The Worst Lies From The FCC Chairman’s Anti-Net Neutrality Speech

The Worst Lies From The FCC Chairman’s Anti-Net Neutrality Speech

Earlier this week, FCC Chairman Ajit Pai announced his plan to repeal the 2015 Open Internet Order, which prevented internet service providers (ISPs) from blocking or prioritising certain traffic, and reclassified providers as “common carriers”. Up to that moment, Pai had kept reasonably quiet about how he planned to dismantle net neutrality, saying only that he favoured an open internet but opposed the reclassification of ISPs as common carriers.

Image: Getty/Gizmodo

Pai’s announcement took the form of a poorly-reasoned attack on net neutrality, which was later posted to the FCC’s website. He warned that net neutrality’s proponents actually had a “longstanding goal of forcing the internet under the federal government’s control”, attacked the internet advocacy group Free Press, and even name-checked the Drudge report. It was a full-throated defence of his indefensible position on net neutrality — a position that only the strongest free-market libertarians and people whose paychecks come from ISPs could support.

Of all the points contained in Pai’s rant, four particularly egregious lies stood out to us.

1. Net neutrality is worse for online privacy

Pai argued that reclassifying ISPs as common carriers and therefore returning them to FTC jurisdiction would be the “best path toward protecting Americans’ online privacy”, because “the nation’s most expert and experienced privacy regulator” would be regulating it again. As we’ve pointed out before, the whole reason that ISPs and Republicans pushed the idea of restoring online privacy oversight to the FTC instead of the FCC is that they know the FTC’s regime is weaker, and that agency can only go after violations after they have already happened. The FCC, on the other hand, has the power to issue rules preventing violations before they happen. The FCC privacy rules that Congress just obliterated were undoubtedly stronger than the FTC status quo, because they required opt-in consent before ISPs could sell your browsing history.

2. Net neutrality has harmed broadband investment

In his speech, Pai repeatedly claimed that net neutrality has reduced investment in broadband infrastructure, citing a study by the Free State Foundation that claimed the 2015 net neutrality order has cost $US5 billion ($6.7 billion) in broadband investment. The Free State Foundation is a conservative think tank with ties to ALEC, the shady group that pushes conservative policies and even writes model legislation in the states. More to the point, the Free State Foundation has received hundreds of thousands of dollars from the two biggest telecom lobbying groups: The Internet and Television Association, formerly the National Cable and Television Association (NCTA), and the Wireless Association, formerly the Cellular Telecommunications and Internet Association (CTIA). Between 2010 and 2014, the latest year for which funding figures are available, NCTA gave $US375,000 ($500,775) and CTIA gave $US280,000 ($373,912), according to tax documents accessed through the Center for Public Integrity’s Nonprofit Network tool. Both are among the strongest opponents of net neutrality; NCTA represents ISPs like Comcast and AT&T, who stand to gain the most from repealing the rules.

Organisations that aren’t financially supported by telecoms see the investment numbers a little differently. An analysis by Free Press provided to attendees to Pai’s speech shows that ISPs’ capital expenditure increased more after net neutrality was passed than in the two years before it. Comcast, too, has invested 26 per cent more since 2015 than it did between 2013 and 2014. The same arguments about how net neutrality would hurt investment were made in 2015, and they were wrong then, too. Business continues to be extremely good for ISPs; so good, in fact, that AT&T had $US2 million ($2.7 million) in cash lying around to drop on Trump’s inauguration.

Indeed, ISPs themselves happily boast of investments when they’re not whining to regulators. According to a Reuters transcript of the event, in December 2016 the CEO of Charter Communications told attendees at the UBS Global Media and Communications conference, “Title II, it didn’t really hurt us; it hasn’t hurt us.” Comcast, which this week announced an increase in internet subscribers, boasted of its “consistent investment and innovation” and how it planned to “double the capacity of our network every 18 to 24 months” in an earnings call in January; Comcast executive Michael J. Cavanagh said the company would “increase our investment in network capacity” during 2017. That doesn’t sound like it’s suffering under the weight of a regulatory burden.

3. Net neutrality accentuates digital redlining

This is related to Pai’s claim about investment, but it’s worth addressing by itself because it’s so wrongheaded. Pai claimed this supposed lack of investment will increase the problem of “digital redlining”, whereby broadband providers avoid building out their infrastructure to poorer areas that won’t return as much profit:

When businesses cut back on capital expenditures, the areas that provide the most marginal returns on investment are the first to go. And in the case of broadband, that means low-income rural and urban neighbourhoods. As a result, Title II has kept countless consumers from getting better Internet access or getting access, period. It is widening the digital divide in our country and accentuating the practice of digital redlining — of fencing off lower-income neighbourhoods on the map and saying, “It’s not worth the time and money to deploy there.”

What he’s basically saying is that due to the imagined lack of investment caused by net neutrality regulations, ISPs won’t invest in poorer communities. There’s extensive evidence that ISPs like AT&T avoid building out their networks to poorer (and therefore less profitable) communities, but there’s no evidence that it’s related to net neutrality.

Obviously, Pai’s claims assume a lot here. This logic assumes that only markets can determine what corporations do, and that state and federal governments are unable to do anything to require broadband providers build infrastructure to everyone, regardless of their economic situation. If the problem is that ISPs won’t invest in areas that return lower profits, does Pai really think that’s just a matter of those companies not having the cash to do so? How much cash do they need before they get around to that? AT&T had a cash flow of $US16.9 billion ($22.6 billion) last year; does that need to be $30 billion, or $50 billion, or $100 billion before the company gets around to investing in the poor? Amina Fazlullah, policy adviser at the National Digital Inclusion Alliance, says that’s just the point: “[T]here’s not always going to be a strong business case” for ISPs “to get into every community”. That’s when “government has to step in” to get them in these areas, whether that’s through programs like LifeLine (which Pai has attacked) or the Universal Service Fund, or simply requiring ISPs to build the infrastructure that people need to get online.

Instead, Pai ignores the entire notion of regulatory action, acting as if the free market is the only thing that can determine where broadband service exists. We wouldn’t accept that argument for electricity service or phone service; why accept it for internet service?

4. The internet wasn’t broken before net neutrality rules

In his speech, Pai said, “Nothing about the internet was broken in 2015. Nothing about the law had changed. And there wasn’t a rash of internet service providers blocking customers from accessing the content, applications or services of their choice.”

This is incredibly disingenuous. Note how Pai said ISPs weren’t blocking traffic to certain sites, because sure, that wasn’t happening. But blocking wasn’t the only kind of harm prevented by the net neutrality order: It also had bright-line rules against paid prioritisation and throttling, where ISPs would limit or boost traffic to certain websites.

One of the most high-profile examples of abuse was Comcast throttling traffic to Netflix in order to extract a payment deal from the streaming video provider, which it eventually agreed to pay. And in 2012, AT&T blocked FaceTime on iPhones, claiming it was using too much bandwidth. In this case, critics argued it was an attempt to block a service that competed with its own voice services. And as the biggest ISPs keep gobbling up content-producers, like AT&T buying DirectTV and then providing free access to itscontent, the risks that ISPs will start prioritising traffic only increase.

The debate over net neutrality has been raging for years, and it gets very exhausting to re-litigate these arguments over and over again. No, net neutrality is not tantamount to government control of the internet; no, broadband investment hasn’t evaporated since net neutrality was passed. But these tiresome arguments, the lines that Pai trotted out this week, are all the ISPs have. This is the tired, unconvincing, misleading crap that will be flung at the public over the next few months, because anti-regulation stalwarts have nothing else to go on. Certainly, they don’t have the truth on their side.

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