A misinterpreted federalism narrative fuels more misinterpretation of net neutrality

A number of state legislatures are ramping up for their legislative sessions where they will pass bills addressing various matters from funding their governments to other state government operational issues to civil rights to fighting crime. I have been giving some thought to the sovereignty of states, to these so-called laboratories of democracy and I am starting to question just how sovereign states are? As I read between the four corners of the U.S. Constitution, I am at a point where I don’t believe states were meant to be sovereign. Instead, states are merely administrative lordships existing to better manage the population, manage the extraction of resources, and convert citizens into tax coin. The U.S. Constitution makes clear that the extent of their powers is set by the federal government, not the other way around, and the regulations of state powers, in my mind, eliminates any claims to sovereignty.

The Tenth Amendment of the U.S. Constitution is usually referred to when describing the extent of state sovereignty. It reads:

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

The Tenth Amendment reads like a “shifting screen”, where the federal government via legislation passed by the Congress or changes in how the administrative states interprets its rules, can determine the amount of power it will either delegate or take back. We have seen over the last 85 years how the federal government has used the U.S. Constitution’s commerce clause to support laws and extend regulations into social and commercial relationships that on the surface seem confined to a particular state, bakery, or bedroom. With changes in presidential administrations or U.S. Supreme Court membership, we also expect to see changes in this shifting screen as public policy, regulations, or court rulings redefine federal and state powers.

Besides, how sovereign can a state be if, as spelled out in Article I, Section 10 of the U.S. Constitution, it is not allowed to enter into any treaties or alliances with other national governments? How sovereign can a state be if it cannot mint and issue its own coin? How sovereign can a state be if it cannot, without the consent of Congress, assess duties on imports and exports? How sovereign can a state be if it cannot even maintain troops and ships in time of peace?

In the net neutrality debate where a number of states, either through legislation or executive orders issued by their governors, states have made the assumption that promoting how an advanced communications network is to be managed is a power reserved to the states under the U.S. Constitution. The internet, as an advanced communications network, is a platform responsible for moving an increased amount of commerce across state and international borders. As a channel for commerce, its regulation falls under the jurisdiction of the Congress, as determined by Article I, Section 8 of the U.S. Constitution. This alone, in my opinion, invalidates any attempts on the part of the states to use the net neutrality narrative to regulate the internet.

I would go one step further. Net neutrality is a management philosophy stemming from the business judgment of network managers and designers. It would not benefit a network manager to provide the public access to an interconnected global network of computers if that manager blocked its subscriber’s access to certain websites.

Nor would it make good business sense to degrade a subscriber’s experience by slowing down the speed of traffic from a subscriber’s chosen content provider. And given the level of competition between network providers, being transparent about prices and charges that a network manager’s subscribers face not only increases the level of faith subscribers have in a network, but also gives the network manager an edge over other competitors. She would be seen as being considerate to her subscriber’s consumer protection interest, a position a network manager can ill afford to ignore in these days of privacy violations.

Because of the interstate nature of the internet, the responsibility lies with the federal government to ensure the above net neutrality principles are met. State governments, as administrative lords over certain populations and territory, should focus on aligning their state advanced communications policy with national policy, including properly administering any national funds allocated for encouraging the deployment of advanced communications. To interpret “state sovereignty” as permission to go one’s way would disrupt the interstate nature of commerce and its regulation by a central government.

Rather than regurgitating the standard rhetoric of “states’ rights”, policymakers need to take a fresh look at federalism and adjust its meaning to the proper interpretation under the four corners of the Constitution.

Advertisements

There is nothing progressive about opposing zero-rated broadband service

When liberal organizations attacked zero-rated broadband access services offered by internet service providers, they may have lost some of their progressive bona fides.  Fortunately for them the 2016 general elections and the 2018 midterm elections did not make net neutrality in particular or broadband access in general a battleground issue.

Here in Georgia, broadband got nary a mention during the gubernatorial debates with both candidates, former Georgia state senator Stacey Abrams and Governor-elect Brian Kemp giving the nod to increasing consumer access to broadband services, especially for citizens living in rural areas.

I sense that Mr Kemp would have no problem with mobile wireless providers targeting rural consumers with their zero-rating plans.  Under zero rating, a wireless provider may choose not to apply data usage caps where a subscriber is accessing particular content, whether the content is provided by a third-party of by the wireless carrier itself.  For example, Verizon may decide not to reduce the amount of data available to me by the amount of time I choose to view a video on Facebook or on one of Verizon’s media properties.  In other words, my data cap would not take a hit.

I can see two primary benefits from such a non-pricing plan. First, for new subscribers being introduced to mobile web service, it provides the consumer with incentive to become familiar with more sources of content and services.  Second, the value of the carrier’s network increases as demand for its content and services increase.  While overall costs of operating the network may go up as more subscribers establish accounts, cost per subscriber should fall providing incentive for keep the price each subscriber pays flat.

Especially given the second benefit, the incentive to keep subscriber rates flat, I would think that progressives would promote zero rate pricing for broadband.  Progressives tend to position themselves as protectors of the middle class and if there is an issue that progressives should empathize with when it comes to the middle class are the increases in consumer prices the middle class encounters given wages that have been flat for decades.  One would also think that as the U.S. economy and educational system requires workers, producers, and students to have access to data via the internet that progressives would encourage consumers to jump on the opportunity to get on the internet at a lower cost.  Instead opponents of zero rating have been emphasizing the alleged negative impact zero rating has on competition between content providers.

For example, the Electronic Freedom Frontier, an internet freedom advocacy group, is concerned that zero rating will divert consumer eyeballs to large content providers such as Facebook that can afford to subsidize a broadband access provider’s lost revenue in exchange for more traffic being sent to the large content provider.  That the consumer may be incentivized to probe content or spend more time on broadband networks is of very little concern to EFF.  The potential threat to market entry by smaller or newer players appears to be more of their concern.

Given this stance by EFF, it is no wonder that the zero rating narrative, while bantered about inside the Washington, DC beltway, has no traction with the general public.  Politically it is a non-starter with a general public made up of consumers that are more concerned with getting bang for their dollars versus whether a content provider has the innovative or content creative capabilities to enter the content market.

For progressives, zero rating is another example of how the Left has strayed away from matters that mean the most to most Americans.

 

Atlanta should avoid the net neutrality debate. It’s not good for business

Internet Innovation Alliance co-founder Bruce Mehlman posted an article yesterday discussing the positive impact relaxed regulatory requirements can have on investment in and deployment of broadband networks. According to Mr. Mehlman, investment in broadband rose by $1.5 billion to $76.3 billion.  He contrasts this to the $3.2 billion decline in investment between 2015 and 2016.

What made the difference? According to Mr. Mehlman it was the decision last year by the Federal Communications Commission to repeal their 2015 open internet order, a decision that put into regulatory code a number of net neutrality principles.  The 2015 order treated broadband access providers as telephone companies by applying consumer and telephone network management rules that were based on communications law from the 1930s.  That approach, according to Mr. Mehlman, just can’t fly in the 21st century.

Unfortunately, Washington has been embroiled in a debate over how net neutrality principles should be applied.  There is a consensus among opponents to and proponents of net neutrality principles that consumers should be able to access web content of their choice; that content providers should not have their traffic speeds throttled by broadband access providers; and that broadband access providers should be transparent about the terms and conditions of their services.  Whether a rule by a regulatory agency is the best approach to ensuring these policy goals is an issue.

Getting to yes on net neutrality may be best brought about by an action of Congress.  Defining net neutrality in the law and laying out the components of its meaning will give content providers and broadband access providers definitive guideposts that help settle any conflicts in the future.  Without a congressional action, the industry and consumers run the risk of a back and forth regulatory battle driven by changes in political power, particularly when a new presidential administration takes over and a new chairman is appointed.  That type of uncertainty every four years is not good for consumers or business.

As more people and businesses move to Atlanta, regulatory certainty becomes an asset for the person who telecommutes; for the financial technology company that needs to maintain connection to its app subscribers; to the student who relies on distance learning to complete assignments.

Treating a broadband provider facing competition from three or four more broadband providers as if they were a monopoly local telephone company in 1934 won’t contribute to Atlanta’s continued growth.

Net neutrality challenges the affordability of information

Last weekend, the State of California upped the ante in the net neutrality debate when Governor Jerry Brown signed into law SB 822, a bill that put into California law net neutrality requirements that were contained in the Federal Communications Commission’s 2015 Open Internet Order, a set of rules that were later repealed by the FCC in its 2017 Restore Internet Freedom Order.  Section 3101(a) and Section 3101(b) of SB 822 provide the core element of the legislation and reads as follows:

“3101. (a) It shall be unlawful for a fixed Internet service provider, insofar as the provider is engaged in providing fixed broadband Internet access service, to engage in any of the following activities:
(1) Blocking lawful content, applications, services, or nonharmful devices, subject to reasonable network management.
(2) Impairing or degrading lawful Internet traffic on the basis of Internet content, application, or service, or use of a nonharmful device, subject to reasonable network management.
(3) Requiring consideration, monetary or otherwise, from an edge provider, including, but not limited to, in exchange for any of the following:
(A) Delivering Internet traffic to, and carrying Internet traffic from, the Internet service provider’s end users.
(B) Avoiding having the edge provider’s content, application, service, or nonharmful device blocked from reaching the Internet service provider’s end users.
(C) Avoiding having the edge provider’s content, application, service, or nonharmful device impaired or degraded.
(4) Engaging in paid prioritization.
(5) Engaging in zero-rating in exchange for consideration, monetary or otherwise, from a third party.
(6) Zero-rating some Internet content, applications, services, or devices in a category of Internet content, applications, services, or devices, but not the entire category.
(7) (A) Unreasonably interfering with, or unreasonably disadvantaging, either an end user’s ability to select, access, and use broadband Internet access service or the lawful Internet content, applications, services, or devices of the end user’s choice, or an edge provider’s ability to make lawful content, applications, services, or devices available to end users. Reasonable network management shall not be a violation of this paragraph.
(B) Zero-rating Internet traffic in application-agnostic ways shall not be a violation of subparagraph (A) provided that no consideration, monetary or otherwise, is provided by any third party in exchange for the Internet service provider’s decision whether to zero-rate traffic.
(8) Failing to publicly disclose accurate information regarding the network management practices, performance, and commercial terms of its broadband Internet access services sufficient for consumers to make informed choices regarding use of those services and for content, application, service, and device providers to develop, market, and maintain Internet offerings.
(9) Engaging in practices, including, but not limited to, agreements, with respect to, related to, or in connection with, ISP traffic exchange that have the purpose or effect of evading the prohibitions contained in this section and Section 3102. Nothing in this paragraph shall be construed to prohibit Internet service providers from entering into ISP traffic exchange agreements that do not evade the prohibitions contained in this section and Section 3102.
(b) It shall be unlawful for a mobile Internet service provider, insofar as the provider is engaged in providing mobile broadband Internet access service, to engage in any of the activities described in paragraphs (1), (2), (3), (4), (5), (6), (7), (8), and (9) of subdivision (a).”

Political actors that favor the FCC’s implementation of net neutrality rules have managed in the past to endear their position to the public by describing efforts opposing the rules as a barrier to freedom of expression.  Net neutrality rules proponents argue that internet service providers have a financial incentive to use their positions as gateways to internet access to favor their content over that of edge providers.  Favoring ISP content may take the form of throttling data coming from a favored website or blocking a consumer’s access to their favorite website.

Net neutrality rules proponents would also argue that even if their access to a website was not blocked or data from their favorite website not slowed down, the receipt by an ISP of compensation in exchange for giving an edge provider higher priority of their traffic may mean that smaller content providers are put at a disadvantage compared to larger content providers with deeper pockets.

Opponents of putting net neutrality into an agency rule would agree that the principles of net neutrality should be adhered to.  However, as network operators, ISPs argue that they cannot afford to devalue their networks by frustrating consumer access to internet content.  The internet has grown in use and popularity as a result of the “network effect” where as more consumers use the internet, the demand for and supply of content and other services increases thus increasing the value of an operator’s network.  In the end, blocking, throttling, or prioritizing content would only work against the network operator.

Often overlooked in the net neutrality debate is the global nature of the internet.  Facebook users, for example, take for granted that most of the social network’s subscribers are not located in the United States and that we all access a network of interconnected computers located in multiple countries. The traffic you receive can come from a number of jurisdictions before landing on your computer.

Ironically, California leads the way in North America when it comes to internet traffic density.  According to data from Akami, California accounts for 5.1% of traffic flows in North America.  Statista.com reports that internet traffic in North America amounts to  1,411,021 terabytes a month. This means that California’s approximate share is 71,962 terabytes a month.

And the amount of internet traffic flowing is expected to continue increasing.  According to findings by Cisco, internet traffic is expected to increase by 278 exabytes a month by 2021.  As gateways for internet traffic, ISPs concerned about managing congested networks may want to employ a time honored method of congestion management: price, and this method of determining where resources flow is what is really being kept in check by SB 822.

SB 822 prohibits ISPs from charging content providers for the handing off of edge provider traffic.  It is ironic that proponents of these rules on the one hand support the notion of regulating broadband providers like telephone companies, but prohibit the very practice telephone companies have used to recover a portion of their network costs. As internet traffic increases along with the costs for delivering traffic, would proponents prefer ISPs increase the prices the end use consumer pays while providing edge providers with free content? If this is the case, then net neutrality proponents in California, many of whom are unwittingly support keeping edge provider costs low, may find accessing information on the internet less affordable.