Tim Wu Explains How the FCC’s Net Neutrality Plan Breaks with 50 Years of History

Next week, the Federal Communications Commission (FCC) is expected to vote on Chairman Ajit Pai’s new rules for governing the internet. Just a few years ago, in 2015, the FCC adopted the Open Internet rules which reclassified Internet service as a common carrier under Title II of the Communications Act. According to Columbia law professor Tim Wu, best known as the person who coined the phrase “net neutrality,” the 2015 Open Internet rules “enacted its strongest-ever rules on net neutrality, preserving an open Internet by prohibiting broadband providers from blocking or slowing content that flows across their pipes.” ("Why Everyone Was Wrong About Net Neutrality" by Tim Wu, The New Yorker, February 26, 2015)

Now, in 2017, FCC Chairman Pai believes “net neutrality and the utility classification stifle innovation and investment. He has decided to throw out the rules altogether.” (“Sorry...What Is Net Neutrality Again? A Handy Q&A,” The Wall Street Journal, November 22, 2017) Chairman Pai’s “Proposal to Restore Internet Freedom” intends to:

…return broadband Internet access service to its prior classification as an information service, and reinstate the private mobile service classification of mobile broadband Internet access service. The item also will eliminate the Commission’s vague and expansive Internet Conduct Standard, along with the bright-line rules. Additionally, it will modify the transparency rule to promote additional transparency, while eliminating burdensome and unnecessary requirements.

To help put Chairman Pai’s proposal in perspective of the net neutrality debate, Professor Wu offers a history lesson. In an article he recently wrote for Wired, Professor Wu asks us to reflect on these questions: “How should a network’s owner treat the traffic that it carries? What rights, if any, should a network’s users have versus its owners?” Below are select excerpts from “How the FCC's Net Neutrality Plan Breaks With 50 Years of History.”

Early History—the 1970s

In the late 1960s, (in a sign of how the politics have changed), the Nixon administration’s FCC sought to increase the prospects for competitors in telephone markets. At that point AT&T had been the nation’s communications monopolist for many decades.

The FCC became interested in a new group of businesses that ran “over the top” of AT&T’s nationwide network. These were at the time newly formed companies, now lost to history, with names like Tymshare, National CSS, CompuServe, and Dial Data, which offered computer services “over” the network to businesses. These were the first ancestors of today’s “over-the-top” operations like Netflix, Wikipedia, Google, and so on.

By 1970, the commission had put in place the first rules meant to protect over-the-top services from discriminatory or unfair treatment by AT&T. By 1976 it had a working framework to distinguish “basic” communications services from what it then called “enhanced” services—that is, the equivalent of today’s applications, like Skype, or the web. A major goal of these rules, known as the Computer Inquiries, was to protect the stuff “on” the network from the network carrying the traffic. They are therefore fairly described as the “first” net neutrality rules, or the direct ancestor of today’s net neutrality rules.

The End-to-End Design Principle

Around the same time, a group of legendary network engineers, including Vint Cerf, Robert Kahn, Jon Postel, and many others, was collectively designing the main operating protocols of the internet. The internet, as its name suggested, was an “inter-network” or a “network of networks,” designed to join a diverse array of computer networks together to be used for just about anything.

In the jargon, the internet’s design principles were sometimes described as following the “end-to-end” principle of network design. That meant roughly that the “ends,” or the users of the network, would decide what the network was for, rather than the network operator. Like the first FCC rules described above, this implied, above all, a principle of nondiscrimination—that the owner of the network should not choose what the network be used for.

On this foundation—the idea of the “open internet”—was built the founding applications of the internet, now omnipresent, such as the World Wide Web and email, plus later innovations, like streaming video and social networking. All of these inventions depended heavily on the internet’s end-to-end design, which made possible “permissionless” innovation, and an extraordinary and fabled era of change.

The Broadband Era

Professor Wu explains how cable and telephone companies started deploying broadband networks in the 1990s. But still the debate over how the owners of the ‘pipes’ (the physical network) treat the applications running on those networks loomed.

Broadband providers had both incentives and the means to block, throttle, or threaten some applications or sites. First, some of the new internet applications, like “voice over IP” telephone service or streaming video, competed directly with the carriers’ telephone or video offerings. Second, the phone and cable providers wanted to use their control over access to extract more money, either from the new internet sites (so called “termination fees”) or from customers.

At the suggestion of Lawrence Lessig of Stanford Law School, I wrote a memo documenting these concerns, which became a paper, both of which used the phrase “network neutrality” to capture the idea of protecting the traditional neutrality of the internet. (I had originally thought the term “inter-net-neutrality” was more accurate, but it lacked the alliteration.)

Professor Wu goes on to outline efforts by FCC Chairmen Michael Powell (a Republican appointee from 2001 to 2005), Kevin Martin (also a Republican appointee, from 2005 to 2009), Julius Genachowski (a Democrat appointee from 2009 to 2013), and Tom Wheeler (also a Democrat appointee, from 2013 to 2017) to enforce network neutrality. Chairmen Powell, Martin, and Genachowski “presumed that the net neutrality rules could be enforced using a part of the Telecommunications Act known as Title I.”

During the 2000s broadband proved to be a successful and highly profitable product, especially for the cable companies, whose higher-capacity lines soon put them way ahead of their DSL competitors. The industry, despite the net neutrality rules, invested many billions of dollars in building higher-speed networks, which it could charge more for, and Verizon built out a fiber-optic network (FiOS) in selected parts of the country. Of course, the internet industry also grew rapidly during this period, as the firms that were startups during the early net neutrality battles, like Google, Amazon, and Facebook, absorbed many smaller firms. By 2012 over-the-top television, led by Netflix and Sling TV, had become widely popular, making them an obvious competitive threat to cable television, much as voice-over-IP threatened phone revenue.

Beginning in 2012, some broadband providers, led by Comcast, refused to upgrade the ports that carried Netflix traffic, even though the cost was trivial. The ports overflowed, causing buffering and delays, and putting into question Netflix’s basic business model. Comcast, Time Warner Cable, and others demanded and received new payments (known as “interconnection fees”) from Netflix in exchange for allowing its traffic to proceed as before. Hence, the broadband carriers had found a new way to extract more payments for their service.

But this newer form of extraction was countered in 2015 by Tom Wheeler, Obama’s second FCC chair, who reenacted and strengthened the net neutrality rules using the broader and more powerful Title II of the Telecommunications Act. He had initially proposed relying on the weaker, auxiliary authority once again, but following a wave of popular resistance (including millions of comments directed to the agency) and a public plea from President Obama, Wheeler changed direction. Wheeler’s new rules were also challenged in court, but in 2016 the DC Circuit Court of Appeals upheld the rules in their entirety. Thus the net neutrality rules, in effect in some form since 2005, now had solid legal foundation.

The Radicalism of the Pai Proposal

Last month the commission [with newly appointed chair Ajit Pai] released its plan to rescind the net neutrality rules in their entirety, and replace them with a “transparency” regime enforced by another agency, the Federal Trade Commission. In short, with a few exceptions, the FCC plans to give up any role in policing how the telephone and cable carriers treat traffic on their networks.

From this brief history, it should now be obvious how radical a break the proposal represents. Since 1970 there have always been some rules controlling what the owners of the pipes on national networks can do to the businesses and people who rely on them. And since 2005 there have been clear bans on blocking and throttling internet applications. Hence, the Pai proposal isn’t merely tinkering with some of the rules imposed by the Obama administration but, rather, is eliminating the FCC oversight in place for decades. He is, in fact, coming close to eliminating the agency as a relevant institution.

Read the full article by Tim Wu: “How the FCC's Net Neutrality Plan Breaks With 50 Years of History.”

Tim Wu is an Isidor and Seville Sulzbacher Professor of Law at Columbia Law School. He teaches antitrust, copyright, the media industries, and communications law. Professor Wu is the author of, among other works, "Network Neutrality Broadband Discrimination" (2003), Who Controls the Internet (2006), The Master Switch (2010), and The Attention Merchants (2016).

Professor Wu served as Senior Advisor with the Federal Trade Commission from 2011-2012. In 2006, he was recognized by Scientific American for his work on network neutrality theory. He has been named twice to the Politico 50 list of those transforming American politics and was also named one of America’s 100 most influential lawyers by the National Law Journal. In 2017, Professor Wu was named to the American Academy of Arts and Sciences.