On Thursday, December 14, 2017, the Federal Communications Commission (FCC) voted to shutter net neutrality laws, rules designed to make sure all Americans have open access to the internet. They also made some changes that will limit FCC authority over the broadband industry going forward, which will make it harder for future FCC appointed officials to reverse this ruling. FCC repeals net neutrality. While net neutrality rules were formally defined and implemented in 2015 during the Obama administration, and upheld by the D.C. Circuit Court Of Appeals in June 2016, net neutrality guidelines have a long history of discussion and support by the FCC. Higher court upholds net neutrality.
During the George W. Bush administration, then FCC Chairman Michael Powell delivered a key note address on February 8, 2004 at the Silicon Flatirons Symposium, entitled “Preserving Internet Freedom: Guiding Principles for the Industry”. His remarks included the following, “…Professors Phil Weiser and Joe Farrell, a former FCC Chief Economist, make this point in a 2002 paper published with the Competition Policy Center at the University of California at Berkeley. Weiser and Farrell acknowledge the strong incentives that network owners have to ensure that broadband platforms remain open. Such openness encourages competition among Internet applications and services, which will in turn make broadband platforms more valuable to both consumers and network owners….” To obtain full remarks, please click here. So basically the December 14, 2017 vote to repeal net neutrality, is effectively a first, and represents sweeping change of delivery and access, since the internet first arrived on the scene in the late 1990’s and transformed our lives.
Aside from the obvious effect, that it puts into the hands of a few, the ability to control how you and I access information, express opinions, and execute consumer transactions on the internet, there are far more concerning long term implications. The world is on the precipice of transformative technological change for innovations in Artificial Intelligence (AI) and Blockchain Technology, that will ultimately demand a higher level of analytical reasoning ability from the human workforce to remain gainfully employed. Gatekeeping the internet, never mind that it’s for profit at your expense, and we will get to that in a minute; and limiting your ability to access information, and thus engage in thoughtful analytical debate, is completely contrary to the workforce game plan that is needed in the 21st Century.
Attorney Generals Schneiderman from the state of New York, Ferguson from the state of Washington, and other Attorney Generals across the country have declared their intent to file a legal challenge. Experts indicate they have multiple grounds for appeal, with the two most convincing being first, one of procedure, in that the FCC violated its own guidelines as to notice and discussion. As one example, on Monday, December 11, 2017, more than 200 companies, including AirBnb, Reddit, and Twitter sent a letter to FCC Chairman Ajit Pai urging the FCC to reconsider the plan to repeal net neutrality. Chairman Pai, not widely known to most Americans before this decision, refused to extend the discussion and review period. Tech companies ask FCC to keep net neutrality rules. Instead, he posted a video on YouTube, with 7 different pop culture clips, including one with Mr. Pai dressed up as Santa Claus and wielding a blue “lightsaber”, apparently looking to capitalize upon the excitement surrounding the latest Star Wars release. Ajit Pai as Santa with blue lightsaber. Perhaps this was intended for people who don’t fully understand the implications of this far reaching decision. For me, it would be helpful to confirm and understand any guidelines in place for appointed officials to lead Federal Commissions like the FCC.
The second convincing argument for appeal is that the Commission disregarded the overwhelming view of the public and ignored the legal precedent upholding the existing net neutrality rules. In 2014, a University of Delaware poll found 81% of Americans were in favor of net neutrality, with support wide across gender, age, race, and level of education. An early December 2017 poll by the University of Maryland concluded 83% of Americans do not approve of the FCC proposal to repeal it.
The real issue is that the 2015 rules officially define broadband telecom providers as utilities, and therefore subject to government oversight and regulation. Telecom providers are concerned this will give government officials the right to regulate and control pricing, which will further inhibit innovation. Repealing net neutrality will give telecom providers the ability to effect pricing policy on the basis of speed and content choice. Major providers have indicated they will voluntarily not engage in this practice. That’s absurd. There are two broad categories of technology necessary to deliver content over the internet, software and infrastructure. Software has always commanded a much higher P&L result than infrastructure. No sound business entity would ever refrain from taking advantage of new regulations that afford the opportunity to improve the bottom line. Nor should they. We are a capitalist economy and as investors, we rely on the experienced good judgment of leaders to provide a meaningful return on our investments. This ruling will have a far reaching cost impact for most Americans, across products and services, or any aspect of delivery of a product or service, that requires transfer of information over the internet.
The other important detail to keep in mind, is whether you use the internet over a physical connection or on a mobile device. The 2015 net neutrality laws, afforded for the first time, rules that would apply fully to wireless broadband. What net neutrality could mean for your wireless carrier. The entire field of delivery is now wide open and available for discriminate change.
The debate will surely rage on and will likely include new legislative actions. Stay tuned. This is certainly a topic I will follow closely. Please note links below you should read.
I’ll leave you with this 70’s classic, from the very first vinyl album I ever purchased,“..And nothing really rocks, and nothing really rolls, and nothing’s ever worth the cost…. and I never see the sudden curve until it’s way too late…” #netneutralityrepeal