When we first heard about the idea that Title II might be used to regulate the internet we asked a US professional we knew and listened to him blaspheme down the phone for about ten minutes, holding the phone away from our ears. It appeared he did not like the idea. It turns out that he must have been a Republican, rather like Ajit Pai, one of the FCC commissioners who tore into the decision by the FCC, with his dissent to the decision.
This is a party political divide and most people who discuss it, who are Americans, have made up their mind before they read the decision, and many of them, we are sure, won’t bother reading the detailed decision.
“I don’t agree with it because I haven’t read it,” may be a weak position to argue from, but then “I don’t need to read it because I know what it is going to say,” has been most people’s position throughout the debate.
We don’t know what’s in and what’s out in the new version of Title II proposed by Tom Wheeler and he has pointed out on a variety of interviews that the FCC regulated cellular with a document that had 19 of the 48 Title II regulations ripped out, and that he is ripping out 27 for broadband.
As an outsider, used to the rather more left-wing politics of Europe, we find this kind of dogma amusing – the words Title II are enough to make people foam at the mouth. The details don’t matter. But don’t get us wrong, in Europe we have our own dogma, which of course we understand, when it affects you directly, it’s not quite so funny.
But here’s the rub. The US leads a lot of European legislation and often insists on Europe sitting alongside it in its approach. And what happens in the US often sets the tone to what is expected elsewhere. So the US political dogma is likely to affect us in Europe one way or another – so we’re more than a little interested.
Right now in the EU, the president is pushing for a similar but weaker piece of legislation, perhaps when it is totally unnecessary – perhaps to be in step with the US. In Europe no operators are threatening to slow traffic down, and all are obeying the European Commission, in agreeing to Net Neutrality, and no-one is threatening to sue anyone over it. But the new European legislation will allow for ISPs offering different levels of service to customers.
So let’s look, one by one at the criticisms that Ajit Pai levelled at the FCC decision. Because as of now we cannot look at the rulemaking itself, because it has not been published.
He said that for twenty years there has been a bipartisan consensus in the US in favor of a free and open Internet, unfettered by government regulation. We have to agree, except that lately the internet has had multiple infractions of those principles in the US in terms of “fast lanes” and payment for connectivity. The timing is right because that bipartisan support was about to break cover.
His next point is that it only happened because President Obama told the FCC to do it. We would respectfully suggest that Obama only said out loud what he thought, because he was worried that the FCC was unsure of the mood of the moment. Funnily enough Republicans were not keen to point out that during Bush’s reign, AT&T was created with mergers okayed by the FCC, when clearly they were NOT in the best public interest – involving mergers with AT&T, SBC and Bellsouth in 2005 and 2006 to create a Telco which is really hard to do business against, after only having it broken up in 1982.
That was a dogmatic republican agreement, pro-big business, at the expense of the community, and it was “obviously” influenced by the government in power. However it was not criticized as such because Bush never said anything about it in public that was remarkable or leading.
If the FCC has its decision overturned by a court simply because it happened to coincide in its decision with the known beliefs of a current president, then every decision that the FCC has ever made, could be up for grabs.
Pai raises the specter of the government controlling the internet, which is not as absurd as it seems – except in the US. China’s government has been instrumental in controlling comments on the internet, and censoring the success of companies like Google inside China, in favor of home grown companies. But does the idea of a fair and open internet really allow the US government the opportunity to meddle? Well not exactly, but this is the concern of the Republicans. There is a tendency for governments to meddle and if not governments, then their agencies, and these agencies can be pretty partisan and extreme. Well that’s true if you were talking about the CIA and its phone tapping of overseas government leaders, but the FCC? Really?
Pai is effectively calling what the FCC has done in this decision political meddling, but more worrying is that subsequent FCCs will have power to question the way things are run at ISPs in the US. It has the potential to become a continual political football once the internet is Title II.
That’s a valid concern and once the instrument of control is in place, then it doesn’t matter that the original FCC decision was benign, if the result is that someone can subsequently regulate pricing, make the investment case for the internet weaker and make its focus too consumer friendly and not profit friendly. But until we read the detailed 27 forbearance regulations, we won’t know, and Wheeler has made it clear that control over pricing is out.
But if that’s the only concern, then as a European we suppose we cannot see it, because we are used to government meddling, while as an American we think many might be worried. It is an issue, but let’s put that aside for a second and deal with the rest of Pai’s comments.
Pai says that rate regulation is next. The FCC chair has said that will not be part of the deal. Pai focuses on zero rated peering charges, but this is what they are today, so there’s no change there. Will this be mandated? Well he has seen the document, and losing out on peering charges is not such a big deal and it takes away an area that ISPs have recently abused – connectivity charges like those charged by Comcast to Netflix (but not anyone else).
He accuses the FCC of being ready to take away your favorite pro-consumer service plan. That’s just sour grapes, as this is done on the back of 4 million comments asking the FCC to act. Again we did not read those 4 million comments, but if press coverage was something to go on, then about 66% of them were pro-Net Neutrality.
Broadband bills will go up he says. Well they are going up, they have always gone up. Cable raises broadband almost every year the FCC might be able to prevent that, but they cannot cause it. This is not a US only situation – Broadband everywhere is price insensitive, and dollars per megabit per second has always gone down, quite rapidly, especially in cable. The shift to DOCSIS 3.1 will likely raise overall broadband revenue slightly, but the total data delivered will go up dramatically.
The FCC will tax the internet, he says – not unless it wants a revolution.
Consumers’ broadband speeds will be slower. Now here we have to really argue with Pai. DOCSIS 3.1 will be rolled out. Vectoring over DSL will be rolled out. LTE Advanced will be rolled out. They are all faster. Broadband speeds have never got slower anywhere.
Then he asks us to compare the broadband market in the US to that in Europe, where broadband is generally regulated as a public utility. He says that it is cheaper in the US and faster. He is deluded. Europe is a ragbag and very few offer slower internet than the US, and almost all of the countries charge less. $30 for a quad play, which is typical in France, is way less than any US price. France also has way more fiber per head of population.
He points out that 82% of Americans have access to 25 Mbps broadband speeds. By access to does he mean that they actually have it? And only 54% of Europeans do. In most European countries 95% of consumers have access to that speed, but not being quite so rich as Americans, less of them buy it. That’s just us being poor.
He says that in the US, average mobile speeds are 30% faster than they are in Western Europe. Now that might be true right now. But average broadband speeds are higher in most of Western Europe and far cheaper. This is interesting in that cellular is hardly regulated at all in Europe, and here was are falling behind, driven by slow build outs, due to excess profits. In the highly regulated fixed broadband Europe is ahead. Go figure? Dogma just doesn’t work.
His point appears to be that cellular is more expensive in Europe and we agree with him, but fixed lines are cheaper and prices in Europe for Quad plays are coming down dramatically.
The plan will reduce competition and drive smaller broadband providers out of business. What smaller broadband suppliers? US incumbent telcos drove the CLECs out of business using a court decision to remove price regulation at the local loop. At a stroke, competition in the US was dealt a savage blow. Smaller companies in broadband do not flourish in the US because there is a monopoly mentality at AT&T and at Verizon.
He insists that the plan is opposed by the country’s smallest private competitors and many municipal broadband providers. Monopoly rules from a monopoly era will move us toward a monopoly. He can’t call them monopoly rules since AT&T had bankrupted ALL of its competition before the Communications Act was drafted in 1934, and it was introduced to prevent AT&T providing bad service and yet still having a monopoly. It brought in universal service obligations to AT&T. It is true that it was too late for the telephone industry. Let’s hope that it’s not too late for the internet industry.
But his next comment really demonstrates where the attack will come from on this rulemaking – Pai says that the plan was not formulated at the FCC through a transparent notice-and-comment rulemaking process, it was dictated from the White House, “Through an unusual, secretive effort inside the White House.”
If it is true that there has been a parallel White House version of the FCC writing this legislation, then we’d be surprised, because it would lead to a way of challenging the rules once they are a) known fully b) in place. Let’s hope not.
Finally he says that the plan has “glaring legal flaws,” that are sure to keep the Commission mired in litigation for a long, long time. Pai is certainly a lawyer and if he says this, perhaps we need to take him seriously. But having been sent back after a court failure, and advised by a practicing judge to redraft this move, the FCC Chair was acting on legal advice and is sure to have taken as many protective measures as possible. And what happens if, when Verizon and AT&T read the details proposals, they realize that it is their best chance to remain in the broadband business, and not be entirely pushed out. It has to be remembered that AT&T and Verizon have not added a single broadband customer to their total subscriber base (16.4 million at AT&T and 8.9 million at Verizon) since 2007. They have failed to invest, failed to compete and failed to change.
The rulemaking has not yet been made public, though Pai has certainly seen it. The rulemaking will now go back to be redrafted in light of Pai’s comments, which by our account probably means it won’t change a jot.