Ajit Pai’s Anti-Net Neutrality Plan Gets The Facts And Law Wrong

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Above Photo: Enlarge / Democrats vs. Republicans.

FCC accused of prioritizing “raw dollars” over small businesses and consumers.

The Federal Communications Commission proposal to repeal net neutrality rules ignores the public interest by favoring Internet service providers over other businesses and individuals, Democratic lawmakers told the FCC today.

FCC Chairman Ajit Pai’s proposal to undo the rules “impermissibly ignores the Commission’s core mandate to fully consider the public interest before taking action,” violating the commission’s obligations under the Communications Act, the Democrats wrote in an FCC filing opposing Pai’s plan. The lawmakers also questioned Pai’s independence from President Donald Trump.

The FCC has prioritized one metric above all—the amount of money Internet providers have spent on upgrading networks since the rules were passed in 2015, Democrats wrote. The argument that investment has decreased is based on “scant evidence and questionable assumptions,” and in any case, network investment should not be the FCC’s only consideration, they wrote.

Pai has said he will make his net neutrality decision based on the “facts and the law,” but the lawmakers argued that he has gotten both the facts and the law wrong. The FCC, Democrats wrote, “is prohibited from ignoring the effects of its actions on important national priorities such as free speech, democracy, small businesses, economic opportunity, jobs, and privacy.”

The FCC comment was submitted by Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-N.J.), Communications and Technology Subcommittee Ranking Member Mike Doyle (D-Pa.), and Reps. Anna Eshoo (D-Calif.), Diana DeGette (D-Col.), Jan Schakowsky (D-Ill.), Doris Matsui (D-Calif.), Kathy Castor (D-Fla.), John Sarbanes (D-Md.), Jerry McNerney (D-Calif.), Peter Welch (D-Vt.) and Joe Kennedy III (D-Mass.).

When contacted by Ars, Chairman Pai’s office declined to comment on the Democrats’ filing today.

Focus on public interest, not “raw dollars”

Pai’s proposal “single-mindedly concentrates on one issue to the exclusion of all others: the raw dollars spent on network deployment” instead of considering other national priorities, they wrote.

“Regardless of whether the studies cited in the recent proposal actually support the Commission’s assertions, this factor alone cannot satisfy the heavy responsibility of determining whether a policy is in the interest of the public,” the Democrats wrote. “If we had intended network investment to be the sole measure by which the FCC determines policy, we would have specifically written that into the law. We did not.”

The cost of broadband deployment has decreased, so broadband service could be getting better even if there was a decline in network investment dollars, they wrote. The FCC should also consider “actual deployment, relative speeds, investment, and innovation from ancillary business like websites and apps,” the Democrats said.

Although ISPs have claimed that the net neutrality rules harm investment, the cable industry’s top lobbying group recently boasted that US Internet speeds are continuing to soar and that the cost of data per megabit has gone down. ISPs have also told their investors that the rules have not harmed network investment, an important factor because publicly traded companies are required to give investors accurate financial information, including a description of risk factors involved in investing in the company.

The FCC’s Republicans seem to have pre-judged the issue of whether to repeal net neutrality rules before considering all factors, the Democrats argued, pointing to comments the commissioners made in a recent House oversight hearing:

The Chairman seems to believe that his primary—and possibly only—consideration in this proceeding is whether the tens of billions of dollars that ISPs have invested in their network infrastructure is “substantially greater” than a hypothetical amount the companies would have spent without the 2015 Order. Specifically, Chairman Pai stated that to change his mind about undoing net neutrality, he would need to see in the record “an economic analysis that shows credibly that infrastructure investment is increased dramatically.” Commissioner [Michael] O’Reilly agreed and went on to state that many of the millions of “comments are empty and devoid of any value, in my opinion.” This testimony indicates that the Commissioners may be ignoring relevant points raised by the public and may have impermissibly pre-judged the issue without fully considering the input from the public.

The FCC is required to base its policy decisions on reliable and accurate data, but the FCC’s own broadband data “is widely known to be faulty” and should be improved before the commission moves forward, the Democrats argued. The FCC data is based on Census blocks so that an entire Census block is considered to be served if even one home in the block has Internet access.

Broadband: Information service or telecommunications?

The FCC is also wrong to argue that Internet access is an “information service” rather than “telecommunications” as defined by the Communications Act of 1934 and the 1996 update to the law, the Democrats wrote.

Congress “labeled services that create content as ‘information services,’ which we defined as those that offer the capability to generate content among other things,” they wrote. “We also created a distinct classification of services that transmit information that we called ‘telecommunications services.’ We defined these services as ones that offer telecommunications for a fee directly to the public. We then defined ‘telecommunications’ as the transmission of the content between two points of the users’ choosing without change.”

Pai has claimed that Internet service is not telecommunications. The Democrats’ filing disputes his reasoning:

The Commission’s proposal performs a historical sleight of hand that impermissibly conflates this fundamental distinction. The FCC proposes to treat network infrastructure as information services because the infrastructure gives access to the services running over their networks. The FCC contends that ISPs are therefore “offering the capability” to use the services that create the content. However, this suggestion obliterates the distinction that Congress set into law—we meant for the FCC to consider services that carry data separately from those that create data. The FCC’s proposal would therefore read this fundamental choice that we made out of the law. Under the proposal’s suggestion, no service could be a telecommunications service going forward.

Congress directed the FCC to regulate telecommunications and information services differently because “networks could use their market power to control the information that Americans could communicate online, whether for commercial or political reasons,” the lawmakers wrote. “In contrast, we intended to set strict limitations on the government’s reach into the content communicated between Americans. This was not an easy compromise to reach and should not be dismissed easily.”

When the Communications Act was updated in 1996, many Internet services “were not open, but rather curated walled gardens with only a pre-selected portion of the Internet’s content,” the lawmakers wrote. But American consumers “rejected the curated Internet services in favor of an open platform,” leading to today’s Internet services that allow access to essentially any website. That change supports the current classification of broadband as telecommunications, the Democrats argued.

But as we’ve written before, courts have generally allowed the FCC to classify broadband however it wishes. Internet service has been classified as both an information service and telecommunications, with the most recent reclassification as telecommunications taking place in 2015.

Chairman Ajit Pai of the Federal Communications Commission (FCC) testifies about the fiscal year 2018 budget request during an Appropriations Subcommittee on Financial Services and General Government hearing.

Chairman Ajit Pai of the Federal Communications Commission (FCC) testifies about the fiscal year 2018 budget request during an Appropriations Subcommittee on Financial Services and General Government hearing. Saul Loeb/AFP/Getty Images

A closer look

Here is a look at the Democrats’ arguments in more detail:

Free speech

Without the rules against blocking and throttling websites and online services, ISPs “will be subject to economic and political pressures to choke off unpopular conversations or speed up viewpoints supported by the politically dominant,” Democrats wrote. “This threat is real. In just the past year we have seen efforts by those in charge in Washington to turn off video cameras on the House floor.” The lawmakers claimed that government leaders might try to block content from appearing on websites.

The FCC’s Notice of Proposed Rulemaking doesn’t ask the public for comments on the net neutrality repeal’s effects on free speech, the Democrats wrote. “The FCC’s net neutrality protections may be the last guard at the gate to free expression on our communications networks. But the Commission’s proposal inexplicably fails to even mention the potential effects on free speech or how it could undermine our democracy,” they wrote.

Political activists on both the right and left use online platforms to organize, and net neutrality rules protect their access to those platforms, the lawmakers argued.

Privacy

While the Republican-controlled Congress recently eliminated privacy rules that protect consumers from ISPs, the Title II authority over common carriers that the FCC uses to enforce net neutrality rules still imposes some basic privacy protections. Technically, Section 222 of Title II still applies to ISPs, requiring them to protect the confidentiality of “customer proprietary network information.” But Pai’s proposal would reverse the Title II classification.

“The Commission’s current proposal would remove the statutory privacy rules that can protect broadband users before they are harmed,” the Democrats wrote. “Instead, the Commission has proposed that the Federal Trade Commission could act on privacy violations only after the damage has been done. Nearly half of Internet users surveyed say privacy regimes like this have left them confused, discouraged, and impatient.”

Effect on small businesses and jobs

The net neutrality rule that forbids ISPs from charging websites for faster access to consumers is important for small businesses that won’t be able to afford paid prioritization, the Democrats wrote.

“With the current protections in place, entrepreneurs pay only once to get their new businesses online,” they wrote. “But under the Commission’s proposal, these businesses could need to pay over and over just to compete—once to their own ISP and then to every other ISP to get access to their subscribers at the same speeds as their competitors. That cost may simply be too much for these small businesses in today’s economy, considering that the census bureau found that nearly one in ten companies with employees are new and still getting off the ground. The situation is even starker for minority and women-owned businesses, which both tend to be newer than the national averages.”

Harming startups could kill jobs, they wrote.

“Moreover, in this time of technological transition, Americans are increasingly using the Internet to take classes, train for new opportunities, and apply for jobs. Without net neutrality, many of the resources people use today could slow down or even stop,” they argued.

Independence from President Trump

“[W]e are concerned that the FCC has jeopardized its independence by taking its instruction directly from the White House,” the Democrats wrote. “Chairman Pai has refused to say whether he was given direction from the President when they met in the Oval Office earlier this year. But the President’s spokesman suggested publicly that the President may have asked the FCC to undo the legal underpinnings of net neutrality. A few weeks after this White House announcement, the FCC complied. If the President did instruct this action, the proceeding may be fatally flawed.”

The Democrats were referring to a statement in March by then-Press Secretary Sean Spicer, who criticized the common carrier classification of ISPs, saying it created an “unfair regulatory framework.”

The FCC’s 2015 reclassification of ISPs came after President Obama publicly urged the commission to do so, and Pai repeatedly accused his Democratic colleagues on the commission of taking orders from the White House. But the Democrats argued that the Trump White House’s influence may run deeper:

Before and after the adoption of the 2015 net neutrality order, Chairman Pai often said that President Obama improperly influenced the FCC by releasing a video supporting a path forward for net neutrality and submitting a proper ex parte filing in the docket. As has been well established, the Chairman’s comments were certainly an overstatement, but the potential influence of this White House goes much further. It appears that the President directly ordered Chairman Pai to repeal net neutrality, potentially during a visit to the Oval Office. If true, this proposal clearly violates our intention to create an agency independent of the executive.

Call for delay

The FCC is planning to take public comments until August 16, but Senate Democrats urged Pai to extend the comment deadline. In 2014, the FCC allowed 60 days for reply comments on a proposal to impose the net neutrality rules, but this time around is only providing 30 days for replies to initial comments, the Democrats said.

Congressional Republicans have scheduled a hearing on net neutrality for September 7 and invited the biggest ISPs and the biggest websites to testify. Democrats objected to the hearing including only giant companies and yesterday suggested additional witnesses for the hearing.

Comments to the FCC are being taken at this link.