The Republican-led FCC is beginning the process of repealing Obama-era legislation that treats broadband providers as utilities, promising to reopen the long-running debate on how traffic should be treated on the internet. The effort moved forward last week, when FCC chairman Ajit Paiintroduced a proposal for "fixing" the agency's net neutrality rules. Those rules, he says, have cost the US economy billions of dollars in lost broadband investment and tens of thousands of jobs.
Broadband and wireless companies cheer the proposed changes, which would dismantle regulation imposed on them since 2015. They say the rules are hurting their businesses.
On the other sider, consumer advocates and internet companies worry repealing the rules will give broadband companies free rein to shut out competitors and censor what you can access online.
The change, which Pai says is a return to a "light touch" style of regulation, comes as President Donald Trump and other Republicans work to repeal other Obama-era policies, including consumer broadband privacy protections, Obamacare and environmental protections. It also comes at a critical time in the internet's evolution, with ISPs and wireless providers morphing into entertainment companies that compete against each other and the likes of Amazon, Google and Facebook.
What do the current net neutrality regulations do again?
Rules adopted two years ago by the FCC basically prevent broadband providers from blocking consumers' access to websites. They also prevent them from playing favorites online by either steering users to or away from certain sites or services. And they prevent internet providers from charging companies extra fees to access their customers faster than their competitors can.
Who is against this?
No one is really against net neutrality. All the big broadband companies, like AT&T and Comcast, say they don't want to block or slow anyone from enjoying their favorite cat videos. Pai has said he wants a free and open internet.
Saying you're for net neutrality, however, is like saying you're in favor of world peace. No one is against it. How you get there is another story.
In a speech introducing his plan, Pai said the country has lost $5.1 billion in broadband capital investment, citing figures by conservative group Free State Foundations. He added that between 75,000 and 100,000 jobs have been lost because of broadband's classification was changed.
Consumer advocacy groups, like Free Press, dispute these numbers. They say capital investment and profits are up. Supporters of net neutrality argue that broadband must be regulated like a utility under a section of the Communications Act known as Title II or the rest of the rules fall apart. Courts have twice said the FCC doesn't have the authority to establish net neutrality regulation without this classification.
1. Ditch Title II. The most important element of Pai's proposal is to strip broadband of the classification that allows the agency to regulate it like a public utility.
2. Let the Federal Trade Commission police privacy and anticompetitive concerns. Before the FCC reclassified broadband, privacy concerns and anti-competitive behavior were handled by the FTC. After the classification was changed, the law required an "expert" agency, a.k.a. the FCC, be in charge of privacy. If the FCC strips away the Title II classification, the FTC will be in charge again.
3. Eliminate the internet conduct standard. This is a broad rule giving the FCC authority to take action if a broadband provider acts in a manner that is anticompetitive or harmful to consumers. The previous FCC used this to investigate wireless carriers' zero-rating practices. Pai ended those investigations earlier this year.
What about the "bright line" rules that prohibit blocking or slowing access to websites and online services?
The "bright line" rules are at the core of the 2015 net neutrality regulation. Those rules prevent broadband companies from blocking or slowing down traffic, and prohibit paid prioritization, which many feared would create fast lanes on the internet. Pai has repeatedly said he favors not blocking or slowing down access to websites and services. But it's unclear whether Pai believes actual regulation is necessary to ensure broadband companies don't engage in these activities.
In the FCC's latest proposal, it is asking the public to comment on whether those rules should be changed or eliminated. So it's likely there won't be official regulations spelling out what broadband companies can and cannot do when it comes to net neutrality.
Does this mean that internet "fast lanes" are back on the table?
Most likely. Commissioner Michael O'Rielly, the other Republican on the FCC, said last week he thought there was no reason for an outright ban on such services, which would allow broadband companies to charge extra fees to deliver some information faster than ordinary internet traffic.
This worries net neutrality advocates because it could tilt the playing field in favor of deep-pocketed incumbents, like Netflix, at the expense of start ups trying to break into the business. More than 800 startups and entrepreneurs wrote to Pai asking him not to dismantle the rules.
"Our companies should be able to compete with incumbents on the quality of our products and services," they wrote, "not on or our capacity to pay tolls to internet access providers."
I'm confused. I thought Pai was for net neutrality. Why would he propose getting rid of rules altogether?
That's a good question. Gigi Sohn, an advisor to Tom Wheeler, the former chairman, said the proposal is all "repeal" with no "replace."
"This isn't 'light touch' regulation the chairman constantly talks about," she said. "This is a 'no touch' abdication of the agency's responsibility to protect consumers and competition."
But FCC officials defend their plan and say repealing the rules entirely doesn't mean consumers won't be protected. The FTC, they say, has authority to go after companies for deceptive or unfair practices.
Critics say the FTC offers weaker protections for consumers' than the FCC because it doesn't have the authority to set regulation. Instead, it acts only when companies don't honor their terms of service with customers.
What does this mean for me?
It depends on which side of this argument you believe.
Broadband companies and Pai argue that investment will pour into broadband networks once the rules are lifted. Consumers will have faster access to the internet at a lower cost, they say. For example, advertisers might subsidize wireless or broadband service for customers who click on their advertisements. Broadband companies, which have already begun bundling video services with their internet access to offer consumers a better deal, could even more aggressive in their offers to entice consumers.
But many Democrats, like Senators Ed Markey of Massachusetts and Al Franken of Minnesota, as well as net neutrality advocates argue these potential benefits come at a high a cost. Without rules protecting an open internet, startups could be shut out of the market in favor of bigger players. This will lead to fewer choices and less innovation, which eventually will lead to higher prices and less access to content. In other words, the internet of the future may look more like today's cable TV with your broadband company determining what websites and services you can access.
The reality is likely somewhere in the middle. Broadband companies are transforming into entertainment companies. Comcast bought NBC in 2013. AT&T bought satellite TV provider DirecTV in 2015, and it's expected to complete its acquisition of Time Warner this year. Verizon bought AOL, and announced a deal with Yahoo.
Each of these companies is offering streaming video services that compete directly with services that rely on their networks to reach customers. The new business model means they're fighting for customers and advertisers with Google, Facebook and Amazon.
How regulators handle consolidation will also affect how the industry evolves. As long as there is sufficient competition, consumers will fare better. But fewer players concentrates power in the hands of big broadband companies. That's rarely good for consumers.
Is this the end for net neutrality?
The process of ditching net neutrality rules has just begun. The FCC will vote May 18 to open its proposal to public comment. Then the agency will review comments and come up with official rules, which will be voted on later this year.
The process won't end there. Net neutrality advocates and Democrats in Congress have already vowed to continue to fight in court.
Sen. Richard Blumenthal, a Democrat from Connecticut, told reporters last week he thinks net neutrality supporters can make a good case against rolling back the rules. '
"In order to change the rules Pai needs a fact-based docket to show that something has changed from two years ago," he said. "Nothing has changed."
Let's not forget that there is still a court battle brewing over the existing rules. Last year, the US Court of Appeals for the District of Columbia Circuit upheld the rules the agency imposed in 2015. AT&T and others who sued the FCC over the rules, asked the full circuit of judges to reconsider the case. After several months of review, that request was denied today. The petitioners in the case could still appeal the decision to the US Supreme Court, but it may not be selected for hearing by the court.
What this all means is that the battle over net neutrality is likely to drag on for at least a few more years.
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