The FCC’s open Internet rules quite sensibly prevented Internet access providers from engaging in blocking and other unreasonable discrimination. The D.C. Circuit, however, struck down these rules, which has led to criticisms that network neutrality is dead. Fortunately, it’s not. The court vacated only these particular rules, not the FCC’s ability to act in the future. Specifically, it concluded that the FCC could regulate Internet providers under a statute known as Section 706, which authorizes the FCC to take various steps to promote broadband deployment. The court correctly recognized that prohibiting blocking and discrimination can lead to greater broadband deployment by increasing consumer demand. For instance, the introduction of the World Wide Web (which required no permission or toll payments) fueled the network investments of the 1990s. The growth of online video is driving modern investment today. …
In sum, the FCC still has sufficient authority to protect the open Internet. The million-dollar question is whether it will choose to use it — and whether the public will pressure it to do so. Following the opinion, Chairman Tom Wheeler stated his preference to proceed in a “common law fashion,” which is legalese for individualized decision-making. I am therefore tentatively hopeful that the FCC is heading in this precise direction.
Matthew C. Klein highlights the costs net neutrality impose on ISPs:
The reality is that these companies must spend vast sums on capital expenditures to keep pace with soaring demand for high-speed Internet service. For all the talk about stifling competition and hurting startups, the existing system means that text-based websites end up paying the same rates to Internet access providers as video-streaming services that consume far more bandwidth. Why is one-size pricing — an effective subsidy — fair?
How is that in the interest of consumers? Why shouldn’t companies pay for the data needs they create? If the government can prove that broadband providers should be classified as common carriers in the same manner as telephone companies, then it should regulate these companies as utilities. If not, it should let Verizon Communications Inc., Comcast Corp. and Time Warner Cable Inc. set Web access prices as they see fit. They could use the extra revenue to invest in new capacity and make U.S. consumers better off.
Berin Szoka and Geoffrey Manne assert that the ruling actually gives the FCC “carte blanche to regulate the entire internet”:
[C]ounterintuitively, there’s every reason to think new entrants — the little guys — would benefit most from non-neutrality: Payola (paying radio stations directly for extra airplay), for example, is frequently derided by those who misunderstand it, but it actually helps new artists break through. Sponsored data and other prioritization arrangements on the internet are just a further extension of this. The FCC’s earlier approach would have foreclosed innovative, upstart edge providers from buying the preferential treatment or “premium carriage” they might need to gain recognition and draw users away from well-established incumbents.
Bottom line: The FCC should stop trying to ban prioritization outright and focus only on actual abuses of market power. But instead of adopting antitrust principles, Wheeler’s case-by-case approach will probably be guided by little more than the outer boundary of avoiding common carriage regulation (if even that). And that’s the real issue here. It’s not about what the FCC wins or loses, but that net neutrality “common law” could be haphazard and devoid of economic rigor — and, worse, that the FCC could use the same Section 706 power to regulate internet services beyond broadband. That’s where we should be focusing this discussion: the FCC’s new, sweeping discretion.
Reihan understands net neutrality proponents’ concerns, even if he doesn’t share them:
The broadband market is defined by high barriers to entry, and one suspects that at least some ISPs will be willing to test the bounds of their customers’ patience before competitors spring up to challenge entrenched incumbents. Or perhaps ISPs will find ways to differentiate their offerings in ultimately consumer-friendly ways. I would feel more comfortable if the U.S. were more open to alternative arrangements, like municipal broadband networks, and if more spectrum were available for innovative wireless technologies deployed by new entrants.
Kevin Werbach thinks competition will allow for more innovation than net neutrality has:
It’s important to keep in mind that the point of network neutrality isn’t to ensure that no company ever has a competitive advantage; it’s to allow innovators to thrive and win in the marketplace. And the best way to do that is through a competitive market. Network neutrality was devised in the early 2000s as a “second-best” response after the FCC refused to require physical open access to dominant broadband networks, the approach adopted in most of the world. Even now, the best hope for a dynamic, affordable, and innovative Internet is real broadband competition.
Most of the greatest barriers to broadband competition are at the local level: State prohibitions adopted at the behest of the incumbent carriers, difficulties with zoning and access to rights of way, and limited willingness to invest in the kinds of municipal open access fiber optic utilities that are wildly successful in cities like Stockholm. The FCC has been hesitant to confront these impediments, perhaps because it was so focused on net neutrality. Yet even Judge Silberman, who dissented in part in the Verizon case because he thought it gave the FCC too much authority, expressly stated the Commission could take such actions.
Paul Waldman fleshes out the competition argument:
Is net neutrality the reason that here in America we have some of the most expensive Internet service in the world, at speeds that have consistently lagged other highly developed nations? No. The reason our broadband is so expensive and yet so mediocre is simple: ISPs operate as virtual monopolies, with most Americans having only a couple of choices for broadband service, but we don’t regulate them like monopolies, meaning they can keep raising prices all they want. It’s the deadly combination of low competition and low regulation.
Susan Crawford doubts that competition will keep ISPs in line:
The court’s opinion is about much more than net neutrality. In finding that the FCC must be held to its decision to exempt Comcast Corp. (CMCSA), Time Warner Cable Inc. (TWC), AT&T Inc. and Verizon Communications Inc. from common carriage obligations, the court says the commission can’t require these giants to connect to any other networks, treat new businesses the same as old ones, carry the speech of Americans without altering it, or otherwise refrain from imposing their profit-driven interests. In the Internet access business, competition cannot replace regulation, because real competition doesn’t exist. At the moment the court’s ruling came down, I was in my living room in Cambridge, Massachusetts, talking to my friendly Comcast installer. He told me that our mayor had signed an exclusive agreement with Comcast so that no competitors would be allowed in town. The man may have been a little confused about the legal niceties of what’s happened here, but he was dead on about the reality: My only choice for high-speed Internet access in Cambridge is Comcast. And the same is true for more than 77 percent of Americans: The local cable monopoly is the only seller of wired high-speed, high-capacity Internet access. I asked whether Comcast would soon be installing fiber-optic service — the fastest kind. Nope, he said. Too expensive. Yet in Stockholm, a city I had just visited, 100 percent of the businesses and 90 percent of the homes have fiber optics. In New York, where I also live, I pay four times as much as someone in Stockholm does for service that is an 18th as fast.
Tim Fernholz bets that this ruling blowing up in the winners’ faces:
The basic question—one at the heart of a lot of internet issues—is to what extent the internet’s pipes should be considered public infrastructure, like roads, water lines or telephone lines. Such “common carriers” may not unreasonably discriminate against their customers. The FCC doesn’t consider ISPs common carriers but “information services,” exempt from regulation as new, developing technologies. The federal appeals court said, in essence, that the FCC can only impose net neutrality on the broadband providers if it first declares them common carriers. It could now take that step. The carriers’ allies in Congress have long opposed such a move, but they probably couldn’t force the Obama administration to block it. Congress itself could also put in place—or prohibit—net neutrality rules, although it’s unlikely to do either. Even failing a common-carriers declaration, net neutrality isn’t buried. Both its opponents and proponents believe the court decision has unintended consequences that will empower the FCC to enforce the essentials of net neutrality without re-classifying ISPs. Even if they aren’t considered common carriers, the FCC is empowered to regulate them under a different statute.