The Internet Innovation Alliance is deeply disappointed with today’s DC Circuit decision affirming the FCC’s Open Internet Order. Unfortunately, the Court has missed a unique opportunity to continue the bipartisan policies that have spurred 21st century broadband wired and wireless infrastructure investment and brought high-speed Internet access services and applications to Americans throughout the nation. As the parties now consider their appellate strategies, we again reaffirm our call for Congress to step in and take a leadership role to adopt bipartisan legislation that ensures both an open internet and the policies necessary to expand critical private investment in next-generation broadband networks.
In the final installment of Larry Irving’s Title II discussion, he talks about the role he believes Congress should play in preserving the open Internet, and whether Congress should seek a bi-partisan compromise on net neutrality.
Our Co-Chairman Larry Irving has recorded a series of videos for our Let’s Get Nerdy series on net neutrality, Title II, and the potential for Congressional action. Here, he talks about the approach to tech policy during his time with the Clinton Administration, and whether there are lessons from then that should be applied today.
On December 4, oral arguments will be heard by the U.S. Court of Appears for the District of Columbia Circuit on the legality of imposing Title II regulations on broadband providers. In advance of the arguments, our Co-Chairman Larry Irving has recorded a series of videos for our Let’s Get Nerdy series on net neutrality, Title II, and the potential for Congressional action.
In this first installment, Larry is asked: What is net neutrality? And does net neutrality necessitate the Title II regulation that the Federal Communication Commission is moving to apply to broadband?
Tomorrow, Part 2 of the series, in which Irving talks about the approach to tech policy during his time as part of the Clinton Administration.
When the FCC moved forward with Title II reclassification, proponents of the regulations claimed it would lead to more investment and more competition in the cable and broadband industries. But as Dow Jones reports, that’s already being proven wrong:
In May, Cablevision Systems Corp. Chief Executive James Dolan publicly implied that his family-controlled company could be a prime acquisition candidate amid needed cable-industry consolidation.
Nobody on Wall Street or in the media world knew how seriously to take the comments, made at an industry convention. After all, the Dolans had been at the altar in the past, but price was an obstacle and it wasn’t clear if the family would part with its core asset.
Why is Dolan selling Cablevision? Among the reasons:
People familiar with the Dolans’ thinking said the price was too good to pass up, and they believe Mr. Drahi will be a good steward. Another issue: Charles “Chuck” Dolan sees certain industry developments, such as utility-style “net neutrality” regulations and cable “cord-cutting,” as negatives for the future, making it a good time to cash out, people familiar with his thinking said.
As for what the sale will mean for the industry, and consumers:
As the Dolans bow out of Cablevision, the cable industry will lose a formidable contrarian voice. Because of its family-controlled roots, Cablevision wasn’t afraid to take different paths from its larger cable peers. It was the first operator to deploy tens of thousands of outdoor Wi-Fi hotspots, allowing it to offer an alternative to cellular phone service that transmits calls over Wi-Fi. It also fought a landmark legal battle against major media companies that legalized the cloud-based digital video recorder. It took on Viacom Inc. in court to press for the right to “unbundle” TV channel packages, a case that is pending.
Our Honorary Chairman Rick Boucher talked with Jeff Hawn of RCR Wireless News for an article on Title II and net neutrality. In the article, Boucher argues that Congress needs to recognize the principles of net neutrality, but that Title II is simply an outdated fit when it comes to regulating broadband. An excerpt:
Boucher’s viewpoint is supported by a recent Georgetown study co-authored by Kevin Hassett of the American Enterprise Institute and Robert Shapiro of the Georgetown Center for Business Policy.
In the study, they write that Title II regulation is “likely to increase costs and regulatory hurdles for providers. Introducing substantial, new regulation of the businesses that provide much of the Internet’s infrastructure and content could not only raise the cost and price of most Internet communications, it also could reduce the efficiency of most network arrangements that depend on Internet platforms, devalue the investments made in those platforms or based on them, and force many organizations to reorient their enterprises in ways that would minimize the costs of the regulation rather than maximizing efficient operations.”
“The uncertainty of Title II will likely cool the willingness of ISPs to make investments in their infrastructure, the net effect of which is that we won’t get the broadband build-out we otherwise would,” Boucher added. “Additionally, companies will be more cautious with new innovations. Essentially Title II hits the slow-down button and it’s the American consumer who will suffer.”
A recent Georgetown University Study by Kevin Hassett and Robert Shapiro confirms that the Federal Communications Commission’s (FCC) decision to subject Internet Service Providers (“ISPs) to “Title II” public utility regulation will “have significant adverse effects on future investment in the Internet.”
The study highlights how new regulation can have a “destructive, negative effect” if capital investment is delayed as a result of the need to resolve new market uncertainty. It notes how the history of FCC regulation of Internet companies has been surprisingly uniform and consistent. Whether under a Democratic or Republican Administration, the historical arc of broadband regulation gravitated toward a light-touch deregulatory approach that treated the Internet as an information service rather than a heavily-regulated telephone common carrier service.
Such treatment of broadband as an information service allowed the pace of Internet adoption to rapidly exceed that of the personal computer or dial-up Internet service. Technological advances and competition accelerated broadband uptake by lowering its “average, quality-adjusted price” that further accelerated its uptake. By contrast, studies have detailed how common carrier regulation inhibited competition for consumers and businesses, and discouraged and slowed innovation in telephone service.
Consumers now, however, bear the risks of the FCC’s decision to reverse course and impose new regulations on ISPs that today provide much of the Internet’s infrastructure and content. Such regulation could ultimately result in increased costs and price for Internet service beyond new universal service fees. Moreover, the Georgetown study notes how the regulatory path toward Title II may result in reduced efficiency of key network arrangements that depend on the Internet platform. Reduced efficiency could have the long-term negative effect of devaluing the investments made in those platforms or based on them and thus trigger many in the Internet ecosystem to minimize the costs of regulation rather than maximize efficient operations.
In addition, the study identifies scholarship that quantifies the negative potential impact of telecommunications regulation on broadband investment. For example, the ban on “paid priority” arrangements could affect telemedicine applications and cost the economy $100 million per year by 2019. More generally, Title II regulation of ISPs could reduce their “future wireline investments by between 17.8 percent and 31.7 percent per year, and their future total wireline and wireless investments by between 12.8 percent and 20.8 percent per year.”
The study’s authors also raise helpful international comparisons to better understand the imminent consequences of Title II regulation on broadband investment. Specifically, they note the “large negative effects on investment” if our nation’s regulatory model were moved closer to the heavy-handed regulations that governed Europe’s communications landscape in the first decade of the 21st century.
Finally, the Georgetown study’s most sobering point is how the “negative effects of uncertainty” resulting from the FCC’s sudden policy shift and on-going litigation may actually understate the harm of reduced broadband investment.
In light of this additional evidence and the potential harm to broadband and consumers, the Internet Innovation Alliance again emphasizes its support for a bipartisan legislative solution to promote an Open Internet without overly burdensome Title II Common Carrier Regulations for 21st Century broadband.
At CNBC, our Co-Chairman Jamal Simmons has an op-ed explaining how the Federal Communications Commission’s new open Internet rules could be swept away with the next presidential election, and how Congress should make permanent in law prohibitions against slowing, throttling and creating Internet fast lanes without imposing public utility-style regulation on broadband. An excerpt:
All those who care about preserving an open Internet that maintains the flexibility to innovate and develop new products and services without entrepreneurs having to seek government permission should support a new law. A new law won’t be perfect and will require both sides to make compromises, but it is a far better path to certainty and avoids legal and political wrangling that could tie advancement up for years, slowing down innovation and economic growth in the meantime.
Voters should ask Congress to pass an open Internet law before all attention turns to the presidential campaign. Otherwise, the next president will hold in her — or his — hands the future of the open Internet. Protecting such an important resource from the whims of shifting presidential political winds is among the most important things voters can do to keep the economy growing.
Earlier today, our Honorary Chairman Rick Boucher returned to Sirius XM’s “Morning Briefing” to once again talk technology and regulations with host Tim Farley. Asked to respond to presidential candidate Sen. Rand Paul’s pledge to overturn the FCC’s recent Title II classification, Boucher argued that a congressional repeal be ineffective (the President would simply veto the resolution), and that a bi-partisan bill offered by Republicans would be a better path — especially for Democrats, since the current net neutrality rules could be swept away in the next election.
In response to the publication of the Federal Communication Commission’s (FCC) Title II Net Neutrality decision in the Federal Register, we encourage Congress to craft legislation in order to avoid legal challenges and market uncertainty. The publication of the decision starts the clock on potential legal challenges, and given that the FCC’s rules will soon take effect, Congress should use this window of opportunity for legislation that sets forth permanent rules to advance Internet openness, continued investment, and innovation in the nation’s vibrant 21st Century digital broadband economy.
Our Honorary Chairman Rick Boucher has an op-ed in Thomas Jefferson Institute’s Jefferson Policy Journal arguing for bipartisanship, rather than heavy-handed regulation, to keep the Internet growing. An excerpt:
Not surprisingly, the policies that have fostered this growth and today’s open Internet have largely been bipartisan. Everyone favors good, clean, well-paying technology jobs and the companies that generate those jobs. This bipartisan consensus extended to the Federal Government as well. Back in the 1990s, during the Clinton Administration, the Federal Communications Commission (FCC) raced to do all it could to get the Internet to as many Americans as possible and to keep it free from overly burdensome public utility regulation that then applied to telephone companies. Two decades later we see the results of bipartisan efforts in the form of the free, open, privately-networked Internet that we enjoy today.
And equally unsurprisingly, anything that threatens this consensus and the Internet on which our economy increasingly depends should be of first importance to Virginia.
Unfortunately, the FCC’s new “net neutrality” rules attempt to promote an open Internet by imposing regulations designed for public utilities, such as gas and water companies. Imposing these so called “Title II” regulations on the Internet introduces unnecessary uncertainty into the broadband marketplace, and it could threaten the future investment that is essential to promoting an innovative, growing, and vibrant Internet-centric economy.
By treating the competitive multi-media Internet as a 20th Century “common carrier”, the FCC’s decision opens the door to Internet regulations modeled on the rules that were developed for the Ma Bell telephone monopoly and for other monopolies that offered a single service and were regulated in virtually all aspects of their businesses. Under the light touch regulation that has applied to the Internet since the Clinton era, investment across the information ecosystem has produced an Internet economy that is the envy of the world. A regulatory environment welcoming to investment was at the foundation of that success, and it is now threatened.
1. The courts
3. A new president
4. The budget
These are the five perils Julian Hattem of The Hillrecently highlighted as potential pitfalls for the FCC’s new net neutrality rules. Hattern’s full piece is required reading for anyone concerned about the future of the Internet, since it casts a light on sheer amount of uncertainty the rules are already causing.
An excerpt about the threat of deadlock from the piece, featuring our own Honorary Chairman Rick Boucher:
For now, given the FCC’s current makeup of three Democrats and two Republicans, any company asking for exemptions to the net neutrality rules is likely to be rejected.
But if that should happen to change — for instance, if a Democratic president is unable to move his or her nominees through a GOP-controlled Senate after the current commissioners’ term expire — the agency could be stuck in a 2-2 deadlock, which would automatically grant an exemption, known as forbearance.
“It’s not too far out there,” former Rep. Rick Boucher (D-Va.), who helped write the 1996 law undergirding the FCC’s authority, recently told The Hill.
“In that circumstance, if a forbearance petition is filed and they don’t act on it, it could be deemed granted.”
In the wake of the FCC’s controversial decision to regulate broadband services under Title II, our Honorary Chairman Rick Boucher spoke with Jim Puzzanghera at the Los Angeles Times about the possibility of Congress formally enshrining net neutrality into law. An excerpt:
Rick Boucher knows as well as anybody that net neutrality is the type of complex technology topic that Congress finds difficult to handle even when Democrats and Republicans are getting along.
But the former 14-term House member, a longtime player on Internet policy who now heads a telecommunications industry trade group, is optimistic that the controversial Internet issue could be a surprising source of compromise in a time of partisan gridlock.
“Each side can give the other the thing it wants the most,” Boucher, a well-respected Democrat who is honorary chairman of the Internet Innovation Alliance. “This is an optimal moment to legislate.”
In the wake of the FCC officially implementing Title II regulations on broadband providers, the organization Tech Freedom put together this handy infographic highlighting the problem with the Commission leaning on forbearance.
The need for a permanent legislative solution to guarantee an open Internet against all risks, present and hypothetical, has been greatly enhanced by the confusion and lack of clarity that Title II proponents have created, perhaps unavoidably, as we break with 20+ years of bipartisan support for light-touch regulation of the Internet and charge forward on treating the most innovative sector of our economy as if it’s among the least. Even net neutrality champions have seemed flummoxed.
For example, one of the loudest champions supporting public utility style regulation for the nation’s broadband ecosystem was Netflix. Netflix publicly pushed the White House and the FCC to embrace Title II as a means to achieve marketplace concessions and prevent assignment of higher costs for consumption of greatest bandwidth. Yet, when Netflix’s Chief Financial Officer was asked at an investment conference this week, “Were we pleased it pushed to Title II,” he replied: “Probably not. We were hoping there would be a non-regulated solution.”
Netflix’s CFO was hardly alone in expressing concern for the potential harms that could cascade from treating the most dynamic and innovative sector of our economy as the most in need of Washington’s control. CloudFlare CEO Matthew Prince eloquently shared his “deep concerns” that the use of Title II to achieve net neutrality protections could well snatch defeat from the jaws of victory – “proponents of a free and open Internet may look back on today not as a great victory, but as the first step in what may turn out to be a devastating loss”. According to reporting by the Wall Street Journal, erstwhile net neutrality champion Eric Schmidt even lobbied the White House against use of the thermonuclear Title II option.
The lack of appreciation for the harms associated with the FCC’s decision to impose public utility style regulation (Title II) on broadband has not been limited to Netflix. During a recent CNBC interview, Title II proponent David Karp, founder and CEO of Tumblr, similarly made statements regarding the proposed Net Neutrality regulations that ironically affirmed why a “light-touch” regulatory approach is superior to Title II to maintain the current open, robust, and investment-friendly Internet. Mr. Karp and others have been led down the proverbial primrose path to believe that Title II is the only solution to keep any potential abuse at bay. However, it is worth reviewing many assertions made by Mr. Karp and other Title II advocates and the realities that contradict them.
The Title II rules will not “slow down innovation.”
Not true. Innovation developed at the Internet’s ‘edge’ by companies like Tumblr depends on robust high-speed broadband wired and wireless networks to reach consumers. Innovative success stories such as Tumblr thrived precisely because Title II was not applied to the Internet ecosystem. Title II regulations that slow broadband investment by Internet service providers will ultimately harm Internet innovation by those hoping for robust and rapidly-improving service.
New rules are needed to achieve “a competitive market for carriers where they’re competing to deliver us the fastest, best Internet.”
That market exists today. It’s the very market in which Tumblr has thrived. The U.S. benefits from robust competition among both wired and wireline Internet providers – competition that exceeds that in Europe, which today maintains Title II-like regulations on Internet providers.
Concerns that Title II will restrict investment “have been disproven.”
There is currently “a lot of artificial throttling going on, [even though broadband providers] have the bandwidth to deliver this.”
Not really. Allegations of throttling are hypothetical. In fact, the FCC found only four instances of alleged anticompetitive throttling behavior, and all occurred before 2010. The core challenge remains: Managing the exponential explosion of content and data generated by “killer content”, such as Netflix’s popular “House of Cards.” Carriers desperately search for more spectrum for mobile broadband services, which is why wireless companies just spent $45 billion at the recent FCC spectrum auction gobbling up airwaves to provide mobile Internet services. But broadband providers, and new entrants such as Dish, may not make such desperately-needed investments in the future if they believe that Title II will inhibit their ability to recoup.
Title II will “move further in breaking down the near-monopoly situation we have right now.”
What monopolies? No broadband company has as much market share as the leading search engine or many of the leading tech players. Today’s broadband market is vibrantly competitive as consumers have multiple Internet options in markets across the U.S. Title II does not “break down” monopolies, since it was crafted to manage and regulate the one service provider that existed in the 1930s monopoly telephone market.
Despite Title II, providers will continue to build the broadband Internet at faster speeds and that the carriers are “just lying” when they claim otherwise.
Really? Public Internet service companies are responsible to their shareholders and logically invest only in markets where they have an ability to recoup their capital. Investment suffers in markets—like Europe—where a Title II-like regulatory regime prevails.
Today the FCC voted 3-2 to impose Title II regulation on the Internet. In response, our Honorary Chairman Rick Boucher had this to say:
The FCC’s decision to embrace Title II regulation over the Internet now creates an opportunity for Congress to craft a non-partisan legislative solution that provides the legal certainty necessary to preserve and maintain an “open Internet” without the burdens of utility-style regulation. After more than a decade of wrangling about the proper regulatory classification of broadband services and the scope of the FCC’s authority, it is time for Congress to provide the certainty that consumers and industry need. IIA looks forward to working with members of Congress to ensure that the promise of broadband remains available for entrepreneurs, innovators and America’s consumers without a return to the days of utility regulation.
Earlier today, our Honorary Chairman Rick Boucher testified before the Subcommittee on Communications and Technology on the effects the FCC’s Net Neutrality proposal will have on the future of the Internet. In his testimony, Boucher — who served on the House Energy and Commerce and Judiciary Committees, along with the subcommittees on Communications, Technology and the Internet during his time in Congress — urged Congress to take up the issue via legislation. An excerpt:
If a Republican wins the 2016 presidential election, the new Administration would be unlikely to support a writ of certiorari to the U.S. Supreme Court if the rules are struck down by a U.S. Court of Appeals. It would be unlikely that in such an event the FCC in a Republican administration would initiate a new network neutrality proceeding. In fact it is probable that an FCC with a Republican majority would, as an early order of business, undertake a reversal of the reclassification order that will be approved tomorrow.
For these reasons, the network neutrality assurances of tomorrow’s reclassification order rest on a tenuous foundation. They are at risk of being lost. Legislation is, therefore, a superior solution. It would be virtually impenetrable from a judicial challenge, and would resolve this debate with a statutory permanence and degree of certainty not available through the regulatory process.
Over the weekend, the San Francisco Chronicle published an op-ed from our own Larry Irving on the perils of the FCC reclassifying the Internet under Title II. An excerpt:
Advocates of net neutrality decry court rulings suggesting that the FCC might not have authority to protect the open Internet, and so utility-type regulation of broadband under Title II of the Communications Act is seen by many progressives — and by the president and his advisers — as the only way to unambiguously assure the FCC’s authority. Yet Title II regulation of the Internet seems like the wrong solution to those of us who support an open Internet but fear the impact of burdening still-evolving wired and wireless networks with centuries-old rules.
The U.S. government declaring the Internet an essential utility and applying Title II rules will also have an impact on policy deliberations about the Internet in other nations. Since the inception of the Internet, the U.S. government has urged international policymakers and regulators to exercise regulatory restraint. To reverse course at this critical time in the development of the global Internet seems self-defeating.
With the FCC expected to vote on regulating the Internet under Title II next week, our Honorary Chairman Rick Boucher appeared on Sirius XM’s The Morning Briefing to break down the potential negative effects the FCC plan could have. Give it a listen.
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