May 2017 Archives

May 30, 2017 11:20 AM

Correcting the [Revisionist] History of Internet Regulation

The FCC's NPRM to re-examine its Net Neutrality rules was just adopted and, with it, the Internet giants' advocacy groups have launched a misinformation campaign.  Over the past couple weeks, a number of articles have appeared that float revisionist history in an attempt  to embarrass FCC Chairman Ajit Pai--who aims  to return Internet regulation to the "light touch" approach favored since the dawn of the commercial Internet (during the Clinton administration) until 2015.

First, the Washington Post (owned by web giant Amazon) offered an "analysis" entitled "The Trump administration gets the history of Internet regulations all wrong."  Then, the website Ars Technica took the Post's "analysis" as fact to deliver an article with the even-more-smugly-insulting title, "Ajit Pai accidentally supports utility rules and open access networks."   More recently, the website TechCrunch repeated many of the same mistaken facts, but divorced from the "gotcha" rhetoric in the first two articles. 

The contortions these writers have gone through to argue that Chairman Pai inaccurately described Clinton era Internet policy could have been avoided had they gone straight to the horse's mouth.  The Clinton FCC's Office of Plans and Policy conveniently published a "Working Paper," in July of 1999, which provides great detail on the agency's approach to Internet regulation.  The paper is entitled "The FCC and the Unregulation of the Internet." (emphasis added)   

Most of the inaccurate narratives in the advocacy referenced above essentially conflate Title II of the Communications Act of 1934, the Telecommunications Act of 1996 ("Telecom Act" or "the Act"), and pre-Telecom Act FCC service classifications.  Let's try to go through some examples in context.    

"Without government oversight, phone companies could have prevented dial-up Internet service providers from even connecting to customers." (Post)

"Those [Title II] rules kept phone companies from charging dial-up Internet providers extra or blocking their connections." (Post)

Not true. In 1980 the FCC commenced a series of rulemakings (the "Computer Inquiries")  in which it decided not to regulate--at all--the new "enhanced services" being created through the combination of computer and telephone services. Telephone services would continue to be subject to the existing web of FCC, DoJ, through the MFJ  (the settlement order resulting from the AT&T antitrust case), and state regulations that already applied to these services.

This meant that a call to an "enhanced service provider," like an ISP, was treated like a call to any other end-user.  No additional charges applied because dial-up service was a call to an unregulated end-user.  Aside from having no commercial incentive to block ISP customers (in those days, customers often bought an extra line just to access the Internet), a telephone company who refused to route an end-user's call to an ISP would have been in violation of numerous federal and state laws/regulations.

"The FCC regulated phone companies under Title II of the Communications Act of 1934, which mandates that the agency ensure that services like telephone networks treat all customers equally."
 
Not exactly.  As noted, the FCC, the DoJ (through the MFJ), and state regulators all regulated some aspect of telephone companies' provision of local telephone services.  While Title II certainly applied to these services, Title II did not "require that . . . telephone networks treat all customers the same." It does, however, require that all services be available to similarly-situated customers on similar terms and conditions.  See 47 U.S.C. Sect 202(a)
 
"In 1999, the FCC used its authority under that section [Title 2] of the law to enact "line-sharing" rules that forced phone companies to let competitors offer DSL over their existing telephone networks. . . ."  (Post)  

Sort of, but needs clarification. This statement conflates the general common carrier obligations of Title II under the 1934 Act with the additional specific obligations Congress imposed on incumbent local exchange carriers ("ILECs") under the Telecommunications Act of 1996 ("the Act").  In exchange for the ability to provide long distance voice service, ILECs had to undertake additional obligations to open the local exchange market to competition.  See 47 USC Secs 251 (c) and (d).   

One of the specific, ILEC-only, obligations imposed by the Telecom Act was the duty to make available for lease, on an "unbundled" basis, certain network elements ("UNEs").  One of these UNEs, ordered by the FCC in its 1999 UNE Remand Order, was the high frequency portion of a local loop--which was already being used by another LEC to provide voice service to the customer--in order to facilitate the provision of ADSL service. This UNE was also referred to as "line-sharing," but is not synonymous with "unbundling."

"The line-sharing (or "unbundling") requirements remained in place throughout the four years of President George W. Bush's first term in the White House." Finally, in August 2005 . . .  the FCC voted to eliminate the line-sharing requirements on phone providers. Bush's FCC had previously decided not to impose line-sharing requirements on cable Internet service . . . ." (Ars Technica)

Needs clarification. This statement reflects confusion and a lack of understanding regarding two things: 1) the FCC's decision in 2002 not to classify cable modem service as a Title II service, and 2) the effect of the FCC's unanimous decision to apply that same classification to wireline broadband Internet access service in 2005. First, the Commission's 2002 cable modem classification was about whether to apply the general, 1934 Act, common carrier obligations to cable modem service. 

The FCC had no authority under the Telecom Act to impose line-sharing, or any other unbundling obligations, on cable companies.  Thus, it is incorrect to state that the FCC "had previously decided not to impose line-sharing requirements on cable Internet service."

Finally, when the FCC unanimously changed the classification of wireline broadband service in 2005 (consistent with its previous classification of cable modem service), the line-sharing UNE was no longer available by operation of law.  However, competitors providing a telecommunications service, such as voice, and DSL service could (and still can) lease the entire local loop as a UNE. 

"[the FCC's line sharing decision] gave customers a choice of broadband providers that today's users might find bizarre. A consumer guide that ran in The Washington Post's Sunday Business section in 2003 featured 18 DSL services available here."  (Post)

Misleading.  Readers will mistake the number of providers in the Post's guide with their competitive effect in the market.  If we look at the FCC's early "broadband" reports, which define "high speed" Internet access service as at least 200kbps downstream (less than 1% of the current FCC definition of broadband), we can see the relative significance of various technologies/competitors in the market.*   
 
Broadband technologies 2000-2005.jpg
The underlying data, which I didn't include in this chart, shows that the CLECs' share of ADSL services in RBOC markets was generally around 5% from December 2000 through December of 2005 (I was unable to find the FCC report with the December 1999 data).  See, e.g., Table 6 of the Report for the data as of 12/31/05.  

However, even this number dramatically overstates the CLECs' importance in the broadband market, as it was evolving.  For example, as of the end of 2005, ADSL's total share (all ILECs + CLECs) of the market for services between 2.5mbps and 10mbps in one direction was only 16%.  See Report at Table 5. Aside from the fact that this "heyday" of "broadband" competition affected very few consumers back then, it's even harder to see how advocates could seriously argue that a return to this era would help any consumers now.
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Future net neutrality advocacy pieces will, no doubt, continue to offer their own versions of the Internet giants' revisionist regulatory history.  But, as they do, they would do well to sticking with subjective interpretations of the "inconvenient truth" instead of simply making up facts that better suit their contrived narratives.  As that great Democratic Senator from NY, Daniel Patrick Moynihan once said: "Everyone is entitled to his own opinion, but not his own facts."


*Comparing CLECs with RBOCs (vs. all ADSL, or all high-speed service providers) offers a more accurate depiction of CLECs' role in the market (than CLECs/ADSL or CLECs/ADSL + Cable Modem)  because: 1) CLECs were concentrated in the urban areas served by the RBOCs, and 2) the RBOCs had to demonstrably to comply w/the FCC's unbundling rules in order to be able to enter the long distance market. 

May 16, 2017 8:16 AM

Oliver's Army

On April 27th, FCC Chairman Ajit Pai delivered a speech, describing the Commission's plan to take another look at the agency's regulatory treatment of Internet service providers.  Pai explained that his concerns with the Commission's current Internet regulatory regime--that monopoly era regulations would stifle broadband growth and service innovations--were shared by every FCC Chairman (Democrat and Republican) since the Telecommunications Act of 1996 was signed into law by President Clinton.   

Furthermore, he noted, it was only after the application of political pressure from the White House that the previous Commission adopted the more draconian "common carrier" designation (under Title II of the Communications Act of 1934), 

And what was the problem that Title II was supposed to address? We were warned that without it, the Internet would suddenly devolve into a digital dystopia of fast lanes and slow lanes....Did these fast lanes and slow lanes exist? No. The truth of the matter is that we decided to abandon successful policies solely because of hypothetical harms and hysterical prophecies of doom. It's almost as if the special interests pushing Title II weren't trying to solve a real problem....

Pai speech, p. 2.

As if on cue, the special interest groups started cranking the hysteria immediately.  A week and a half later, comedian John Oliver from HBO couldn't wait to reprise the bit that made him famous...literally.

john oliver search.png

If you missed John Oliver's segment a week ago, the gist of it was "if you disagree with me/the special interests/Internet giants, it's because you are either: 1) stupid, or  2) 'on the payroll' of the [evil] ISPs."  Chairman Pai was targeted, personally, as being both.  Predictably, the FCC's website was promptly shut down by DDOS attacks, the Commission received "comments" in the form of racial/xenophobic insults directed at Pai, and the Chairman/his family were personally threatened ...all courtesy of "Oliver's Army."

Oliver's style of argument--and that of the special interest groups he is aligned with--is known as the ad hominem fallacy, and it is used when a party is unable, or unwilling, to refute the facts, or reasoning of the opposing side.  Thus, those who question, or oppose, this view are referred to as "shills" in sympathetic publications.

The ad hominem argument is not intellectually persuasive, as it necessarily substitutes reason for venom.  However, it can be as invigorating to those who already "believe" in a cause as it is polarizing to society in general.  Perhaps Oliver thinks that since his sneering, "too-smart-for-you" condescension and contempt for anyone who thought differently worked out so well against President Trump, why not use it in every debate?  

This unproductive, and uncivil, style of discourse has infected even normally pragmatic lawmakers in this debate.  For example, in a speech to a net neutrality advocacy group about the FCC's decision to re-examine ISP regulations, Rep. Frank Pallone (D-NJ) concluded,

[i]f you're truly American, and care about the country and its democracy and the Bill of Rights and capitalism and competition, you should be on the side of Net Neutrality.

Pallone Speech at Open Technology Institute of New America Foundation (where half (5/10) of the $1million+ donors are affiliated with Google or Microsoft), see video at 25:47.  Was Pallone--like Oliver--trying to appeal to the worst instincts of the masses, as some have suggested?  I'd like to think no, but when you attack the person and not the argument, there is always the chance that someone will take the attack . . . well, personally.

The Antidote to Sneering Condescension and Vitriol

If anyone took the venom of Oliver's Army personally, it wasn't Chairman Pai.  He has consistently taken all the invective hurled at him (and it's been prodigious) with a sense of humor, a good-natured attempt to diffuse the rancor, and a commitment to listen to any reasoned concerns about net neutrality rules.  A good example is this "Mean Tweets" video he put out on Saturday (5/13). 



Perhaps Pai's good humor and generosity of spirit had some effect.  For whatever reason (perhaps due to a return of some long-lest sense of shame?), this past Sunday John Oliver put out a second, Internet-only, video asking his followers to observe some decency, as well as respect for the law.  Oliver noted, in addition to asking viewers to omit racist/vulgar comments from their invective, that the FCC's "Sunshine Act" rules prohibit advocacy on a matter in the week preceding a Commission vote on that matter. 

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In the second half of the 20th century, the city of Rio de Janeiro was home to a kind of self-described mystic, named José Datrino, but better known as the Prophet Gentileza (Kindness).  Gentileza was convinced that a return to human kindness was the only antidote for the chronic and widespread malaise/unhappiness afflicting modern society.  His most famous quote, which succinctly distilled his message, was "gentileza gera gentileza," meaning "kindness begets kindness."  Initially, of course, some people thought he was crazy, but over time he became a much-loved cultural icon. See, e.g., this video by Marisa Monte.   

Gentileza.jpg

 
The recent presidential election, and the exacerbated social polarization/incivility that have accompanied it, have only confirmed that vitriol and bile only lead to more of the same.  Perhaps there is hope that the tone set by Chairman Pai in the replay of this often-contentious economic debate will be enough to moderate the useless, angry rhetoric between Oliver's army (the Internet platform giants) and the nation's many ISP infrastructure providers.