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
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.