Primer on Net Neutrality

“Title II regulation of the Internet is a solution in search of a problem.”  — Logan Albright, Research Analyst at FreedomWorks

I confess, I have been putting off taking the time & effort to get up to speed on this whole “Net Neutrality” thing. I mean, I had the gist of it but didn’t know enough to talk intelligently about it. (Whether or not I can now is still up for debate.) But, feeling impelled by the recent FCC vote, I finally dug into some research to get a better handle on the issue and put together this primer. Hope you find it helpful, too.

NetNeutrality - red, urgent“Net Neutrality”, in essence, is the idea that all traffic on the Internet should be treated equally, regardless of the type of data or the identity of the customer. Sounds fair, right? The way proponents want to do this is by extending the reach of Title II. This refers to the section of the Communications Act of 1934 which declared telecommunications utilities (i.e., telegraph and old-style telephone services) to be “common carriers”, which the federal government can regulate. By declaring that Internet broadband providers (including wireless) fall under the same classification, thereby redefining the Internet to be a “public utility” rather than a mere facilitator of information-sharing, the federal government will be able to tax and regulate the Internet as it sees fit.

Title II regulation is said to be necessary to protect consumers and innovators against unscrupulous Internet service providers (ISPs) who like to 1) play favorites and 2) squash potential competition. However, none of the supposed dangers (see numbered below) have been proven. As per Logan Albright over at FreedomWorks:

“Despite allegations about what ‘might’ happen if we allow the Internet to remain unregulated, as it has, for the most part, always been, no one has yet demonstrated a market failure that would justify government intervention.”

In fact, according to researchers James Gattuso and Michael Sargent at the Heritage Foundation’s Roe Institute for Economic Policy Studies,

“[M]ost of the practices that have been identified by regulation supporters as activities that should be prohibited are in fact beneficial to consumers or are conducted by challengers in the marketplace, rather than by the big, dominant firms.”

In his statement encouraging adoption of “Net Neutrality”, President Obama listed four primary concerns that the new regulation will address. They are the need to:

1) Eliminate Blocking (i.e., an ISP’s ability to block customer access to certain (legal) websites & services)

2) Eliminate Throttling (i.e., an ISP’s occasional slowing down or speeding up delivery of select content)

3) Eliminate Paid Prioritization (i.e., requiring certain services to pay a fee, lest they be kept in a “slow lane”)

4) Increase Transparency (i.e., applying “Net Neutrality” rules to points of interconnection between the ISP and the rest of the Internet, not just the “last mile” between ISPs and consumers)

This all sounds reasonable and very egalitarian, and, if they were actual threats, they might be worth pursuing. But, as Logan Albright and others have pointed out, it is actually a “smokescreen” for what the real impact of such regulation would be. In this article, Albright gives counterarguments for each of the four above. It all comes down to economics (the best allocation of finite resources) and free-market capitalism (competition through product differentiation, responding to consumer demands), without requiring unnecessary hurdles and costs. Albright concludes:

“The president’s push for Net Neutrality stems from a misguided egalitarian instinct that doesn’t make sense when dealing [with] the incredible diversity of web content. Providers need to have the flexibility to allocate their resources as their customers demand, not be forced to adhere to a strict standard that doesn’t differentiate between text, video, audio, or interactive content.”

Speaking of transparency (see #4 above), if the President’s 317-page “Net Neutrality” plan was so great, why wasn’t it made public? (This sounds really familiar.) One reason might be that people would be able to read for themselves how the plan gives the federal government — i.e., the Executive Branch via the FCC — ultimate control of Internet service provision and use in America. (Thanks to Ajit Pai, one of the two Republican FCC Commissioners, for giving us the heads-up.) In other words, it is yet another example of Executive overreach by this administration.

Also, remember how I mentioned taxes earlier? You better believe the government will use this newfound authority to its benefit, and that includes taxes, taxes, and more taxes. According to an article in Reuters by Americans for Tax Reform’s Grover Norquist and Patrick Gleason:

“Under this decision to reclassify broadband, Americans would face a host of new state and local taxes and fees that apply to public utilities. These new levies, according to the Progressive Policy Institute (PPI), would total $15 billion annually. On average, consumers would pay an additional $67 for landline broadband, and $72 for mobile broadband each year, according to PPI’s calculations, with charges varying from state to state.”

Obamacare for the InternetAdvocates of “Net Neutrality” claim that the recently extended Internet Tax Freedom Act would prohibit extra taxes and fees by state and local authorities, and, as an extra safety measure against them, suggest that the FCC can designate broadband as an interstate service. Norquist and Gleason explain why such assurances are false. They also explain why higher taxes and intrusive regulation are bad for the economy.

Some dissenters against “Net Neutrality” are most concerned with the free-market implications — that is, the government will be able to interfere with ISPs’ freedom to provide service how and to whom they want. The Competitive Enterprise Institute’s Ryan Radia says,

“It’s not about speech being regulated by the government. It’s about speech being regulated by private companies [as they have a right to]. If you build a network, you own it, you operate it and you decide that your policy will be just to allow certain types of messages. You should be free to do that. Of course, your subscribers are free to choose who their provider is.”

FCC Chairman Tom Wheeler insists, “This is no more a plan to regulate the Internet than the First Amendment is a plan to regulate free speech.” That is sort of ironic, since it obviously is about Internet regulation, and some opponents see that it could have consequences for free speech, as well. (In fact, many of its advocates insist that “Net Neutrality” is necessary to ensure freedom of speech.) As conservative activist and attorney Matt Barber told Charlie Butts at “One News Now”,

“We know that any speech that the progressive left disagrees with they want to classify as ‘hate speech’. I’m concerned about the free speech aspects of this on the Internet as well.”

The FCC’s Ajit Pai agrees. With newfound authority to regulate Internet service directly and indirectly, the Executive Branch could indeed instruct the FCC to crack down on those it sees as ideological threats or merely in the way of its agenda. (Sort of like it does with the IRS, EPA, etc.) This goes hand-in-hand with the fact that such regulation would increase the government’s ability to spy on its citizens. (As if it isn’t bad enough having companies like Google and Facebook pressured to turn over user information.)

To add insult to injury, Pai thinks this recent push for “Net Neutrality” is largely a political move by the Obama administration.

“If you look at some of the reports, it’s pretty clear the White House was casting about for a political issue after the November election and they settled on net neutrality.”

He also says that the FCC was originally headed in a different direction, until the administration pressured them into pursuing this more aggressive, “progressive” plan, which is contrary to the government regulation-free Internet agreed upon by the Clinton administration and Congress in the 1990s.

“It means,… instead of the Internet being governed by engineers, technologists, and innovators, it’s going to be governed by lawyers, bureaucrats, and politicians. It’s a massive shift toward government control of how the Internet works and nobody knows exactly how this brave new world is going to play out. One thing is for sure, it’s going to be bad for American consumers and entrepreneurs going forward.”  — Ajit Pai, FCC Commissioner

As of Feb. 26th, the FCC voted 3-2 in favor of the President’s proposed Title II regulation of the Internet. Now, the courts will likely begin reviewing the plan, if they haven’t already. They rejected earlier such attempts in 2005 and 2010, finding that the FCC didn’t have the necessary authority. The new proposal has even broader ramifications, so let us hope and pray that the current courts also see the wisdom in striking this down. Congress will want to weigh in, too, as they should. But, their options are limited, as they will likely need a lot of bipartisan support to pass a veto-proof bill against it. Regardless, the battle will continue for a while, so we “the People” must continue to make our voices heard on this issue!

“Title II regulation of the Internet is a clear example of unnecessary federal overreach that would saddle ISPs with the same costs and inefficiencies as traditional utility carriers, with no clear justification for doing so.” — Logan Albright

For the full analyses by FreedomWorks and Heritage, respectively, follow these links:

“Issue Analysis: Title II Regulation of the Internet”

“Beyond Hypothetical: How FCC Internet Regulation Would Hurt Consumers”

Also, for an audio discussion on Title II from the Cato Institute, check this out: “Net Neutrality, Obama and Oatmeal”

Finally, Nick Sanchez at Newsmax put together this quick list of “7 Reasons Net Neutrality Is a Threat to Your Freedom”.

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