A year end blessing: No net neutrality

By Brian A. Rankin of CEI.

"As we approach the end of the year, it’s a natural time to reflect on what we’re grateful for. While many blessings come to mind, one worth highlighting is something we don’t have: net neutrality.

After all the years of arguments, FCC orders, and appeals, one might recoil from the mere mention of the topic. We may not look back on the net neutrality saga fondly, but it is worth recognizing what the Sixth Circuit Court of Appeals’s reversal of the Biden FCC’s net neutrality order makes possible today.

Rather than heavy-handed utility-style net neutrality regulation, the United States has a light-touch broadband regulatory regime – one that emphasizes investment, innovation, and flexible network management. The results are measurable. According to the USTelecom 2025 Broadband Pricing Index, real broadband prices have continued to fall while speeds have continued to climb.

From 2024 to 2025, the price of providers’ most popular service tiers (100 Mbps to 940 Mbps) fell by 8.7 percent, and since 2015, inflation-adjusted prices for those plans have dropped 63.4 percent. Meanwhile, download speeds have doubled, and upload speeds have increased by more than 80 percent. Consumers are getting far more value for every broadband dollar they spend.

The evidence leads to a clear conclusion: light-touch regulation is working. Americans continue to access any lawful website or video service they choose, and they benefit from a wide range of broadband plans and providers. None of the dire predictions made during the net neutrality debates – slowed traffic, blocked websites, or ISP-driven censorship – came to pass.

We should appreciate a regulatory environment that recognizes the importance of continued network investment, innovation, and competition. The strong performance of US broadband under a light-touch framework is a reminder that sometimes what we avoid is as important as what we achieve." 

Net neutrality, we hardly knew ye

By Tyler Cowen.

"That is the topic of a recent Bloomberg column.  Here is the opening bit:

One of the longest, most technical and, as it turns out, most inconsequential public-policy debates of the 21st century was about net neutrality. Now that a federal appeals court has effectively ended the debate by striking down the FCC’s net neutrality rules, it’s worth asking what we’ve learned.

If you have forgotten the sequence of events, here’s a quick recap: In 2015, during President Barack Obama’s presidency and after years of debate, the Federal Communications Commission issued something called the Open Internet Order, guaranteeing net neutrality, which is broadly defined as the principle that internet service providers treat all communications equally, offering both users and content providers consistent service and pricing. Two years later, under President Donald Trump, the FCC rescinded the net neutrality requirement. It was then reinstated under President Joe Biden in 2024, until being struck down earlier this month.

Hardly anyone cares or even notices, and the rest of the column explains why.  Here is one part of that argument:

The actual reality has been somewhat different. Bandwidth has expanded, and Netflix transmissions do not interfere with Facebook, or vice versa. There is plenty of access to go around. That has been the case during periods with net neutrality and without.

So one lesson of the net neutrality debate comes from economics: Supply is elastic, at least when regulation allows it to be.

Internet experts Tim Wu, Cory Doctorow, Farhad Manjoo and many others were just plain, flat out wrong about this, mostly due to their anti-capitalist mentality."

Good Riddance to Net Neutrality

A federal appeals court smacks down Biden’s FCC regulators

WSJ editorial. Excerpts:

"The Sixth Circuit panel ruled 3-0 that the FCC exceeded its statutory authority, citing the Supreme Court’s 6-3 landmark Loper Bright Enterprises v. Raimondo decision last year. Loper Bright overturned the Court’s Chevron doctrine, which required judges to defer to an agency’s interpretations of a supposedly vague law as long as it was “reasonable.”"

"The panel held that broadband providers are properly considered an “information service,” and as such can’t be regulated as common carriers."

"Democrats invoked a decades-old law so they could expand political control over the internet. The resulting regulatory uncertainty was one reason investment fell after the Obama rule. After Mr. Trump’s first-term FCC Chair Ajit Pai repealed the Obama rule, investment increased."

Consumers can see a net benefit from FCC’s net neutrality rule stall

By Brian A. Rankin of CEI.

"The saga of broadband regulation is finally taking a positive turn.

On August 1^st, the 6^th Circuit Court of Appeals granted a stay of the FCC’s net neutrality rule pending final review of the broadband providers’ appeal. The Court stated that “broadband providers have shown that they are likely to succeed on the merits” because “the final rule implicates a major question, and the Commission has failed to satisfy the high bar for imposing such regulations.”

It is no surprise that the FCC’s expansive net neutrality rule is in jeopardy. As detailed in my paper, Major Questions on Net Neutrality, a primer on the FCC’s brewing broadband legal fight, the major questions doctrine holds that for questions of vast economic and political significance, a regulatory agency must have clear congressional authorization for the power it is asserting. The 6^th Circuit found that the net neutrality rule involves a question of vast economic and political significance due to the importance of broadband service and the debates that Congress and the states have had regarding net neutrality. The Court also stated that “The Communications Act likely does not plainly authorize the Commission to resolve this signal question.”

The FCC should read the writing on the wall and take this as an opportunity to exercise regulatory humility and carefully limit itself to the power Congress authorized. Regulatory restraint should be the watchwords. And if the FCC continues to push the limits of its authority, the FCC’s (or any federal agency’s) interpretation of an ambiguous statute will no longer receive deference. In Loper Bright Enterprises v. Raimondo, the Supreme Court recently overturned Chevron deference, the requirement that a court defer to a regulatory agency’s interpretation of an ambiguous statute. Courts will now interpret ambiguous statutes, providing the type of check that is a foundation of our system of government.

Congress has an opportunity as well. The press secretary for Chicago Mayor Richard J. Daley once admonished reporters to “Write what he means, not what he says.” Congress, the people’s representatives, should say what it means, speaking with clarity and clearly stating the powers it is granting regulatory agencies.

The need for clarity also means that Congress should update out of date statutes such as the Communications Act of 1934. There is a need for a new communications act that embraces sensible free market, pro-competition principles that support the growth and development of the communications marketplace. A new act should clearly limit the FCC’s regulatory authority, make clear that contradictory and expansive state statutes are preempted and that the priorities are innovation, investment and competition rather than regulation and government mandate.

The winners in an era of regulatory restraint and clarity will be consumers. Technologists and entrepreneurs will have increased freedom to invest, create, and innovate without the uncertainty that comes from an expansive and ambiguous regulatory environment.

Just as consumers benefited from the years of light touch regulation that allowed broadband providers to build resilient, high capacity, well capitalized networks, consumers will benefit from the innovation and investment that occurs with regulatory restraint and clarity.

Policymakers should take advantage of this opportunity. The consumer benefits will speak for themselves."

Net Neutrality Goes Down in Court

The Sixth Circuit blocks the overreaching FCC rule, citing the Supreme Court’s major questions doctrine

WSJ editorial.

"The Biden regulatory blitz continues, but courts are beginning to do their job to stop the biggest legal overreaches. A Sixth Circuit Court of Appeals panel last week blocked the Federal Communications Commission’s net neutrality rule, citing the Supreme Court’s major questions doctrine. Welcome to the post-Chevron world.

Democrats on the FCC this spring reclassified broadband providers as common carriers under Title II of the 1934 Communications Act. This let the commission regulate broadband rates and impose “non-discrimination obligations.” The Biden FCC wants to impose political control over the internet.

But as the three-judge Sixth Circuit panel explains in an unsigned order, the law doesn’t let the FCC regulate broadband providers as common carriers. The D.C. Circuit Court of Appeals upheld the Obama FCC’s Title II rule in 2016 under the Chevron doctrine, which required judges to refer to regulators’ interpretations of laws if they are “reasonable.”

The High Court tossed Chevron this summer, in a long-overdue ruling that restored the job of judges to assess if regulators have exceeded their statutory power. Critics, including the Court’s liberals, said lower courts would struggle to review regulations in a post-Chevron world. Not the Sixth Circuit. Two of the three reviewing panel’s judges are Democratic appointees, one of whom was elevated by President Biden. The other is Chief Judge Jeffrey Sutton, appointed by George W. Bush.

As the panel explains, the Telecommunications Act of 1996 “created a new category of ‘information service’” providers separate from common carriers. The panel also cites the Supreme Court’s major questions doctrine, which requires Congress to clearly authorize significant administrative actions.

“An agency may issue regulations only to the extent that Congress permits it,” the panel writes. “The more an agency asks of a statute, in short, the more it must show in the statute to support its rule.” The FCC pointed to a catch-all in the 1934 law that lets it “prescribe such rules and regulations as may be necessary in the public interest” to implement Title II.

“But such general or ‘ancillary’ authority to fill gaps in Congress’s regulatory scheme does not suffice to show that Congress clearly delegated authority to resolve a major question like this one,” the panel writes. In the Chevron world, judges routinely deferred to administrative agencies when regulators sought to fill in such “gaps.”

The Justices have put lower courts and administrative agencies on notice that they cannot read between a law’s lines to implement policy without clear Congressional command. Will the White House hear the Court now?"

The Biden FCC Brakes the Internet With Net Neutrality

The agency revives Obama’s Title II regulation that slowed investment and kept broadband prices high

WSJ editorial. 

"Remember when progressives said the Trump Administration’s rollback of net neutrality would break the internet? Federal Communications Commission Chair Jessica Rosenworcel now concedes this was wrong, yet she plans to reclaim political control over the internet anyway to stop a parade of new and highly doubtful horribles. 

The FCC on Thursday is expected to vote to reclassify broadband providers as common carriers under Title II of the 1934 Communications Act. This will let the commission regulate providers like AT&T, including by fixing prices and micro-managing network investment. Why does the FCC need this power?

She concedes that providers don’t block, throttle or charge more to speed up sites. Yet this was the justification for the Obama FCC’s Title II power grab. Ms. Rosenworcel’s new justification is that “loopholes” in FCC oversight have left the internet vulnerable to national-security, cyber-security and privacy threats. This is ridiculous, and she knows it.

The Biden Administration notes in an FCC filing that U.S. security agencies already have and “exercise substantial authorities with respect to the information and communications sectors.” The FCC draft order lists the numerous authorities the FCC has to restrict the equipment of such foreign-controlled companies as Huawei in broadband networks.

Title II doesn’t grant the commission new national-security authority. Nor does it grant new tools to bolster cyber-security, which is the purview of the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency.

Reimposing Title II would ironically create a privacy loophole for broadband providers by stripping the Federal Trade Commission of oversight. A 2017 Congressional Review Act resolution overturned the Obama FCC’s broadband privacy regulation, which prevents the commission from re-imposing such rules.

The draft order doesn’t argue that the FCC needs Title II to protect Americans, only that it “furthers” and “enhances” the FCC’s existing power with “a broad grant of rulemaking authority to ‘prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this chapter.’”

In other words, Ms. Rosenworcel is reimposing Title II because she wants sweeping political control over the internet. The draft order even floats the possibility that the FCC could use Title II to ensure “residents of apartment buildings can choose their own broadband providers.” Does she plan to intervene in condo disputes? The draft order says the agency will “forebear” from applying most of the hundreds of Title II authorities for now. Yet it leaves the door open to applying them in the future.

Provider practices that interfere with the government’s “digital equity” goals could be deemed unlawful. The order reinstates a vague “no-unreasonable interference or disadvantage standard” that lets the FCC “prohibit practices that unreasonably interfere” with and cause “harm to the open Internet.”

What are such unreasonable practices? Carriers will find out when the FCC prohibits them using a “case-by-case review” and “multi-faceted enforcement framework comprised of advisory opinions.” In other words, the decisions will be up to bureaucratic whim. To minimize legal risks, providers will have to ask FCC permission to do almost anything. This will create enormous regulatory uncertainty that will slow innovation and investment. After the Obama FCC imposed Title II, broadband investment fell for the first time outside of a recession.

That changed after the Trump FCC scrapped the Obama rule. Investment and access to high-speed Internet surged. By the end of 2019, 94% of Americans had access to high-speed fixed and mobile broadband, up from 77% in 2015. In 2022 broadband builders laid more than 400,000 route miles of fiber, more than 50% more than in 2016.

Prices fell with more competition. A study by Casey Mulligan and Phil Kerpen for the Committee to Unleash Prosperity found that, from September 2017 to September 2023, the price index for wired internet services fell 11% compared to the overall consumer-price index. The CPI for wireless fell 21% in real terms. The biggest winners from this price decline were low-income households, which pay a higher share of their earnings on broadband.

There’s no legal, economic or equity justification for Ms. Rosenworcel’s pending power grab. It will slow the spread of 5G access. This diktat is all about asserting political control over more of the private economy—no matter the consequences."

Internet Regulation Is Back: FCC Refuses to Retire “Net Neutrality” Rules

By Brent Skorup of Cato.

"The Federal Communications Commission today voted to reinstate Title II regulations for the Internet, needlessly extending the so‐​called net neutrality controversy into its third decade and opening the agency up to legal challenges. In 1996, before most Americans knew the sound of an AOL login dial tone (ask your parents), Congress passed a law announcing a national policy “to preserve the vibrant and competitive free market that presently exists for the Internet … unfettered by Federal or State regulation.” Lawmakers wanted to protect Internet services and companies from 70 years of accumulated telecommunications and media rules, including licenses to operate, content restrictions, and frequent, politicized rulemakings.

That deregulatory policy has been a resounding success. It was not obvious in the early 1990s that US tech companies would lead the world, but today, the largest Internet and artificial intelligence companies—Alphabet, Meta, Microsoft, Amazon, and the like—call the US home. Further, on the infrastructure side, there has been tremendous investment and improvement, including the millions of miles of new fiber optics, the roadside conduit, the radio spectrum, and cell towers.

The telecom industry spends over $100 billion spending in capex annually. Even before the pandemic and new federal spending, FCC data said around 130,000 rural households were getting high‐​speed broadband for the first time every month.

Since the early 2000s, amid this rapid progress, the so‐​called net neutrality movement has urged the FCC to apply 1930s telecom laws—Title II—to Internet access services. While appreciating the Internet’s democratic possibilities, regulation advocates have long regarded the prevailing Internet and tech culture as too libertarian, too disruptive, and too troll‑y to leave to market forces and general law. Thus, these advocates argued regulation by experts was needed.

Many in the FCC didn’t need much encouragement; the agency’s areas of regulation—telegraph, telephone, broadcast‐​TV, and cable‐​TV providers—are obsolete, dying, or being reinvented with Internet technology. The Internet undermined the FCC’s authority over media distributors and regulation advocates inside and outside the agency realized that the FCC needed new problems to “solve.”

For many of us who have followed the net neutrality controversy, the FCC’s attempt to re‐​impose Title II is a tremendous waste of the FCC’s expertise and time. Since 2003, when “net neutrality” was coined, millions of households have seen their Internet speeds increase from 200 kilobits per second to a gigabit per second, due in part to the deregulatory policy of Congress and a lot of infrastructure investment. It’s difficult to identify another service Americans use regularly that has seen a 5,000-times quality improvement in 20 years.

Title II regulations, created to police the Ma Bell phone monopoly, would transform Internet access from one of the least‐​regulated services in the United States into a national common carrier service. Access providers would be subject to second‐​guessing by regulatory lawyers, interminable waiver proceedings, and the FCC’s vague, new “general conduct standard.”

The FCC faces immense legal challenges. For one, it’s hard to square Title II common carrier regulation of the Internet with Congress’ deregulatory policy for the Internet. Courts struck down two previous attempts at net neutrality regulations, though the FCC extended Title II to Internet access companies for a couple years before it was rescinded by the Trump administration. Further, net neutrality enforcement creates complex First Amendment problems that the FCC seems indifferent to. Finally, the FCC claims it has the power to be the judge, prosecutor, and jury in net neutrality enforcement, an argument that seems to violate the separation of powers, and will likely receive a chilly reception from courts.

If history is any guide, these Title II rules will compel the thousands of small Internet service providers to “lawyer up” and keep abreast of the unpredictable interpretations and pronouncements of Washington, DC, regulatory lawyers. Larger companies will grow more sclerotic and risk‐​averse, as the pernicious revolving door between regulators and corporation spins faster. Hopefully, the net neutrality controversy will be retired—by courts or by Congress—before it does much damage to the Internet services and infrastructure sectors and before it enters a fourth decade."

Competition—Not Net Neutrality Regulations—Should Determine the Future of Broadband

By Mark Jamison of AEI. 

"The internet, once an open frontier, is again at the center of a contentious debate over regulatory approaches, thanks to a Federal Communications Commission (FCC) proposal to once again impose its Title II authority on broadband providers. The nearly 30 year debate has been marked by partisan contention and regulatory oscillations. From a hands-off strategy during the Clinton and Trump administrations to the Title II regulation under Obama and various light-handed policies in between, the regulatory landscape has seen considerable flux.

At issue is who determines the future of broadband in the US: Will it be consumers and internet content providers choosing the broadband services that best meet their needs or will it be the FCC? As with any regulatory issue, it is crucial to assess the economic implications of the decision. The lessons from scholarly research are clear: Title II regulation, which was designed for monopoly telephone companies, would damage the American broadband ecosystem that consumers and businesses have come to depend on.

When the FCC relinquished its Title II control in 2017, the research available in top-tier economics journals was all theory based. In it, the predicted impacts of regulation depend on assumed marketplace conditions. Under various conditions, the regulations might hinder investment, lower economic efficiency, and be harmful to consumers, network providers, content providers, or some combination. But there are also conditions under which opposite effects occur. The models gave different results because they made different assumptions about whether providers were monopolies, how charges might be implemented, the network engineering, and the types and variety of content provided.

The somewhat mixed findings in the theoretical literature indicate that the FCC should favor ex post regulation over ex ante regulation, like Title II. Ex post regulation stops harmful outcomes without also stopping beneficial conduct. The mixed findings also point to the need for empirical investigations as their findings would reflect actual industry conditions.

The empirical literature emerged after the 2017 decision to end net neutrality regulations. The first study—conducted by scholars from Austria, Italy, and Germany—examined broadband development in 32 OECD countries from 2000 to 2021. It found “that net neutrality regulations exert a significant and strong negative impact on fiber investments.”

During the COVID era, additional empirical studies by US scholars Anna-Maria Kovacs and George Ford shed light on the comparative network performance across countries. Kovacs highlighted the benefits of the United State’s light-handed regulatory approach, finding that US download speeds exceeded those in Europe and across OECD countries for both fixed broadband and mobile broadband. Ford’s analysis revealed stable download speeds in the US, while countries with more regulation experienced statistically significant speed reductions during the pandemic.

The confluence of theoretical and empirical research findings strongly argues against the application of Title II to broadband providers. The theoretical research underscores the situation-specific sensitivity of net neutrality regulations, advocating for a judicious and flexible regulatory approach. Empirical evidence points to the negative impacts of heavy-handed regulation on fiber investments and broadband performance. The literature is nearly unanimous: Hands-off regulation is more effective than Title II like regulation.

Title II was designed for a different era and industry. It tried to address the needs of a 1930s telephone industry made up of government-protected monopolies, dominated by AT&T. Initially the FCC’s primary role in regulating telecommunications was to limit AT&T’s interstate long distance prices. Ostensibly, the prices would reflect the amount of money AT&T needed to be able to share revenue with local telephone companies while also being profitable. In reality, the numbers resulted from negotiations between the FCC, AT&T, and state utility regulators.

Today’s broadband industry is much different from the telephony of a century ago. Providers now compete, engage in market tests of new technologies and pricing systems, customize network features for diverse customer needs, and succeed or fail based on their abilities to profitably serve customers. Regulatory interference would stifle internet services’ dynamic evolution."

Brain Death at the FTC and FCC

Net neutrality and Amazon show why Congress needs to kill agencies as well as creating new ones

By Holman W. Jenkins, Jr. Excerpts:

"Amazon controls a third of online sales and a single-digit share of all retail sales. Its business is smaller than Walmart’s. How does it become a monopoly? Only through the tired trick of inventing a new category, online superstore, which it can be accused of monopolizing. Yet as not a single critic failed to point out, consumers don’t buy thousands of goods at a time. They buy one or a few. Because consumers have no trouble comparing prices at non-superstore retailers, even those specializing in a single product line, Amazon can’t usually get away with charging even a penny more than competing online retailers do.

Seeing how badly its argument was flying, the FTC then let out that Amazon had once used software to test if price hikes would stick. What business doesn’t? The need to test if price hikes will stick again reveals only that Amazon is no monopolist."

"The sequel in that case is also telling. To their credit, Trump FCC Chairman Ajit Pai and the courts undid the damage as quickly as Mr. Wheeler did it. Internet investment soon revived. We got the faster fixed and wireless speeds that Ms. Rosenworcel so head-scratchingly now wants to jeopardize all over again. The moral is one this column has preached for 20 years. Those who come to Washington to take over our tired, old agencies often do their best work in protecting America from our tired, old agencies."

Don’t drink the water: Why FCC treating broadband like a utility could make service worse

By Brian A. Rankin of CEI.

"In its initial Fact Sheet, the Federal Communications Commission (FCC) proposes to apply Title II of the Communications Act to affirm “that broadband service is on par with water, power, and phone service; that is: essential.” 

Technologically advanced broadband networks may be essential, but essential does not equal utility. Food and clothing are essential, but no one considers grocery and clothing stores utilities. This misguided approach will damage broadband service quality and investment, leading to an inferior consumer experience.

In fact, the FCC should refrain from applying utility regulation to broadband because it is essential.

Unfortunately, the FCC’s tentative Notice of Proposed Rulemaking embraces the notion that utility regulation is a panacea, where networks are protected, service is affordable and consumers benefit under the watchful eye of empowered regulators. 

Let’s take a look at what “on par” with water and other utilities would mean for this high performing essential service. In Philadelphia and other cities, it’s common to have water mains more than 75 years old.  Recently, a 120 year old water main in New York City burst, flooding Times Square and the subway system. 

Water main breaks and flooded streets occur all too frequently. The American Society of Civil Engineers 2021 Report Card for America’s Infrastructure states that there is a water main break every two minutes and an estimated 6 billion gallons of treated water is lost each day, enough to fill over 9,000 swimming pools. The report card also indicates that funding for drinking water infrastructure “has not kept pace with the growing need to address aging infrastructure systems.”

The tragic failure of Jackson, Mississippi’s water treatment plant in 2022 caused a multi-day outage in which over 150,000 people were left without safe drinking water. The failure was attributed to decades of underinvestment, causing the federal government to provide $600 million to stabilize and repair the water system.  Earlier this year the New York Times reported that Jackson’s water system is so broken that “one pipe leaks 5 million gallons a day,” enough water to serve the daily needs of 50,000 people.

What about “on par” with other utilities?

In heavily regulated California, Pacific Gas & Water’s (PG&E) utility networks have been responsible for billions of dollars in damages and loss of life.  In 2010, after a PG&E gas pipeline explosion in San Bruno that killed eight people, the company was convicted of five felony counts of knowingly failing to inspect and test its gas lines for potential dangers. The company also paid a $70 million settlement to the city. 

In 2018, PG&E’s aging electrical plant caused the Camp Wildfire that devastated the town of Paradise.  PG&E pled guilty to 84 counts of manslaughter after PG&E equipment on a nearly 100 year old transmission tower broke, causing a power line to fall and spark.  In addition to the criminal charges, the associated liability led PG&E to file bankruptcy.  PG&E is not the only electric utility to be involved in wildfires.

While not every utility has this kind of track record, these examples illustrate that utility classification only promises regulation and not investment, resiliency or safety.

In contrast, US broadband networks are well capitalized and the industry has a long and strong track record of investment, investing over $102 billion during 2022 alone. These robust and resilient networks perform effectively even under extreme circumstances such as the pandemic.

But doesn’t utility regulation ensure affordability? 

The evidence says it does not. The difference between regulated utility pricing and broadband is striking. According to Bureau of Labor Statistics data, from January 2017 to December 2022 water prices increased by 22%, electricity by 27% and gas by 55%. During the same period, overall broadband pricing increased by only 5%.    

On top of that, from 2022 to 2023, adjusted for inflation, the price for providers’ most popular speed tier dropped 18.1% and the price for providers’ fastest speed tier dropped 6.5%.  While these prices have decreased, ISPs have increased speeds to add even more consumer value.

The facts are clear. Utility regulation ensures neither network quality nor affordability.

President Biden is known for asking not to be compared to the almighty but to the alternative. If the FCC makes an honest comparison of the actual record of utilities to broadband’s impressive network investment, pricing and consumer value, it will abandon this ill-conceived effort to put broadband “on par” with utilities."

The Biden FCC’s Plan to Brake 5G

Rosenworcel wants to reimpose net-neutrality rules that are illegal and unnecessary

WSJ editorial. 

"Remember predictions that Trump Federal Communications Commission Chair Ajit Pai would break the internet by rescinding the Obama “net neutrality” rules? The internet somehow still works and is now even faster. Yet Biden regulators plan to “fix” it by re-imposing political control. 

Democratic FCC Commissioner Anna Gomez was sworn in Monday, and Chair Jessica Rosenworcel is off and running with a new 3-2 majority. On Tuesday she announced plans to reinstate the Obama regulatory regime that reclassified broadband providers as common carriers under Title II of the 1934 Communications Act.

Net neutrality has long been a rallying cry on the left. Progressives claimed during the Obama years that broadband providers had to be regulated as utilities so they wouldn’t slow or block websites. Yet providers weren’t doing so then and haven’t since the Trump FCC scrapped the Title II regime in 2018.

Instead, Americans have experienced faster broadband speeds. By the end of 2019, 94% of Americans had access to high-speed fixed and mobile broadband, up from 77% in 2015. Between 2016 and 2019, the number of rural Americans lacking high-speed internet fell nearly 50%.

Broadband investment dipped after the Obama FCC imposed Title II in 2015. But the Title II rollback and 5G rollout have produced a surge of investment. Last year the industry spent $102 billion on capital expenditure, up from $76 billion in 2016. Prices for internet service have risen 7% since January 2020, much less than the 18.2% increase in the consumer-price index.

Contrast this high-speed U.S. leap to Europe where broadband providers are regulated as utilities. By 2020 U.S. rural fixed broadband deployment led all areas in the European Union. The digital divide between Europe and the U.S. has been growing as investment per household is three times higher in the U.S.

Americans today can enjoy streaming their favorite shows without service interruptions that are common in Europe. The faster U.S. speeds and greater broadband access have enabled more technological innovation, including in artificial intelligence. Farmers can use automated and connected equipment to collect data and grow crops more efficiently.

So what problem is Ms. Rosenworcel trying to fix? Title II isn’t needed to prevent carriers from slowing down service or charging websites more for faster speeds since they aren’t doing either. Her regulation won’t address social media censorship since Big Tech wouldn’t be covered.

But Title II could provide the FCC an opening to regulate rates, though Ms. Rosenworcel says she won’t. The agency might also seek to prohibit providers from giving customers free access to streaming services on grounds that this favors some content providers.

AT&T

provides Max service at no charge to customers with unlimited plans.

Preventing companies from offering perks to consumers can’t be popular. Then again, as Federal Trade Commission Chair Lina Khan showed by suing

Amazon

on Tuesday, progressives are happy to ignore consumer welfare. Their goal is to impose more political control over the economy, and they are dusting off ancient laws to do so.

***

And without the proper legal authority. Former Obama Solicitors General Donald Verrilli and Ian Heath Gershengorn argued in a paper last week that “neither the Communications Act nor the 1996 Telecommunications Act unambiguously authorizes the FCC” to reclassify broadband providers as common carriers. They say doing so would violate the Supreme Court’s major questions doctrine.

This means the new rule without Congress’s authorization is likely to lose in court. “The contentious litigation leading to that inevitable result would waste countless resources for the government, industry, and the public, while distracting all parties from more promising efforts,” they wrote.

A D.C. Circuit Court of Appeals panel in 2016 upheld the Obama Title II rule by invoking the

Chevron

doctrine, which says courts should defer to regulators when laws are silent or ambiguous. But then circuit Judge Brett Kavanaugh wrote a dissent teeing up a High Court challenge before Mr. Pai repealed the Obama rule. Is Ms. Rosenworcel trying to compete with Ms. Khan for most legal defeats?

She wants to jam through the new rule to reduce the odds that Republicans could use the Congressional Review Act to overturn it if they retake the White House and flip the Senate in 2024. But when regulators move fast, they tend to break things, not least the law."

New Net Neutrality Rules Could Threaten Popular Services

FCC Chair Jessica Rosenworcel has initiated a new rulemaking that would enact what are largely the same net neutrality rules tried back in 2016

By Will Rinehart. He is a senior research fellow at the Center for Growth and Opportunity at Utah State University.

"Net neutrality regulations have been dead for years. They should stay that way.

Unfortunately, the Federal Communications Commission (FCC) has moved to reopen and relitigate the issue.

Net neutrality boosters believe we need strict laws to keep internet service providers (ISPs) from prioritizing, slowing down, or blocking specific types of content, such as an application or a website. Such rules were enacted in 2016, under the Obama administration. They were removed after Donald Trump's FCC chair, Ajit Pai, brokered a 2017 agreement with the Federal Trade Commission (FTC) to address potential harms caused by ISPs while simultaneously repealing strict net neutrality laws.

This was a good outcome. The FCC would serve as the expert on broadband, and the FTC would bring cases when consumers were harmed. Consumers got protection, and the FCC was prevented from adding another layer of bureaucracy (and from grabbing regulatory powers that Congress never granted it).

But now FCC Chair Jessica Rosenworcel has initiated a new rulemaking. It would enact what are largely the same net neutrality rules tried back in 2016.

A lot has happened since then. Since we last had this debate, Mark Zuckerberg went in front of Congress for the first time, the Cambridge Analytica story broke, we had the COVID shutdowns and the switch to online life, there was a riot at the Capitol, the Parler app was booted by its infrastructure providers, and we learned about the government's involvement in taking down lab-leak posts.

The law has changed and markets have changed, and yet the arguments for and against net neutrality have largely remained the same. Then as now, the strongest argument against the rules is that it puts services that people love under FCC scrutiny.

These new rules could, for example, put T-Mobile's Binge On package on the chopping block. This deal exempts YouTube, Netflix, Hulu, HBO, Sling, ESPN, SHOWTIME, Starz, and other content from counting toward the data cap on all T-Mobile phone plans. The FCC never liked this plan and might go after it again.

Cox Communications' "Elite Gamer" service could also be cut. This service is advertised to gamers who want quick reaction times from the Internet. Since 2019 Cox has offered this package for $15 a month, but it could face FCC scrutiny under these rules because it provides prioritized service.

Fortunately, net neutrality rules are not likely to survive legal scrutiny this time around, thanks to a 2021 Supreme Court decision.

In West Virginia v. EPA, the Court relied on the so-called major questions doctrine to make it more difficult for agencies to expand their power. Unless Congress has granted it explicit, clear-cut authority, the Court said, an agency cannot regulate a major economic or political issue.

This probably applies to net neutrality. Two Obama-era solicitor generals didn't equivocate in a recent legal brief on the issue, saying such FCC rules "will not survive a Supreme Court encounter with the major questions doctrine."

Just as the commission is facing a tougher court, it will also face a tougher court of public opinion. Net neutrality was meant to stop ISPs from limiting content. But several years after repeal, it feels like it's everyone other than ISPs that actually limited content.

While the companies were well within their rights to deny service, there was a dramatic cascade by infrastructure providers and platforms in the days just after the Capitol riot. When it came out that some organizing for January 6 had taken place on Parler, Google dropped the social network from the Google Play Store, contending that its lack of "moderation policies and enforcement" posed a "public safety threat." Then Apple dropped it too, and then Amazon Web Services and DigitalOcean cut ties with Parler as well, effectively taking the app off the web. 

Just last year, Cloudflare, which provides various services to help websites perform better, dumped protection of Kiwifarms. (The online forum was blamed for a wave of harassment against trans activists, though this version of events has been disputed.) The site was immediately opened to cyberattacks, and like Parler, Kiwifarms also went offline.

It turns out half the Internet has a single point of failure, and it's called Cloudflare.

And although there is justified concern about the power of platforms, the real threat of censorship still comes from the government. In Missouri v. Biden, handed down on July 4, a federal judge basically blocked key officials in the surgeon general's office, the Centers for Disease Control and Prevention, and the Federal Bureau of Investigation from contacting tech companies. Turns out that federal law enforcement has been using encrypted and self-deleting apps to communicate about "misinformation" and content removal.

When net neutrality was introduced, people feared that ISPs would become a major source of censorship. That hasn't happened. Why revive the rules now?"

How Big Tech Uses Net Neutrality To Subvert Competition

By Roslyn Layton. Excerpts:

"net neutral internet regulations have been in place for more than a decade in dozens of countries, but not in others. This inconsistency makes for a global natural experiment, which we studied in a five-year research project at Aalborg University’s Center for Communication, Media and Information Technologies by measuring mobile apps on mobile networks across 53 countries."

"To test these claims, we coded the panel countries in our study for their type of net neutrality regulation: soft, hard, or none. Soft rules include guidelines, multi-stakeholder models, and self-regulation with reported key performance indicators. Hard rules, made through legislation and administrative decree, entail price and traffic controls on broadband; prohibitions on prioritization and partnerships with broadband providers, and punitive fines for violation. No net neutrality rule countries like Australia and New Zealand opt for ex-post competition law to police net neutrality. Apart from 2015-2017 when the FCC’s Open Internet Order was in place, the US Federal Trade Commission (FTC) has policed the broadband market with competition law. However a volley of lawsuits have been waged on the issue over the years in US.

To test the premise that better net neutrality rules result in higher levels of innovation, we constructed a data-science model to record the degree to which the introduction of net neutrality rules stimulated mobile app innovation in the given country. Two enterprise-level mobile app store measurement tools provided the data for app frequency, downloads, rank, and revenue for the period 2010-2016, before and after rules were imposed.

This analysis found statistical support for soft net neutrality rules promoting innnovation (eg South Korea, Japan, Switzerland), however there was no innovation advantage for countries with hard rules (eg Chile, Canada, Brazil).

To avoid spurious conclusions from differently endowed nations, data was further regressed on two similar socio-economic countries with advanced mobile broadband networks but different rules: Denmark, which launched a ‘soft’ self-regulatory regime in 2011, and the Netherlands, which legislated the world’s toughest rules to date including bans on price differentiation in 2012. Denmark produced 115 apps in the study; Netherlands, 102. The differences thereafter were stark: the average Danish app increased in popularity rank to 26 from 42 during the period, whereas the average Dutch app decreased in popularity rank from 31 to 42. Moreover, Denmark succeeded to export the killer app ‘Subway Surfers,’ which had more revenue and downloads than the top 18 Dutch-made apps. Of the foreign apps used in the two countries over the 5-year period, just 20 apps came from countries with hard rules; 150 from soft rule countries; and 130 from no rule countries.

However, the preponderance of US apps complicated the study, an additional 302 apps mainly from the major US platforms Google, Meta (Facebook), Amazon, Apple, Microsoft, and Netflix. They were all founded years before hard rules in the US were implemented, and rules seemed to freeze the status quo in place to cement their advantage.

Looking more closely at Denmark and Netherlands found that while both countries each had 4 advanced mobile networks and many internet developers, Denmark’s commercial freedom to market mobile subscriptions was higher. Danish mobile operators were more liberated to use free data and partnerships to stimulate next generation mobile adoption, things which were illegal in Netherlands under their net neutrality rules. As a result, Denmark enjoyed greater levels of advanced smartphone penetration and post-paid contracts, allowing Danish developers a broader test bed in the local market.  

Today, both Denmark and Netherlands are part of the EU’s net neutrality regime, among other EU internet regulations. Before net neutrality rules were imposed, Europe accounted for many of the top 20 internet companies but not anymore. Today the top European enterprise is Germany’s ‘Delivery Hero’ at #53 in the global internet market value ranking. Europe’s share of global internet value is less than 2 percent on the world’s total and will soon be surpassed by Africa. Meanwhile, the US enjoys two-thirds of the internet’s market value.

China is the only nation which has succeed to produce platforms which rival the US giants — a country which has never had net neutrality rules and which hardly fits the definition of “open.” All the same, China’s TikTok surpassed Google to become the world’s most visited domain with 150 million US users and CapCut, the Chinese mobile video editing platform, has 200 million. Chinese apps like Shein and Temu exceed downloads for Amazon and Wal-Mart in USA."

How the UK Can Reform Net Neutrality Regulations and Promote Innovation

By Ryan Nabil of CEI.

"As post-Brexit United Kingdom recalibrates its approach to net neutrality, the country needs to balance competing priorities of Internet access, efficient broadband networks, consumer protection, and technological innovation. That is why efforts by Ofcom—the UK’s communications regulator—to adopt a more flexible, pragmatic net neutrality framework and seek expert comments through the recently concluded consultation is a welcome development. CEI responded to Ofcom’s consultation with feedback on the proposed net neutrality reforms and recommendations on how to meet Ofcom’s goals.

Net neutrality—or open Internet—is the principle that Internet service providers (ISPs) must treat all traffic equally without prioritizing, throttling, or blocking any particular content or service. Although broadband connectivity and the telecommunications industry have thrived in the United States under a more permissive approach to net neutrality, the European Union took a much stricter approach. The EU’s net neutrality rules was integrated into UK law through the Open Internet Access Regulations 2016 (the “Net Neutrality Regulation”), which continues to provide the main legal framework for the UK’s net neutrality regime.

Policy makers on the continent view strict net neutrality regulations as necessary for ensuring that service providers do not arbitrarily discriminate against certain content and websites. However, if the net neutrality rules are defined and interpreted too strictly—as is currently the case in the EU and the UK—it can prevent Internet service providers from offering differentiated levels of service, prioritization of traffic for specialised services, and even offering certain services altogether.

Examples where ISPs need the flexibility to distinguish between and prioritise different traffic types include video calls in life-threatening emergencies, remote-assisted surgeries, automated vehicles, and flights where connectivity is limited. Without this ability to prioritize traffic, ISPs would be restricted in their capability to offer many services that benefit consumers and help drive innovation.

That is why Ofcom’s proposals to grant service providers more flexibility in applying open Internet rules while implementing proportionate transparency requirements and monitoring mechanisms are a step in the right direction. Adopting a pragmatic, market-friendly approach that grants ISPs greater flexibility in offering differentiated retail services and prioritizing traffic flows will improve consumer welfare, promote technological innovation, and enhance network efficiency.

Among the policies Ofcom suggests, its approach to three areas are particularly noteworthy.

First, Ofcom’s proposed flexibility regarding zero-rating offers is a step in the right direction. By allowing consumers to access certain online content without reducing their overall data allowance, zero-rating can benefit consumers, especially less affluent users on low-data plan. By allowing ISPs to provide most zero-rate content while implementing proportionate transparency measures and reporting requirements, Ofcom can help improve less affluent consumers’ access to information and the overall online experience.

Second, the UK’s current regulatory framework limits the ability of Internet service providers to offer different quality levels of online access for different consumer segments. When IPSs are allowed to customise retail offers, they can offer basic subscriptions at affordable prices while offering premium services for a higher fee. By allowing ISPs to prioritise traffic to different consumer segments, Ofcom can help service providers better serve consumers, save network costs, and build better networks in the long run.

Third, in light of rapidly changing communications technologies, Ofcom is right to recognize the need for flexible rules for specialised Internet services, such as, for instance, in the context of automated vehicles and remote surgery. Ofcom rightly recognizes that various Internet services—from Web browsing to augmented reality and virtual reality applications—can require divergent connectivity needs. Allowing ISPs to tailor retail offers based on consumer needs and technological requirements will enable them to offer more customized services, improving consumer welfare and network efficiency.

Although Ofcom’s proposed reforms constitute an excellent step in the right direction, Internet reforms will need to go further. The UK’s EU-derived Net Neutrality Regulation circumscribes the extent to which Ofcom can design effective Internet rules within the existing legal framework. That is why the UK Parliament and government should update or replace the regulation with a more permissive, market-friendly legal framework.

Ultimately, Internet service providers need greater freedom to prioritize different types of traffic flows and offer different categories of services based on consumer and business needs. Such flexibility will be even more crucial in the future due to emerging technologies with vastly different connectivity requirements—from remote sensing to edge computing and the metaverse—which will require ISPs to tailor the quality of their retail offerings accordingly. 

As the next generation of wireless technologies widens the gap between basic and more advanced online applications, regulatory agility will be crucial for enabling innovation and improving consumer welfare. By adopting a more pragmatic, flexible approach to digital regulation, the UK Parliament and government should lay the legal framework that allows the private sector to spearhead innovation and promote UK leadership in emerging technologies. 

See the full text of CEI’s response here."

 

Did the Death of “Net Neutrality” Live Up to Doomsday Predictions?

By Peter Jacobsen. Peter Jacobsen teaches economics and holds the position of Gwartney Professor of Economics. He received his graduate education at George Mason University.

"This week for Ask an Economist I’m answering a question sent to me by Lawrence. He asked, “what [has] been the effect of getting rid of net neutrality?”

To answer this question, we have to wind back the clock to 2017. Then-chair of the Federal Communications Commission (FCC) Ajit Pai successfully led an effort to repeal a set of 2015 regulations on Internet Service Provider (ISP) companies originally put into place by the Obama Administration.

The simplest summary of net neutrality regulations is that they required ISPs to enable access to content on the internet at equal speeds and for equal costs. For example, your ISP charging you to get faster speeds on YouTube or blocking High Definition access on Netflix would be examples of violations of net neutrality.

The idea of paying your ISP extra to have access to certain websites is a scary one, but it appears the worst fears associated with the end of net neutrality were overstated. To some extent proponents of net neutrality are the victim of their own apocalyptic marketing.

The Rumors of the Internet’s Death Were Greatly Exaggerated

If you spent any time on the internet during the death of net neutrality, it was hard to miss it. On July 12, 2017 websites across the internet coordinated their messages for the “battle for the net.”

Websites including Amazon, Netflix, YouTube, and Reddit called their users to fight for “a free and open internet.”

On Twitter, #SaveTheInternet thrived, seemingly implying the internet itself was facing an existential threat.

After the decision by the FCC, CNN briefly declared it was “the end of the internet as we know it.”

Unfortunately for all kinds of doomsday prophets, extreme rhetoric always looks silly in hindsight when it fails to pan out.

Obviously we aren’t seeing ISPs charge users different amounts to use different websites in any systematic way. There’s no “pay your ISP to access Hulu” package yet. So already it’s clear some of the doom and gloom was over-hyped.

Fears of ISPs offering “fast lanes” to make users pay more for better service don’t seem to have materialized either. The only example of this sort of thing I could find was a Cox Communications trial of an “Elite Gamer” service. But this service was unlike the “fast lanes” hyped up by net neutrality proponents in that it never offered a less throttled experience and would have been permissible under the old net neutrality rules.

One of the biggest concerns about the repeal of these regulations was that it would lead ISPs to favor their own services. For example, AT&T owns Time Warner and HBO Max. In theory, AT&T could silently throttle speed to competing streaming platforms like YouTube and Netflix, thereby destroying competition.

So did this happen? Well it’s hard to say. ISPs don’t exactly release an annual report of internet traffic they throttle. But we’re not totally in the dark, either.

Researchers at Northeastern University developed a method to monitor throttling known as Wehe. The researchers tested data throttling before and after net neutrality, and the results are surprising.

If the researchers are right, ISPs do throttle services, but they were already doing so before the repeal of net neutrality rules. In other words, the repeal of net neutrality had little to no impact on throttling. You can check out the data yourself.

Net neutrality advocates may see this as a win because it provides evidence that ISPs engage in this process. But it seems to me this hurts the case for these regulations more than anything. Why?

The data, if correct, show that the internet net neutrality advocates fought for when they were campaigning to keep net neutrality was no different than the internet without those regulations. The internet that advocates were fighting to save already had throttling!

To me this is akin to someone who believes they’re drinking a Coke and they’re complaining about it being worse than Pepsi, only to be told they are actually drinking a Pepsi.

Another problem the data present is that most of the throttled data rates are fast enough to stream standard definition videos on YouTube, for example. Some rates are even fast enough to stream high definition.

Granted, different streaming services require different data rates, and some users have a strong preference for HD, but I personally have a hard time getting worried about being “throttled” into having my YouTube videos look like they did while I was growing up. Admittedly, I’ve never been obsessed with “graphics,” but 480p has always looked fine to me.

So, has the repeal of net neutrality been totally without downsides? Some groups claim there have been negative effects. For example, one report lists as downsides:

1. ISPs are throttling data according to Northeastern University
2. The $15 Gamer Fast Lane
3. Real-time locations of consumers can be sold by cell phone companies
4. Frontier Communications is charging mandatory equipment rental fees—including to customers who don’t rent equipment.

Points one and two have already been addressed. The Northeastern University Report shows the throttling existed before the repeal of net neutrality, and the gamer fast lane (which as far as I can tell, no longer exists) was also in compliance with net neutrality rules.

Point three may be concerning to some, but doesn’t clearly seem to follow from the net neutrality repeal. It’s not clear the government couldn’t address that issue separately.

And the Frontier Communications case was also already addressed legally without use of net neutrality laws.

Admittedly, there could be preferential throttling happening at increased rates that we don’t know about and perhaps other issues, but the verdict from what I can tell is that concerns about the repeal of net neutrality were enormously overblown.

Meanwhile, the EU, which does support net neutrality regulations, seems to have performed worse than the US during the pandemic. European regulators outright asked streaming services to throttle video speeds.

What is the Economic Reason for Throttling?

It appears the downsides from ending net neutrality regulations have been minimal, but is it true that ISPs have an incentive to throttle data? And is it bad if they do?

Proponents of net neutrality often argue against an ISP’s ability to do so because providing 5mbps speed on Netflix costs the same as providing 5mbps of speed on YouTube, for example.

But that isn’t exactly right. It’s true that technologically providing the same speed to different platforms is the same, but economically it is different.

To understand why, consider the market for groceries. Imagine Dan, Patrick, and Jon are the only three customers in the market for oranges. Patrick is willing to pay at most two dollars for an orange, Dan is willing to pay at most three dollars, and Jon is willing to pay one dollar. Let’s say the cost of producing an orange is 50 cents.

How much should the grocery store charge for oranges? Well, if it charges three dollars it will sell only one orange to Dan for three dollars in revenue and 50 cents in cost. Total profit is $2.50.

What if the store lowers the price to two dollars? Well, Dan still buys an orange and this time he pays two dollars. At the lower price, Patrick is willing to buy an orange for two dollars. The store generates four dollars in revenue and it costs them one dollar (50 cents per orange sold). This means the store has earned three dollars in profit, which is more than it got for selling the orange for a higher price.

Now what if the store lowers the price to one dollar? Jon, Dan, and Patrick all buy an orange for 1 dollar each which leads to three dollars in total revenue. Each of the three oranges cost 50 cents, for a total cost of $1.50. This time the store only makes $1.50 in profit. This is less profit than the two dollar option, so the store won’t be lowering the price to one dollar. Two dollars is the profit-maximizing price for the store. (These figures are summarized in the table below.)

Price	Oranges Purchased (Dan)	Oranges Purchased (Patrick)	Oranges Purchased (Jon)	Total Oranges Purchased	Total Revenue	Total Cost	Profit
$3	1	0	0	1	1x$3=$3	$0.50	$2.50
$2	1	1	0	2	2x$2=$4	$1	$3
$1	1	1	1	3	3x$1=$3	$1.50	$1.50

Table 1: Grocery Store Profit With a Uniform Price for Oranges

So far in our example, we’ve assumed that stores only charge one price for oranges. That assumption isn’t a bad one. In many markets, there is a single stated price for all customers at some point in time. But it doesn’t have to be that way.

Imagine the grocery store could charge different prices to different customers for oranges. Now the store could charge Dan three dollars, Patrick two dollars, and Jon one dollar. In this case the store would make six dollars in revenue (3+2+1) and have a cost of $1.50 (0.50+0.50+0.50) for a total profit of $4.50. This is the best result for the store so far!

Economists refer to this practice of charging customers different prices based on their willingness to pay price discrimination. And price discrimination exists all over the place.

Senior discounts, first-class plane seats, algorithmic pricing, and grocery store coupons are all methods through which companies try to assess and charge customers based on their willingness to pay.

Is this a “bad” thing? Well, economics as a value-free field can’t answer that question, but it can give us some insight which helps us make our decision.

The first question we should ask is, “who most benefits from price discrimination?” There are two groups who directly benefit. Consider our grocery store example. Store owners are able to make more profit when they successfully price discriminate. This is one beneficiary. The other beneficiary is customers with low willingness to pay.

If the grocery store weren’t allowed to charge different prices to different customers, we saw that the profit-maximizing price was two dollars. Jon isn’t willing to pay two dollars, so he doesn’t buy an orange. In the world of price discrimination, though, the store is able to profitably sell Jon an orange for $1. Jon benefits from this, otherwise he wouldn’t have been willing to make the trade at all! The store will try to get Jon to pay as much as he’s willing to, but it will never charge him such a high price that he doesn’t consider himself better off for the purchase.

If there is a “loser” due to price discrimination here, it’s Dan. Without price discrimination, Dan would buy an orange for two dollars. With it, the store is able to charge him three dollars.

It’s important to highlight that Dan isn’t actually worse off for buying the orange here. He is still willing to pay three dollars for an orange, so by definition he values the orange at more than three dollars. The trade is still a win-win, but Dan would certainly prefer to have been charged two dollars, other things held constant.

So what can this teach us about data throttling? Throttling involves charging relatively higher rates for different services (either by increasing the price or decreasing the quality). In other words, throttling is a form of price discrimination. And, much like the oranges, providing speed to customers for different streaming or gaming services doesn’t mean the ISP pays more to provide it.

The oranges in our example above always cost the store 50 cents to produce. But charging different customers different prices allowed the store to make more profit, so there is an implicit cost to charging a single price (in the form of losing higher profits).

ISPs, like grocery stores, are able to earn more profits by charging different rates for different speeds on websites. This is no different than grocery stores benefiting from mailing out coupons to charge different prices for the same product, or airlines benefiting from selling first-class tickets to customers who want to pay for luxury.

Those less willing to pay for internet are more likely to be able to afford it when ISPs price discriminate. So much like Jon benefitted from price discrimination, some consumers would here as well.

As far as groups who would prefer no price discrimination go, it’s possible heavy internet users who spend a lot of time streaming and gaming online would pay more if ISPs could price discriminate.

But, at least for now, it seems like the benefit to ISPs of price discrimination is fairly low, as evidenced by the minimal impact of ending net neutrality."

Congress Should Stay Out of Broadband Regulation and "Let the Free Market Keep Working"

By Jessica Melugin of CEI.

"Today, House Speaker Nancy Pelosi will roll out a new piece of legislation aimed at reversing the FCC’s decision to repeal so-called “net neutrality” rules imposed by the Obama Administration.

Associate Director of CEI’s Center for Technology and Innovation Jessica Melugin said: 

“Despite some outlandish predictions of doom in the wake of the FCC’s decision to repeal the Obama Administration’s heavy-handed Title II Internet regulation, we’ve seen big improvements in both speed and access for users. While broadband speeds increased by almost 40 percent, more homes gained access to fiber in 2018 than in any other year.

“Nancy Pelosi’s new so-called ‘net neutrality’ legislation will almost surely suffer from the same policy problems as the Obama-era regulations. Rather than help people, misguided legislation will threaten both innovation and investment in search of a solution to a problem that simply doesn’t exist. The lesson of the net neutrality-free broadband market is that government should stay out of the way and let the free market keep working.”

Read more:

• Melugin: Net Neutrality Regulation Still a Bad Idea
• Melugin in USA Today: No, the Internet Is Not About to Be Destroyed
• Melugin and Radia: A Net Neutrality Primer"

Democrats' latest net neutrality bill is a partisan death sentence for internet innovation

The internet is not crumbling. It is not grinding to a slow trickle. It does not need saving by a government superhero with regulatory super powers.

By Michael Powell. He is a former chairman of the Federal Communications Commission.

"Software engineers use the term “infinite loop” to refer to a piece of code that lacks a functional exit so that it repeats indefinitely. But it’s also a perfect way to describe the worn out, never-ending debate over net neutrality regulation.

The latest partisan effort — the heroically named  Save the Internet Act— won’t bring us any closer to an exit ramp. By a  sponsor's own admission, the act is a “messaging” bill. Can’t we all agree it's time to stop sending political messages and start drafting bipartisan policy that can realistically become law?

The net neutrality infinite loop isn’t caused by any fundamental disagreement over internet openness rules. In fact, virtually all major stakeholders support the basic idea of net neutrality protections to stop interference or manipulation of internet traffic. I first outlined four “internet freedoms” capturing these basic points while serving as the Federal Communications Commission chairman back in 2004, and a strong consensus on the substance has taken shape since.

Where regulators have struggled for nearly 15 years is finding a legal hook on which to hang net neutrality rules because Congress never gave regulators the clear power they needed. Courts several times rejected the FCC’s contorted legal attempts to find that authority.

Four years ago, then-FCC Chairman Tom Wheeler resorted to alchemy to advance net neutrality rules. He reclassified internet providers into  telephone carriers. Why? Because the FCC has vast amounts of authority left over from the Roosevelt era to regulate telephones and, thus, with a little sleight of hand it invested the agency with expansive power to regulate almost anything to do with internet service. In one audacious move, the Federal Communications Commission transformed itself into the Federal Internet Commission. It got the inch of authority it needed to adopt net neutrality rules, but it took a mile of power over the future of the internet.

The problem with this trick is that it did more than shore up the FCC’s power to adopt net neutrality rules. It opened the door to applying a morass of old telephone laws — known as  Title II — to the modern internet without any thought to the consequences. It is unquestionably important to keep the internet open for tech innovation and for consumers, but it is equally critical to the public to keep strong incentives in place for the network to grow and advance robustly — to reach citizens in rural communities, to increase speed and capabilities, and to reduce wait time and handle the cornucopia of home gadgets. 

  

The country needs 5G wireless networks and 10G broadband networks to keep pace with AI, quantum computing, and more and more streaming video. Title II and similar public utility regulation, however, has a well-documented history of impeding investment, stifling innovation and increasing prices. We should not want the internet to suffer the same fate as our potholed roads, decaying electric grid and overburdened airports.

The Wheeler FCC’s controversial move also shattered the strong bipartisan consensus that had formed around net neutrality policy and politicized the issue. This has created the ping-pong syndrome where rules will swing back and forth wildly every time a new administration comes to power — never producing a resolution for consumers and innovators. This uncertainty only chokes rather than nourishes modern communications networks.

Latest bill is a partisan sham, not solution

Sadly, however, instead of trying to fix this mess, the latest effort by Democratic leaders in Congress is not a well-reasoned policy solution but rather a cynical partisan maneuver. 

Let’s be clear. Congress has plenty of authority under the Constitution to protect the open internet without resorting to Title II and the legal gyrations that have tripped up regulators. It can strike a better balance between open internet protections and incentives for continued internet growth. It can better tune the law to a modern infrastructure that differs radically from the phone system. And it can stop the endless court proceedings by shoring up regulatory authority.

The internet is not crumbling. It is not grinding to a slow trickle. It does not need saving by a government superhero with regulatory super powers. It just needs a set of simple rules, backed by clear authority to ensure its open nature remains unchanged. A moderate solution is within reach, if only our leaders would take it."

3 Reasons Congress Should Not Bring Back Obama-Era Net Neutrality

By Patrice Lee Onwuka of Independent Women's Forum. She earned her bachelor’s degree in economics and political science from Tufts University and a master’s degree in international relations from Boston College.

"Net neutrality may return if liberals in Congress get their way. The House is set to vote on a bill this week - as early as today - to restore Obama-era regulations on the internet. They claim it’s to save the internet, but in fact they would hurt internet innovation.

Contrary to what John Oliver and Alyssa Milano told us in 2017, repealing net neutrality regulations did not destroy the internet nor did it make the internet less free and open. 

Instead net neutrality slowed down investment in broadband internet expansion meaning that it would take longer for many Americans (especially in rural areas) to get access to the fast internet connectivity that other Americans enjoy. You might call that internet inequality.

Liberals claimed repealing net neutrality would grind web traffic to a trickle. They lied. 

The Trump Administration Federal Communications Commission was right to overturn net neutrality and Congress should not try to resurrect these onerous regulations.

Here are 3 reasons for Congress to leave net neutrality in the trash pile:

1. Repealing net neutrality made the internet faster. Since the repeal of net neutrality in June 2018, U.S. internet speed jumped from 12th to 6th fastest in the world (and currently hovers a couple spots below). According to analysis by an independent internet speed testing company, from the end of 2017 to 2018, download speeds increased nearly 40 percent and upload speeds jumped over 20 percent.
   
   Upload and download speeds make it possible for us to quickly access information like sports scores or photos on Facebook as well as to share information such as new recipes on Pinterest.
   
   Consumers benefit from faster and easier access to browsing online, uploading and sharing photos or capturing videos and hosting livestreams.

2. Repealing net neutrality boosted investments in expanding internet access to more Americans. During the first two years of the Obama net neutrality regulations, broadband network investment declined by $3.6 billion-—or more than 5 percent –-and that was the first time investment declined outside of a recession. Americans in rural America likely missed out on better access to the internet as companies pulled back on developing expensive but needed internet infrastructure.
   
   
3. Net neutrality wasn’t needed to begin with. Net neutrality was a solution in search of a problem. There is little evidence of wrongdoing, such as anti-competitive behavior, that warranted the added regulations.

The 2015 net neutrality rules were initiated from a power grab by the Obama FCC from the Federal Trade Commission, the previous federal cop on the beat. By reclassifying broadband providers as telephone carriers they expanded their authority over internet providers and opened the door to a slew of regulations on how broadband internet was delivered. 

 

As former FCC Chairman Michael Powell explained in a recent editorial: “Title II and similar public utility regulation, however, has a well-documented history of impeding investment, stifling innovation and increasing prices. We should not want the internet to suffer the same fate as our potholed roads, decaying electric grid and overburdened airports.”

 

Congress shouldn’t undo net neutrality’s repeal but allow the “light-touch” regulatory framework that preceded net neutrality -- when the internet grew and flourished at lightening speed -- to continue to govern today."