The FCC’s “Ten Facts About Net Neutrality Protections” Are Actually Myths
From its earliest days until 2015, the Internet was not regulated like a utility under Title II of the Communications Act. Then from 2015 to 2018, the Federal Communications Commission (FCC) adopted regulations that reclassified broadband Internet access service as a telecommunications service under Title II. This was to ostensibly to ensure that Internet service providers (ISPs) didn’t engage in anti-consumer practices, like blocking or throttling competitors—safeguards commonly known as “net neutrality.” The trouble was that there was no blocking or throttling problem to be fixed, and the potentially heavy hand of Title II caused the Internet’s long-term prospects to shift toward sclerosis and stagnation rather than expansion and innovation. When the FCC repealed those regulations in 2017, Title II advocates predicted the Internet would die. Instead, the opposite happened. American broadband networks and edge services both are thriving.
As the FCC prepares for another foray into Title II regulation, it appears aware that people are wondering, “why are we doing this again?,” so it has provided a dubious “fact sheet” with ten purported reasons Title II regulation is necessary this time around. But a close examination of the FCC’s rationale reveals its reasoning to be based more in myth than fact.
As the sloganeering rings more and more hollow some “net neutrality” advocacy will be increasingly revealed have transformed it into a stalking horse for their end goal of publicly regulated broadband prices—and perhaps even a publicly owned monopoly. If that is the FCC’s objective, too, then it would best serve the public interest by holding an open and honest debate about the pros and cons of private-sector-led Internet service versus a heavily regulated or government-run system. Either way, it’s also important to get the facts straight about net neutrality.
Myth 1: Broadband Is Essential, so Regulating It Under Title II Is Essential
This “reason” isn’t so much wrong as it is a non sequitur. Broadband is indeed essential, and a key mandate of federal broadband policy is ensuring that every American is included in our connected society. But Title II regulation would be counterproductive to that goal. Title II is a regulatory framework intended for the old telephone monopoly, and regulations tend to produce the market structures for which they were designed. In the absence of Title II, the United States ranks among the top countries in the OECD for broadband deployment. Private broadband providers invest tens of billions of dollars every year to expand and improve networks. Congress has provided over $42 billion to close any remaining coverage gaps. Congress has started, and should continue, the Affordable Connectivity Program to bridge the digital divide for those who can’t afford broadband. These actions and policies sensibly follow from the fact that broadband is essential. A Title II regulatory structure would impede, not support, the positive trajectory of U.S. broadband development. The federal government has stated that food is essential, but it doesn’t regulate grocery stores; it provides food stamps. Broadband is no different.
Myth 2: Anything Other than Title II Is an Abdication of Oversight
Electing to use regulations that are less onerous than they could be does not equal abdication. The FCC has been involved with the Internet as it grew for decades without a Title II classification, so the 2017 decision to go back to that original framework is far from an abdication. Title II, not its absence, is the aberration.
Moreover, we should expect a regulator to make its case for the market failure that makes its proposed regulation necessary. If there were anti-competitive blocking and throttling of Internet traffic, maybe the FCC would have a better case for heavier regulation. But examples of harmful violations of “net neutrality” are vanishingly rare. Non-Title-II approaches have produced a free and open Internet. That’s cause for celebration, not cause for abandoning what works in favor of utility regulation.
Myth 3: The FCC’s New Proposal Will Be Targeted
Apparently conscious of the extreme mismatch between Title II and sensible broadband regulation, the FCC retreats from applying the very Title it insists is necessary to a free and open Internet. The Commission assures us that it will “forbear” from applying the most onerous portions of Title II to the Internet, most notably the power to regulate rates. Unfortunately, forbearance is entirely at the Commission’s discretion. Even if we take the FCC’s word for it now, a future FCC can simply un-forbear and bring the full weight of Title II down on the Internet. That sword of Damocles is bound to make broadband providers more tentative in their infrastructure expansions and upgrades lest they later be made untenable at the whim of the FCC.
Though the Commission offers the brief reign of the 2015 Open Internet Order as evidence that Title II plus forbearance is not “heavy-handed,” even that blip showed the significant harm that can come of the allegedly targeted Title II rules. Under the 2015 rules, for example, the FCC undertook a vague and open-ended inquiry into “zero-rating” practices in which mobile providers allowed certain data not to count against a consumer’s monthly data limit. Such “mother-may-I” review of obviously pro-consumer practices surely chilled future attempts to develop business models that better match consumer needs. That dynamic is a recipe for the stagnation that characterizes utilities, which is exactly what we should expect more Title II regulation to produce.
Myth 4: Comparing the United States With Europe Is Invalid
ITIF wrote the report on why comparing American and European broadband markets is an apples-to-oranges comparison. As we showed, the central difference between the two is that U.S. broadband providers face more extreme demographic challenges and higher costs for broadband inputs like labor and spectrum. Nevertheless, thanks to extensive private investments, U.S. broadband networks performed better than European ones when faced with the pandemic-driven swell in traffic. The FCC claims that the throttling of European streaming services in the face of this increased traffic is mere “anecdote.” But if so, it’s a continent-wide one that affected the most popular streaming services. What’s more, ITIF conducted a systematic analysis of the pandemic’s impact on broadband early in the pandemic, complete with comparisons with Europe. This research confirmed that the U.S. performance outmatched many European countries precisely because of the greater degree of private infrastructure investment, which would be threatened by the imposition of Title II regulations.
It is particularly confusing to see such facts dismissed as anecdotes since Title II proponents have no problem latching on to far more tenuous anecdotes to prop up their own position. Even the FCC Chairwoman repeated the tortured interpretation of a fire department’s purchase of the wrong wireless plan to transform it into malevolent “throttling” by an ISP. Plus, the FCC’s own bullet point dismissing the failures of European-style regulation as “anecdote” goes on to rest its argument on an anecdotal newspaper column about children accessing the Internet from parking lots.
Myth 5: The FCC Needs Title II to Oversee Broadband Outages
The FCC doesn’t make a case that widespread outages are occurring in a way that broader oversight would help. But even if more outage reporting is necessary, Title II is not necessary to realize it, as evidenced by the fact that the FCC already requires outage reporting for non-Title II services like voice over Internet protocol. If outage reporting is a serious problem that the FCC lacks authority to address, that is a narrow gap that Congress can fix; it doesn’t justify throwing away the regulatory framework that has enabled the proliferation of broadband in the first place.
Myth 6: Title II Reclassification Is Legal
The scope of the FCC’s legal authority to classify broadband as a Title II service is really the heart of the debate. It is true that the D.C. Circuit deferred to the FCC the last time it tried to apply Title II to broadband, but that ruling was never tested at the Supreme Court, which has since signaled that such deference may be too much. One source of this shift is the Supreme Court’s decision in West Virginia v. EPA which gave teeth to the so-called “major questions doctrine.” That doctrine states that agencies can’t claim broad authority over matters of major economic and political significance unless they have clear congressional authorization to do so. For rules that are, as the Commission insists, so essential to the future of the most important communications network in the country, enacting a regulatory sea change seems likely to strike the Court as a matter of such significance, and though Congress has passed many broadband statutes in the past decade, none of them provided the Commission with clear authorization for the sort of rules it now pursues. Nor is this a fringe legal theory; two of President Obama’s Solicitors General analyzed the question and concluded that “reclassifying broadband as a Title II telecommunications service will not survive a Supreme Court encounter with the major questions doctrine.”
Myth 7: Title II Won’t Depress Investment
The FCC calls the idea that heavier regulation could reduce the level of investment in broadband networks as myth on its own. Calculating the effect of regulation on investment is difficult, but the FCC’s blithe assumption that its rules couldn’t matter because broadband companies “plan their investments years in advance” is unserious. Indeed, it is precisely because of this future outlook that a Title II reclassification will tend to depress investment despite the FCC’s promises to forbear from the most onerous parts of Title II. That (at best) regulatory uncertainty will make broadband providers less likely to take risks to increase the reach and quality of their networks.
The best study of the investment effects of the threat of Title II regulation found that the FCC’s prior foray cost us $160 to 210 billion of broadband investment. The FCC should pay closer attention to that empirical analysis rather than dismissing it as a myth.
But the FCC has a fallback position: State and federal funding programs will pay for broadband deployment, so we shouldn’t worry about the effect on private investment. But public and private investments in broadband are not even of the same order of magnitude. Private ISPs invested over $100 billion in their networks in the last year alone. Even the Broadband Equity Access and Deployment (BEAD) program, the largest ever federal broadband investment program, will spend only $42.45 over multiple years. Moreover, BEAD is supposed to fund broadband in places with no broadband; not provide for continuous network improvement around the nation. Private broadband investment is the engine powering American connectivity, and a policy that discounts it in favor of government funding will prolong the digital divide.
Myth 8: Title II Is Necessary for National Security
Here the FCC reaches for the ultimate trump card, claiming that if you don’t support Title II for the Internet, you are supporting a compromise on national security. But that strong statement isn’t backed up by tangible threats that Title II will address. If broadband is necessary for national security, so is food, clothing, medicine, health care, education, and news media.
Moreover, there is bipartisan support for national security. If the FCC needs some law enforcement power it currently lacks, Congress can provide it without bringing along the potential mischief that a Title II classification would enable.
Myth 9: Title II Is Necessary to Protect Privacy
As ITIF has long argued, U.S. privacy law certainly has room for improvement. But ISPs aren’t an unusual risk in this area. If anything, ISPs present fewer privacy concerns to consumers than most since they generally handle encrypted traffic that can only be accessed by the intended recipient of IP packets. There are other tools to address privacy concerns outside of Title II and outside the FCC. The fact that Title II contains privacy provisions isn’t a reason to apply them to broadband access. Passing a national privacy law is the answer.
Myth 10: The FCC Is Focusing on a Lot More Than This Issue
This one is actually true. But it doesn’t do anything to strengthen the case for Title II. It’s precisely because the FCC has so many other ways to address the digital divide and improve connectivity for all Americans that it should not derail successful policies. Furthermore, Commission resources are limited. The money and staff time about to be poured into a years-long legal dispute cannot also be spent on high-priority efforts that would actually help consumers.
The FCC lacks good reasons for pursuing Title II regulation of the Internet. The apocalyptic predictions of 2017 have been proven false by history, but the Commission still grasps at straws to check a partisan box at the expense of consumers. The FCC should enact policies that buttress the success of broadband in recent years rather than advancing the camel’s nose of publicly regulated or owned broadband networks with the weight of Title II.