THE BLOG

Net Neutrality Is Now Just 'Net Ridiculous'

02/14/2015 07:14 pm ET | Updated Apr 16, 2015

On Feb 26th, 2015, the FCC is supposed to reveal the full plans for Net Neutrality but Waiting for Godot is probably a better idea if you expect something to happen anytime soon.

What is 'Net Neutrality', 'Title II', 'reclassification', the 'Communications Act'?

The FCC is supposed to be announcing a plan to 'reclassify' the network infrastructure and the Internet Service (ISP) that is delivered over it, as 'Title II", which is named for a section in the Communications Act of 1934 (amended in 1996), "Title II: Common Carriers". The Agency has been nice enough to supply a 'Fact Sheet', and one the FCC Commissioners, Ajit Pai, also has put together his version of a 'Fact Sheet'.

However, Feb 26th, 2015 will most likely be remembered like the day the when the world was supposed to end, on October, 21, 2011 (it was originally May 21, 2011). I was on the subway at the very moment and there were even posters prominently scattered around the subway car to remind us, and they even included that this was to take place at 3PM, EST (if I remember correctly). When the time passed, while one older woman appeared relieved, most were laughing about it, which had started before the 'fateful' event.

Net Neutrality is now a traveling circus show -- and it will continue for years and the date is, well, meaningless.

According to those who are friends of, or are funded by the phone and cable companies, (referred to as Internet Service Providers (ISPs) or broadband providers) they have been ranting that the proposed plan by the FCC will raise rates, add new taxes, and apply new, odious regulation while it also harms innovation in services and applications, and slows, if not stops investment in infrastructure. My personal favorite is from FCC Commissioner Ajit Pai who told The Hill that it "could embolden foreign leaders in North Korea, Iran and other authoritarian states to increase the grip on the Internet...". I'll get back to this.

On the advocates side, they claim it is the best thing since sliced bread, it will 'free the Internet' and block harmful acts, while some believe it will even end world hunger and global warming, if applied properly (OK, I'm just kidding about ending hunger...).

I note that getting the FCC to actually attempt to use Title II as a solution is a small victory.

But all of these posturings, platitudes, rants, demands and denials, really don't matter. Like greyhounds at the dog race, waiting to hear the ring of the bell -- groups, companies, individuals, political parties, and boatloads of lawyers are going to sue the FCC to stop anything from being done. AT&T has said that this is the path they are taking, whatever shows up.

Ars Technica writes:

"AT&T seems resigned to the near-certainty that the Federal Communications Commission will reclassify broadband as a common carrier service in order to enforce net neutrality rules. But it isn't going to let the decision stand without a legal challenge..."

Net Neutrality Rules, if Applied, May Kill Your Communication's Rights Anyway.

While I'm all for the need of Net Neutrality rules, after going through the FCC Fact Sheet and examining the sections of the Communications Act that will be erased or 'forebeared', meaning that the rules are still in place but are not going to be enforced --we all lose if this fact sheet resembles the final order -- and it were to be implemented.

The FCC claims that it is "Fostering Investment and Competition", and yet it has decided to kill any hopes of serious competition, or lowering rates, and there will be no 'data-trail' for anyone to check to see how we get played yet again by the providers.

The FCC's plan:

"To preserve incentives for broadband operators to invest in their networks, Chairman Wheeler's proposal will modernize Title II, tailoring it for the 21st century, encouraging Internet Service Providers to invest in the networks American increasingly rely on.

The proposed order does not include utility-style rate regulation

  • No rate regulation or tariffs
  • No last-mile unbundling
  • No burdensome administrative filing requirements or accounting standards.

To put this into English:

a) "No rate regulation or tariffs"
-- Let the companies charge what they want and force customers onto contracts where they lose their rights -- 'tariffs' are filed documents about the price of service and other specifics. Contracts are what the company decides are the rules. Today, you can not sue the wireless companies for harms; you have to arbitrate; and since they wrote the contracts...

b) Rate Regulation -- is when there is no competition to lower rates, and the FCC or state 'regulates' the price of service to make sure that it is 'fair and reasonable'. Since the FCC and state commissions have abandoned examining most communications bills and their charges, this would almost be moot, but for the fact that it is needed now because the networks are not open to direct competition.

c) "No last mile unbundling" means -- Keep the networks closed to all forms of competition rather than open the network infrastructure which would foster the delivery of voice, cable TV and high-speed Internet services by competing providers. As we wrote elsewhere, Net Neutrality was caused when the FCC closed down the networks to direct competition. The Telecom Act of 1996 required that the local phone companies open the phone wires coming into homes and offices so that you, the customer, could choose your phone, broadband, Internet, and on upgraded networks, even cable service.

The networks were closed around 2004-2005 when the telco-cable plan was to get the FCC to block competitors and led by former FCC Chairman Michael Powell, who now runs the National Cable and Telecommunications Association (NCTA), the cable lobbying association, they decided to shut down competition in the US, killing off 7000 small ISPs and putting the two largest competitors, AT&T and MCI up for sale.

d) "No burdensome administrative filings" -- means erase all data and information requirements. In 2007, the FCC stopped publishing "Statistics of Common Carriers" which started in 1939 and was the staple of financial information about the companies, including the state utilities, like Verizon NY, or AT&T California.

New Networks Institute's reports about Verizon New York should have been done for every Verizon, AT&T and Centurylink state -- but the states are not collecting adequate information and the FCC has been on a steady path to erase the obligations to supply information.

e) Removal of Section 214? -- This section appears to be missing in the Fact Sheet. Section 214 of the Communications Act came into 'view' when Verizon filed after the Sandy storm in 2012 to essentially shut off or abandon areas of New York and New Jersey were the copper wires had been harmed. Verizon also gave customers VoiceLink, a wireless service that can't handle data applications, like alarm circuits.

Bottom line: If this section is removed -- If your line breaks -- you're screwed. Or if Verizon and AT&T want to shut off the copper and replace your service with wireless -- they can without asking permission.

Forebear This

And the way the FCC is going to do some of this wholesale destruction of Title II is by using "forbearance" -- I.e., the FCC will use Title II, but gut it, removing whole sections of the law.

The FCC writes

"Major Provisions Subject to Forbearance:

o Rate regulation: the Order makes clear that broadband providers shall not be subject to tariffs or other form of rate approval, unbundling, or other forms of utility regulation
o The Order will not impose, suggest or authorize any new taxes or fees - there will be no automatic Universal Service fees applied and the congressional moratorium on Internet taxation applies to broadband.

Elsewhere the fact sheet states:

o The proposed order does not include utility-style rate regulation.

PUNCHLINE: The FCC's plan ends up with -- the networks are NOT going to be opened to competition; you will have no choice of ISP, broadband provider or cable provider, except from the incumbent wired companies. There will be no price decreases because there is no competition or "rate regulation", and if your line breaks -- tough.

So, Verizon shuts off your wired phone service, and doesn't upgrade it to fiber -- to bad.

And there is nothing about fixing the communications bills, the deceptive advertising, the 'made up' fees that we detailed on our mark up of a Time Warner Triple Play bill, where the advertised price of $89.99 actually cost $190.77 after the second year -- an increase of 112% above the advertised price.

Contrary View: I Didn't Know FCC Commissioners have a Sense of Humor.

Ajit Pai, is currently a Republican FCC Commissioner, but was also a "former associate general counsel" for Verizon Communications.

Pai also has strange bedfellows. In 2013, he spoke at an American Legislative Exchange (ALEC) event and congratulated the group on their good work. ALEC is an organization that is designed to allow corporations to create model legislation that is used by state legislators (most of which are funded by the very corporations through campaign financing or grant/foundation money for their area), to help the corporation's agenda, over the politician's constituents.

Commissioner Pai said:

"I am honored to be with you today to give the keynote address at this meeting of the American Legislative Exchange Council's Task Force on Communications and Technology. It isn't every day that a group comes to Washington, DC to advocate for a vibrant free market, limited government, and federalism....

"I congratulate you on the good work you've done on these issues in the past and look forward to working with you in the future. And going forward, please keep making your voices heard here in Washington. I know that the work can seem painstaking, but you have a lot to contribute as we enter the dawn of this new and exciting technological age."

And he even noted that the ALEC Task Force developed 'model legislation', which was created at ALEC and was molded by the funders of ALEC's telecom work, AT&T, Verizon, Comcast and Time Warner.

"The Task Force on Communications and Technology deserves special thanks for encouraging these reform efforts and for developing model legislation like the Advanced Voice Services Availability Act."

ALEC's bills include blocking municipalities from doing upgrades where the incumbents have failed to deliver, or erasing Title II laws through deregulation, which passed in the majority of the US state legislatures.

But it is Commissioner Pai's stance on Net Neutrality that recently attracted attention. Pai stated that Net Neutrality is very bad. The Hill's recent article's headline reads:

"Net Neutrality will help foreign leaders control the Internet FCC Republican says strict Internet regulation would harm US credibility abroad."

And it goes on to say:

"Tough net neutrality regulations in the U.S. could embolden foreign leaders in North Korea, Iran and other authoritarian states to increase the grip on the Internet..."

And if you want irony? Here is the man who called advocates "chicken little" because they are convinced the sky is falling.

"In the story of Chicken Little, an acorn falls on a young hen's head, and she becomes convinced that the sky is falling. Some in Washington have had that same reaction to the IP Transition... I worry that we are well on our way to becoming like Ducky Lucky, Goosey Loosey, and the other characters who join in Chicken Little's hysteria. All too much ink is spilled in this item discussing every conceivable harm that might come with the IP Transition."

Pai also wrote a "Fact Sheet", though I'm not sure why it's called 'facts'. What is really amusing/distressing about his points is that they directly contradict what is in the FCC's released "Fact Sheet".

Pai writes:

  • "President Obama's plan opens the door to billions of dollars of new taxes on broadband.
  • President Obama's plan will reduce competition and decrease consumer choice.
  • The plan implements Title II public-utility regulation that was designed for a monopoly. A one-size-fits-all regulatory framework intended to regulate a monopoly will push the broadband market in that very direction
  • President Obama's plan will slow broadband speeds for American consumers and the deployment of high- speed broadband."

Meanwhile Pai appears to be doing this as part of a larger plan. The Washington Post reports that the Republicans will attempt to short circuit any changes. "The Republicans' new strategy looks much like the old: Argue that the FCC's proposed rules will stifle investment, hurt innovation and raise prices for consumers."

The kicker:

As we showed in our previous articles, reports, filings,

  • Verizon's entire 'Fiber-to-the-Premises' networks are already Title II.
  • These FTTP networks were constructed based on charging all local telephone customers extra, (at last in Verizon NY) regardless as to whether they can actually get Verizon's FiOS services; they are defacto investors as they paid for the construction.
  • The company used Title II to also get the state-based rights-of-way.
  • The company failed to inform the FCC, the courts or the public of this fact -- that Title II is the primary classification used for the deployment and investment in fiber optic services.
  • And Verizon is using utility regulation to do this -- today.

There is no competition today, especially for high speed networks. And there have been no investigations as to how Verizon et al collected billions per state to build out the networks. And there are no investigations of how much money customers paid for the construction of networks they never got. There's even been no serious investigation of what customers are paying today.

If the FCC's Fact Sheet points become law, it will just get worse. Or worse, if the Republicans decide to write a new bill that erases the laws, (which is their plan).

But, the bottom line is -- At least this FCC is attempting to do something, and using Title II is better than previous slash and burn positions. Over the last fifteen years we had Chairman Michael Powell, who helped to close the networks and protect the incumbent phone and cable companies -- and he was rewarded as the head of the cable association, the NCTA. Chairman Martin, a Republican and Chairman Genachowski, a Democrat, were empty suits who attempted to place band-aids on the issues or not 'do the right thing'.

However, Net Neutrality itself doesn't solve America's communications problems and we hope that the FCC decides to actually investigate our claims that a) Verizon failed to disclose that the networks are already Title II, and b) that the cable companies have not only charged customers for network upgrades of the cable plant under something called the "Social Contract", (this hidden charge should have stopped being billed in 2001), or that the bills are unreadable and covering over 'rate increases' and 'made up' fees, but there are also a host of other issues that need investigation, especially in light of the pending merger.

To get the full story about how we ended up here, see "The Book of Broken Promises: $400 Billion Broadband Scandal & Free the Net"