Despite all the lobbying money, all the public fearmongering, and all the threats of disaster and doom from the big ISPs and their minions, the FCC will vote this month to classify Internet service providers as Title II common carriers. The proposal put forth by FCC Chairman Tom Wheeler is a watershed event.
That this is occurring in 2015 instead of many years ago is due to several factors. For one, the FCC has kicked this can down the road for decades, with various commissioners taking a milquetoast approach or instituting rules that carried no weight. As the courts noted, the rules imposed on the ISPs by the FCC in 2010 were baseless because the FCC itself had declined to classify ISPs properly. These massive monopolies and oligopolies were still technically “information services,” not telecommunication providers.
All of that is now poised to change with the FCC vote coming later this month. Tom Wheeler’s proposal is to define Internet service providers as Title II common carriers, which will be regulated as such, much like telephone and electricity providers have been for decades. It is very important to note that Wheeler also includes wireless broadband providers here, which acknowledges that mobile broadband is as important as wired broadband. This means the Internet will finally be defined as a utility, not a luxury. Given the overwhelming presence of the Internet in daily life and the steady increase of that presence, this should come as no surprise. In fact, the only surprise here is that common sense has apparently won in the face of extremely stiff opposition from massive corporations.
It’s the actions of those very corporations that have brought us here. For many years now, ISPs have operated with very little oversight or regulation, and have been free to build and define their Internet service business as they see fit, with the bonus of massive amounts of taxpayer dollars lining their pockets. Billions of dollars has poured into these companies through such vehicles as the Universal Service Fund and government grants to encourage expansion of service to underserved areas.
In many cases, these ISPs have taken the money and delivered poor or no service at all. They have conspired with other ISPs to divvy up the markets so that there is no reasonable competition in broadband Internet services in most areas, leaving the majority of Americans with no meaningful choice. Along with that lack of choice and direct competition, we have seen the major ISPs become more despised than any other entity in the United States -- including the IRS. They have built giant businesses based on delivering as little service as possible for as high a price as possible at enormous profit.
Market forces cannot level this playing field. The market is powerless against the collusion, profiteering, and extortion these corporations have engaged in for years. Essentially, these ISPs have broken the system, and now, the system needs to change to fix the problem. This is why the FCC is proposing Title II classification. There is no such thing as self-regulation in a market with no competition, and the big ISPs have abused this situation for long enough.
It has been fascinating to see Tom Wheeler’s position change over the course of the past year. Originally, he was a proponent of a King Solomon-style approach that would try to appease both sides while stopping short of Title II classification, but still try to impose some regulation of the way Internet service is delivered. He also proposed a “fast lane” approach that would allow some traffic prioritization -- with weak definitions that would have done very little to address the real problems.
These proposals gained no traction. In fact, the FCC has witnessed one of the largest outpourings of public opinion in history, with millions of Americans writing, calling, emailing, and communicating their displeasure with the way Internet service providers have acted. Although there have been many attempts to discredit the Net neutrality concept by warping the definition into an unrecognizable specter of government interference and overreach, the fact is that most Americans live with the realities of their monopolistic ISP every day, and that experience is enough to see through the obfuscation.
When President Obama released a special statement urging the FCC to “impose the strictest regulations possible” and classify ISPs as Title II common carriers, it accomplished two things: It torpedoed Wheeler’s badly received compromise approach, but also gave him cover to ask for full Title II reclassification. After all, the President demanded as much, publicly, in no uncertain terms.
As precursor to this proposal, Wheeler presided over the FCC vote last week to define broadband Internet as a minimum of 25Mbps down, 3Mbps up. This change of definition means that 75 percent of the American public has access to one or fewer ISPs that can provide broadband Internet. As measured by the rest of the world, the United States is woefully behind in providing broadband Internet access.
In addition to all of these elements pushing for strict regulation of ISPs is a bill floated by the GOP that would play lip service to the concept of Net neutrality, yet curtail the oversight of the FCC over ISPs. It would essentially turn the FCC into nothing more than an advisory board and allow the big ISPs do more or less as they please. Clearly, that approach has not worked out well in the past, and there's no reason to believe it would in the future.
Tom Wheeler’s decision was either to go big or go home. He made the only rational choice.
But reclassification isn’t the end of the road. One of the major elements of this proposal is forbearance -- specifically which Title II provisions the FCC will choose to ignore and not enforce. Historically, the FCC has used forbearance in many industries, such as staying out of rate regulation. The provisions of this proposal could change, but it’s likely that the FCC will try to keep a light touch for now. Wheeler has stated that there will be no tariffs, no rate regulation, and no unbundling.
Unbundling would force cable companies to open up their last-mile connections to competition. They would still earn money on those connections, but competitors would not face the difficult or impossible task of building out their own physical last-mile network. This is akin to the fact that you don’t have four different phone lines or electrical lines attached to your house. In his statement he makes a comparison of the lack of unbundling to the wireless industry, which is not a truly accurate stance due to the nature of the two technologies -- it's far easier to install your own wireless cells than it is to run cable or fiber to each customer's home, especially when cable is already there.
Also up in the air, and not addressed by Wheeler, is the proposed mega merger between Comcast and Time Warner Cable. Although this merger is no longer thought to be a done deal, it's still moving forward pending FCC and DoJ approvals. This reclassification could foul that plan, which has met broad public disapproval.
If the FCC votes to uphold Wheeler's Title II proposal later this month, we can expect lawsuits from the big ISPs to occur immediately. Moreover, the details on how these regulations will be enforced remains uncertain.
But for those of us who have been advocating for Net neutrality, this is a day to celebrate. Wheeler's bold proposal, if adopted, will be the biggest win for the open Internet in the United States in history.