Net Neutrality and Broken Records

Cite this Article
Daniel J. Gilman, Net Neutrality and Broken Records, Truth on the Market (November 03, 2023),

I don’t mean to sound like a broken record, but why is the Federal Communications Commission (FCC) playing a broken record?

I’ve been writing a fair bit about Federal Trade Commission (FTC) rulemaking initiatives. On the theory that you deserve a nominal break from all of that, this post is mostly about the FCC.

On Sept. 28, the FCC published a “fact sheet” and a notice of proposed rulemaking (NPRM) on “Safeguarding and Securing the Open Internet.” Just shy of a month later, on Oct. 25, the FCC published another “fact sheet” and NPRM—this one, on “Preventing Digital Discrimination.”

My International Center for Law & Economics (ICLE) colleague Eric Fruits has written about the proposals here, here, here, here, here, and, with our colleague Ben Sperry, here. ICLE’s Kristian Stout is here. Eric explains how, in relatively straightforward fashion, the anti-discrimination requirements could lead to price regulation, notwithstanding the FCC’s own observation that “there is little to no evidence of intentional digital discrimination of access.”

Both recall a long-running policy debate about “net neutrality.” Some have thought net neutrality terribly important. No less a figure than Tim Berners-Lee declared the following way back in 2006:

Net neutrality is very important. It allows a fair market. Yes, regulation to keep the Internet open is regulation. And mostly, the Internet thrives on lack of regulation. But some basic values have to be preserved. Democracy depends on freedom of speech. Freedom of connection, with any application, to any party, is the fundamental social basis of the Internet, and, now, the society based on it. Network Neutrality principles are comparable in importance to principles of free speech. There is a long tradition that democracies have of protecting their vital communications channels. We nurture and protect our information networks because they stand at the core of our economies, our democracies, and our cultural and personal lives. Let us protect the free and open Web and the Neutrality of the Net.

So that’s a lot. Here’s then-Sen. Al Franken (D-Minn.) in 2011:

Let’s not sell out. And let’s not let the government sell us out. Let’s fight for net neutrality. Let’s keep the Internet weird. Let’s keep the Internet free.

In 2017, the Sen. Ed Market (D-Mass.) tweeted (yes, that was a thing already):

In 2018, after the FCC’s Restoring Internet Freedom (RIF) order repealed 2015’s net-neutrality order, Sen. Bernie Sanders (D-Vt.) called it the “end of the internet as we know it.”

In a 2019 speech on the U.S. House floor, then-Speaker of the House Nancy Pelosi (D-Calif.) declared that (ultimately failed) legislation to restore net neutrality would, inter alia, protect young people’s “jobs and their futures”; give “entrepreneurs and small businesses a level playing field on which to compete, and ensure that American innovation can continue to be the envy of the world”; “make all the difference in the world, guaranteeing a better, cheaper internet for everyone so we can create jobs and unlock the economic potential of every person in every community.” Indeed, she observed, “our very democracy is at risk.”

And yet, we the people persisted; and rumors of the death of the internet have been greatly exaggerated. Or, as dissenting FCC Commissioner Brendan Carr observed, “the internet didn’t break.”

How did we get here?

For those new to . . . stuff, the phrase “net neutrality” is more than 20 years old. Coinage often is attributed to slogan stylist Tim Wu and his 2002-posted/2003-published article, “Network Neutrality, Broadband Discrimination” (not nearly so catchy as “net neutrality”). The phrase was never well-defined, although it commonly incorporates various anti-discrimination and anti-tiering provisions common to the current FCC proposals and their various regulatory ancestors.

Some readers—at least three, I’m guessing—may recall that I spent a minute (16 years) working in the FTC’s Office of Policy Planning (OPP). Tim was actually assigned to OPP, if only nominally, during his stint at the FTC a while back—not remembering the details, I see that it was 2011-2013, according to his CV.

Leaving aside the question of how far Tim meant to push the evolutionary metaphor, in the piece where he coined the phrase, he seemed to think there was some sort of identity between net neutrality and competition:

The promotion of network neutrality is no different than the challenge of promoting fair evolutionary competition in any privately owned environment, whether a telephone network, operating system, or even a retail store. Government regulation in such contexts invariably tries to help ensure that the short-term interests of the owner do not prevent the best products or applications becoming available to end-users. The same interest animates the promotion of network neutrality: preserving a Darwinian competition among every conceivable use of the Internet so that only the best survive.

That seems unobvious to me, and not “the best” gloss on evolution or competition either, but we’ll get to that. It seemed unobvious to others too. See, for example, Christopher Yoo’s portion of his 2007 debate with Tim Wu in the Vanderbilt Law Review, on the topic “Keeping the Internet Neutral?” in which he notes:

Simply put, deviations from network neutrality may represent nothing more than network owners’ attempts to satisfy the increasingly intense and heterogeneous demands imposed by end-users.

As it happens, the net-neutrality-equals-competition claim is, in some ways, more modest than the FCC’s current ambitions:

Restoring Title II authority will allow the Commission to safeguard and secure the open Internet in three significant ways. First, this authority will allow the Commission to protect consumers, including by issuing straightforward, clear rules to prevent Internet service providers from engaging in practices harmful to consumers, competition, and public safety, and by establishing a uniform, national regulatory approach rather than disparate requirements that vary state-by-state. Second, reclassification will strengthen the Commission’s ability to secure communications networks and critical infrastructure against national security threats. Third, the reclassification will enable the Commission to protect public safety during natural disasters and other emergencies.

So . . . competition, consumer protection, public safety, disaster relief, and national security all are on the table, which may or may not be what the White House intends by a “whole of government” (in a single agency) approach.

While we’re on the topic (obscure agency history for $500, Alex), the FCC’s recent notice of proposed rulemaking (NPRM) on “Safeguarding and Securing the Open Internet” calls to mind some work that FTC colleagues and I did just a little. . . wait . . . a while ago, back in 2006-7.

In August 2006, then-FTC Chair Deborah Platt Majoras formed an Internet Access Task Force to investigate internet access issues and, specifically, those having to do with net neutrality. In February 2007, we held a two-day workshop on “Broadband Connectivity Competition Policy” and, in June 2007, we released a slender 165-page report called, you guessed it, “Broadband Connectivity Competition Policy.”

Much has changed in the interim. But then, I took my first computer science class in high school, writing screamingly simple code on large stacks of cards, and I went off to college before there was any such thing as the internet (although a good while after the debut of ARPANET, thank you).

It was a while ago, but no, neither Alan Turing nor Al Gore attended the workshop. FTCers at the workshop included still familiar names: Debbie Majoras (then chair), Tim Muris (former chair), and Maureen Ohlhausen (then director of the FTC’s Office of Policy Planning, later commissioner and acting chair of the FTC). And outside participants included still-familiar names, like Christopher Yoo, Tim Wu, and Gigi Sohn.

The workshop and report were all-offices-on-deck efforts. Maureen Ohlhausen had a real hand in both efforts (and not just because OPP had only five staffers in those days). Greg Luib should still get props for taking the staff lead in drafting the report. Chris Grengs and I also contributed a good deal of material, as did staff from the Bureau of Economics, the Bureau of Competition, and the Bureau of Consumer Protection.

This might all seem extraneous and antiquated detail (to steal a bit from “The Wonder Boys,” akin to “the genealogies of everyone’s horses, and the dental records, and so on”), and maybe it is. But the FCC’s NPRM and the surrounding policy discussion seem very much plus ça change: same old story.

Indeed, the FCC’s own NPRM situates the current proposal as the culmination—or, at least, the next step—in a policy saga commencing with former FCC Chair Michael Powell’s 2004 statement that “ensuring that consumers can obtain and use the content, applications, and devices they want … is critical to unlocking the vast potential of the broadband internet.” That was followed in 2005 by the FCC’s “Internet Policy Statement,” which was essentially a guidance document setting forth the commission’s view of general principles to “encourage broadband deployment and preserve and promote the open and interconnected internet.”

The NPRM also gives us what seems a somewhat slanted review of the FCC’s application—from 2005-2010—of the principles in enforcement actions under its Telecommunications Act Title I “ancillary authority.” That exercise of the FCC’s Title I authority suffered a bit of a setback in 2010, when it was repudiated by the U.S. Circuit Court of Appeals for the D.C. Circuit in Comcast Corp. v FCC.

But as the old saw goes, when the D.C. Circuit closes one door, an agency can try to open another. Hot on the heels of the Comcast decision and still in 2010, the FCC adopted several “open internet” rules—very general anti-discrimination, anti-blocking, and transparency rules sounding in some of the same principles as those articulated in the Internet Policy Statement.

Those prompted renewed challenge and, in 2014, a new decision from the D.C. Circuit in Verizon v FCC. But this time, the circuit court reversed . . . not much. The D.C. Circuit vacated the anti-discrimination and no-blocking provisions of the 2010 order, concluding—among other things—that the rules imposed de facto common-carrier status on broadband internet access service (BIAS) providers.

Trying another tack—specifically, its Title II authority—the commission adopted a new set of regulations with the 2015 “Open Internet Order.” It applied some of the stringent common-carrier requirements to BIAS providers, while simultaneously deciding to forbear the application of 27 of Title II’s provisions (and about 700 FCC implementing rules and regulations).

That time around, they argued that the language of Title II, and of Section 706 of the Communications Act, was ambiguous on the question of how to define broadband services. Hence, the FCC could interpret the ambiguous language by classifying BIAS services as “telecommunications services” under Title II, which would render them subject to Title II requirements (apart from those the FCC would forbear). And this time, the D.C. Circuit bought it; that is, the court found that the reclassification under Title II was a permissible exercise of agency discretion under then-current principles of deference to agency decision making.

And then, sometimes an agency gets that horror movie “don’t go down in the basement” feeling and closes the door it just opened. In 2018, the FCC issued its “Restoring Internet Freedom Order” (RIF):

We reverse the Commission’s abrupt shift two years ago to heavy-handed utility-style regulation of broadband Internet access service and return to the light-touch framework under which a free and open Internet underwent rapid and unprecedented growth for almost two decades. We eliminate burdensome regulation that stifles innovation and deters investment, and empower Americans to choose the broadband Internet access service that best fits their needs.

The reversal was sustained by the D.C. Circuit in 2019 in Mozilla Corp. v FCC. But now, if you’re still with me, the FCC proposes to reverse the reversal, saying (twice in one proposal) that the 2018 commission “abdicated” its responsibility in the RIF. For those new to regulatory policy, this is not what’s commonly meant by “the revolving door.”

Why? The FCC’s recent proposals—and accompanying “fact sheets”—double down on all the old policy justifications for prior regulations (and for net neutrality); and they place new stress on a rationale that had historically received less emphasis: national security.

What’s changed? We are told, among other things, that the crisis of the COVID-19 pandemic has made all of these policy rationales all the more salient, and indeed, that it “demonstrated how essential broadband Internet connections are for consumers’ participation in our society and economy.”

Perhaps, but that falls a bit short of a justification for particular regulatory proposals. Especially those so sweeping as the application of Title II common-carriage regulations (remember, the FCC forbore 27 Title II provisions and some 700 implementing regulations and orders when it adopted its 2015 rules).

Back to the FTC’s old report. For those who don’t want to bother with the executive summary, I’ll note with nostalgia that it provided a framework for evaluating broadband-access and net-neutrality issues:

[T]his Report reflects the views of the staff of an agency that enforces the federal antitrust and consumer protection laws. The statutory mission of the FTC is to protect both competition and consumers by safeguarding and encouraging the proper operation of the free market. In carrying out that mission, the FTC primarily is focused on maximizing consumer welfare, as that term is defined in an economic sense in modern antitrust and consumer protection jurisprudence. [emphasis added, so sue me.]

There were also some tentative conclusions. First, that:

The competitive issues raised in the debate over network neutrality regulation are not new to antitrust law, which is well-equipped to analyze potential conduct and business arrangements involving broadband Internet access.

Second, there was:

…evidence that the broadband Internet access industry is moving in the direction of more, not less, competition,

And third, a recommendation:

…that policy makers proceed with caution in evaluating proposals to enact regulation in the area of broadband Internet access.

In other words, evaluate BIAS-provider conduct on a case-by-case basis under the rule of reason, unless or until we learn a good deal more about systematic problems of the sort best addressed by new regulations.

If you don’t want to plow through the 2007 report, I’ll suggest the executive summary. I’ll also suggest the 2007 Chris Yoo vs. Tim Wu debate I mentioned above. I think that time has been on Yoo’s side on this, although, to be fair to Tim Wu, he was not among those who said that a failure to implement Title II regulations would cause the internet and our democracy to halt, catch fire, and fall into the virtual sea.

That old FTC report looks eerily fresh. It reminds me to question why these regulations, and why now? By all of the FCC’s own measures, broadband access (and what it means to have broadband access) have steadily improved since 2018 (and, indeed, since 2010). See, e.g., here and here. Has output of some product or service decreased? Will consumers really be better off if the FCC changes course yet again? Would consumers be better off under a “disparate outcomes” standard of digital discrimination, as the FCC has now adopted? With price regulation?

National security is, indeed, a legitimate policy concern, but the phrase “national security” is not a regulatory deus ex machina, to be trotted out to justify any darn thing one wants to propose. Or it shouldn’t be. Neither FCC proposal specifies how the FCC will safeguard national security or, to put it differently, offers any specific national-security vulnerabilities that the FCC is well-positioned to remediate, however effectively, and however efficiently.

For that matter, one wonders whether the FCC’s considerable (staff) expertise extends much to national security. And why, say, the Pentagon, the Office of the Director of National Intelligence, or the Central Intelligence Agency have not been pushing for net neutrality—much less the application of the panoply of Title II requirements (or whatever proper subset the FCC decides to apply)—to be implemented and enforced by the FCC.

The FCC’s September NPRM (with the fact sheet) ran some 128 pages. The October NPRM ran 101 pages, not counting its 87 pages of appendices. Part of what’s remarkable about the hundreds of pages is just how little they do—just how little they try—to identify any systematic market failures, much less systematic market failures due to (or even since) the FCC’s own 2018 RIF, and even much less systematic market failures that the FCC is well-positioned to remediate, efficiently and effectively, while doing more good than harm. Or how they will accomplish all of that.

The most obvious explanation seems to come in two parts:

  1. Any number of things could go wrong; and
  2. We want to be able to do whatever we want to be able to do.

Whether that will pass muster under the major questions doctrine might be a hard question. Whether it’s a convincing case for sweeping regulations and nearly unbridled agency discretion seems an easy one.