FCC Website Crash Doesn’t Free the Internet

Apparently, the guy with the HBO comedy show doesn’t think innovation is a good thing. So John Oliver, host of  “Last Week Tonight” decided that it’d be a good idea to encourage his fans to a website that would take users to a page to file comments to the Federal Communication Commission about its plans to roll back Obama-era rules on so-called “net neutrality.”

The FCC website crashed, and Oliver fans took credit for pushing so much traffic to the site that it couldn’t handle it. The FCC claimed its website had been hit by a cyberattack after Oliver’s segment.

In a true case of irony, it would appear that Oliver fans think crashing a website secures Internet freedom. In another apparent delusion, they also believe that net neutrality regulations are helpful in giving Internet access to more people. In fact, a rollback of the two-year-old rules return the Internet to a place where it has thrived for nearly 20 years.

When President Clinton broke down the barriers created by the telephone companies trying to dictate how the emerging digital economy should evolve, it was heralded as a breakthrough for competition. The Internet was born, and nothing has been the same since. The world shrank as billions of people became virtually connected.

Then, suddenly in 2015, the rules changed, and the Internet was treated like a utility to be regulated rather than an innovation to be nurtured. To hear Bret Swanson, president of Entropy Economics LLC, a strategic research firm specializing in technology, tell it, the oddly timed push toward net neutrality was a “cause in search of a purpose.”

Now, Ajit Pai, the head of the FCC, is calling to roll back the 2015 net neutrality rules. Swanson explains:

Pai’s approach will now do three things: (1) return broadband to its original classification as a Title I information service; (2) eliminate one of the 2015 order’s most mischievous policies, the ‘general conduct rule,’ under which the FCC gave itself nearly unlimited power to govern the entire digital economy; and (3) seek comment on the order’s so-called bright line rules on blocking, throttling, and paid prioritization.

What does this mean? Net neutrality proponents like former FCC Chairman Tom Wheeler, who ushered in the 2015 regulations, claim that rolling back Title II, which essentially designates the Internet as a utility, will cause a slowdown or blockage of Internet content to end users because it will permit service providers to price their services. Others say that it means people will only have access to what they’re willing to pay for.

But Swanson say Wheeler and other critics have it all wrong. In fact, he calls Wheeler’s grasp of the impact of Title II  “a near total misunderstanding of the technology, economics, and history of the Internet.”

Title II, with its price controls and endless permission slips, would have delayed the buildout of residential, enterprise, and mobile broadband networks. The general conduct rule and bright-line ban on prioritization may have blocked the emergence of important ‘paid priority’ technologies like content delivery networks (CDNs) and paid peering, which were essential for Web video, and prohibited industry partnerships, such as the Apple-AT&T hook-up that made the iPhone possible. Until Pai ended the investigation, Title II was already starting to chill an important new practice, known as free data, which allows content providers to subsidize the data consumption of consumers.

Indeed, a fascinating description by Babette Boliek, a Pepperdine University law school professor, explains just how onerous the “General Conduct Rule” in the Open Internet Order, (a.k.a. the “net neutrality” regulations) is.

It is a regulatory steam valve where the FCC gives itself permission to regulate anything it can’t think of now that it might think of (or be convinced of) later, which may ‘unreasonably’ interfere with the FCC’s ever expanding definition of ‘net neutrality.’ That includes anything that may ‘unreasonably’ disadvantage … well, anyone.

… Think of it this way. What if you sell lemonade by subscription? For a monthly fee, you send your subscriber two gallons of any variety of lemonade the consumer selects from a list of 50 varieties (all the lemonade in the world). Several other lemonade subscription services are vying for your customers so you come upon a creative competitive idea — in addition to the two gallons of lemonade the consumer selects from the list of 50, the consumer may also select an unlimited amount of lemonade from a subset of the 50. Great idea! More for the consumer at the same price! Since the unlimited amount will come from a subset of the 50, the consumer who craves variety will likely use her two gallon allocation to pick a new type of lemonade — one not from the subset that she can get free. It’s a win for the consumer, a win for the less popular lemonade producer, and a win for you, the lemonade subscription seller.

But what if someone argues that this ‘unreasonably’ disadvantages a lemonade producer? Is that really the most important takeaway from this lemonade example? Shouldn’t we focus on how happy the consumer is? How is ‘disadvantage’ even defined?

Boliek concludes that “FCC policies that focus on the costs borne by corporations and businesses almost to the exclusion of actual benefits for consumers are just bad policy.”

Had Title II standards been applied to the Internet in the 1990s, we might never have enjoyed “supercomputer smartphones, Netflix, GitHub, Google Maps, Kindle, Facebook, endless cloud services, and online everything,” which includes the future of digital innovation — connected cars, mobile health, and 5G wireless, for instance. Some people may say this is a good thing. But the imposition of net neutrality rules in the past two years appears to have slowed capital investment and smaller providers have been prevented from expanding their market share. As a result, consumers are the ones denied access and options.

So is this what John Oliver is protesting, a free market that benefits consumers and the economy? That seems like a fight without an argument.

Read more about the rollback of Obama-era Internet regulations.