Wrong on the In­ter­net

The Trump ad­min­is­tra­tion is mis­read­ing his­tory in its push to abol­ish reg­u­la­tions like the ones that helped com­pe­ti­tion flour­ish in the 1990s, says tech writer Rob Pe­go­raro

The Washington Post Sunday - - OUTLOOK - Twit­ter: @robpe­go­raro

Nos­tal­gia for the Clin­ton ad­min­is­tra­tion may not be what you’d ex­pect from a prom­i­nent Trump ap­pointee. But the new head of the Fed­eral Com­mu­ni­ca­tions Com­mis­sion has been hand­ing out com­pli­ments for the 42nd pres­i­dent’s tele­com poli­cies. “The In­ter­net is the great­est free-mar­ket suc­cess in his­tory,” FCC Chair­man Ajit Pai said in a speech at the New­seum last month. “And this is in large part due to a land­mark de­ci­sion made by Pres­i­dent Clin­ton and a Republican Congress in the Telecom­mu­ni­ca­tions Act of 1996.”

Pai has of­ten cred­ited that “light-touch reg­u­la­tory frame­work” for en­abling two decades of progress in In­ter­net ac­cess, and he blames the Obama ad­min­is­tra­tion’s FCC for ruin­ing ev­ery­thing two years ago. “It de­cided to slap an old reg­u­la­tory frame­work called ‘Ti­tle II’ — orig­i­nally de­signed in the 1930s for the Ma Bell tele­phone mo­nop­oly — upon thou­sands of In­ter­net ser­vice providers, big and small,” he said in the speech. “It de­cided to put the fed­eral gov­ern­ment at the cen­ter of the In­ter­net.”

At another re­cent ap­pear­ance, at the Amer­i­can En­ter­prise In­sti­tute, he ar­gued that “the Clin­ton ad­min­is­tra­tion got it right in the 1990s.” He de­scribed that era’s lais­sez­faire ap­proach as “the re­al­ity from the dawn of the com­mer­cial In­ter­net un­til 2015.”

Now Pai says his move to scrap net neu­tral­ity rules — which bar In­ter­net providers from block­ing or slow­ing le­gal sites, or charg­ing them for pri­or­ity de­liv­ery of their data — will bring back that in­vest­ment-friendly reg­u­la­tory cli­mate.

But Pai’s his­tory is wrong. The gov­ern­ment reg­u­lated In­ter­net ac­cess un­der Clin­ton, just as it did in the last two years of Barack Obama’s term, and it did so into Ge­orge W. Bush’s first term, too. The phone lines and the con­nec­tions served over them — with­out which sub­scribers had no In­ter­net con­nec­tion — did not op­er­ate in the sup­pos­edly dereg­u­lated par­adise Pai mourns.

With­out gov­ern­ment over­sight, phone com­pa­nies could have pre­vented dial-up In­ter­net ser­vice providers from even con­nect­ing to cus­tomers. In the 1990s, in fact, FCC reg­u­la­tions more in­tru­sive than the Obama ad­min­is­tra­tion’s net neu­tral­ity rules led to far more com­pe­ti­tion among early broad­band providers than we have to­day. But Pai’s nos­tal­gia for the ’90s doesn’t ex­tend to re­viv­ing rules that man­dated com­pe­ti­tion — in­stead, he’s moving to scrap reg­u­la­tions the FCC put in place to pro­tect cus­tomers from the tele­com con­glom­er­ates that now dom­i­nate the mar­ket.

The story starts in what you could call the cop­per age of In­ter­net ac­cess. In the 1990s, the tiny share of Amer­i­cans on­line usu­ally got there by us­ing dial-up modems to reach In­ter­net ser­vice providers — of­ten small, lo­cal com­pa­nies — over the cop­per lines owned and op­er­ated by phone com­pa­nies.

The FCC reg­u­lated phone com­pa­nies un­der Ti­tle II of the Com­mu­ni­ca­tions Act of 1934, which man­dates that the agency en­sure that ser­vices like tele­phone net­works treat all cus­tomers equally. Those rules kept phone com­pa­nies from charg­ing dial-up In­ter­net providers ex­tra or block­ing their con­nec­tions.

As phone com­pa­nies be­gan pro­vid­ing dig­i­tal sub­scriber line (DSL) broad­band over their lines, slower dial-up ser­vices faded. But Ti­tle II rules stayed in ef­fect. In 1999, the FCC used its au­thor­ity un­der that sec­tion of the law to en­act “line-shar­ing” rules that forced phone com­pa­nies to let com­peti­tors of­fer DSL over their ex­ist­ing tele­phone net­works.

In the Wash­ing­ton area, that pol­icy gave cus­tomers a choice of broad­band providers that to­day’s users might find bizarre. A con­sumer guide that ran in The Wash­ing­ton Post’s Sun­day Busi­ness sec­tion in 2003 fea­tured 18 DSL ser­vices avail­able here — from big na­tional com­pa­nies like AOL and MSN to such lo­cal firms as Stick­dog and Toad­Net. (Those al­ter­na­tives helped around the turn of the cen­tury, when Ver­i­zon’s DSL ex­pe­ri­enced de­layed in­stal­la­tions, fre­quent dis­con­nec­tions and outages that lasted for hours, some­times days.)

What about ca­ble? It didn’t fit ob­vi­ously un­der ei­ther Ti­tle II or a newer cat­e­gory — cre­ated in the Telecom­mu­ni­ca­tions Act of 1996 to cover “in­for­ma­tion ser­vices” that both trans­mit and process data — that per­mits much less reg­u­la­tion. The FCC fi­nally de­cided in 2002 to clas­sify ca­ble In­ter­net providers as in­for­ma­tion ser­vices, free­ing them from the threat of Ti­tle II’s com­mon-car­rier rules. It ex­tended the same fa­vor to phone-based broad­band in 2005. The re­sult­ing end of line­shar­ing rules soon extinguished DSL com­pe­ti­tion, leav­ing many con­sumers stuck with their lo­cal phone and ca­ble com­pa­nies. Only 64 per­cent of Amer­i­cans are sat­is­fied with their In­ter­net ser­vice providers, ac­cord­ing to the Amer­i­can Cus­tomer Sat­is­fac­tion In­dex — the low­est rat­ing of all the in­dus­tries sur­veyed by the or­ga­ni­za­tion.

That doesn’t sound like the free­dom Pai has been ex­tolling as he pitches the end of net neu­tral­ity. A spokesman for the chair­man says what Pai praises about that era was that In­ter­net providers weren’t stuck un­der Ti­tle II rules, even if the phone com­pa­nies were. “Dialup ISP ser­vice was Ti­tle I, de­liv­ered over the Ti­tle II phone line,” the spokesman said (in keep­ing with long-stand­ing FCC pol­icy, he spoke on the con­di­tion that he not be iden­ti­fied fur­ther). That is, the DSL or phone com­pany’s con­nec­tion to con­sumers was cov­ered by more in­ten­sive reg­u­la­tions, be­cause it came from a com­mon car­rier. But the In­ter­net ser­vice it­self — the con­nec­tion to the Web, plus some ba­sics such as email — was a more lightly reg­u­lated “in­for­ma­tion ser­vice.”

This is true. But what does it mean for to­day? As John Bergmayer, se­nior coun­sel for open-ac­cess ad­vo­cacy group Pub­lic Knowl­edge, put it, to­day’s ca­ble and fiber lines are much more like the phone lines of the ’90s than like the In­ter­net providers of that era. They’re the phys­i­cal net­work on which other ser­vices ride — only where the 1990s dial-up lines let us con­nect to In­ter­net providers that bun­dled things like email, to­day’s net­works con­nect us to a va­ri­ety of “edge providers” that of­fer things like TV pro­gram­ming and phone conversations.

To­day’s ISPs also look less like “in­for­ma­tion ser­vices” as de­fined in the 1996 law, some­thing the FCC cited as a rea­son for the 2015 re­clas­si­fi­ca­tion of wired and wire­less broad­band providers as Ti­tle II com­mon-car­rier telecom­mu­ni­ca­tions ser­vices. That le­gal foun­da­tion, which Pai now wants to undo, al­lowed the agency to con­struct net neu­tral­ity rules that, un­like ear­lier at­tempts, with­stood le­gal chal­lenges.

In­ter­net providers no longer of­fer their own soft­ware bun­dles like AOL (or The Post’s doomed Dig­i­tal Ink dial-up ser­vice) did, and they’ve dropped ex­tras like Web pub­lish­ing. Ver­i­zon is aban­don­ing email out­right, since most users just use the com­pany’s band­width to con­nect to Gmail or another in­box, any­way. You can quickly de­cline your In­ter­net provider’s ser­vices for a net­work­ing task as ba­sic as map­ping do­main names to nu­meric In­ter­net pro­to­col ad­dresses.

In the ugly but hon­est phras­ing of tele­com an­a­lysts, to­day’s In­ter­net providers are dumb pipes. But they’re also what peo­ple keep pay­ing $70 or more a month for af­ter dump­ing land­line phones and pay-TV bun­dles.

Op­po­nents of net neu­tral­ity claim that the FCC’s move away from stricter Ti­tle II reg­u­la­tions freed busi­nesses to in­vest in new in­fras­truc­ture. But that doesn’t jibe with his­tory, ei­ther. Ver­i­zon, for in­stance, first de­ployed its fiber-op­tic Fios ser­vice in the sum­mer of 2004, a year be­fore the FCC changed its reg­u­la­tory ap­proach. It planned to run fiber to 1 mil­lion cus­tomers in its first five months — which means its am­bi­tions were hardly ham­strung by fed­eral over­sight.

Pai’s mis­taken his­tory of the ’90s also pa­pers over the na­ture of the prob­lem that the net neu­tral­ity rules are try­ing to solve.

Back then, no one was wor­ried about tele­com providers charg­ing some sites more to send data to cus­tomers or to get data there faster. The term “net neu­tral­ity” didn’t ex­ist un­til Columbia Univer­sity law pro­fes­sor Tim Wu coined it in a 2003 pa­per. By 2005, though, tele­com ex­ec­u­tives were brag­ging that they would charge sites for faster de­liv­ery, af­ter which we saw episodes like AT&T block­ing Face­Time video call­ing on iPhones, but not Skype video call­ing, over its air­waves.

In­stead, Clin­ton-era reg­u­la­tions ad­dressed the risk of abuse of mar­ket power, not by pro­hibit­ing con­duct, but by forc­ing phone com­pa­nies to open their fa­cil­i­ties to com­peti­tors. The FCC re­nounced that op­tion un­der Pai’s pre­de­ces­sor Tom Wheeler — but if it hadn’t, Pai would cer­tainly have been irate over such an in­tru­sive ap­proach.

“Pai lavishes praise upon Clin­ton, but were Pai in power at the time, he would have been throw­ing an ab­so­lute fit about the line-shar­ing obli­ga­tions,” said Karl Bode, ed­i­tor of DSLRe­ports.com, a site founded in 1999 to help broad­band shop­pers choose DSL providers.

It’s also hard to ar­gue that the net neu­tral­ity rules the Trump ad­min­is­tra­tion wants to dump have im­per­iled the growth of In­ter­net providers. While ca­ble com­pa­nies have con­tin­ued to build out broad­band, Ver­i­zon halted its Fios ex­pan­sion in 2011 and launched a cozy part­ner­ship with three ca­ble firms to cross-mar­ket ser­vices, years be­fore the new wave of reg­u­la­tions. More re­cently, Google Fiber’s ex­pan­sion has stalled — in part be­cause ca­ble and phone cor­po­ra­tions blocked its at­tempts to de­ploy its own lines along their util­ity poles. (Pai has com­mend­ably pledged to ad­dress that prob­lem, but so did his pre­de­ces­sors.)

These days, if your In­ter­net provider an­noys you, good luck tak­ing your busi­ness else­where. The FCC’s lat­est num­bers show that as of June 2016, 42 per­cent of de­vel­oped cen­sus blocks had two or more providers of­fer­ing high-grade down­load speeds and 37 per­cent had only one.

In a mar­ket that, at best, lets some cus­tomers choose be­tween an in­cum­bent ca­ble com­pany and an in­cum­bent phone com­pany, dereg­u­la­tion in­vites abuse of that mar­ket power. “Net­work neu­tral­ity is a thing you need be­cause you have a du­op­oly,” ar­gues Elec­tronic Fron­tier Foun­da­tion Ex­ec­u­tive Direc­tor Cindy Cohn.

Pai talks about the im­por­tance of com­pe­ti­tion, but so have a lot of other FCC chair­men wish­ing that it would hap­pen. Un­for­tu­nately, the 1990s legacy he keeps en­dors­ing of­fers no hope that dump­ing the rules of those days will give us more com­pe­ti­tion. Rob Pe­go­raro cov­ers tech­nol­ogy for Ya­hoo Fi­nance, USA To­day, the Wire­cut­ter and other sites. From 1999 to 2011, he wrote The Wash­ing­ton Post’s per­sonal-tech col­umn.



FCC Chair­man Ajit Pai has called for re­turn­ing to the “light-touch” In­ter­net reg­u­la­tions of the 1990s, in­clud­ing elim­i­nat­ing net neu­tral­ity rules.

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