FCC Chair: Networks Have “Incentive And Ability” To Disregard Consumers

Image courtesy of Consumer Reports

Next week, Tom Wheeler will step down as Chairman of the Federal Communications Commission after three years, during which the FCC issued the 2015 Open Internet Order (aka Net Neutrality), making internet service providers and wireless companies more accountable. While the incoming Trump administration has not yet nominated Wheeler’s replacement, all indications are that the new-look FCC will seek to undo much of the current Commission’s work. This morning, Wheeler made his final argument against taking a sledgehammer to everything he’s accomplished.

Speaking this morning at The Aspen Institute in D.C., Wheeler — who previously headed up the two major trade groups representing the wireless industry and cable companies — spoke of the inevitability of these industries to make consumers an afterthought.

“The historical facts are clear,” said Wheeler. “Those who build and operate networks have both the incentive and the ability to use the power of the network to benefit themselves even if doing so harms their own customers and the greater public interest.”

This is not a judgment, cautioned Wheeler, just the nature of the beast. He likened it to the same impulse that moves drivers to speed on the highway, which is why we have regulation in the form of speed limits.

“The question going forward is whether the ISPs and policy makers will recognize that obeying speed limits helps everyone?”

Detractors of the FCC’s current regulations claim the rules are too restrictive and stifling (even though there is little evidence that increased FCC oversight has harmed investment, and some of Net Neutrality’s biggest critics have said it’s really not as scary as they made it out to be). For his part, Wheeler contends that the work his Commission did is working and, for that reason, should not be thrown out for political reasons.

“In the year after the Open Internet rules were adopted, venture investment in Internet-specific businesses was up 35 percent,” claims the outgoing chairman. “Network construction efficiencies are going up and thus costs are going down as networks get more bang for the buck.”

In addition to arguing that Net Neutrality has been a net positive, Wheeler questions the urgency of industry and anti-regulation advocates to undo the Open Internet Order.

“Where’s the fire? What has happened since the Open Internet rules were adopted to justify uprooting the policy?” asked Wheeler. “Network investment is up, investment in innovative services is up, and ISPs revenues – and stock prices – are at record levels. So, where’s the fire? Other than the desires of a few ISPs to be free of meaningful oversight, why the sudden rush to undo something that is demonstrably working?”

He also contends that — contrary to some stances on the issue — reversing the Open Internet Order is “not a slam dunk.”

In order to roll the rules back, Wheeler argues that opponents would need to demonstrate that so much has changed since 2015 that a rollback is justified, and that a federal appeals court erred in 2016 when it upheld the rules.

Wheeler maintains that preserving Net Neutrality isn’t just about protecting his Commission’s legacy, but about laying a path for the everything-is-connected future.

“The revolution comes with the next step of the Internet, harnessing that connectivity to productive activities,” said Wheeler. “I’ve seen machine-learning artificial intelligence build an aircraft wing at Boeing. I’ve seen augmented reality assist and improve human activities at Microsoft. I’ve seen virtual reality transform information consumption at Facebook. I’ve ridden in autonomous cars at both The Ohio State University and the University of Michigan.”

His contention is that these technologies don’t just rely on internet connectivity, but that they were built on the assumption that this connectivity will be “fast, fair and open,” as guaranteed by the conditions of the Open Internet Order.

“To take those protections away at the request of a handful of ISPs threatens any innovation that requires connectedness and with it the productivity gains, job creation, and international competitiveness required for American economic growth,” said Wheeler, adding that the increasing use of cloud-based applications is also an indicator of the importance of not allowing companies like Verizon and Comcast to determine who gets the fastest access to the internet.

“If ISPs get to choose which applications and clouds work better than others in terms of access speed and latency, then they will control the future,” he noted. “ISPs free from open access obligations and behavioral oversight can choke growth and innovation, or, at the least, demand tribute for passing over their network.”

Without Net Neutrality, Wheeler argues that ISPs would also get to determine which web-connected devices get to actually connect to the internet. An ISP could, in theory, decide to block access for one company’s remote-access home security cameras, or could set things up so that only one company’s cameras get priority access.

The ultimate proof that Net Neutrality is working, argued Wheeler, comes from its biggest detractor.

AT&T, the lead plaintiff in the lawsuit to overturn the Open Internet Order, recently launched the DirecTV Now streaming service, and not just to users of AT&T’s wireless or wireline broadband services. Wheeler pointed out that, because of Net Neutrality, AT&T is “assured access to the broadband networks of Comcast and Charter.” Without these rules in place, competing wireless and cable companies would be free to block or throttle access to DirecTV Now.

“Access to the network is what the new economy is built on, and it must not be taken away,” said Wheeler, who cautioned against the inevitable regulatory and legislative proposals that will use the “Net Neutrality” phrase but not include the protections at the core of those rules.

“As we choose our path forward, we need to remember how we got here. We got here with smart government, not absent government,” concluded the outgoing Chairman. “We got here with a government that was pro-competition, not pro-incumbent. We got here thanks to policies rooted in reality, not ideology. Most important, we got here because of the genius of America’s inventors and entrepreneurs and an open platform that allowed them to execute their ideas without having to ask for permission.”

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