FCC Says Good-Bye to Net Neutrality

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(December 11, 2017 – Jarret Cummings) On December 14, 2017, the Federal Communications Commission (FCC) will almost certainly pass a proposed order for "restoring light-touch regulation" to consumer broadband Internet access. FCC Chairman Ajit Pai and his fellow majority commissioners go well beyond "restoring light-touch regulation," however. EDUCAUSE and several other higher education associations illustrated just how much this is the case in a final letter to the FCC ahead of the vote.

The FCC action will eliminate the current net neutrality rules, passed just two years ago, by changing the legal classification of consumer broadband services to one that, on its own, won't support such rules. Unlike previous Commissions, though, including ones under Republican as well as Democratic administrations, the Pai FCC goes further and renounces virtually any substantive role for the FCC in providing net neutrality guidance or overseeing consumer broadband services.

Instead of the bans on blocking, throttling, and paid prioritization1 currently in place, as well as the "general conduct standard" to help the FCC prevent anti-net neutrality behavior in the future, the Commission will only impose a transparency requirement on consumer broadband service providers. This means that they can block or throttle data traffic on their networks, as well as engage in paid prioritization arrangements, as long as they disclose what they are doing. The FCC majority asserts this will allow market competition to constrain such behavior, as consumers "vote with their feet" and choose broadband providers that don't block, throttle, or charge content or other online services providers for faster transmission of their data streams.

As the net neutrality coalition in which EDUCAUSE participates has argued, however (see our reply comments and recently submitted letter), the idea that sufficient competition exists in mass-market broadband access to allow consumers to exercise such pressure is a fallacy. The FCC majority tries to argue that FCC data showing 68% of the U.S. population lives in census blocks at least partially served by a minimum of two wireline broadband providers (where "broadband" equals 10 Mbps downstream and 1 Mbps upstream)2 indicates that consumers will be able to change Internet service providers (ISPs) if they don't like their current provider's anti-net neutrality actions. Setting aside the limited definition of "broadband" in the contemporary, multimedia-driven world, consumers' practical experience with their ISPs, as reported in numerous surveys over the years, illustrates that competition on the basis of consumer satisfaction doesn't appear to be a high priority.

ISPs essentially offer an undifferentiated product where consumers face high transition costs for shifting providers (in terms of time and effort if not always expense) with little expectation that they will receive better service. In this environment, ISPs generally compete for customers on the basis of short-term price reductions, which they advertise loudly while burying the "snap-back" price consumers will pay once the "teaser" timeframe is over. Not surprisingly, the long-term price the consumer will ultimately face often bears little difference to that charged by their current provider.

Given this context, where the providers and their products exhibit little distinction, and supposed market competition between the two existing, virtually identical providers most consumers have available has produced little if any improvement in the pricing and service they receive, it is hard to understand the FCC majority's faith in this "competitive environment" allowing consumers to "vote with their feet." And with the ISPs' new freedom to pursue paid prioritization and other rent-seeking3 activities, they will have the ability to augment their profits without substantively changing their operations to the benefit of their consumers.

Our higher education coalition joined other groups in noting that the very expensive, very lengthy process for litigating anti-trust/anti-competition complaints through the Federal Trade Commission (FTC) made it unlikely to have much effect in constraining anti-net neutrality behavior. For a relevant example, one need only remember that the federal government won its anti-trust case against Microsoft over the steps it took to undercut Netscape; unfortunately, by the time Microsoft lost, Netscape was out of business. With major ISPs in an ongoing race to acquire online content and services companies, and then leverage the value of those acquisitions to "lock in" consumers, the likely consequences of an "unlevel" playing field online are not hard to imagine — in fact, as I've shown, one doesn't have to use one's imagination at all. And as FTC Commissioner McSweeny makes clear, the FTC isn't up to the task of leveling the playing field itself:

But after-the-fact enforcement by the FTC is not a substitute for clear preemptive rules. For one thing, the FTC's mandate in the competition space is to " maintain competition." I believe in the virtues of competition. But we cannot "maintain" competition that does not exist. The reality is that tens of millions of Americans have little or no choice when it comes to wireline broadband service. Those who oppose net neutrality rules often make the mistake of suggesting that market competition will limit discriminatory conduct and push ISPs to offer consumers better service. But that argument only makes sense if there is underlying market competition to begin with.4

The FCC majority's effort to eliminate net neutrality rests on a fundamental misunderstanding of the Internet. Our coalition's closing letter to the FCC puts the case in terms of the majority confusing "regulating the Internet," which there has rightly been a long-term, bipartisan consensus against, with "regulating access to the Internet," where net neutrality is essential to ensuring that the lack of the latter doesn't leave major ISPs in the position to do the former, to their own benefit and with no public accountability. Others, such as a group led by Vint Cerf, Tim Berners-Lee, and other Internet experts, equate eliminating the classification of broadband access as a telecommunications service to saying that telephone service is not a telecommunications service, "an obviously absurd conclusion."5

In either case, none of the groups trying to persuade the FCC majority to revisit its basic errors and change course have any expectation that it will. Instead, we will have to consider how we can best inform and strengthen the now eagerly anticipated legal challenges to the FCC order in the DC Circuit Court of Appeals. If the court issues a stay of the order, the existing rules will remain in effect as the case is heard, and the flawed nature of the order and the process that produced it provide good reason to think a stay is possible. Our coalition's attention will have to shift to Congress as well. In its current state, the ability of the House and Senate to consider a legislative compromise permanently restoring net neutrality is limited at best. However, avoiding radical shifts in net neutrality policy as the Executive Branch changes hands now seems to depend on Congress taking action. EDUCAUSE and its coalition partners will work to ensure that such action reflects the best interests of higher education and libraries, which can only happen if clear legal protections for net neutrality are set in law.


  1. I.e., allowing companies to pay to have their data transmitted across a network faster than those that don't pay.
  2. Restoring Internet Freedom, p. 71.
  3. Definition of "rent-seeking."
  4. Terrell McSweeny, "The FCC plans to kill the open internet; don't count on the FTC to save it," Quartz, December 5, 2017.
  5. Jon Brodkin, "Net neutrality repeal based on false description of Internet, inventors say," Ars Technica, December 11, 2017.

Jarret Cummings is the Director of Policy and Government Relations for EDUCAUSE.