According to most press accounts, including Sen. Kerry's well-intentioned post, the DC Circuit Court of Appeals decision two weeks ago, overturning the FCC's Comcast Order, is a death knell for the Internet. The FCC's neutrality Order was overturned, leaving Comcast, Verizon, Laramie.net, and other network providers to determine their own network management practices. Right-wing sites cheered.
But the actual decision, written by one of the rare liberal judges (Tatel) on that circuit, was anything but. It actually provides the FCC with a clear road map to fixing the previous FCC's mistakes that have indeed threatened the Internet. In the bargain, it affirms a rather obscure legal principle we call the free press.
If the first you heard about the issue was in 2005 or 2006 when the newly-coined phrase "network neutrality" became a rallying cry, the legal arcana can be very confusing. But they matter. Communications law in the United States is indeed a mess, but the actions of the FCC, who makes Rules, have to be governed by the actual statutes that Congress passes.
The laws in question are the Communications Act of 1934 and the batch of amendments called the Telecommunications Act of 1996. CA34 established the FCC. Title I is "general provisions", not much detail. Title II deals with Common Carriers. Radio matters (spectrum, broadcast, etc.) are in Title III. Cable regulations are in Title VI, which was added in the 1980s.
The key issue here is that Title II applies to "common carriers", who are regulated a certain way, including:
202(a). It shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.
So a common carrier has to sell its services to anyone. This is how traditional phone service works: The telephone company has a price for a given service, and you pay it. They don't dicker, and most importantly the content of your phone call is your own business. The price must be "just and reasonable":
[201](b) All charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful...
Now the plain fact is that the Internet itself is not, and never was, common carriage. Internet is what people do with common carriage! For many years, the common carriers were legal monopolies. It was forbidden to compete with Ma Bell. The restrictions on competition were gradually lifted between 1968 and 1996, but the pre-1996 phone companies, now referred to as Incumbent Local Exchange Carriers (ILECs), benefited from all sorts of monopoly privileges. It was regulation that forced them to permit ISPs to use their lines. They wanted to charge tolls for calls to ISPs (this led to the famous 1987 "modem tax chain letter", which circulated long after the FCC decided otherwise in 1988, under pressure from Congress). Regulation of common carriers made the public Internet possible. Eventually competition became possible, and now you might be able to get service from an alternative company, but in most places, there are only two wires to the home.
The second wire, of course, is cable. This began as a TV distribution service but in the 1990s, the cable industry recognized that the Internet was happening, and they jumped onto it with cable modems even faster than the telephone companies. In the 1970s, the FCC ruled that the local phone company could not provide cable service except in rural areas, where it was unlikely that a separate cable company could be financially viable. Nowadays, cable competes for video, Internet, and dial tone. But cable modems were never common carriers.
In the 1960s, the FCC began its Computer Inquiries, to figure out how computers and the network would get along. Clearly a computer as payload of the network (dial-up modem, for instance) was not part of the network, and a computer controlling a phone switch was part of the network. But what about packet-switched network data services? In 1980, the Computer II decision drew a line between "basic" and "enhanced" services. Bell phone companies could provide only basic services (voice, bit-level services, and some very basic packet switching), but could provide enhanced services through separate subsidiaries. Those subsidiaries had to buy the basic services on the same terms as their unaffiliated competitors. In other words, if MaBell.net used a MaBell Telephone service, then TristeroISP could buy the same basic service. So if MaBell.net screwed up, competitors could still operate. Computer III later replaced the separate-subsidiary rule with an accounting-separation rule, but all basic services were still "open".
Here's where the trouble begins. The ILECs, and only the ILECs, had to be "open". Cable never was a common carrier. Nor was the neighborhood WISP who climbed the roof of the hospital and put up an antenna, or the company that pulled its own fiber across town between its offices. Of course the Bells had the benefit of a century of monopoly, and their rates had just been largely deregulated, so they were able to exploit their monopoly power (which exists even if there is a little bit of competition) to increase rates. And when cable modems happened, the Bells followed with DSL, at unregulated rates. (They rarely led.) But DSL was technically open to other ISPs. When you bought Verizon.net DSL or SBC-Yahoo DSL, that entity was technically buying wholesale "raw DSL" from the local Verizon or SBC (now ATT) state telephone company. And you could go to other ISPs who also had a regulatory right to buy the same raw DSL.
The phone companies whined about this. The Clinton-Gore FCC (Bill Kennard was the chairman) didn't really care; they recognized the difference, and how important it was to make DSL available to ISPs. But when the Cheney-Rove FCC (Mike Powell was the chairman from 2001 to 2005) came in, they turned the tables and essentially did anything the Bells wanted. Competition be damned! Verizon then requested that Computer II be overturned, as there was "vibrant competition" (when you hear that term, hold your wallet tight!) with cable, and that was enough. Plus Powell was enamored of a mysterious "third pipe" that might happen some day. Maybe it would be Broadband over Power Lines (usually a nonstarter, for various reasons, though it might show up in a few places eventually), or Star Trek Subspace communications (about his level of reality).
Now in 2002, the FCC formally ruled that cable modems were not common carriage, and not "cable service" (basically broadcast TV channels). They held it to be "information service", the TA-1996 term that is almost but not quite synonymous with "enhanced service". This was an affirmation, not a change, in policy. But it overruled the City of Portland and others who had tried to force open access rules on cable.
A Santa Monica ISP, Brand X, pressed this in court, eventually leading to a Supreme Court ruling that immortalized its name. The Brand X ruling (a rare one written by Thomas) affirmed the doctrine of "Chevron Deference", by which a regulatory agency like the FCC is not to be overturned by a court if the court thinks it didn't make the best decision. Rather, the court defers to the agency if the decision was plausibly legal, if the law is ambiguous. Trust me on this: TA96 is an incredibly ambiguous law! (The Brand X ruling even said so.) So the FCC did not have to open cable to competitors, and it didn't have to treat cable the same was as cable, but it could.
So in August of 2005, the FCC revoked Computer II. They issued an order that flatly misstated the Brand X ruling. The FCC said that the Supreme Court had ordered them to treat cable and DSL the same way. So rather than open up cable as the ISP had asked, they were closing DSL the way that the Bells had asked.
Preacher: Lord, won't you please make this one hand like the other!
[pregnant pause]
Parishioner: Uh, Wrong hand!
[from Burns & Shriver]
Almost immediately, the consequences of that decision were noted. Under Computer II, there had been an unlimited supply of ISPs. The Bells' ISPs and the cable ISPs were both subject to competition from new entrants, who could at least pay the Bell to use their raw DSL. But the new rule was that the entire wire, the raw DSL too, was to be treated as "Title I" information service, meaning not regulated common carriage. No more ISPs unless the Bell chose to let them on. So the Bell now had control over the content of the wire, as the cable companies already had.
The FCC tried a charade to cover their heinies. In his last major ruling before retiring, Powell concocted his "four principles". These purported to regulate how ISPs themselves acted. Not strict neutrality (which for technical reasons is a recipe for absolute failure), but a vague set of guidelines not backed by the legalities of formal rulemaking. Now it's pretty clear from the legal point of view that the FCC has to follow the Administrative Procedures Act in order to make rules, so these principles could not be binding, but the FCC pretended otherwise.
A couple of years later, Comcast had a problem. A few customers were running BitTorrent file servers, uploading vast amounts of material at all hours of the day and night. Retail ISP service is as cheap as it is because, frankly, the ISP doesn't expect you to use it so much. And the usual Terms of Service explicitly forbid running file and web servers at home. But rather than strictly enforce the rule, Comcast got too clever. They installed a system that monitored for the fingerprint of a Torrent server, and, if it seemed to be running unattended (that is, uploads without downloads) for a while, they jammed some of the connections with TCP Resets. The torrents eventually completed but in many cases the torrent client would find the file elsewhere first, relieving Comcast of the load.
Bear in mind that cable networks, unlike DSL or fiber, are very short of upstream capability. The system is highly asymmetric, because all upstream (including phones and Internet) has to fit into the spectrum 20-42 MHz, while downstream and TV channels share 54 MHz on up to 750 or 860 or even higher MHz. So they really don't want file servers at home.
Now the Comcast hack was subtle. It did not stop torrenting, and it ran for months before some hacker figured out what was going on. But when they did, the "network neutrality" crowd had their test case, a Big Corporation who was obviously trying to block torrents because they might just be movies or something that Comcast was selling. (Unlikely, but if you aren't inside the industry, the paranoia sounds plausible. Remember, upstream capacity on cable is precious.)
So the FCC issued an Order to Comcast to stop. Comcast did in fact redo their system, and now it blocks all applications equally in times of congestion, so torrent servers work better while games and VoIP work a bit worse. But Comcast decided to fight on principle. They appealed, and that is what the DC Circuit just decided in early April.
Tatel's ruling did not say that there could be no "neutrality". It said, quite simply, that the FCC's claim of "Title I" "ancillary jurisdiction" was not valid, because "ancillary jurisdiction" (there's no law, but we do this because it supports another law) only works when it's tied to a real law. The FCC failed to do so. Ancillary jurisdiction doesn't work in a vacuum.
Why did the FCC not cite a more specific law? Because the obvious law was Title II common carriage. And the FCC had just revoked common carriage. So by dancing around it, they flunked the legal test. This was not a surprise; the Court's unanimous ruling was a no-brainer, especially after hearing the oral argument.
What did Tatel's ruling say, then? It went on and on over what was and wasn't valid "ancillary jurisdiction". It went into considerable detail on Brand X itself, but even more interestingly it brought up the Computer II ruling, which had itself withstood a court challenge. So Tatel was telling the FCC, in pretty clear terms, that Computer II was good law and regulating ISPs without it was a bad idea.
So where do we get neutrality out of this? Well, the idea of regulating ISPs is hogwash! By Verizon's definition, Daily Kos is an ISP! So are other web sites. Hogwash, sure, but there is no legal definition or licensing of ISPs. There are "Christian ISPs" who block this and other Democratic sites, and if somebody wants to use them, I say that's fine! The more ISPs, the merrier.
What needs to be regulated is the wire. Most homes have two wires, cable and telephone. That is not much competition! At very least the phone wire needs to be opened to other ISPs, as it was before 2005. If there is open competition for ISPs, then we recognize them as being a bit more like the press, not subject to content regulation. If one wants to allow torrents and another wants to support only high-speed interactive applications, why not have a choice? But then the ISP is not the wire. So restore common carriage on the wire, and neutrality just happens.
When you watch debates on the topic, bear in mind that this is not a "two sides to a story" issue. There are really three major factions:
- The
propertarian side, supported by the cable and telephone industries, thinks that it's their wire, to do with as they want. No regulation, no how. And thus little competition, since the wire's so expensive.
- The strict neutralist side, supported by the Torrent crowd (hated by ISPs) and some academics, wants all ISPs to be regulated, so that they don't discriminate among any applications, even if it helps 95% of their subscribers. This faction assumes that there won't be much competition anyway, so you must regulate ISPs as the new common carriers.
- The layerist side, which supports a view that the bottom layer -- the wire and raw bit transfer -- should be regulated as open common carriage, but that ISPs who use it should not be. This is what most countries now have, though many got it by copying the pre-Bush US position.
Alas, most debates only feature the first two sides, and they're both wrong. What the DC Circuit really said is that the third approach, the layerist one, is likely to withstand scrutiny. Hence the FCC should fix the Internet by recognizing the error of its 2005 ruling and restoring common carriage to DSL and, ideally, some other media, like new fiber. And its future policies shouldn't be all about protecting monopolies; it should be about protecting the public's right to information.