net neutrality

S. Korea “Sender Pays” Is a Warning, Not a Model, or Why (Almost) Everyone Keeps Telling the EU This Is a VERY Bad Idea.

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Economist/NYT opinion writer Paul Krugman coined the term “Zombie idea” to describe an idea that, despite being repeatedly refuted with evidence, keeps coming back. Not surprisingly, zombie ideas typically have powerful constituencies that benefit from the adoption of the zombie idea they push, and who invest a great deal of money and energy continuing to resurrect the idea each time it gets killed.

 

This Halloween brings us the return of the “content companies should pay money to last mile networks because they use more resources” idea. I first explained why this was a dumb idea back in 2006, after then-AT&T CEO Ed Whitacre explained that he wasn’t going to let companies with content his subscribers actually wanted “use his pipes for free,” Despite lots of reasons why this is a Dumb Idea that would end up seriously reorganizing the internet economy for the worse, you find carriers around the world reviving it because $$$. This is particularly true outside the U.S., where the argument also gets caught up in debates about American dominance of internet content and popular culture. There is a separate U.S. flavor, supported by folks like Brendan Carr, about charging “big tech” to build out broadband infrastructure, which I’ve also previously criticized. But the non-US flavor has been gaining traction as a function of the “Techlash” and therefore needs some in depth discussion — especially since we can actually see the predicted bad consequences play out in real time in South Korea.

 

Back in 2016, South Korea adopted a new interconnection rule based on a long-standing telco compensation rule called “sending party network pays” (SPNP). As I’ll explain in detail below, SPNP has deep roots in the whacky world of telecom “settlement” (the fancy word for who pays whom in international calling) how networks compensated each other for exchanging traffic. Those opposed to adopting this approach predicted (based on about 100 years of history) that it would prove impossible to enforce without super intrusive government oversight and would introduce severe latency into S. Korea’s networks as the “sending networks” (such as Netflix, but also gaming companies and others with high resolution visual content) routed traffic in clever ways to avoid paying significant charges. To the surprise of no one except the advocates for the proposal, the predicted badness happened. The cost of transit skyrocketed, latency dramatically increased, and the Korean government keeps needing to consider new and more intrusive ways to (a) stop companies from avoiding the fees to ISPs while (b) trying to target foreign content providers while protecting domestic uses they like — such as video chat and video games.

 

Despite this real world example, and an impressive array of folks explaining in detail why they totally hate this stupid idea, important folks in the European Council (egged on by the EU telcos) continue to think this is a Totally Awesome Idea. So I will explain how we got here, what traditional “sending network party pays” actually means, why this ain’t it, but even setting that aside, why what happened in S. Korea shows this is a Really Dumb Idea.

 

More below . . . .

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Does SCOTUS EPA Case Impact Net Neutrality? Here’s Why I Say No.

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For most people, the Supreme Court’s decision in West Virginia v. Environmental Protection Agency was about environmental policy and what the Environmental Protection Agency can still do to cut carbon emissions. For a smaller subset, mostly lawyers, W. VA v. EPA was an important (but confusing) administrative law case that we will spend a bunch of time arguing about how to apply to agencies generally. And for the tiniest of all possible subsets, meaning me and a handful of other telecom lawyers, it was about . . . net neutrality. Because just about everything in telecom still revolves around net neutrality. Srsly. If we were living in the Don’t Look Up universe and a giant asteroid was about to smash into the Earth, I’d be getting questions from folks about whether I thought the asteroid supported classifying broadband as Title II.

 

The other basic truism about these events is that they are rather like ink blots, where what you see depends a lot on what you already think. So those who hate Title II are convinced that this spells doom for any FCC reclassification efforts, whereas those on the pro-Title II side think this doesn’t really change anything. I’m as much a human being subject to this bias as anyone else. So I can only explain why I think W.VA. v. EPA hasn’t changed anything and let y’all decide if I’m right. It all depends on what the Court means by a “major question” that requires “clear proof” that Congress intended to vest the agency with the power to do the thing.

 

Annoyingly, the Supreme Court has not been particularly clear on this concept. The anti-Title II folks point to Kavanaugh’s dissent from the D.C. Circuit’s refusal to rehear USTA v. FCC (the case that upheld the FCC’s 2015 Title II/Net Neutrality Order, which rested in part of what Kavanaugh called “the major rule” doctrine (now officially called “major question” doctrine) and the fact that the Roberts decision in W.VA v. EPA cited the Kavanaugh dissent (although not for anything having to actually do with net neutrality.) On the other hand, as I explain below, the actual language describing the “major question doctrine” if you read the case runs against the description of the “major rules doctrine” as described by Kavanaugh in USTA. More importantly, the Court’s reliance on Gonzales v. Oregon – which cites the FCC’s authority over broadband in Brand X approvingly as an example of where Congressional delegation is “clear” – seems to me much more important than a passing citation to the Kavanaugh dissent.

 

Additionally, while we always knew where Kavanaugh would be if this ever reaches SCOTUS again, there is plenty of reason to believe he lacks 4 additional votes for his position. Notably, Thomas (and to some degree it seems Alito and Gorsuch) have all fallen in love with common carrier again. True, that is in the context of social media, but it would be a level of weirdness to find that judges by common law can determine Facebook is a common carrier but broadband providers can’t be common carriers without Congress expressly saying so. Also, Thomas actually wrote the Brand X opinion, which found that it was totally cool for the FCC to classify DSL as Title II even if cable broadband were classified as Title I, so it’s hard to see how this kind of agency discretion is compatible with “major question doctrine.”

 

I break all this down in detail below . . .

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We Will Have a Dream Team FCC (and NTIA) — But You Still Have To Fight For Your Right To Broadband!

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President Biden has finally made his critical telecom appointments to fill out the Federal Communications Commission and the National Telecommunications Information Administration (NTIA). As expected, Biden named Acting Chair Jessica Rosenworcel to serve as full chair and renominated her to fill her expired term. As hoped, he also nominated my former boss (and all around Telecom Boss) Gigi Sohn to be the third FCC Commissioner. In addition, Biden nominated Alan Davidson to serve as Administrator/Assistant Sec. for NTIA. In addition to the critical role NTIA plays in spectrum policy, NTIA will also be the agency running the multi-billion broadband infrastructure program in the Bipartisan Infrastructure Bill (assuming that passes).

 

This makes lots of important things possible. Not just headline items like reclassifying broadband as Title II (which one would expect any Democratic FCC to do at this point). It includes developing smart and innovative policies to close the digital divide, enhance competition, put consumer protection front and center, and advance new spectrum management technologies that move us from scarcity to abundance. This trio (combined with already serving FCC Commissioner Geoffrey Starks, a champion of privacy and inclusion) are as potentially transformational in telecom policy as the appointment of Lina Kahn and Alvaro Bedoya to the Federal Trade Commission.

 

The Key word here is “potentially.”

 

One of the biggest mistakes that people keep making in policy and politics is that you can just elect (or in this case, appoint) the right people and go home to let them solve the problems. Then people get all disappointed when things don’t work out. Incumbents are not going to simply surrender to new policies, and political power has limits. This will be especially true if Congress flips in 2022. So while this is definitely cause for celebration, we are going to have to fight harder than ever to get the policies we need to create the broadband (and media) we need — starting with the fight to get them confirmed over the inevitable Republican resistance.

 

Happily, fighting to achieve the right thing is much more enjoyable than fighting to prevent the wrong thing. But no one should think we can just go home, problem solved. As I have said for over 15 years, you can’t outsource citizenship. Citizen movements are citizen driven, or they either get co-opted or die. We are going to need to support (and occasionally push) the new FCC and NTIA in the face of unflagging industry pressure and political obstacles. The laws of political reality have not been repealed — but we have a unique opportunity to use them to our advantage.

 

A bit more about who these people are and the policy opportunities below. . . .

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U.S. Actually Performed Worse During Covid Than Some Net Neutrality Countries, Not Better.

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Every time the net neutrality debate flares up, the ISP industry and its anti-net neutrality allies come up with some reason why leaving unfettered gatekeeper power in the hands of the people who invented the cable video bundle is awesome rather than something that needs oversight to prevent rip offs and anticompetitive behavior. It used to be “net neutrality/Title II will kill investment.” This claim has been repeatedly disproven (you can see some Free Press explanation for why this is nonsense here, here and here). Furthermore, Covid showing the truly massive dimensions of the persistent digital divide has largely discredited “deregulation will spur investment — really!” to all but the most diehard true believers.

 

With Title II back on the table again, we are seeing the repetition of yet another talking point that sounds plausible but turns out to be totally wrong when you actually dig into the evidence. ISPs and their defenders are repeatedly claiming that the U.S. did better than other net neutrality countries (specifically, the EU27) when it came to handling the crush of Covid-19 induced traffic. Unsurprisingly, they credit the lack of regulation for this amazing response. Once again, this claim does not hold up to real scrutiny.

 

As with the investment nonsense, this is a highly complicated area and therefore subject to a lot of spin and heated arguments over what the data actually show and how to explain it. It is made even more difficult by the complete lack of any official statistics (or, as the recent BITAG report put it more politely: “Data sources vary from independent measurement systems to self-reported internal company sources.” (P 7 n.1) So I will just give a few headlines up top and dig into the details below.

 

Contrary to industry boosterism, everything was not awesome for networks during Covid. As one industry observer put it: “By ‘handling’ the volumes they mean that their networks are not crashing and shutting down. But I think there is a whole lot more to these headlines than what they are telling the public.” For reports from the actual time about U.S. problems, see here, here, and here.

 

The U.S. Performed Worse Than Some Countries With Net Neutrality Laws. Studies vary, but one important one looked at not simply the EU and U.S., but also the European Free Trade Association (EFTA) and Canada. EFTA member states have the same net neutrality mandates as the EU (sometimes referred to as the EU27, referring to the full member 27 as distinct from the EFTA). Canada has treated broadband as a telecom service for something like 2 decades now, and has similar net neutrality laws to the U.S. 2016 rules. As this study found the U.S. internet traffic as a whole suffered a 4.9% increase in congestion as compared to 7.25% for the entire EU27, but this was significantly higher than for EFTA (3.3%) or Canada (2.4%). Additionally, when surveyed a week later, EFTA and Canada had made significantly greater progress on reducing congestion than the U.S. Furthermore, the U.S. numbers were for the largest cities with the strongest networks. If you start taking out members of the EU27 who aren’t considered our economic peers, the numbers for Europe improve to be comparable with those of the U.S. So sure, there were some differences but they had nothing to do with net neutrality regulations.

 

There isn’t a lot of evidence to support the “U.S. did better than the EU” claim. While you can find some studies that support the thesis that the U.S. did “better” by some set of metrics, there are a lot of other studies that show that from a consumer perspective, E.U. and U.S. subscribers had similar experiences. See here, here, here, and here.

 

The Netflix Red Herring. The “EU asked YouTube and Netflix to downgrade traffic” factoid beloved of ISPs and their supporters is a red herring. Yes, EU regulators approached Netflix, YouTube when lockdowns began to reduce the quality of their video from high-def to standard. But this was a prophylactic precaution to head off a potential concern, not a response to congestion. Only in the U.S. — and only among industry and Libertarians — would the idea of government and all industry sectors coordinating and accepting “a joint responsibility to take steps to ensure the smooth functioning of the internet” be regarded as a sign of weakness or regulatory overreach rather than a simple statement of reasonable prudence and preparedness.

 

More below . . .

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No, California Net Neutrality Law Did Not “Nail” Veterans — Carriers Are Using Vets as Pawns.

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It’s a cliche villain scene: “Don’t force me to kill the hostages. Unless you do as I say, their blood is on your hands.” While no one would mistake policy fights for a hostage situation (usually), the same principle applies frequently when challenging industry to stop anticompetitive and anti-consumer practices. Industry will take some anti-competitive practice that provides an apparent marginal benefit to someone sympathetic and threaten that the proposed law change will make it impossible for them to do the “nice” because it stops them from doing the bad thing.

 

So it is no surprise that after California’s 2018 net neutrality law survived it’s first day in court, carriers are doing everything in their power to make it look like banning zero-rating (which the California law does to some degree, but not completely. See more detail below.) is bad for consumers. Almost immediate, for example, AT&T announced it would discontinue its anti-competitive practices of zero-rating it’s own video product and “sponsored data” from third parties. But carriers have now reached a new low by claiming that California’s net neutrality law forces them to discontinue zero rating a specific telehealth program available from the Department of Veterans Affairs. Needless to say, opponents of net neutrality have rushed to trumpet this claim without troubling themselves to investigate whether it is even true.

 

Spoiler alert: Its not true.

 

As net neutrality expert and law professor Barbara Van Schewick explained in a blog post immediately after the Politico story broke, California’s net neutrality law does not prevent carriers from zero rating telehealth programs for veterans. What the law does do, as it was designed to do, is prevent carriers from choosing a single program among a universe of competitors and anointing this one program as the only program that gets such special treatment. Or, as I explain below, carriers can choose to continue to zero rate the Veterans Affairs program in a number of ways, provided they don’t disadvantage other programs that do the same thing (here, veterans health). Mind you, carriers could also decide not to impose artificial bandwidth caps as a means of overcharging consumers and/or favoring their own affiliated content. But hey, where’s the fun and profit in that?

 

I break this out below . . . .

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Mozilla v. FCC Reaction, or Net Neutrality Telenovela Gets Renewed For At Least Two More Seasons.

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I’ve been doing network neutrality an awfully long time. More than 20 years, actually. That was when we started arguing over how to classify cable modem service. As complained almost a decade ago, this is the issue that just will not die. I understand that, given the central importance of broadband to our society and economy. Nevertheless, my feeling on this can be summed up by the classic line from Godfather III: “Just when I thought I was out, they pull me back in.” [subtle product placement] I even went so far as to write a book on platform regulation to try to get away from this (available free here). [/subtle product placement] . But no. Here we are again, with a decision that creates further muddle and guarantees this will keep going until at least after the 2020 election.

Sigh.

 

Getting on to the basics, you can find the decision in its 186-page glory here. You can find a good analysis of what potentially happens next for net neutrality by my colleague John Bergmayer here. The short version is that we lost the big prize (getting the Order overturned, or “vacated” as we lawyers say), but won enough to force this back to the FCC for further proceedings (which may yet result in the “Restoring Internet Freedom Order” or RIFO being reversed and/or vacated) and open up new fronts in the states. The net result on balance is rather similar to what we had after the 2014 court decision that tossed out the 2010 net neutrality rules but laid the groundwork for reclassifying broadband as Title II; a curve ball that lets all sides claim some sort of win and creates enough uncertainty to likely keep the worst ISP abuses in check for the time being. (Mind you, ISPs will continue to test the boundaries, as they are already doing without actual enforceable rights in place.)

 

Most importantly, industry and the FCC can’t get what they want most (preemption of state authority) without going full Title II. This puts the FCC in a bind, since it can’t deliver the thing industry most wants. It also means that various state laws (especially the comprehensive California net neutrality law) and various executive orders imposing some sort net neutrality obligations now go into effect get to be litigated individually. As with the California privacy law passed last year, industry now has significant incentive to stop fooling around and offer real concessions to get some sort of federal law on the books. Also like the California Privacy Law, this is not going to be enough to overcome industry reluctance against a law with teeth and therefore is unlikely to go anywhere. So we are likely stuck until after the 2020 election.

 

I also want to emphasize that even the parts where we lost, as in 2014, contain the groundwork for ultimately winning. This gets lost in the headlines (particularly in the triumphant crowing of FCC majority). But like any good telenovela, this latest dramatic plot twist has lots of foreshadowing for the next few seasons and a set up for an even BIGGER plot twist in future seasons.

 

My incredibly long, highly personal and really snarky dissection of the D.C. Circuit’s opinion in Mozilla v. FCC and what it means going forward below.

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Net Neutrality Oral Argument Highlights Problem For Pai: You Can’t Hide The Policy Implications Of Your Actions From Judges.

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Friday, February 1, we had approximately 4.5 hours of oral argument before Judge Millett, Judge Wilkins, and Senior Judge Williams. You can listen to a recording of the oral argument here. As everyone who does this for a living will tell you, you can’t judge the outcome by what happens at oral argument. Because that’s the biggest set of tea leaves we have that can tell us anything about the black box of the court making its decision, however, we all speculate shamelessly. Unsurprisingly, Williams seemed most favorable to the FCC. He dissented in USTA v. FCC, and generally prefers deregulatory policy choices. Millett, as expected, pushed both sides hard. But ultimately both she and Wilkins seemed to come down against the FCC on several issues, including a lengthy discussion of the Section 257 argument I highlighted last week.

 

My colleague John Bergmayer has this summary of the substance of the argument. I want to just highlight one theme, the refusal of the FCC to be honest about the expected policy consequences of its actions. I highlight this for several reasons. First, people need to understand that while the agency can always change its mind, it has to follow the Administrative Procedure Act (APA), which includes addressing the factual record, acknowledging the change in policy from the previous FCC, and explaining why it makes a different decision this time around. As I have noted for the last couple of years, there is a lot of confusion around this point. On the one hand, it doesn’t mean you have to show that the old agency decision was wrong. But on the other hand, it doesn’t mean you get to pretend like the old opinion and its old factual record don’t exist. Nor do you get to ignore the factual record established in this case.

 

It was on these points that Millett and Wilkins kept hammering the FCC, and where they are likely in the biggest trouble in terms of the Order. Because FCC Chair Ajit Pai has pretty much made it his signature style to ignore contrary arguments and make ridiculous claims about his orders, this problem has already chomped the FCC on the rear end pretty hard (ironically, in an opinion released on Friday), and will likely continue to do so.

 

More below . . .

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Fun Arguments To Watch At Net Neutrality Oral Argument, or Did Marsha Blackburn Accidentally Save Net Neutrality?

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At last, the contest everyone has been waiting for is finally here! Get ready tomorrow (Friday February 1) for the oral argument in Mozilla v. FCC, the challenge to the 2017 repeal of net neutrality and re-reclassification of broadband as a Title I “information service.” (aka the “Restoring Internet Freedom Order” or “RIFO”).  Obviously, as one of the counsel’s in the case, I am utterly confident that we will totally prevail, so I am not going to try to rehash why I think we win. Besides, you can get horse race coverage and results anywhere. ToTSF is where you go for the geeky and get your policy wonk on!

 

So in preparation for the Superb Owl of the the 2018 telecom season, I thought I would point out some of the more fun arguments that may come up. As always, keep in mind that oral argument is a perilous guide to the final order, and the judges on the panel have a reputation for peppering both sides with tough questions. Also, there is a lot of legal ground to cover, and many important issues raised in the briefs may not get discussed at all because of time limitations. With all that in mind, here are some things to look for if you are lucky enough to be in the courtroom tomorrow, or listen to the full audio when it’s released.

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Pai Continues Radical Deregulation Agenda. Next On The Menu — SMS Texting and Short Codes

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In December 2007, Public Knowledge (joined by several other public interest groups] filed a Petition For Declaratory Ruling asking the Federal Communications Commission (FCC) to clarify that both SMS Text Messaging and short codes are “Title II” telecommunications services. Put another way, we asked the FCC to reaffirm the basic statutory language that if you use telephones and the telephone network to send information from one telephone number to another, it meets the definition of “telecommunications service.” (47 U.S.C. 153(53)) We did this because earlier in 2007 Verizon had blocked NARAL from using its short code for political action alerts. While we thought there might be some question about short codes, it seemed pretty obvious from reading the statute that when you send “information between or among points of the users choosing, without change in the form or content as sent and received” (definition of “telecommunications”), over the phone network, using phone numbers that it is a “telecommunications service.”

 

Sigh.

 

On the anniversary of the repeal of net neutrality, FCC Chair Ajit Pai now proposes another goodie for carriers – classifying both short codes and text messages as Title I “information service” rather than a Title II telecommunications service. As this is even more ridiculous than last year’s reclassification of broadband as Title I, the draft Order relies primarily on the false claim that classifying text messaging as Title I is an anti-robocall measure. As we at PK pointed out a bunch of times when the wireless carriers first raised this argument back in 2008 – this is utter nonsense. Email, the archetypal Title I information service, is (as Pai himself pointed out over here) chock full of spam. Furthermore, as Pai pointed out last month, the rise in robocalls to mobile phones has nothing to do with regulatory classification and is primarily due to the carriers not implementing existing technical fixes. (And, as the Wall St J explained in this article, robocallers have figured out how to get paid just for connecting to a live number whether or not you answer, which involves a kind of arbitrage that does not work for text messages.)

 

As if that were not enough, the FCC issued a declaratory ruling in 2015, reaffirmed in 2016, that carriers may block unwanted calls or texts despite being Title II common carriers. There is absolutely nothing, nada, zip, zero, that classifying text messages as Title II does that makes it harder to combat spam. By contrast, Title II does prevent a bunch of blocking of wanted text messages as an anticompetitive conduct which we have already seen (and which is occurring fairly regularly on a daily basis, based on the record in the relevant FCC proceeding (08-7). This includes blocking immigrants rights groups, blocking health alerts, blocking information about legal medical marijuana, and blocking competing services. We should therefore treat the claims by industry and the FCC that only by classifying text messaging as “information services” can we save consumers from a rising tide of spam for what they are – self-serving nonsense designed to justify stripping away the few remaining enforceable consumer rights.

 

Once again, beyond the obvious free expression concerns and competition concerns, playing cutesy games with regulatory definitions will have a bunch of unintended consequences that the draft order either shrugs off or fails to consider. Notably:

 

  1. Classifying texting as Title I will take revenue away from the Universal Service Fund (USF). This will further undermine funds to support rural broadband.

 

  1. Classifying texting as Title I disrupts the current automatic roaming framework established by the FCC in 2007.

 

  1. Classifying texting as Title I may, ironically, take it out of the jurisdiction of the Robocall statute (Telephone Consumer Protection Act (TCPA) of 1991).

 

  1. Trashing whatever consumer protections, we have for text messages, and taking one more step to total administrative repeal of Title II completely. Which sounds like fun if you are a carrier but leaves us operating without a safety net for our critical communications infrastructure (as I’ve been writing about for almost ten years).

 

I unpack all of this below.

 

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