No, the FCC Isn’t 'Overturning Net Neutrality': Set aside the Chicken Little fears about the internet dying

By Andrea O'Sullivan of Mercatus.

"The left is in a veritable state of hysteria as the Federal Communications Commission (FCC) moves to vote on Chairman Pai's deregulatory "Restoring Internet Freedom" (RIF) order on Dec. 14. It's gotten so bad that incensed supporters of so-called "net neutrality" have taken to harassing commissioners' children and even threatening to kill a congressman.

It's a nasty state of affairs, and it's one unfortunately driven by a lot of false rhetoric and outright fearmongering over how policy is actually changing. Telling people that a policy change will "end the internet as we know it" or "kill the internet" can agitate troubled people into doing crazy things.

In truth, the Obama administration-era "Open Internet Order" (OIO) that the FCC is overturning has little to with "net neutrality" at all. In fact, the OIO would still allow internet service providers (ISPs) to block content—to say nothing of the many non-ISP tech companies that can and do openly suppress access to content.

Furthermore, repealing the OIO does not mean that the principles of "net neutrality" will not be upheld, nor that ISPs will be "unregulated." Rather, the RIF will rightly transfer oversight of ISPs to other regulatory bodies in an ex post fashion.

The OIO allows all kinds of content filtering

One of the biggest misconceptions of the OIO saga is that it achieved "net neutrality." It didn't. While proponents like to spin a lot of rhetoric about "treating all traffic equally," the actual implementation of the Obama administration's regulations did nothing of the sort.

As my Mercatus Center colleague Brent Skorup has tirelessly pointed out, the OIO did not require all internet actors—ranging from ISPs to content platforms to domain name registrars and everything else—to be content-blind and treat all traffic the same. Rather, it erected an awkward permission-and-control regime within the FCC that only affected a small portion of internet technology companies.

Not even ISPs would be truly content-neutral under the OIO. Because of First Amendment concerns, the FCC could not legally prohibit ISPs from engaging in editorial curation. The U.S. Court of Appeals made this very clear in its 2016 decision upholding the OIO. ISPs that explicitly offer "'edited' services" to its customers would be virtually free from OIO obligations. It's a huge loophole, and it massively undercuts any OIO proponent's claims that they are supporting "net neutrality."
But importantly, the OIO still allowed the vast majority of internet companies to filter and block away to their heart's content. Indeed, one could argue that content aggregators and search engines, like Facebook and Google, have proven to be much more draconian in their censorship of controversial but legal content than the ISPs over which so many agonize. Consider the recent incident where Twitter decided to block the political speech of a pro-life American politician. Most people are far more worried that social media companies will block their content rather than Comcast or Verizon.

FCC Chairman Ajit Pai made this very point last week at an R Street Institute event on the repeal. Major edge service providers like Google, Facebook, Reddit, and Twitter have made their opposition to OIO deregulation loud and clear to their user base. Some have displayed automatic messages on their front pages, urging visitors to take action and encourage others to do the same. Yet at the same time, these services engage in kinds of content blocking that they say broadband providers could possibly do.

This hypocrisy is relevant for more than just ideological inconsistency. It's about economic power. By encouraging harsh regulation of ISPs that effectively controls the rates that major tech companies can be charged for bandwidth, these companies are engaging in a kind of regulatory capture. (It should be noted that there is some division within these firms: Google's Eric Schmidt, for instance, famously discouraged the Obama administration from pursuing these regulations in 2014.)

Not only is it unfair, it is absolutely disingenuous to the user bases that they have so inflamed with their rhetoric. These companies are not taking principled stands at all. They are trying to use the force of the state to improve their economic outlook. In Pai's words, "they might cloak their advocacy in the public interest, but the real interest of these Internet giants is in using the regulatory process to cement their dominance in the Internet economy."

Regulators will still go after bad actors

The second biggest misconception about the OIO repeal is that consumers will simply be at the mercy of unscrupulous broadband service providers without recourse or protection. This has never been true, and will not be true under the RIF either.

OIO supporters imagine a world where ISPs slice and dice internet access into tiered packages, similar to cable subscriptions. This misleading image is a popular one: It shows a hypothetical broadband package where consumers are forced to pay $10 for a "Hollywood" package including YouTube and Hulu, and a $5 "Playground" offering access to Steam and World of Warcraft. Of course, no ISP has ever come close to proposing anything like this arrangement, but this scenario has curiously lodged itself as a chief anxiety of many "net neutrality" supporters.

Recently, this hypothetical fear metastasized into a seemingly real threat. None other than Tim Wu himself, the brains behind the concept of "net neutrality," shared a scary story about the dystopian world of Portuguese broadband provision, where ISPs had seemingly started to act more like cable companies. An image shared by Silicon Valley congressman Ro Khanna seemed to confirm this worst-case-scenario, sharing an image of a breakdown of Portuguese telecom packages by category.

But there was a huge problem with this story, as an excellent post by Ben Thompson pointed out. That Portuguese telecom provider was not slicing and dicing the 'net for no reason, but rather was an offer for an extra 10 GB of access to a collection of apps on top of the existing family data plan for €25 a month, or about $30. There are examples from the U.S., too. In 2010, then-tiny MetroPCS began offering zero-rated, or discounted, access to YouTube content to be competitive. But net neutrality activists went berserk over this benefit to MetroPCS customers, putting this and similar services in legal jeopardy. Consumers like these kinds of plans because they can be cheaper than all-inclusive data packages while giving them access to the services that they really need.

These kinds of unhelpful hoaxes underscore the fears that "net neutrality" rhetoric has instilled into the public. Sometimes, as is the case with Portuguese example, an alleged "violation" is actually a valued (and voluntary!) option for many consumers. But in general, people believe that the OIO repeal will usher in a world where ISPs can do whatever they want without having to answer to anyone. Of course, this was not true before the OIO was instituted in 2015, and it will be even less true under the RIF.

The debate has never been over "regulation" vs. "no regulation" of ISPs. Rather, it's a question of whether it is more appropriate for an oversight body to observe market activities and intervene when foul play is suspected, called "ex post regulation," or whether a beefed-up precautionary regulator should preemptively prohibit new service innovations until private bodies can prove them to be in the public interest, known as "ex ante regulation."

The latter approach obviously stems new innovation and investment considerably, and in fact a study from the Pheonix Center found that broadband investment was choked to the tune of some $30 billion each year due to the OIO. Furthermore, introducing a Soviet-style ex ante regulator into the mix creates opportunities for regulatory capture and corruption.

The RIF will actually provide a more robust regulatory framework that then one that proceeded the OIO. It will transfer oversight of ISPs to the Federal Trade Commission, which has decades of experience ensuring consumer protection, privacy, and security. It will return to transparency rules established by the FCC in 2010, which would require broadband providers to disclose their network management practices, thereby cutting down on the potential for sneaky behavior. And most importantly, it would achieve these "neutral network" goals without erecting a Depression-era system of permission and control that is both costly and susceptible to corruption.

The OIO allowed content filtering anyway. The RIF is a far better way to promote a fair and innovative internet that does not bring the many costs of the OIO.

Keep calm and binge on

People who maintain that the sky will fall and the internet will forever change for the worst after the FCC votes to ratify the RIF later this month are either misinformed or unfortunately opportunistic. Moving oversight of ISPs from a permissioned ex ante regulatory regime to a permissionless ex post one not only makes plain sense, it is the kind of framework that allowed the internet to develop into the powerhouse of innovation that we enjoy today. The internet is important in our lives, and it is easy to see how people can get upset when they are told that a policy change will ruin it forever. But a brief examination of the facts shows no such threat, and in fact the RIF is what can actually preserve the internet that we all know and love."