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November 18, 2014

POSTSCRIPT

Open Net
Obama Scores on Net Neutrality
Marvin Ammori
MARVIN AMMORI is a Future Tense Fellow at the New America Foundation, a lawyer, and the author of On
Internet Freedom [1]. Follow him on Twitter @ammori [2].
Last summer, I argued that U.S. President Barack Obamas unwillingness to push for net neutrality might end up
being the biggest technology-related failure of [his] presidency [3]. Net neutrality is the idea that Internet service
providers (ISPs) should treat all traffic that goes through their networks the same, not offering preferential treatment
to some websites over others or charging some companies arbitrary fees to reach users. Obama had supported the
concept during his initial presidential campaign, but stood by while his own appointees to the Federal
Communications Commission (FCC) adopted a different position, one much closer to that of vested interests in the
telecommunications industry (who care more about increasing profits than maintaining an open Internet).
Last week, however, the president finally stepped up to the plate, releasing a video and a detailed plan [4] calling on
the FCC to adopt the the strongest possible rules to protect net neutrality. He said the commission should embrace
bright-line rules, without loopholes, and on the strongest legal authority (Title II of the 1996 Telecommunications
Act), so that it doesnt lose in court on this issue for a third consecutive time. It was, in short, the most accurate, wellinformed, and important statement ever issued by a public official on the topic of Internet freedom.
Net neutrality sounds wonky and technical, but is actually quite simple. It would keep the Internet as it has always been
cable and phone companies would remain mere gateways to all sites, rather than gatekeepers determining where
users can go and what innovators can offer them. Judging from the four million comments the FCC has received from
individuals, small businesses, and web titans, this issue pits most of the population against a handful of powerful cable
and phone companies and their vendors and allies. And if the FCC were to follow the approach the president outlined
in his recent comments, the resulting policy would bolster free trade, reduce communications costs, and help
preserve an open and uncensored Internet.

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On the Internet, speed matters. According to research by Microsoft, Google, and others, if a website is even 250
milliseconds slower than a rival, people will visit it less often [5]. Were phone and cable companies allowed to charge
for the use of fast lanes, the companies that purchased such access would receive a clear competitive advantage over
their rivals, one unrelated to the quality of the products or services in question. Both U.S. and foreign
telecommunications companies would then be able to discriminate against non-domestic sites in ways that impact
free trade. In the United States, Apples iTunes radio could purchase a fast-lane deal helping it against, say, Swedens
Spotify, or Zynga could purchase an advantage against Finlands Rovio. Political pressure, cultural trade policy, and
overlapping business relationships could lead to a protectionist spiral in which local champions get preferential
treatment in local markets over foreign competition, and consumers everywhere suffer as a result.
Allowing phone and cable companies to impose fees on web companies, moreover, would likely result in a return to
sender pays arrangements. Prior to the advent of the Internet, international phone calls were incredibly expensive.
Providers in one country (such as AT&T) would pay providers in other countries (such as Telmex or France Telecom)
high fees to carry calls. The system was known as sender pays, and it was based on idea that calls from relatively
rich Americans could provide subsidies to foreign telecom providers, particularly in the developing world, so they
could build infrastructure.
Today, telecommunication companies in developing nations still call for sender paysonly this time, for the Internet.
They want Google, Netflix, and Facebook to pay for sending data to users in countries other than the United States.
Up to now, the Internet has been governed by a different model, which mostly involves direct interconnections
without payment (known as peering) with local telecommunications companies paying (rather than being paid) to
connect their users. However, if Americans could auction access to fast-lanes or charge for providing services to
remote websites, foreign telecommunications companies would eventually engage in similar practices, extracting
fees from popular American senders.
Failure to pursue strict net neutrality, finally, would probably lead to a balkanized and censored Internet. Right now,
with some notable exceptions in non-democracies, users everywhere access the same Internet, regardless of the ISP
they use. Absent net neutrality, however, some sites will load well on some ISPs and others will not. That would
fragment the market and sap the power of a single, global interconnected network. It would also provide an excuse for
more foreign censorship. Once Washington blesses the notion of fast and slow lanes, others will followand not be
unduly chastened by the notion that politically or economically motivated discrimination is different from or worse
than purchased discrimination.
Some parties to this debate have tried to confuse the issue by agreeing with the need for a free and open Internet, but
arguing that Obamas preferred approach is harmful because it calls on the FCC to use authority in Title II of the
Telecommunications Act. Such major assumption of regulatory power, the argument runs, would encourage both
excessive regulation and foreign overreach.
But this claim doesnt stand up to scrutiny. Almost 85 percent of the Latin American market is subject to net
neutrality rules and the European Parliament already favors strong ones. Following recent legal judgments, Title II is
the only jurisdictional authority available to U.S. telecommunications regulators to adopt meaningful
nondiscrimination rules. Even Supreme Court Justice Antonin Scalia, hardly an Obama lackey, concluded in a 2005
dissent that, as written, Title II applies to high-speed Internet access service. Title II also happens to be extremely
flexible, allowing the FCC to forbear from any and all unnecessary provisions, and already applies in the United
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States to the Internet services offered to all businesses and to two million rural Americans.
If the case in favor of Obamas Internet policy is so strong, why is it so controversial and so difficult for the president
to enact? Because a gutting of net neutrality would be extremely profitable to telecommunications companies (which
could charge for access) and major existing Internet businesses (which could afford to buy protection against smaller,
pesky competitors).
FCC Chairman Tom Wheeler has appeared unwilling to move against the interests of cable and phone companies on
this issue, and has the bureaucratic autonomy to resist the wishes of outsiders, including those in the White House. At
this point, however, the issue is in play, and both Wheeler and Obama may ultimately be able to point to a truly
significant and noble legacythe preservation of the freedom and openness that has made the Internet such a
revolutionary force in the world.
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Links:
[1] http://www.amazon.com/On-Internet-Freedom-Marvin-Ammori-ebook/dp/B00B1MQZNW/ref=sr_1_1?
ie=UTF8&qid=1401933205&sr=8-1&keywords=on internet freedom
[2] https://twitter.com/ammori
[3] http://www.foreignaffairs.com/articles/141536/marvin-ammori/the-case-for-net-neutrality
[4] http://www.whitehouse.gov/net-neutrality
[5] http://www.nytimes.com/2012/03/01/technology/impatient-web-users-flee-slow-loading-sites.html?pagewanted=all

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