroic if you rescue people from your own fire, the fire here is being set by Ajit Pai and big broadband's key supporters. They're setting this fire of rolling back Wheeler's rules solely to whine about the uncertainty that will be caused by their own unnecessary rule change... and then will say that "only Congress can settle this."

So, what does all this mean? It means people who are mad about this (as you should be) need to be direct in what they're talking about here. Don't pretend that Pai's rule change is the real problem. It's not. It's just a mechanism to get to new regulations from Congress that will cause real problems. Don't let anyone say that the Wheeler rules have harmed the internet or investment. They have not. Don't let anyone (especially supporters of killing net neutrality) launch into self-pitying cries about "uncertainty." Remind them that the uncertainty is coming from them and their supporters. And, most importantly, don't pretend that a bill from Congress pretending to "save" net neutrality will actually do so, when it's quite obvious that the bills being offered will undermine our internet, help big broadband screw over users, and diminish competition.

Filed Under: ajit pai, broadband, competition, controversy, fcc, john thune, mike lee, net neutrality, open internet, tom wheeler

ISPs Lose En Banc Appeal, Current Net Neutrality Rules Remain Intact...For Now

from the if-at-first-you-don't-succeed dept

Last June, you'll recall that the U.S. Court of Appeals for the D.C. Circuit upheld the FCC's net neutrality rules, claiming the FCC was within its rights to reclassify ISPs as common carriers under Title II of the Communications Act. In fact, the FCC was driven toward that move by Verizon, which sued to overturn the agency's much weaker 2010 rules. Needless to say, ISPs were quick to try and appeal last June's court decision by requesting an en banc hearing before the whole court.

This week the court refused the industry's request, meaning the existing 2015 rules crafted and passed under former FCC boss Tom Wheeler remain intact. Consumer groups and content and hardware trade groups like Incompas were quick to applaud the ruling as a victory for consumers and those wary of large ISP attempts to hamper streaming video competition:

"Today’s court decision is a significant blow to those who want to take away Open Internet protections, raise prices and cut off the streaming revolution. The FCC and the courts have spent a significant amount of time and effort over more than a decade on various Open Internet policies, and the current law has shown itself to be both legally sustainable and market effective."

Of course things have been complicated by the fact that current FCC boss Ajit Pai last week unveiled his plan to kill the existing net neutrality rules and replace them with the policy equivalent of wet tissue paper. So while the current net neutrality rules will continue to stand, for now, Pai (likely with Congress' help) continues his attempt to roll the rules back at the behest of AT&T, Comcast, Verizon and Charter. ISP lawyers could appeal the en banc rejection to the Supreme Court, but with the current FCC looking to completely kill the rules anyway, it doesn't seem likely that the high court would hear the case.

And while consumer groups got notably excited about having any win in what's been an ugly few months for consumer-centric telecom policy, the actual opinions in the en banc rejection are a somewhat mixed bag. It's worth noting that the rejection made it clear that the en banc appeal was refused, at least in part, because of Pai's decision to launch a new NPRM:

"En banc review would be particularly unwarranted at this point in light of the uncertainty surrounding the fate of the FCC’s Order. The agency will soon consider adopting a Notice of Proposed Rulemaking that would replace the existing rule with a markedly different one. In that light, the en banc court could find itself examining, and pronouncing on, the validity of a rule that the agency had already slated for replacement."

And the dissenting positions of some of the judges are notably alarming in some regards. Especially that of Judge Brett Kavanaugh, who somehow managed to buy into an ISP claim that the courts -- and most observers -- had been laughing at for years. Specifically, the ISP claim that net neutrality rules somehow hamper their First Amendment rights. Said Kavanaugh:

"Absent a showing of market power, the Government must keep its hands off the editorial decisions of Internet service providers. Absent a showing of market power, the Government may not tell Internet service providers how to exercise their editorial discretion about what content to carry or favor any more than the Government can tell Amazon or Politics & Prose what books to promote; or tell The Washington Post or the Drudge Report what columns to carry; or tell ESPN or the NFL Network what games to show; or tell How Appealing or Bench Memos what articles to feature; or tell Twitter or YouTube what videos to post; or tell Facebook or Google what content to favor."

Again though, arguing that rules protecting consumers from anti-competitive ISP behavior is a free speech issue remains a bizarre distortion. The idea was largely shot down during the court's ruling last year. Even many ISPs had been walking away from this argument -- after having simply used it as a scattershot attempt to see what claims stuck. But in their own options, Judges Srinivasan and Tatel are quick to warn that Kavanaugh's opinion, if piggybacked upon during future rulemaking, could let large ISPs easily dodge Pai's plan to hold them accountable via "voluntary" commitments and shaky FTC oversight:

"Under that view, an ISP, for instance, could hold itself out to consumers as affording them neutral, indiscriminate access to all websites, but then, once they subscribe, materially degrade their ability to use Netflix for watching video — or even prevent their access to Netflix altogether — in an effort to steer customers to the ISP’s own competing video-streaming service. Alternatively, an ISP, again having held itself out as affording its customers an unfiltered conduit to internet content, could block them from accessing (or significantly delay their ability to load) the Wall Street Journal’s or the New York Times’s website because of a disagreement with the views expressed on one or the other site.

An ISP has no First Amendment right to engage in those kinds of practices. No Supreme Court decision suggests otherwise ... The First Amendment does not give an ISP the right to present itself as affording a neutral, indiscriminate pathway but then conduct itself otherwise. The FCC’s Order requires ISPs to act in accordance with their customers’ legitimate expectations. Nothing in the First Amendment stands in the way of establishing such a requirement in the form of the net neutrality rule."

Where we go from here could get even complicated (at a time when Joe Public already had no idea what any of this means), but the opinions of the en banc rejection will be certain to resurface on May 18, when Pai's 2-1 partisan majority will formally vote to begin dismantling the rules. Keep in mind Pai still has to prove to the courts that the market has changed substantively enough to justify a complete reversal of Title II in the wake of last year's court ruling.

Pai knows this will be a challenge, which is why it seems likely that net neutrality opponents will try to use Pai's saber rattling to push through a "compromise" GOP law promising to "fix" net neutrality once and for all. Folks relentlessly pushing this route tend to ignore the fact that large ISP lobbyists and lawyers will be the ones writing these laws, ensuring they're so packed with loopholes as to be less helpful than no rules at all.

Filed Under: appeals, dc circuit, fcc, net neutrality, open internet, supreme court

New Verizon Video Blatantly Lies About What's Happening To Net Neutrality

from the up-is-down,-left-is-right,-and-you're-a-walrus dept

Lies and hyperbole are certainly no strangers to either side of the net neutrality debate, but as the FCC moves to kill net neutrality -- net neutrality opponents have taken things to an entirely new level. FCC boss Ajit Pai's speech last week unveiling the move was utterly packed with claims that had already been painstakingly debunked over the last decade (read: lies), from the absurd claim that gutting consumer protections would somehow help consumers in the Comcast era, to the similarly untrue claim that net neutrality killed broadband investment.

Of course ISPs followed Pai's speech with a bunch of their own misleading statements. Most of them tried to claim that nothing is actually going on and even if it were -- consumers shouldn't worry because large duopolists can always be trusted to remain on their best behavior in light of no oversight. Comcast, for example, was quick to post a missive to its website trying to claim that net neutrality somehow gets better -- by killing net neutrality. Just look at the banner used by the ISP:

Yes, consumers, prepare to "enjoy" the amazing benefits of gutting nearly all oversight of one of the least competitive, least-liked, and most anti-competitive companies in the history of American industry. You're welcome!

But Verizon upped the ante and deserves some kind of award for publishing this abomination of a video to the internet:

In it, a bespectacled faux-journalist named Jeremy asks Verizon General Counsel Craig Silliman about net neutrality. The "interview" is only under way for a few seconds before Silliman drops a major lie:

"The FCC is not talking about killing the net neutrality rules and in fact not we, or any other ISP are asking them to kill the open internet rules. All they're doing is looking to put the open internet rules in an enforceable way on a different legal footing."

To be clear: this is the same company that has been trying to kill net neutrality (in any form) for more than a decade, trying to claim that a former lawyer (FCC boss Ajit Pai) isn't trying to accomplish that goal (hint: he is). And while Pai may be pushing a line of nonsense about how gutting oversight of mono/duopolies like Comcast and Verizon is somehow a major step forward, anybody that actually believes that hasn't been paying attention. Rolling back Title II obliterates the FCC's authority over broadband providers, shoveling a tiny-thread of remaining oversight to an FTC authority ISPs have already shown they can tap dance around.

Verizon, you'll recall, has historically been so opposed to even the weakest net neutrality rules, it sued to overturn the original, flimsy 2010 rules it helped write (rules, it should be noted, even Comcast and AT&T were ok with). But Silliman crafts an entirely other reality out of whole cloth, insisting that unspecified "advocacy groups" are somehow lying to the American public, leaving it to a Verizon lawyer to provide the public with THE TRUTH (TM):

"You gotta understand there's a lot of advocacy groups out there that fund raise on this issue. So how do you fund raise? You stir people up with outrageous claims. Fortunately we live in a time where people have discovered it doesn't matter what's true, you just say things to rile up the base. It's not sexy to say they're changing the legal foundation for this, it's only sexy if they say they're killing the open internet. It's not true."

Silliman then trots out an analogy that, like most net neutrality analogies, is comprised predominately of nonsense:

"Imagine in your town someone says 'I'm really concerned homeowners may prohibit people from walking up their front walks, so the mailman can't deliver mail, girl scouts can't sell cookies,' it will be chaos, right? So the mayor says I'm gonna pass a rule: I'm gonna pass a rule that no one can prohibit people from walking up their front walk. But to pass this rule, I need you Jeremy and all home-owners to give me complete authority over your property. Well, how are you going to feel about that?"

But I'm not ok giving that authority, and the Mayor may even say 'Don't worry, I won't use that authority.' But you're not comfortable giving them that, right? So, that's where we are with Title II and net neutrality."

That argument makes no coherent sense. Net neutrality is about a lot of things. It's about keeping Verizon from using usage caps to harm streaming competitors (which Verizon is already doing). It's about keeping ISPs from using their power to unfairly drive up costs for transit or content providers (they've already done that, too). Verizon and Ajit Pai's "solution" to these problems is to make it virtually impossible to hold companies like Verizon accountable should they use a lack of competition in broadband to harm competitors and consumer choice in this fashion.

Mayors and god-damned sidewalks have nothing to do with it. And what Silliman really doesn't want you to understand is that it's Verizon's fault we're here in the first place.

In 2010, the FCC passed some feeble net neutrality rules. Despite helping write them (to ensure they didn't cover wireless), Verizon sued to overturn them anyway, and won. As a result, the courts told the FCC that it needed to reclassify ISPs as common carriers under Title II if it wanted to have the authority to enforce them, which is what the FCC did. Again, that's something you can thank Verizon for specifically. And while Verizon whines about over-reach, even the 2015 rules weren't very tough by international net neutrality standards, avoiding hard line bans on zero rating and broadband rate regulation.

The large ISPs spearheading this new assault on privacy and net neutrality protections are no stranger to using lies and hyperbole to justify eroded oversight of the uncompetitive broadband industry, but this video clearly ratchets things up to another level. Companies like Verizon are clearly feeling emboldened in the Trump post-truth era by the press' struggles to handle a tsunami of falsehoods. They also clearly hope their bare-knuckled attempt to crush meaningful consumer protections can somehow be twisted, contorted and massaged until it's perceived as a net gain for the public.

Filed Under: ajit pai, craig silliman, fcc, net neutrality, open internet
Companies: verizon

Over 800 Startups Tell FCC's Ajit Pai Not To Kill Net Neutrality

from the don't-be-foolish dept

As we noted yesterday, FCC Chair Ajit Pai has officially kicked off his plan to kill net neutrality -- and unfortunately did so by spouting debunked myths and fantasies about how much damage net neutrality was causing for investment. As we pointed out that, that's complete hogwash. If you actually looked at what telcos and ISPs were spending it showed no impact from the open internet rules. And, really, why should it have changed investment plans? As we've noted, the rules had basically no impact on ISPs unless those ISPs were looking to screw over consumers. And if it harmed those ISPs' investment plans, that doesn't seem like a very big loss. Otherwise, the open internet rules just provided clear "rules of the road" for ISPs to treat internet data fairly and to not screw over end users.

Either way, that's not the only "investment" that Pai should be looking at. Because one of the other key aspects of having an open internet is the massive amount of investment that has resulted for companies that operate on the internet. Pai seems (bizarrely) exclusively focused on investment in the infrastructure (which, again, has not dropped despite his claims) and totally ignores all the investment layers above (which also helps funds the infrastructure). So, just as Pai is (wrongly) whining that net neutrality harmed investment, over 800 startups, from all 50 states, sent him a letter urging him not to get rid of the open internet rules (and, yes, we were among those who signed onto the letter).

This is important. Pai is making all sorts of misleading to nonsensical claims about the impact on the economy of the net neutrality rules, but in doing so he's trying to ignore all of the business that's created because the internet is kept open and free and the giant incumbent access providers are unable to favor their own services or throttle and stifle innovative upstarts. Pai talks a good game about how he wants the "democratization of entrepreneurship" thanks to a fast internet. That's great. But if he kills off net neutrality we lose that. We get a system where each startup has to go begging and pleading to each access provider for a deal they probably can't get or couldn't afford even if they were able to. We've seen that world. It's the world that existed on mobile phones in the early 2000s when the providers got to control (i.e., charge ridiculous sums for) who had access to their customers. That was not a good world to live in and it vastly limited the economic opportunities of the mobile world. It was only when smartphones broke away from the carriers' control that things changed.

We shouldn't move back towards that kind of world, yet that appears to be the clear end result of the plans that Pai is pushing. This is a mistake and over 800 startups are letting him know that. Pai may think he can ignore them all, but he should note that each of those companies has a lot of users, and it's not difficult to ask them to speak up too. Pai is playing with fire if he thinks that the public won't speak out about his attempts to kill off net neutrality and to harm the most innovative companies out there, in favor for the slow, lumbering duopolists who control the pipes.

Filed Under: ajit pai, competition, entrepreneurship, fcc, jobs, net neutrality, startups

FCC Boss Unveils Ingenious Plan To Replace Net Neutrality Rules With Fluff & Nonsense

from the throttled,-blocked,-hamstrung-and-hindered dept

FCC boss Ajit Pai has made no secret of his disdain for net neutrality. Or, for that matter, his general disregard for the consumer-protection authority granted the agency he's supposed to be in charge of. Pai had already stated that his "solution" -- to his perceived injustice that is net neutrality -- is to replace the government's existing, hard net neutrality rules with "voluntary commitments" by the likes of AT&T, Comcast and Verizon. From there, he hopes to leave any remaining regulatory enforcement to the under-funded and over-extended FTC (we've explained why this is a notably bad idea here).

Pai clarified his plans a little during a speech today in Washington, DC at an event hosted by FreedomWorks (which, not coincidentally, takes funding from the giant ISPs Pai is clearly eager to help). According to Pai, the FCC will issue a Notice of Proposed Rule Making tomorrow to begin the process of rolling back Title II and killing net neutrality. The FCC will then vote on the proposal on May 18, according to the agency head. That means there will be a full public comment period (that's where you come in) ahead of a broader vote to kill the rules later this year.

Pai's full speech (pdf) was packed with conflations, half-truths, and statements that have been repeatedly, painstakingly debunked over the course of the last decade. Among them being the ongoing claim that net neutrality rules weren't necessary -- because incumbent ISPs had done nothing wrong:

"Nothing about the Internet was broken in 2015. Nothing about the law had changed. And there wasn’t a rash of Internet service providers blocking customers from accessing the content, applications, or services of their choice.

Pai apparently "forgot" the time that AT&T intentionally blocked iPhone users from using FaceTime unless they signed up for significantly more expensive mobile data plans. Or that time MetroPCS blocked all access to video on its introductory plans to drive users to costlier plans if they wanted the "full internet experience." Or that time a small ISP named Madison River decided to block a competing VoIP provider. Or that time AT&T, Verizon, and T-Mobile blocked their users from using Google Wallet to help prop up their own mobile payment services. Or the longstanding allegations that Comcast, Verizon, AT&T and others intentionally let their peering points get congested to kill settlement-free peering and force content and transit providers to pay an additional toll.

The idea that net neutrality rules are arbitrary and unnecessary is a joke, and if you still don't believe consumers and startups need some kind of regulatory protection from giant (and ever-growing) broadband duopolists like Comcast, the joke's on you. And it's notably unfunny.

Pai, like most of the ISP allies in favor of gutting the rules, simply refuses to be proven wrong -- no matter what the actual data shows. For years now, Pai has cited broadband industry-funded studies that try to claim that net neutrality rules severely hampered broadband investment, despite zero objective evidence that's actually the case. But this being the post-truth era, Pai was quick to trot out the "Title II and neutrality killed investment" canard to the immense joy of the crowd of attending lobbyists, think tankers and other loyal ISP allies:

"So what happened after the Commission adopted Title II? Sure enough, infrastructure investment declined. Among our nation’s 12 largest Internet service providers, domestic broadband capital expenditures decreased by 5.6% percent, or $3.6 billion, between 2014 and 2016, the first two years of the Title II era. This decline is extremely unusual. It is the first time that such investment has declined outside of a recession in the Internet era."

It never happened. What did happen: some telecom industry-funded think tanks cherry picked data to make it appear that investment had foundered, then repeated the fabrication they'd created, apparently believing that repetition forges truth. But if you spoke privately to most ISPs, they'd be telling you they saw no investment reduction under Title II. ISPs don't oppose net neutrality and Title II because it makes investing harder; they oppose Title II and net neutrality because it prevents them from abusing the uncompetitive shitshow that is the broadband last mile.

What's abundantly clear here is that net neutrality opponents have zero problem with lying to achieve one, singular goal: maximizing the income of large broadband providers to the detriment of consumers, competition, startups and the health of the internet. And Pai poured it on exceptionally thick during his speech at FreedomWorks, claiming that gutting oversight of some of the most anti-competitive and least liked companies in America will somehow magically improve broadband competition, create jobs, expand internet access, and more:

"Without the overhang of heavy-handed regulation, companies will spend more building next-generation networks. As those networks expand, many more Americans, especially low-income rural and urban Americans, will get high-speed Internet access for the first time. And more Americans generally will benefit from faster and better broadband.

Second, it will create jobs. More Americans will go to work building these networks. These are good-paying jobs, laying fiber, digging trenches, and connecting equipment to utility poles. And established businesses and startup entrepreneurs alike will take advantage of the networks that they build to create even more jobs.

Doesn't that sound lovely? Except it's not happening. If the claim that Title II and net neutrality stifled investment was bullshit, the narrative that removing these regulations magically creates jobs and competition is just as fantastical. If anything, turning a blind eye to duopolists like Comcast and Verizon as they abuse the lack of broadband competition to make life harder on streaming competitors (something they're already doing) will have the opposite impact on existing and emerging internet markets to come. And if protecting ISP revenues is the top priority (and let's not fool ourselves that it isn't), actually fixing the industry's competitive shortcomings will never be on Pai's radar.

The problem Pai faces now is two-fold. One, net neutrality has broad, incredible bi-partisan support, and those consumers are certain to give him an earful during the public comment period that will begin after the May 18 vote. If Pai isn't familiar with the concept of backlash and overreach, he may want to bone up on some history. Pai will also need to show to the courts that the market has changed dramatically enough since the FCC's June 2016 win over ISPs to justify a massive reversal of the rules. If he can't, his entire effort will be struck down.

As a lawyer Pai knows this, which is why I still think Pai's playing a game of good cop, bad cop. Under this plan, Pai saber rattles for a few months about his intent to kill net neutrality, at which point the GOP shows up with some "compromise" legislation (likely this summer) that claims to codify net neutrality into law, but is worded in such a way (by the ISP lawyers that will inevitably write it) so the loophole-riddled "solution" is worse than no rules at all. If I were to guess, the legislation will come from Senator John Thune, who attempted to derail the 2015 net neutrality rules using a similar strategy.

It seems likely that neutrality opponent hubris could easily backfire. After all, every time ISPs have tried to kill net neutrality, the end result has been more stringent protections (as we saw when Verizon sued to overturn the FCC's flimsy 2010 rules, only to get... tougher rules). That said, this fight still may be harder than previous battles. With Google and Netflix likely to be less active (they're large enough now that they apparently think they no longer need to worry), the onus is going to be on grassroots activists, debate-fatigued consumers and startups to carry the brunt of the load this time around.

Filed Under: ajit pai, competition, fcc, net neutrality, oversight, regulations

Canada Rushes To Defend Net Neutrality As The U.S. Moves To Dismantle It

from the who-needs-a-healthy,-working-internet-anyway? dept

Here in the States, regulators and Congress are preparing to gut our existing net neutrality rules -- replacing them with the policy equivalent of wet tissue paper. In Canada, regulators are taking the complete opposite tack, last week cementing the country's net neutrality rules as some of the most comprehensive in the world.

After years of some obnoxious behavior by Canadian ISPs like Rogers, Canadian regulators adopted guidelines back in 2009 that prevent ISPs from blocking websites, while requiring that they're transparent about network management. In 2013, those guidelines were expanded to cover zero rating after Ben Klass, a graduate student in telecommunications, filed a complaint with the CRTC over zero rating. Specifically, Klass and his co-filers noted that Bell had begun exempting its own streaming video service from the company's usage caps, thereby putting smaller streaming competitors at a notable disadvantage.

While many people (especially here in the states) continue to labor under the misconception that zero rating gives them something for free, Klass rather concisely broke down why this was a problem in a blog post at the time:

"To figure out exactly what’s going on, I compared the price Bell charges for 5 gigabytes of mobile TV data to the least expensive data-only plan that lets you watch 5GB of Netflix without going over your cap (it’s called the “Tablet Flex” plan). It turns out that Bell charges you $5 a month to watch 5GB worth of their own content. If you want to watch 5GB worth of Netflix on the Bell network, on the other hand, they charge you $40. That’s a markup of 800%."

The short version: usage caps (which are already arbitrary constructs only made possible by a lack of real competition) are being used as an anti-competitive weapon to harm streaming video competitors. Here in the States the FCC seems to think this is a really nifty idea. In Canada, Chile, Japan, India, Norway, and The Netherlands where the practice has been banned; not so much.

In 2015, the CRTC sided with Klass, arguing that this implementation of zero rating could wind up "inhibiting the introduction and growth of other mobile TV services accessed over the Internet, which reduces innovation and consumer choice." And last week, the CRTC released its final net neutrality guidelines, which puts in place a framework for addressing similar zero rating complaints moving forward. The CRTC decision first makes it clear that this kind of "differential pricing," when applied asymmetrically, can harm the overall market:

"differential pricing practices, generally speaking, result in (a) a preference toward certain subscribers over others, (b) a preference toward certain content providers over others, (c) a disadvantage to subscribers who are not eligible for, or interested in, a differential pricing practice offering, and (d) a disadvantage to content providers that are not eligible for, or included in, an offering."

Instead of using usage caps to disadvantage competitors and fracture the market, the CRTC has a crazy idea: how about ISPs instead directly compete on the quality and price of their networks?

"The Commission considers that competition in the retail Internet access services sector is best served, and the telecommunications policy objectives set out in the Act are best achieved, when ISPs compete and differentiate their services based on their networks and the attributes of the services on those networks, such as price, speed, volume, coverage, and the quality of their networks."

Of course ISPs loathe the idea of simply being "dumb pipe" providers that just offer a quality connection at a quality price. And they'd much rather continue engaging in half-hearted non-price competition -- using the lack of said competition to protect their TV revenues. But the CRTC also wasn't buying the argument put forth by ISPs (and the policy wonks and politicians paid to love them) that zero rating somehow improves overall internet access. Nor did it buy the argument that zero rating benefits users by letting them watch content for "free":

"The Commission considers that any short-term benefits of differential pricing practices would be greatly outweighed by the negative long-term impacts on consumer choice if ISPs were to act as gatekeepers of content through their use of such practices.

In other words, consumers labor under the illusion they're getting a better deal because their ISP's content doesn't count against caps. But as we've pointed out for years now -- the practice of zero rating simply shifts the cost burden around -- driving up costs elsewhere and hurting overall streaming competition. The CRTC is making it clear that -- barring some exceptional creative trickery by ISPs -- this will no longer be acceptable business behavior in Canada. For now.

This is all dramatically different from what we're doing here in the States. Our 2015 net neutrality rules didn't specifically ban zero rating, but instead left it up to the FCC to determine the anti-competitive impact of such plans on a "case by case basis" (something we made clear was a mistake at the time). But by the time the FCC actually got around to enforcing the rules last fall (when it warned both AT&T and Verizon their zero rating plans are clearly anti-competitive), the existing FCC was on the way out the door, to be replaced by a new FCC led by new boss Ajit Pai.

And Ajit Pai's first order of business? To kill the agency's inquiry into zero rating. And he's now getting ready to push a plan that would eliminate hard, real net neutrality rules and replace them with voluntary guidelines -- and weaker FTC oversight that ISPs are fairly certain to laugh at. In other words, as Canada moves to protect consumers, net neutrality and competition, the United States -- driven ignorantly and blindly by Comcast, AT&T and Verizon lobbyists -- is preparing to give a giant, neon middle finger to all three.

Filed Under: canada, fcc, net neutrality, us, zero rating

Roku Hires DC Lobbyists For First Time To Fight For Net Neutrality

from the K-Street-showdown dept

With broadband privacy rules dead, ISP lobbyists and their loyal lawmakers have begun quickly shifting their attention to killing FCC oversight of broadband providers and net neutrality. We've pointed out how folks concerned about this shouldn't expect a lot of help from the likes of Facebook, Netflix and Google this go round. We've also noted how folks need to begin waking up to the false arguments being used to sell the pitch (namely that gutting net neutrality and FCC authority over ISPs will be fine because existing FTC rules will protect users, which simply isn't true).

Roku certainly appears to have gotten the message, with reports suggesting the company has hired DC lobbyists for the first time ahead of what's expected to be a May or June attack on net neutrality (either at the FCC, in Congress, or a combination of both):

"For Roku and others in the business, an end to the Obama-era protections could make it harder — or, in some cases, more expensive — to offer content or services to customers at top download speeds. That’s why Roku has hired a pair of Republican lobbyists through an outside government-affairs firm, according to a federal ethics reports filed this week, specifically to focus on net neutrality. It’s the first time the company has ever retained lobbyists in Washington, D.C."

Roku, like countless other companies, is considering a live TV streaming platform that would compete with services from the likes of AT&T, Verizon and Comcast. Via usage caps and zero rating, these providers have already been waging a not-so-subtle war on streaming competitors. The former FCC had just started doling out wrist slaps for this sort of anti-competitive behavior, though the current Ajit Pai-led FCC was quick to kill all inquiries into the tactic. As we've long-noted, this kind of behavior is only made possible by a lack of competition in the broadband space, something the current FCC is clearly not interested in fixing.

Roku has been on the receiving end of other anti-competitive behaviors by the likes of Comcast, designed to protect the cable industry's long-standing monopoly over cable TV hardware. While not technically a net neutrality violation, Comcast spent years refusing to implement the relatively-simple authentication needed to let Comcast broadband customers watch services like HBO Go on Roku, Playstation, or other devices. And while it has since backed off that behavior, it's now charging Roku users a completely arbitrary $7.95 fee just to use the Roku to watch Comcast TV services.

As we've long noted, these kinds of anti-competitive behaviors are just symptoms of the disease that is the lack of competition in the broadband market (which, contrary to some narratives, is far from "free," is deeply taxpayer subsidized, and doesn't magically fix itself with blind deregulation). With the current FCC making it abundantly clear it plans to ignore this lack of competition -- and strip away consumer protections in the space -- Roku should be worried. If you've spent any time watching the behavior of companies like Comcast as they grow larger and less accountable, you should be worried as well.

Filed Under: lobbyists, net neutrality, washington dc
Companies: roku