Wednesday, December 13, 2017

No, The FTC Won't Save You Once Net Neutrality Rules Are Killed

from the tricksy-and-false dept

If you understand anything about the net neutrality fight, it should be this: repealing these popular rules is just one small part of a long-standing ISP plan to reduce meaningful oversight of one of the least-competitive industries in America. So far this year we've already watched as the Trump administration gutted broadband privacy rules, defended price-gouging prison phone monopolies, made life easier on business broadband monopolies, and began weakening the standard definition of broadband to help obfuscate a lack of competition in the sector.
And they're only really getting started. The next big push, lobbied for by Comcast, AT&T and Verizon, is to gut meaningful FCC oversight of giant ISPs, then shovel any remaining authority over to the FTC. This week the FCC and FTC released a joint statement declaring that this new "coordination of online protection efforts" would be a massive boon to consumers while protecting a "free and open internet":
"The Memorandum of Understanding will be a critical benefit for online consumers because it outlines the robust process by which the FCC and FTC will safeguard the public interest,” said FCC Chairman Ajit Pai. “Instead of saddling the Internet with heavy-handed regulations, we will work together to take targeted action against bad actors. This approach protected a free and open Internet for many years prior to the FCC’s 2015 Title II Order and it will once again following the adoption of the Restoring Internet Freedom Order."
Again (as if pointing out facts matters with this FCC), there are numerous falsehoods being pushed here. One being that the 2015 net neutrality rules were "heavy handed," since by international standards they're pretty modest. Two being that the internet somehow magically flourished under Title I throughout history, which ignores the fact that ISPs were classified under Title II with no ill effect for years. Cable (2002) and DSL (2005) were only re-classified under Title I because ISPs promised this reduced oversight would result in incredible levels of competition that you may have noticed never actually materialized.
But the biggest problem the FCC is ignoring is that the FTC doesn't really have much solid authority over broadband providers, and what authority that exists is at risk of being obliterated by an ongoing AT&T court battle with the FTC.
So one, the FTC agency lacks rule-making capabilities, meaning it can only act after bad behavior has already occurred, and only if that behavior can be classified as "unfair or deceptive," which will give companies like Comcast ample wiggle room to pretend bad behavior was necessary for the health of the network. And the FTC is already over-extended and under-funded, so most meaningful ISP oversight will likely fall through the cracks. According to an interview earlier this year with former FCC boss Tom Wheeler, this of course was the ISP lobbyist plan from the beginning:
"In the Trump administration, people are talking about stripping regulatory power from the FCC, and essentially taking the agency apart (including moving jurisdiction over internet access to the Federal Trade Commission [FTC]). “Modernizing” the FCC is the lingo being used. What’s your thought about that?
It’s a fraud. The FTC doesn’t have rule-making authority. They’ve got enforcement authority and their enforcement authority is whether or not something is unfair or deceptive. And the FTC has to worry about everything from computer chips to bleach labeling. Of course, carriers want [telecom issues] to get lost in that morass. This was the strategy all along.
So it doesn’t surprise me that the Trump transition team — who were with the American Enterprise Institute and basically longtime supporters of this concept — comes in and says, “Oh, we oughta do away with this.” It makes no sense to get rid of an expert agency and to throw these issues to an agency with no rule-making power that has to compete with everything else that’s going on in the economy, and can only deal with unfair or deceptive practices.
Ironically, this doesn't even cover the biggest problem: that an AT&T legal battle against the FTCcould obliterate what little authority the FTC does have over broadband providers. That case, revolving around AT&T's decision to throttle unlimited data customers then lie about it, could result in any company with even a modest common carrier component being able to dodge FTC authority almost entirely. Should AT&T win, the FTC is already on record clearly stating that companies could simply acquire small common carrier oriented businesses to dodge regulatory oversight:
"The panel’s ruling creates an enforcement gap that would leave no federal agency able to protect millions of consumers across the country from unfair or deceptive practices or obtain redress on their behalf. Many companies provide both common-carrier and non-common-carrier services—not just telephone companies like AT&T, but also cable companies like Comcast, technology companies like Google, and energy companies like ExxonMobil (which operate common carrier oil pipelines). Companies that are not common carriers today may gain that status by offering new services or through corporate acquisitions. For example, AOL and Yahoo, which are not common carriers, are (or soon will be) owned by Verizon. The panel’s ruling calls into question the FTC’s ability to protect consumers from unlawful practices by such companies in any of their lines of business."
Mentioning this massive, looming loophole appears to simply have slipped Ajit Pai and the FCC's mind as they sell the public on this turd of a policy proposal. But it gets worse. According to telecom policy expert Harold Feld, even if the FTC manages to win that case, its authority over broadband ISPs remains so shaky, most of the net neutrality violations we've long been familiar with (from ISPs letting interconnection points congest to drive up costs for Netflix, to AT&T blocking Facetime to force users on to more expensive plans) wouldn't be policeable under this new regime.
In short, Feld makes it clear (again) that those stating that FTC authority and existing antitrust will protect us in the wake of net neutrality repeal don't have a solid understanding of how regulatory oversight of the broken telecom market actually works:
"...if you think AT&T or any other broadband provider has the right to decide what content and services subscribers should access — then this Order eliminates what you have considered nasty FCC overreach for the last 15 years (more, really, but at least since the 2002 Cable Modem Order). Don’t bother with handwaving about how you think it won’t happen, or how consumer pushback will keep ISPs from doing bad things, etc. On the question of “does the FTC have the power to stop a broadband provider from saying ‘I’m not going to let you use a particular service or access particular content,’ the answer is a flat out straight up “no.” Because for normal everyday businesses, absent a specific enforceable regulation, offering you some limited service is not “unfair” under 15 USC 45(a). Period. Full stop.
These are all notable, telling omissions by those claiming that fleeting FTC authority will be enough to police massive, predatory duopolies like AT&T and Comcast. It's simply not the case. And again, the goal here isn't just more reasonable or less heavy handed oversight of these giant companies, the goal is the elimination of nearly all meaningful oversight entirely. And while there's still numerous "free market" folks who believe gutting FCC oversight of natural monopolies like Comcast magically fixes a very broken market, that's simply not supportable by history or factual data.
Anybody that believes gutting oversight of some of the least liked and least competitive companies in America magically forges Utopia is either being willfully obtuse for personal financial gain, or they're taking ideological lessons from elsewhere and misapplying them to a broken market they simply don't understand. If allowed to pass, this push to gut oversight of these apathetic duopolies is going to have a profoundly negative impact on the health of the internet, the ability to innovate, and content and service competition for a generation. Pay attention, and don't be part of the problem.

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