The list of things imposed on Americans that we can’t navigate back from, or massage on the margins and try to live with, is growing.
“Net neutrality” looks set to be the next one. It will be a very big one. It won’t be possible to live with the government holding over us the regulatory power implicit with the so-called “net neutrality” package that will be voted on by the Federal Communication Commission on 26 February (tomorrow). Not only “net neutrality,” but the FCC itself – assuming it begins regulating on the implied basis – will have to be broken entirely. It will have to be done away with, and we will have to start from zero again.
“Net neutrality” has no valid, morally positive meaning; it is a nice-sounding but deceptive expression, and will be used in scare quotes here. It doesn’t portend neutrality for the Internet, in any meaningful sense. There is no such thing as regulated neutrality; regulation, by definition, yields a non-neutral result. Regulation produces a result that is preferred by some and resisted by others; if it didn’t, there would be no need for it. Therefore, Internet regulation is not about neutrality; it’s about coerced outcomes that are preferred by some.
Here is the core of the danger in “net neutrality”: it gets the government’s foot in the door to regulate mankind’s most uniquely open content forum, by treating the Internet as if it’s a mere electronic utility.
There are two models for comparison that we should find alarming and daunting here. Neither of them is the basic telephone system (although it is frequently used as one). All you could do with the basic telephone, when the federal government began regulating it, was have a voice conversation. There was no way to regulate content with that communication mode; the only thing (tangentially) related to content that regulation could affect was the length of a phone call you were willing to pay for.
The “utility” model
But let’s look at the two relevant models. One is the electrical or natural gas utility model, either of which is a heavily regulated public utility. In such a comparison, the question most relevant to regulating Internet content is this: does the regulator care what you do with your electrical or gas service? Are you regulated differently depending on whether you’re a commercial or residential user? Are there different pricing tiers depending on how much you use in a billing period? Are you offered incentives or penalties for types or levels of use? Do activists and lawyers sit around thinking up new reasons to incentivize and penalize you – and do your rates keep going up because of that?
The answer to each of those questions is yes. Once you get regulated like a utility, the regulator has an opinion about what you’re doing with your service, and makes distinctions about how much it should cost you on that basis.
Perhaps you can already see how regulating Internet service like a utility would enable the FCC to raise the entry price for commercialized access. One aspect of this is the potential impact on very small entrepreneurs.
Government is notorious for treating small entrepreneurs as if they are big corporations, for regulatory purposes of every kind. The costs a big corporation can absorb are prohibitive for small innovators – like, for example, the overwhelming majority of political bloggers from both sides of the spectrum.
A small blog needs the same things a big media company needs, in order to present content online. And today, there are plenty of services out there to meet the needs of small bloggers for prices they can afford. This is because small bloggers can contract for such services on the same basis as people who want to use the Internet for any old other reason. Each person, especially in big urban areas, can pay for a level of service that meets the needs he projects for himself.
Even if he earns a few bucks a month running his blog, the small blogger today isn’t in the crosshairs of any regulatory agency that is motivated to see him as being more like Time-Warner – i.e., as a huge, vertically integrated commercial content provider – than like a user of email, Facebook, and Amazon. The same is true, for that matter, of small sellers on eBay and Amazon.
After tomorrow, if the FCC vote goes as predicted, there will be such an agency. As with electrical or gas utilities, there will be a regulator that now cares what you’re doing with your Internet service, and that will have an opinion about how your service should be priced on that basis.
That doesn’t mean that such use-based regulation will start immediately. It means the door will be opened to it. (We’ll see how a little bit later.) No such door, when opened, has ever failed to usher in regulations that begin to restrict a market and raise the entry price of access.
The second model is that of the effectively content-regulated communication modes: TV and radio. There are two key differences right now between the Internet, on the one hand, and TV and radio on the other. One difference is the “channelization” basis on which TV and radio are regulated from a physical standpoint – which is absent, for those on both sides of the content divide, from the Internet.
The other is the very specialized equipment requirements for entering the TV or radio market as a broadcaster, rather than a customer. The two media are set up for one-way transmission of content, and the customer’s arrangements literally cannot make him capable of acting as a provider.
These two points go to the heart of the Internet’s uniqueness. Because of the way TV and radio work, there are tall obstacles, independent of regulation, to entrepreneurial entry as a content-provider. That doesn’t mean that regulation hasn’t made entry even harder. It has. Regulation of TV and radio deters all but the deepest-pocketed aspirants from trying to break into the two media.
But what it does mean is that we don’t lose as much by deterring content provision in TV and radio as we do by deterring it on the Internet. The physical attributes of transmit-only media mean that far fewer people will be trying to transmit – in effect, become content providers – to begin with.
They also mean that all uses of the media can legitimately be regulated on the same, content-blind basis, because with TV, all you do is transmit video signals, and with radio, all you do is transmit audio signals.
The Internet, by contrast, isn’t channelized, is inherently a two-way communication mode, and handles multiple kinds of traffic. One big reason it hasn’t been more regulated before now is that it doesn’t fit the simpler models of TV and radio. On what basis does the FCC form restrictive opinions about service plans and bases for access, when there’s no channelization, and the provider-customer relationship is so diffuse and unstructured?
Inevitably, what you’re using the Internet for is going to become part of the basis for regulation. It hasn’t been, up to now. But the FCC can’t organize the medium into a “regulatable” system without looking at how you use it. Unlike TV and radio, the Internet doesn’t sort itself into a regulatable system, independent of your interaction with it.
Now, before we leave this aspect of the problem, consider one more point. The FCC has always had a ready means of regulating TV and radio without paying the slightest attention to content or how customers actually use them. But has it restricted itself to that, over the decades?
Of course not. It has inquired explicitly into content, not only to police obscenity and pornography, but most notoriously with the so-called “Fairness Doctrine,” which restricted the political content of radio programming between 1949 and 1987. Notably, it did this without a written body of regulatory rules from 1949 to 1967. It eventually incorporated some written “Fairness Doctrine” rules in FCC regulations in 1967. The “Fairness Doctrine” was revoked during the Reagan administration, but Democrats in Congress tried to resurrect it several times, until Congress ultimately abolished the concept entirely in 2011.
An example of content ripe for regulation
The “Fairness Doctrine” demonstrates that regulators will seek to regulate content in any communications medium for which there is a reasonable possibility of doing so. There are two especially likely bases for such regulation on the Internet: profit and politics. To illustrate this, let’s consider the example of a JibJab political video, a staple of the modern election season.
JibJab is a commercial company – JibJab Media Inc. – which sells original video content for profit on the web. It specializes in e-cards for holidays and occasions. And when national elections roll around, one of the things it has done is put out politics-themed videos, which are humorous (and most people would say non-partisan), and serve as promotional material for the company because they’re offered on YouTube – i.e., effectively for free.
So far, so good. Maybe the FCC won’t see a need to regulate this, even if its zealots are going with a fine-tooth comb over political content on the web, or over how sellers are making their money.
But now, let’s say a political blogger, who earns a little each month with a small media company, embeds a YouTube-hosted JibJab video in a blog post about one of the candidates. Today, no one thinks twice about that. It’s fair use of content that the originator has made available, and that’s what matters. JibJab is happy to have the exposure. The blogger is happy to have entertaining content to liven up his post. YouTube is happy to have the video views.
But with the “net neutrality” regulatory regime in place, the FCC will have a basis for caring that the blogger is making money off of writing content about a candidate, and that YouTube and JibJab are both getting commercially beneficial exposure from that.
The Federal Election Commission will have a basis for caring that content is being disseminated about a candidate, and that the blogger, as well as – implicitly – YouTube and JibJab, are all involved in it.
There are FEC and FCC rules in place governing political content for TV and radio. There are rules in place governing the election activities of corporations, which is what each of the players in this scenario is. The latter forms of regulation may well involve the IRS, depending on how the companies spend their political dollars. But up to now, the Internet, as a communication medium, hasn’t been a nexus for regulation in this regard.
It’s about to be one regulatory ukase away from becoming just that.
Consider, moreover, how the IRS, under Obama, has used its power to thwart the formation of tax-exempt Tea Party organizations. And then tell me the FCC and FEC won’t begin very quickly to dramatically curtail the freedom we have today to use content on the Internet, without license, regulation, or inspection. The intersection of politics and Internet commerce is exactly where they’ll start. And the people who will lose freedom are precisely the small bloggers and media companies, who are least able to defend themselves, or to keep going if the FCC and/or FEC impose new costs on them for what today is an unregulated activity.
Why “net neutrality” creates these dangers to Internet freedom
The short answer on why is the 324 pages in the proposed regulatory package that are not devoted to the actual regulations. FCC Commissioner Ajit Pai, a strong critic of the “net neutrality” proposal, summarizes it this way, in an interview with Nick Gillespie and Todd Krainin of reason magazine (all text emphases added):
The rules are eight pages. However, the details with respect to forbearance, the regulations from which we will not be taking action—that alone is 79 pages. Moreover, sprinkled throughout the document, there are uncodified rules — rules that won’t make it in the code of federal regulations that people will have to comply with in the private sector. On top of that, there are things that aren’t going to be codified, such as the Internet Conduct Standard, where the FCC will essentially say that it has carte blanche to decide which service plans are legitimate and which are not, and the FCC sort of hints at what factors it might consider in making that determination.
“Uncodified rules” – sure, there’s nothing to worry about there. Consider also the vulnerabilities on multiple fronts from things that could be regulated or imposed, but that the FCC isn’t stating up front will be. Pai discusses one example:
Pai: If you look at your phone bill, you’ll see a line that says, “Universal Service Fee.” That applies only to your voice service right now. But treating broadband internet access as essentially telephone service, the FCC explicitly opens the door in this document to the assessment of universal service fees at the federal and state level.
reason: Now I’m assuming that proponents are also saying, “No, that’s part of the forbearance. We won’t actually insist on that.” Is that accurate, or is it just that the problem is there are few cases where the government grants itself power and then doesn’t eventually start exercising it.
Pai: If you were able to see this document—which you are not—you would see that it explicitly says that in a few months, it says, that we, the FCC, are expected to get a recommendation on how to consider broadband for purposes of this universal service fund fee program.
So the baseline “net neutrality” package is just the opening salvo. If the initial regs are only 8 pages long, we clearly won’t know how extensive they’re going to get, even when they’re (presumably) released on Friday, after the vote.
The whole Pai interview with reason is well worth your time, but I want to fit in a little more from Pai, and FEC Commissioner Lee Goodman, in an op-ed they wrote for Politico this week. They address specifically the regulation of political speech on the Internet:
While the FCC is inserting government bureaucracy into all aspects of Internet access, the FEC is debating whether to regulate Internet content, specifically political speech posted for free online. …
[I]n 2006, the FEC adopted a regulation that protected the right of people and groups to disseminate political commentary online free from regulation. Specifically, the 2006 rule exempted from regulation all political commentary that citizens and groups post online for free, including on websites, blogs and social media platforms. (The FEC maintained regulation over online posts by campaigns and PACs as well as paid advertisements.) …
Despite this success, the FEC finds itself locked in a renewed debate over the regulation of online political opinions. The debate was triggered last October when commissioners split 3-3 in a case involving a group that posted two political videos on YouTube without reporting them to the FEC. Three commissioners (including the co-author of this piece) voted to exempt the YouTube videos from regulation under the 2006 Internet rule while three voted to investigate and regulate the organization. Two months later, commissioners split again over the metes and bounds of the 2006 Internet freedom rule in a case involving an organization that simply posted political news releases on its own website.
These are activities that independent bloggers engage in every day. Consider that Pai and Goodman are talking here about the worst case: the regulation of political content that is posted for free. In theory, that should be the speech category most protected from regulation.
But it’s not certain that monetized websites – the ones (like LU) that are free to the reader but depend on revenue from advertisers – will even continue to be regarded as “free content” websites. The website proprietor is, after all, making money off them. Those 324 pages of “uncodified rules” could turn at any time into a sword of Damocles hanging over small bloggers.
A good reason to worry
If nothing else convinces you, maybe this will. In his reason interview, Ajit Pai outlined how intervention from the White House tilted the scales on the “net neutrality” package:
reason: What role did the White House play in creating the Title II decision [i.e., to regulate the Internet like a utility]? A year ago, everyone was saying, “Well, [FCC Chairman Tom] Wheeler is not going to go with Title II. He’s a former lobbyist or employee of the cable industries. He’s not going to do that.” So what role did the White House play in enforcing this decision?
Pai: I think the White House changed the landscape dramatically with the president’s announcement shortly after the midterm elections that he wanted the FCC to adopt Title II regulations and said—and it’s still on his website—“I ask the FCC to implement this plan.”
reason: Now the FCC is technically an independent agency, right?
Pai: It is and always has been.
reason: So is it a break with past protocols of the president kind of demanding certain things?
Pai: It is a break in my experience. I’ve served under a number of different chairmen during administrations of Republican and Democratic affiliation. I’ve never seen anything as high profile as this. There have been other examples of presidents weighing in with a letter or a phone call, that kind of thing. But creating a YouTube video of a website with very specific prescriptions as to what this agency should do, followed by the agency suddenly changing course from where it was to mimic the president’s plan, I think suggests that the independence of the agency has been compromised to some extent.
Finally, a last snippet from the Pai interview. Pai and the reason writers have been talking here about a well-known “net neutrality” case in which a small start-up undercut the service prices of the big ISPs, by offering users service for only a limited purpose – streaming video – for a substantially lower monthly fee. The exchange that follows characterizes perfectly what “net neutrality” really is – and shows why we don’t need the regulatory regime.
reason: So it’s basically someone saying, “We’re going to give you less for less, but if you want it, you can have it.”
This was considered unfair competition by the big ISPs. Pai nails it:
Pai: You either get to eat all you can eat at a restaurant, or you don’t get to eat at all.
reason: So that’s the idea of net neutrality?
I’ll give Pai the last word.
I think the most important thing that people need to know is that [“net neutrality”] is a solution that won’t work to a problem that simply doesn’t exist.