Net Pride & Prejudice

emerging technological trend: abolishing net neutrality? (Getty Images license)

     The U.S. internet will become a source of pride and prejudice depending on business deals and how much consumers are willing to pay for faster service. On December 14, 2017 the U.S. FCC voted to eliminate net neutrality in a hotly contested issue. According to the order, the internet in the U.S. will be reclassified as a Title I information service under the federal Communications Act. Internet service providers ("ISP"s) will no longer be classified as "utilities" so now are legally permitted to speed up, slow down, or grant preferred access to online content based on consumer pricing deals.

     Part I of this paper looks at the implications of the FCC's vote. Part II focuses on pending legal and legislative challenges to the vote and Part III examines the international treatment of net neutrality. 

Part 1: Why Net Neutrality Matters?

     So why does net neutrality matter? Many countries in the world are doing fine without it (see Part III below). The U.S. FCC issued the Open Internet rules which was effective from June 2015 which imposed net neutrality on ISPs some of whom challenged this rule. On June 14, 2016, the US Court of Appeals for the DC Circuit ruled in favor of net neutrality by upholding the Open Internet rules. Flash forward a few years, the FCC has now voted to eliminate it. So what’s going on?

will ISPs speed up or slow down your U.S. net access? (Getty Images license)

     Under net neutrality rules, ISPs are forbidden to block access to or “throttle” (meaning speed up or slow down) the streaming speeds of websites. ISPs cannot favor web content or consumers and must provide equal access to all those who conduct affairs on the internet regardless how much they pay for internet services. Net neutrality also requires enhanced transparency of the internet and prohibits its unreasonable interference. For an entertaining guide on net neutrality, please see video from John Oliver’s show below. (Warning: very funny & explicit, viewer discretion is advised!)

Prideful ISPs vs Prejudiced Net users?

     Many ISPs have argued that requiring compliance with net neutrality would decrease capital expenditure investments into network infrastructure and related hardware and software upgrades. For example, the top 12 broadband firms like AT&T, Verizon and Comcast decreased their domestic internet capital expenditures by US$3.6 billion compared to 2014, before the effective date of the rule enforcing net neutrality in June 2015 (see sources here and here).  ISPs have argued that it is not fair to put the burden of maintaining the internet (which is the backbone of the modern digital economy) as a “public good” solely on them. Also, critics of net neutrality also argue that ISPs from rural areas are concerned about how net neutrality rules have negatively affected “their ability to build broadband infrastructure”.

     On the other hand, supporters of net neutrality argue that the principle protects free speech and ensures a vibrant and robust “marketplace of ideas”. No ISP should have the power to block or throttle streaming speeds to websites or force consumers to pay more for faster streaming speeds or access to certain websites.  Free speech proponents fear that ISPs will have the power to slow or block consumer access to web content. For example, in December 2011, a major U.S. ISP blocked access to Google Wallet (viewed as a potential competitor). In 2007, the same ISP blocked pro-choice text messages from being sent out over services provided by its wireless arm.

censorship via net access control? (Getty Images license)

     There is also the concern that ISPs with their own telecommunications affiliates may give preferential Internet access to their own mobile hardware and content services. For example, a major ISP in March 2017 announced that all of its Android phones will have a certain app pre-installed that helps users find content and services across different apps without the need to open each of those apps individually. The same ISP has partnered with Samsung to develop 5G potential for Samsung’s Android devices. This leads to another concern that Samsung’s smart devices may be given preferential treatment and Internet access over devices made by its competitors like Apple for example.  The concerns don’t stop there. The same ISP also has a cloud business arm and a mobile financial services arm, which may be provided preferential treatment to the detriment of other cloud services providers like Microsoft and Alibaba or other mobile financial services players like Bank of America who do not have the power to control internet access and download speed.

will we be affected by potentially slower speed? (Getty Images license)

Potentially Significant Impacts

     Two major groups using the internet will be affected: users and content providers. Users like e-commerce consumers, net surfers, social media users, gamers, cryptocurrencies traders and miners may need to pay extra to enjoy smoother downloading or surfing speeds.  The second group consists of content  (like HBO or Netflix) or services providers (like Amazon) who would be relatively powerless to help their consumers or users access their websites faster, unless they both pay extra to ISPs for such privilege. 

     To help combat against possible abuses resulting in a net non-neutral environment, some techies are beginning to resurrect the use of "mesh networks" which is an old technology that permits users to surf the net without an ISP.  

     Part II: Judicial & Congressional Intervention

     Opponents of the FCC's vote are busy asking both the judiciary and Congress to intervene. For example, New York Attorney General Eric Schneiderman announced that his offices will lead a multi-state litigation campaign against the FCC vote. Several Congressional lawmakers introduced a bill in late December to limit the FCC's authority to regulate ISPs and would prevent ISPs themselves from blocking websites or intentionally throttling web traffic based on its content. However, the bill does not ban paid prioritization, which was a cornerstone of the net neutrality regime. On December 15, 2017 New York Senator Chuck Schumer plans to force a vote on a net neutrality bill that, if passed, would overturn the FCC’s ruling under the Congressional Review Act, which allows Congress to reverse agency rules with majority approval from both the House and Senate.

judicial & legislative efforts to revive basic principle (Getty Image license)

Anti-Trust Challenge?

     The smart cookies are thinking of using federal anti-trust law and regulations to challenge the FCC vote. Vertically integrated ISPs have incentives to discriminate against other apps or content thereby undermining fair competition. Sounds like a solid argument. However there is a problem to this. The agency in charge of enforcing the anti-trust law is the Federal Trade Commission "FTC".   However it would seem that the FTC may be conflicted since it signed a joint cooperation agreement with the FCC to dismantle net neutrality and enforce the FCC's vote in adopting the Restoring Internet Freedom Order. Whoops? 

will the anti-trust regulator be conflicted? (Getty Images license)

Part III: EU & Asia Treatment of Net Neutrality

     International treatment of net neutrality spans the spectrum of its full adoption to its complete disregard. It would seem the degree to which a jurisdiction embraces principles of net neutrality is directly proportionate to its level of democratic maturity. For example, in both the UK and EU countries, net neutrality is enshrined in EU Regulation 2015/2120 of November 26, 2015 which is enforced across member states. This Regulation became effective April 30, 2016. For example, Article 3(3) provides for safeguarding of open internet access. It obligates ISPs to treat all traffic equally irrespective of the sender & receiver, the content accessed or distributed, the applications or services used or provided or the terminal equipment used. 

Champions of net neutrality (Getty Images license)

    The Body of European Regulators for Electronic Communications drafted guidance to help national regulators enforce the Regulation.

     India passed the "Prohibition of Discriminatory Tariffs for Data Services Regulation" in February 2016 which prevents ISPs from offering or charging discriminatory tariffs for data services on the basis of content being accessed by a consumer.

     Singapore issued its net neutrality policy in 2011 which only prohibits blocking but does not ban throttling.

(Getty Images license)

     Needless to say, China is completely net non-neutral. According to the Economist, Chinese ISPs block access to sites banned by the government. Also using specific search terms will cause the user to be blocked from the search engine for around 90 seconds. Chinese ISPs are ordered to take down pages that include banned keywords. Over 100,000 people police the net to catch dissenters. Not a fun place to surf the net it would seem, no? Not unless, according to my source, if you are a guest of the World Internet Conference hosted by China annually before an international delegation. During the pendency of the Conference, I was informed that the usual internet firewalls are (temporarily) suspended so its esteemed guests like one of this year's keynote speakers Tim Cook can freely access the net. 

Hello, Hong Kong's telecom law of 1963 calling! (Getty Images license)

     Hong Kong is characteristically backwards in its regulatory approach. Hong Kong does not have any express net neutrality requirements. Instead, Hong Kong uses a telecommunication law (which dates back to January 1, 1963!!) to punish a telecom officer from willfully detaining or delaying any message. (See s.24(1)(c)). Alternatively one may consider using the Competition Ordinance which provides a framework for prohibiting anti-competitive and discriminatory conduct to launch a fight for net neutrality. But good luck in trying to do that in a territory accused by its own leading English newspaper as being the "king of crony capitalism".

     Based on my own personal experience of using the internet in Hong Kong, it is the slowest in all the places in which I have worked. Downloading content from overseas websites takes relatively longer. There are no packages available from the ISPs here that offers "unlimited" internet surfing and downloading. The most expensive package generally provides about 10GB of content after which the user is charged extra for using more MBs.  All except one of the ISPs are owned by property developers since it is more cost effective to install internet base stations on their properties near the city centers. This leaves the speed of the internet very slow in the outlying areas.

turtles move faster than 3 megabits per second? (Getty Images license)

      For example in one outlying district reported in a 2015 Hong Kong news article, the download speed was 3 megabits per second!! Try watching a YouTube video on that speed folks. You can bake a whole turkey in the time it takes to download a typical online film.  According to Cisco, "it would take an individual more than 5 million years to watch the amount of video that will cross global IP networks each month in 2021. Every second, a million minutes of video content will cross the network by 2021 ... [and that] [a]nnual global IP traffic will reach 3.3 ZB." (To put this into scale, 1 zettabyte (ZB) equals 1,000 exabytes.) By Cisco's estimates, it would probably take an individual living in the outlying districts of Hong Kong an eternity to watch that same amount of video to hit the global IP networks by 2021. 

Conclusion

     Through the net neutrality debate, we are able to see how emerging technologies can have a significant effect on our basic notions of freedom of speech. Back in 1978, the U.S. Supreme Court narrowly upheld (5 to 4 vote) the FCC's right to censure a radio station for broadcasting over the radio a comedian's standup routine that contained "sexual and excretory activities in a particularly offensive manner" during the early afternoon. The Court was divided doctrinally on the limits of the FCC's power to regulate the content of speech based on its level of obscenity, indecency, or profanity. The Court reasoned that the FCC had an interest to shield children from potentially offensive material, and ensure that unwanted speech does not enter one's home. 

     Back in 1978, the limits of free speech were obscenity, indecency, or profanity. In setting the contours of free speech, the debate focused on preventing the government from regulating the content of speech based on judging, on the basis of its content, which speech protected by the First Amendment was most valuable and therefore deserving of First Amendment protection, and which was less valuable and hence less deserving of protection.

     Emerging technologies are on the verge of introducing 5G internet connectivity to enable our smart devices (which have more computing power than mainframes back in 1978) to interact with each other faster and more intrusive than ever.  These changes have also created a new way for the government to regulate speech. Our ability to participate in the market place of ideas depends directly on the speed of and access to such internet connectivity.  By repealing net neutrality, the government has indirectly allowed the potential censorship of the market of ideas in our future through the blocking or manipulation of such speed and access in a discriminatory manner. Only through countervailing judicial and or congressional action may we prevent the pride of ISPs from prejudicing our freedom of thought.

cornerstone of tomorrow's market place of ideas (Getty Images license)

#net neutrality #free speech