By Brian Fung
Federal regulators voted Thursday to allow Internet providers to speed up service for some apps and websites — and block or slow down others — in a decision repealing landmark, Obama-era regulations for broadband companies such as AT&T and Verizon.
The move to deregulate the telecom and cable industry is a major setback for tech companies, consumer groups and Democrats who lobbied heavily against the decision. And it marks a significant victory for Republicans who vowed to roll back the efforts of the prior administration, despite a recent survey showing that 83 percent of Americans — including 3 out of 4 Republicans — opposed the plan.
Led by Chairman Ajit Pai, the Federal Communications Commission and its two other GOP members on Thursday followed through on a promise to repeal the government's 2015 net neutrality rules, which sought to force Internet providers to treat all online services, large and small, equally. The agency also went a step further, rejecting much of its own authority over broadband in a bid to stymie future FCC officials who might seek to regulate providers.
— Tom Precious (@TomPreciousALB) December 14, 2017
The result is a comprehensive redrawing of the FCC's oversight powers in the digital age, at a time of rapid transformation in the media and technology sectors.
The move is also a prominent example of the policy shifts taking place in Washington under President Trump. With Republicans controlling the levers of government, federal policy has swung to the right, in some respects eclipsing what would have been considered middle-of-the-road conservative positions just a decade ago, said Jeffrey Blumenfeld, co-chair of the antitrust and trade regulation practice at the law firm Lowenstein Sandler.
"What we're seeing now is a dramatic change not just from the Obama administration, but even from the prior Republican administration," said Blumenfeld.
Under President George W. Bush, the FCC outlined a series of guiding principles that would eventually lead to the 2015 net neutrality rules. Then-FCC Chairman Michael Powell, in a 2004 speech, said Internet users should enjoy four fundamental freedoms: The freedom to access any Web content of their choice, so long as it was legal; the freedom to use any online application; the freedom to use their home broadband connections on any device; and the freedom to get subscription information from their own providers.
Consumer advocates fear that those freedoms could be curtailed in a world where Internet providers are legally permitted to give preferential treatment to sites they own or share commercial relationships with, and to discriminate against apps they do not like.
For example, under the net neutrality rules Verizon was not allowed to favor Yahoo and AOL, which it owns, by blocking Google. In addition, Verizon was not be allowed to charge Google extra fees in order to connect to Verizon customers. Under the new rules, that type of behavior would be legal, as long as Verizon disclosed it. Some analysts say affected content companies could pass any new network costs to Internet users, and that Internet providers will develop new ways to market Internet service that could lead to higher prices.
"You and I and everyone else who uses the Internet for personal use will see some changes in pricing models," wrote Glenn O'Donnell, an industry analyst at the research firm Forrester, in an email. "For most of us, I expect we will pay more. Service bundles (e.g., social media package, streaming video package) will likely be bolted on to basic transport for things like web surfing and email."
Internet providers vigorously contest that prediction. They argue there is no financial incentive to penalize specific apps or services, that giving some sites the option of faster service could in fact benefit consumers, and that the new rules allow the Federal Trade Commission to sue carriers that act anti-competitively. Consumers' daily Internet experience will be the same "next week, next month and next year," industry officials promised on a conference call Wednesday.
The officials also said the 2015 rules discouraged providers from making broadband faster and more reliable, according to the industry. USTelecom, a trade group representing AT&T, Verizon and others, said that annual broadband infrastructure spending fell from $78.4 billion in 2014, before the rules took effect, to $76 billion in 2016.
With Thursday's decision, "this country will return to a rational regulatory framework similar to the one that capably governed the Internet for decades," said AT&T in a blog post Wednesday.
Powell, who now leads a top cable industry trade group, said that the repeal of the FCC's net neutrality rules is still consistent with the four freedoms he described nearly 14 years ago.
"Our belief at the time was that the Internet needed to retain a light regulatory environment to get broadband moving," said Powell. "And the companion to those four freedoms was the decision to keep the Internet classified as an information service." ("Information service" providers face fewer obligations under the FCC's regulatory structure than do providers of telecom service, a category that covers landline phone companies.)
Under Democratic FCC Chairman Tom Wheeler, the net neutrality rules took the extraordinary step of reclassifying Internet providers as telecom providers, giving the FCC broad powers to define new obligations for providers on everything from prices to privacy practices.
Advocates hailed the 2015 decision as a victory for consumer protection and a necessary step in light of how differently the Internet now looked compared to its earlier days, when fewer massive companies dominated the space. Meanwhile, industry groups sought to get the regulations overturned in court. They failed, but have escalated the case to the Supreme Court. The Court has yet to decide whether it will hear the case.
Meanwhile, supporters of the net neutrality rules have signaled that they will sue the current FCC in hopes of stopping Pai's decision.
Some analysts believe the uncertainty surrounding net neutrality provides an opening for congressional legislation to settle the issue once and for all. Republicans on Capitol Hill are optimistic. But their efforts are likely to stall unless they can court Democratic votes, and many Democrats view litigation against the FCC as the preferable course of action.
The sharp divides on net neutrality show that what began as a bipartisan issue has hardened into two distinct sides.
"Tribal partisanship is dominating our public policy debates," said Marc Martin, a communications lawyer at the firm Perkins Coie. "It wasn’t always this way. First adopted and enforced during the Bush administration, net neutrality began as a noncontroversial policy to protect consumers’ use of online platforms."