(A shorter version of this story originally appeared in the official TWICE Show Daily during CES 2018.)
Game of Thrones fans know that Jon Snow has been trying to convince Daenerys Targaryen, Cersei Lannister and everyone else in Westeros that the battle for the Iron Throne is a sideshow compared to the coming war against the White Walkers and their army of the dead.
The same could be said for the debate over the recent repeal of net neutrality regulations. Repeal isn't necessarily about battles over zero-rating, fast lanes, bandwidth throttling, pricing tiers or content blocking. ISPs are likely to sneak in some of these or other back-handed tricks to benefit themselves, but overt violation of the spirit of the recently repealed net neutrality regulations would be akin to a bank robber robbing a bank the day after getting paroled.
Repeal is more about empowering the ISP White Walkers – Verizon and AT&T, and, to a lesser extent, T-Mobile and Sprint – and the coming of 5G. And how ISPs have badly acted in the past tells us how they will act in a lightly regulated future.
All the clues to net neutrality repeal's real intent are contained in FCC chair Ajit Pai's mendacious defense of it: to empower wireless ISPs to control the coming 5G future.
Turning Back The Regulatory Clock
First, let's define our terms. The FCC did not totally repeal all net neutrality rules. Net neutrality regulations were initially adopted by then-FCC chair Michael Powell during the George W. Bush administration. But these first net neutrality regulations were adopted under, and restricted by, the classification of the internet as a Title I "information service" as defined by the Telecommunications Act of 1934.
What Pai and the current FCC repealed was the action taken by previous FCC, under chair Tom Wheeler, which re-classified the internet as a so-called Title II public utility, which granted the FCC far more regulatory authority.
Pai incompletely entitled his Title II repeal "Restoring Internet Freedom." What Pai means is restoring internet freedom to the ISPs to control the 21st century's most important information source and economic driver.
In his statement in support of the repeal, Pai, who served as Associate General Counsel at Verizon from February 2001 until April 2003 (and pulled out of a CES appearance citing security concerns), wants "to return to the Clinton-era light-touch framework that has proven to be successful."
This is akin to rolling back traffic laws to what they were in 1900, passenger airline regulations to what they were in 1930, and home recording rights to what they were in 1975.
In the Clinton era, when the Telecommunications Act of 1996 was adopted, the World Wide Web wasn't even two years old. There were only 100,000 websites, top modems delivered data, such as it was, at 33.6 kbps – a thousand times slower than what is needed to stream 4K video today – slowly delivered via dialup modems connected to simple telephone lines, not more copious coaxial or fiber optic cable. Cellular 2G and 2.5G data networks could deliver nothing more than text messages with tiny photos. Ethernet was only a commercial technology and there was no such thing as Wi-Fi.
The Maturing Net
So up until around a decade ago, the internet wasn't lucrative enough for ISPs to squeeze huge profits from primarily because there was no such thing as an ISP – anyone could connect a modem via a simple telephone jack. And there were no web entities large enough able to wield the financial muscle to block smaller competitors.
But, as Wired magazine noted, "by the early 2000s there were signs that the cable and phone companies intended to use their control of the physical architecture in restrictive ways" by blocking apps and specific Web companies that threatened burgeoning ISP businesses, including VoIP (voice over internet protocol) companies such as Skype and Vonage. To keep the phone and cable companies from restricting competition, George W. Bush's FCC Chairman Michael Powell started fining offending ISPs, the first net neutrality rulings, in February 2005.
Over the next decade, ISPs and some large Web companies such as Netflix tried to manipulate the internet to their benefit. When the FCC attempted to enforce net neutrality, its authority under Title I was challenged in court, usually successfully.
But Pai insists that "[t]he Internet wasn't broken in 2015. We were not living in a digital dystopia. Nonetheless, the FCC that year succumbed to pressure from the White House and changed course. Even though the FCC couldn't find any evidence of market failure, it turned its back on almost two decades of success."
First off, no one was suggesting that the internet was broken or had devolved into a wasteland. But zero-rating, fast lanes, bandwidth throttling and other ISP shenanigans were stifling potential innovators and threatening to turn the internet into an oligarchy – "evidence of market failure" to most eyes – prompting FCC action.
And President Obama didn't "pressure" anyone – the FCC's own investigation "found no evidence of secret deals, promises or threats from anyone outside the Commission, nor any evidence of any other improper use of power to influence the FCC decision-making process."
Leading the FCC at the time was Tom Wheeler. Wheeler was the former president of both the NCTA-The Internet & Television Association, and the CTIA-The Wireless Association, and so was intimately familiar with how ISPs operated, for better and for ill. What Wheeler saw were ISPs operating more in their interest and less in the public's. It was growing ISP abuses that, on Feb. 26, 2015, prompted Wheeler and the FCC to reluctantly re-classify the internet as Title II utility, which gave the FCC the power to curb these growing ISP abuses. It is this re-classification that Pai and the current FCC repealed.
Repeal's Real Rationale
Pai tacitly admitted that repeal is designed to help ISPs first and foremost, noting that "companies investing in next-generation networks hesitated to build or expand networks, unsure of whether the government would let them compete in the free market," noting that "domestic broadband capital expenditures decreased by 5.6 percent, or $3.6 billion, between 2014 and 2016, the first two years of the Title II era."
For one thing, NCTA figures show a consistent annual industry rise in cable ISP infrastructure investment. Wired magazine reported that "Comcast, the nation's largest internet provider, increased its capital expenditures…by about 13 percent in 2015, and by another 8.6 percent in 2016, to a total of $7.6 billion." Comcast Cable's then-CEO Neil Smit also admitted to investors that Title II regulations "really hasn't affected the way we have been doing our business or will do our business."
For another, Pai's figures focus on capital expenditure spending, and not actual next-gen network investment. Verizon, AT&T, T-Mobile and Sprint each have spent and will spend billions on building out their 5G networks, investments made with similarly-stated indifference to Title II. Their goal: to provide 10 to 20 Gbps 5G cellular or fixed wireless broadband to consumers under-served and over-charged by local cable monopolies.
Sans sensible regulations to equalize access and opportunity, ISPs will employ any means to monetize 5G, with consumer benefits considered mostly as a means to these ends or forced upon them. We know this because, over the last century, communications companies have always acted with barely enlightened self-interest, which has always necessitated industry regulations, including the first net neutrality rules a dozen years ago. And, because that's how capitalism works, it's how communications companies will always act without meaningful government oversight in the form of net neutrality regulations.