These days, there’s a lot of discussion about something called Title II. It’s a boring name for an issue that could not be more important: access and support to the Internet, the marvelous ecosystem we enjoy, and to what degree it should be regulated. There is no doubt that the issue generates a lot of feelings, but unfortunately these feelings get more airtime than the facts.
A case in point is a recent editorial from the New York Times calling for regulation of broadband providers under Title II of the Communications Act, the statutes that governed the Ma Bell telephone monopoly for fifty years. The editors assert that the Federal Communications Commission “could soon allow phone and cable companies to block or interfere with Internet content.”
This is an egregious and irresponsible misstatement. Nowhere in the FCC’s two-page Notice of Proposed Rule Making released in May does it say such or can it even be interpreted that the FCC would allow blocking of Internet content. The NYT editorial is framed as a plea to President Obama, but it’s actually an insult to both the President and his appointed FCC Chairman Tom Wheeler to mischaracterize the FCC’s proposal. It’s worth remembering that President Obama made the appointment of commissioners to discharge their responsibilities to the agency in service of the nation, and the Senate unanimously approved the choices.
In any case, here are five good reasons not to support Title II reclassification, a possibility under consideration from the FCC’s proposal:
- There are better ways to govern modern broadband networks than with monopoly telephone era rules.
The NYT asserts that the FCC needs to use Title II to “reclassify broadband Internet service as a telecommunications service, which would allow regulators to prohibit phone and cable companies like Verizon and Comcast from engaging in unjust or unreasonable discrimination against content.” However, there are already ample rules on the books under consumer and competition law that protect against blocking and discrimination. They haven’t been invoked because there haven’t been violations. There is simply no business incentive to block content, and broadband providers don’t do it. Indeed, comments from attorneys’ associations to the FCC’s NPRM suggest that if Title II were to come into play, they would be disempowered from bringing court cases against broadband providers, should such abuses occur.
In any case, the DC Circuit Court, the FCC, and many Democrats support the authority contained in Section 706 of the 1996 Telecommunications Act, which allows the FCC to pursue any disturbing conduct on a case by case basis. This is the proper approach when there is no evidence of abuse or market failure.
- Title II opens the door to regulation not just of broadband providers but also of Internet and software companies, operating systems, and devices.
Why stop at net neutrality when you can go for search neutrality, content neutrality, and platform neutrality? The French government, smarting from the market power of “American giants,” the GAFTAM (Google, Apple, Facebook, Amazon and Microsoft), recently issued the report Platform Neutrality: Building an open and sustainable digital environment as groundwork for a new regulatory regime for the Internet value chain. Leading American supporters of net neutrality have noted the need for search neutrality. In any event, it’s hard to square the popular notion of “permissionless innovation” with an Internet that is increasingly regulated.
- Title II reclassification will likely create 5-10 years of litigation with an uncertain outcome.
Should the FCC suddenly reclassify broadband as a highly regulated common carrier service, it will face a stiff burden in court to justify its about face. For the last 40 years, the FCC has expressly chosen that such services be only lightly regulated. Moreover common carrier regulations have been relaxed for the airline, railroad, trucking, bus, and cellular industries. The vast majority of Americans choose a non-common carrier for voice services. The FCC would have to disprove the economics not just of other industries, but of their own reports—and the President’s—that the broadband industry is increasingly competitive. Additionally, the FCC would face First and Fifth Amendment challenges, as the regulation could be construed as obstruction of speech and taking of property. The FCC’s net neutrality rules have twice been struck down in the courts, which is not a good batting average for the Commission. Worse still, if the FCC is caught up in protracted litigation, it will be distracted from important initiatives such as the IP transition, spectrum reform, and a new public safety network.
- A decade of utility regulation in the EU has resulted in loss of investment and next generation access coverage.
There is no reason to speculate what will happen should utility style regulation be applied to broadband; just look at the EU record. As Christopher Yoo describes in his new report US vs. European Broadband Deployment: What do the data say?, for the period 2011-2012, next generation access (NGA) to networks with speeds of 25 Mbps and higher was available to 82% of households in the US, but just 54% of the EU. The coverage of 4G/LTE mobile in the US is three times the rate of the EU, and fiber to the home (FTTH) is nearly double.
There is low NGA coverage in the EU because of low investment. As I show in my new report, the rate of broadband investment in the EU has plummeted from more than a third of the world’s total a decade ago to less than one-fifth today. Meanwhile, Americans, just 4% of the world’s population, have enjoyed nearly a quarter of the world’s broadband investment for the same period. Capital that would have gone to European networks came to the US instead where it could be invested under limited regulation.
- The myopic focus on broadband networks comes at the cost of lost attention to people and digital skills education.
Politics is about making choices. Politicians and regulators have limited time, and can implement 1-2 policies at best. The other downside of the European approach is the effort spent on regulating networks takes political energy away from developing people and their skills for the digital economy. The European Commission’s own 2014 Digital Scoreboard shows that 90 percent of jobs require at least some amount of digital literacy and nearly 40 percent of the EU workforce is not ready. Some 100 million Europeans have never used the Internet.
As my colleagues at Aalborg University discuss in their new paper on the future of telecom regulation, modern nations are moving from the paradigm of the regulatory state to that of a developmental state. Many EU leaders and regulators advocate phasing out utility style regulation in favor of policies that promote investment in networks and envision broadband as an enabler of the digital society, not the national regulatory project. Imagine the positive outcome that could be created if supporters of regulation of networks redirected their energies to the development of human beings.
If there are so many good reasons not to regulate broadband under Title II, it’s a wonder why the NYT supports it. The answer is simple. Because there is scant evidence of the actual blocking of content, support for Title II is based on the theoretical notion that such laws are needed to prevent broadband providers from doing so. It’s unfortunate that the NYT Editorial Board bases their opinion on feelings and myth, not fact.