WASHINGTON, July 23, 2021 – On Tuesday, President Joe Biden said he will nominate Jonathan Kanter, a critic of Google, as the next assistant attorney general in charge of the Justice Department’s antitrust division.

Kanter is known for his criticism of the “consumer welfare standard” that has come to dominate antitrust enforcement. As reported by Broadband Breakfast, at a 2019 event Kanter hosted by the Capitol Forum, Kanter said that antitrust involves both keeping prices low and protecting the competitive process.

Then an attorney in private practice with Paul Weiss, Kanter – who has also had experience investigating mergers for the Federal Trade Commission’s Bureau of Competition – said that it was unclear that Congress intended for the scope of antitrust laws to be so narrow.

Kanter is the latest in a number of high-profile selections made by Biden that definitively manifest an intent to put big tech under a microscope.

Within the space of four months, Biden will have placed three such critics into major positions, including net neutrality advocate Tim Wu to the National Economic Council and the appointment in June of Lina Khan to chair the Federal Trade Commission, which will investigate big technology companies.

The nomination of Kanter comes after Biden, on July 9, signed an executive order to crack down on the increasing market power of big technology companies and promote competition. The order targets “killer acquisitions,” in which technology companies have purchased “hundreds” of nascent competitors in the past decade. The order says that federal agencies have not done enough to examine or condition these mergers.

Before that, on July 2, the FTC passed a measure in a party-line vote to rescind a 2015 policy statement that limited the scope of antitrust regulation to the framework established by the Sherman Act of 1890. Section 5 of the FTC act permits the FTC to enforce unfair business practices that are not necessarily explicitly outlined by the Sherman Act. By rescinding the statement, the agency will be able to more aggressively crack down on anticompetitive business practices.

Antirust policy and law have a long history in the United States. When antitrust comes to mind, some instantaneously think the United States taking Microsoft to court in 1998 over its alleged monopolization of the personal computer market.

But it’s much older and richer than that. And with quickly emerging developments in antitrust policy on the hill, Broadband Breakfast has selected this topic for a deep dive for our latest explainer.

• Broadband Breakfast Explainer 1 (Net Neutrality): On the Cusp of Sea Change, Broadband Breakfast Examines the Net Neutrality Debate
• Broadband Breakfast Explainer 2 (Spectrum): Is Spectrum Sharing a Key to Broader Connectivity Goals?
• Broadband Breakfast Explainer 3 (Section 230): With Florida Social Media Law, Section 230 Now Positioned In Legal Spotlight 
• Broadband Breakfast Explainer 4 (Antitrust): Antitrust Heats Up as Biden Selects Tech Critic Jonathan Kanter for Top Enforcement Spot

The original guiding principle behind ‘consumer welfare’

In his 1978 book, The Antitrust Paradox, Robert Bork, former Solicitor General of the U.S., coined the term “consumer welfare” in his attempt to articulate the historical standard of antitrust, dating back to the passing of the Sherman Antitrust Act of 1890.

Archival photo of Robert Bork by Jose R. Lopez from The New York Times

While consumer welfare has been the metric of measuring the need for antitrust enforcement since the 1970s, with the rise of the Chicago schools of thought regarding economic policy, the standard has many frustrated today and pushing for a change in thought.

Consumer welfare refers to the collective benefit derived from all consumed goods and services in a market. It’s measured by assessing an individual’s welfare defined by their own assessment of the satisfaction of a good, given the good’s price and their income. Their assessment is added to the collective’s assessment of that same good, and the sum of all assessed value is considered the consumer welfare in that market.

In general, higher prices mean less consumer welfare and lower prices mean more consumer welfare. Similarly, however, less consumer welfare translates to more revenue and better profit margins for firms.

The problem, according to the critics of Big Tech, is that online platforms such as Google, Facebook, and Twitter present virtually no cost to consumers. Consumer welfare, they argue, cannot measure how these firms are treating their consumer base and whether consumer interests are being harmed or helped.

Challenges to the consumer welfare standard

While antitrust enforcement has historically been measured against this metric, recent happenings in Washington dating the past nine months is challenging this standard as policy makers and legal experts alike have found themselves increasingly dissatisfied with the state of the private sector.

Last year, in October, the Department of Justice opened an antitrust lawsuit against Google, claiming foul play in Google’s competition practices. The FTC followed suit two months later in December, claiming Facebook has violated federal law in illegally maintaining a monopoly in the personal networking market.

Following a 16-month investigation completed last year by the House Judiciary’s Antitrust Subcommittee scrutinizing the business practices of Amazon, Apple, Google, and Facebook, a package of six antitrust bills awaits vote on the House floor after successfully passing a grueling markup in the House Judiciary Committee.

If passed, the six bills would mark the greatest change in antitrust legislation since the passing of the Clayton Act in 1914 and represent a marked shift in antitrust enforcement.

The July 1 rescinding of the 2015 policy statement that limited the scope of antitrust regulation will mean “greater scrutiny of mergers,” with special attention to the “acquisition of nascent competitors,” as well as, “competition by ‘free’ products, and the effect on user privacy.”

The language used there is particularly interesting because it signals a shift away from the school of thought historically based on prices and consumer welfare, to an embrace of newer theories of competition regulation and antitrust enforcement.

Evolving antitrust: From the Sherman Act to the Chicago school

In the later 19^th Century, business collusion and monopoly power posed a threat to America’s burgeoning economic frontier. Monopoly powers stifle innovation in markets when they purchase all other competing firms, and by controlling their supply of a good, they in turn control its price pushing higher prices onto consumers.

To combat this, the Sherman Act of 1890 was passed to regulate domestic business practices that were unfair and harmed consumers by making it illegal to monopolize the trade of any single market or area of commerce in the United States. It also makes it illegal for firms to collude in ways that manipulate or fix prices.

The Sherman Act had a rough start, however. Its language was vague, and prosecutors consistently failed to employ the act in ways that sufficiently regulated business in its intended ways. This led, 24 years later, to the creation of the Clayton Act, which clarified the language of the Sherman Act.

For example, while the Sherman Act made the formation of monopolies illegal, which was difficult to define, prove, and enforce, the Clayton Act made certain business practices that are conducive to monopolization illegal. If the Sherman Act is the dog of antitrust, the Clayton Act is the teeth that gives it its bite.

Referred to by some as the death of antitrust, in the 1970s and 1980s the Chicago school of economic thought caught wind and became the prevailing philosophy of economic doctrine in the United States. The school argues that markets operate most efficiently on their own, without government intervention.

While traditional antitrust approaches aimed at limiting extreme concentrations of power, the Chicago school of thought argued that government intervention makes markets operate inefficiently, which pushes higher prices onto consumers. It argues that consumer interests are best protected by competition, even if that only comes from a few large firms in an industry.

The Lina Khan essay on Amazon

A 2017 essay by now acting FTC Chairwoman Lina Khan while she was a student at Yale law school challenged the Chicago imperative and revived the dying discussion of antitrust enforcement.

Khan’s essay, Amazon’s Antitrust Paradox, examined Amazon’s business structure, taking note that while the company’s profit margins are and always have been meager, they have operated with an enormous capital expenditure, which has allowed them to seize a controlling stake in not just online retail, but expand and become “a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space.”

FTC Chair Lina Khan

Khan argued that prices are too narrow a standard to measure the need for antitrust enforcement, and regulators should take a broader approach at measuring competition. Her essay gained traction with legal scholars and has led to a new, emerging pattern of economic thought known as the Brandeisian school of thought, which argues that measuring prices is too narrow—that observing and scrutinizing business structures is an essential element of antitrust enforcement.

Congress’ package of antitrust bills in the House integrate elements of Brandeisian thought by concerning itself directly with market concentration and making explicit the illegality of certain business practices, such as favoring one’s own product on marketplaces they operate and mandating data transparency for online platforms.

The package of proposed bills would only apply to firms with a market cap exceeding $600 billion, signaling a distinction between how massive firms will be regulated comparedd to their competitors. Domestically, only six firms exist with such a market cap, and only one of those is not a Big Tech firm (Tesla Inc). The other five are Apple, Microsoft, Amazon, Alphabet Inc (the parent company of Google), and Facebook.

Online platforms and the consumer welfare standard

Last year, cases were opened by the Justice Department antitrust division and FTC against Google and Facebook, respectively, over antitrust and competition concerns. These cases are both being prosecuted with the original legislation written in the Sherman and Clayton Acts and fought under the lens of consumer welfare.

Google was accused by the antitrust division of illegally maintaining a monopoly power through anticompetitive and exclusionary practices. Facebook was accused by the FTC for similar reasons—specifically for anticompetitive practices in acquiring nascent competitors Instagram and WhatsApp in the early 2010s. The main question facing these trials is whether the consumer welfare standard is enough to tackle these firms and substantiate the government’s claims against them.

The answer: It probably won’t be, primarily because Google and Facebook don’t charge consumers to use their products. They are free to anybody with internet access. And since the consumer welfare standard deals with price, and how those prices are affecting consumers, there is no way of applying the consumer welfare standard to these firms.

Without this standard, lawyers will have little basis of empirically measuring the harm Google and Facebook may be imposing on the market, which will likely make convicting them extremely difficult.

In fact, though the FTC has until the end of July to rework and resubmit their case, U.S. District Judge James Boasberg threw the FTC’s case against Facebook out of court, claiming that it was “legally insufficient.”

Photo of Judge James Boasberg by Diego Radzinschi in Law.com

Recently resolved and ongoing cases, including: FTC v. Facebook

Facebook was accused by the FTC of illegally maintaining a monopoly in the personal networking market largely because of its acquisition of Instagram in 2012 and WhatsApp two years later.

The agency wrote in a report that those acquisitions, which came at a time when both competitors were growing into massive communications platforms, made it more difficult for other social networking platforms to compete at scale. It also accused the company of forcing third-party developers interfacing with the platform to refrain from promoting other social services.

In Judge Boasberg’s opinion, throwing out the FTC case, he wrote that the FTC had failed to offer adequate evidence that Facebook had monopolized the market for social networking.

Looking forward, however, the FTC’s recent decision to rescind the 2015 statement that directed them to enforce antitrust within the framework of the Sherman Act will allow them more leeway in prosecuting Facebook when they resubmit the case later this month.

United States v. Google

The Justice Department, alongside eleven state attorneys general, sued Google in October, accusing it of illegally maintaining a monopoly through anticompetitive and exclusionary practices. Google does not share its user statistics, but the DoJ claims that around 90% of online searches are routed through Google.

The antitrust division’s complaint alleged that Google entered into a series of exclusionary agreements with firms that promoted their services over competitors, barring the consumer’s choice in the matter.

The division argues in its complaint that these practices damage competition and harm consumers through reducing the ability of innovative competitors to compete at scale with Google. However, alongside the difficulty of empirically demonstrating that harm has been pushed onto consumers, the division must also battle the notion that, generally, most consumers may be happy with Google’s products, and there exists little friction between the company and the public.

Google Play Store lawsuit

On July 7, a group of 36 state attorney general, alongside Washington, D.C., launched a new antitrust case against Google, accusing the search engine of exploiting its control of the Android app store. The lawsuit challenges a policy that forces Google Play app developers to pay a 30 percent commission fee on sales made through the app.

According to reports, the Google Play app store for Android devices is responsible for more than 90 percent of Android app downloads in the United States. No other Android app store has hold of more than a 5 percent market share, according to the plaintiffs.

Essentially, the complaint alleges that, because of Google’s dominant hold in the Android app market, there exists little competition and app developers therefore have no choice but to go through Google wo market their apps and pay the 30 percent commission fee.

Prosecutors will need to, as with the other antitrust cases, prove that Google’s actions have limited competition in the private sphere and damaged consumer welfare in the public.

District of Columbia v. Amazon

On May 25, 2021, Karl Racine, attorney general of Washington, D.C., sued Amazon, alleging that the company’s policies have led to fixed prices, raising prices for Washington, D.C. residents.

The case was filed specifically through the District of Columbia, and is not being prosecuted by federal agencies, the same way the Facebook and Google cases are. However, if Racine successfully establishes liability by Amazon, the ruling could have far-reaching consequences and impact the states.

Photo of Karl Racine by Lexey Swall in the Washingtonian

The Office of the Attorney General alleges that Amazon fixed online retail prices through a policy that applies to third-party sellers on its platform, which prevents third-party sellers from offering their products at lower prices on any other online platform, including their own. The problem with the policy, D.C. argues, is that Amazon charges high fees to sellers using their platform, upwards of 40% in certain cases.

That fee is worked into the price of the good a seller is providing on Amazon, and because they cannot offer that product for a cheaper price anywhere else, Amazon’s commission fee is in turn worked into the price of the good being sold elsewhere. If retailers try to work around this, they risk losing the sales they get from selling their product on Amazon.

Washington, D.C.’s Assistant Attorney General, in its report, said that Amazon accounts for 50-70 percent of all online commerce. Allegedly, Amazon is using this market dominance to manipulate prices throughout the rest of the market. The higher prices are pushed onto consumers, and such business practices are prohibited under the Sherman and Clayton Acts.

The future of antitrust

The package of proposed antitrust bills successfully passed through the House Judiciary Committee and will likely pass in the House of Representatives. However, save a few Republican dissenters who helped draft the bills, the voting turned out to be partisan and the vote followed party lines with few exceptions.

At the risk of Democrats defecting, and with a slim majority in the Senate, the Democrats may need to recruit more GOP support for the bills if the they stand a chance of being passed into law.

On July 9, the FTC opened an official investigation into the legality of Amazon’s acquisition of major entertainment studio, MGM. Amazon filed a recusal motion against Khan, claiming that her special interest in Amazon marks her involvement as a conflict of interest, asking that she remove herself from any proceedings involving Amazon.

Whether the recusal stands or not, it is likely that aggressive antitrust enforcement will be applied under Khan’s leadership throughout the duration of the Biden Administration.

• Broadband Breakfast Explainer 1 (Net Neutrality): On the Cusp of Sea Change, Broadband Breakfast Examines the Net Neutrality Debate
• Broadband Breakfast Explainer 2 (Spectrum): Is Spectrum Sharing a Key to Broader Connectivity Goals?
• Broadband Breakfast Explainer 3 (Section 230): With Florida Social Media Law, Section 230 Now Positioned In Legal Spotlight 
• Broadband Breakfast Explainer 4 (Antitrust): Antitrust Heats Up as Biden Selects Tech Critic Jonathan Kanter for Top Enforcement Spot

May 18, 2021—In February of this year, the Federal Communications Commission’s Acting Chairwoman Jessica Rosenworcel announced her support for spectrum sharing, the process by which carriers must share their spectrum with newer operators.

Viewed broadly, the move signaled another shift in a new-look administration: Like the exploration of a possible reintroduction of net neutrality laws we covered in our first explainer, spectrum sharing doesn’t always sit well with the larger carriers.

• Broadband Breakfast Explainer 1 (Net Neutrality): On the Cusp of Sea Change, Broadband Breakfast Examines the Net Neutrality Debate
• Broadband Breakfast Explainer 2 (Spectrum): Is Spectrum Sharing a Key to Broader Connectivity Goals?
• Broadband Breakfast Explainer 3 (Section 230): With Florida Social Media Law, Section 230 Now Positioned In Legal Spotlight 
• Broadband Breakfast Explainer 4 (Antitrust): Antitrust Heats Up as Biden Selects Tech Critic Jonathan Kanter for Top Enforcement Spot

That’s because the major wireless carriers, including AT&T and Verizon, prefer to have exclusive rights to the use of radio-frequency spectrum.

Spectrum sharing has picked up steam in the industry, with announcements about a sharing model for the 3.5 GHz Citizens Broadband Radio Service and others coming down the pipe. And it’s generating a lot of attention because the new-look FCC sees it as a critical inflection point in the deployment of broadband: by sharing spectrum, more carriers can offer more services, thereby increasing coverage, competition and driving down prices for Americans.

Join the Broadband Breakfast Live Online event, “Spectrum for 5G, LEOs and the Future of the 12 GigaHertz (GHz) Band,” on Wednesday, July 14, 2021. You can also PARTICIPATE in the current Broadband Breakfast Live Online event. REGISTER HERE.

What do radio waves do and why are they regulated?

The electromagnetic spectrum represents the full range of electromagnetic radiation. The spectrum runs from the very short gamma waves, to X-rays, to ultraviolet light, to visible light, to infrared, to the much longer radio waves.

The time it takes for a wave to change direction in a second is called frequency, which is measured in Hertz (Hz); one Hz is equal one wave cycle per second. The comparative lowest frequency waves are known as radio waves, which are what the telcos really care about.

Audio and visual data can be carried on radio waves, which can be sent and received over devices like televisions, radios, and cellphones.

But because there is only so much spectrum, different regions of spectrum—known as bands—would become crowded and dysfunctional if there was no coordinating mechanism for regulating use. This can come in the form of regulations from the FCC or from a form of quasi-property rights in the airwaves.

Certain bands are licensed for exclusive use. Other bands have been designated for users to operate without licenses. Both of these approaches have distinctive rules designed to address the unique obstacles each presents.

The history of regulating airwaves and licensing

To address the issues of spectrum licensing and other related matters, the United States government created the FCC through the Communications Act of 1934. A previous version of the agency, the Federal Radio Commission was created in 1927 and operated out of the Department of Commerce under then-Secretary (and later President) Herbert Hoover.

Nowadays, the FCC primarily regulates non-federal spectrum. The National Telecommunications and Information Administration of the Commerce Department regulates federal government and U.S. military use of spectrum.

The term “licensed spectrum” refers to bands of radio frequencies that have been designated by the FCC as areas that require credentials to operate in. Licensed spectrum is considered by many to be prime real estate—though it is expensive, there is often less interference than unlicensed spectrum, where operators do not require credentials, and is open to amateur use.

The primary bands of unlicensed spectrum in the U.S. are the 902-928 MegaHertz (MHz) band, the 2.4 GigaHertz (GHz) band (or 2400-2500 MHz), the 5.8 GHz band (5725-5875 MHz), and the 24-24.25 GHz band.

Spectrum tiers and sharing momentum

So far, the FCC has allocated bands between 9 KiloHertz and 275 GHz. For many, the answer to a limit in spectrum is a model known as “spectrum sharing.” This practice allows for multiple operators to inhabit the same band of spectrum.

One well-known band in the U.S. that uses this model is the Citizens Broadband Radio Service (3550-3700 MHz). Rather than license this band of spectrum, users operate in a series of three tiers that denote levels of priority.

Those at the bottom of the list have what is referred to as “general authorized access.” These users have free access to the CBRS band, but also limited priority.

Above these users are operators with the “Priority Designation.” These operators pay for a higher status than general authorized access, but even they must yield to the top priority users. These users have what is referred to as “incumbent access.”

Watch our 2:48 preview video on radio frequency spectrum

Incumbent access is reserved for significant users who have operated within the band the longest or have crucial government or societal roles. For the CBRS band, this is the United States Navy, which uses the band for their underwater radar operations. Users that operate in the same areas of the band as the Navy can still use it, but they must yield to all naval operations.

Similarly, those with general authorized access must yield to those with priority designation. Licensing and sharing are not mutually exclusive; a band of spectrum can be both licensed and shared, as is the case with the CBRS band.

Though many large telcos are opposed to spectrum sharing, Dish Network is a notable exception. In May of 2021, the company came out in favor of the spectrum sharing model proposed for the 12 GHz band (12.2-12.7 GHz).

The FCC’s Acting Chairwoman Jessica Rosenworcel is a notable proponent of spectrum sharing. She has openly advocated for spectrum sharing as a solution to the U.S.’ need for more spectrum as its appetite for 5G increases.

Rosenworcel specifically expressed her support for spectrum sharing in the 3450-3500 MHz band; she would see that auctions for this band begin as early as October 2021.

Under Rosenworcel’s leadership, the FCC also greenlit the deployment of equipment designed to facilitate spectrum sharing, to Guam, American Samoa, and Puerto Rico.

The Dept. of Defense is also supportive of various spectrum sharing initiatives.

Opponents of spectrum sharing

Of course, shared spectrum also has opponents. Critics of spectrum sharing argue that operator cohabitation diminishes the value of specific bands and leads to inferior service. Many of these critics instead favor what is known as a “flexible exclusive use” model.

The “flexible” component refers to the U.S. practice that specific bands do not have to be used for specific services. For example, one band may be used for cellular service or satellite service. Though different bands may be better suited for different services, they are not required to be used in a specific way. This is not widely practiced around the world, and is somewhat unique to the U.S.

The “exclusive” part distinguishes the model from “shared” spectrum; one band is designated and licensed to one operator, for their use only—they are not required to yield access to any incumbent providers.

Join the Broadband Breakfast Live Online “Ask Us About Radio Frequency Spectrum” on Wednesday, May 19, 2021. You can also PARTICIPATE in the current Broadband Breakfast Live Online event. REGISTER HERE.

With a change in the guard at the Federal Communications Commission and the White House, the United States is on the cusp of a possible change in direction with respect to its network neutrality rules.

By the summer of 2018, the country had changed its position on the issue when the Trump-era FCC voted to roll back Obama-era rules that, in 2015, cemented rules bolstering net neutrality. The roll-back essentially allowed the telecoms to manage and give preferential treatment to certain traffic that run on their networks.

But something changed. It started when the Department of Justice — the new one under the administration of President Joe Biden — withdrew a lawsuit started under Trump’s presidency against California for its proposed net neutrality rules. After the internet service providers lost a legal challenge to the proposed rules, California became the first state to implement the new legislation.

Join the Broadband Breakfast Live Online “Ask Us About Net Neutrality” on Wednesday, May 12, 2021. You can also PARTICIPATE in the current Broadband Breakfast Live Online event. REGISTER HERE.

Then the Biden White House appointed Tim Wu, a fierce advocate for and who coined the term “net neutrality,” to the National Economic Council this year.

There’s an emerging debate across the country about whether more states will follow suit or if a federal-level plan will emerge first.

Before that’s answered, Broadband Breakfast is taking a step-back and has put together an explainer on the issue to get you up-to-speed on its history and what’s at stake.

• Broadband Breakfast Explainer 1 (Net Neutrality): On the Cusp of Sea Change, Broadband Breakfast Examines the Net Neutrality Debate
• Broadband Breakfast Explainer 2 (Spectrum): Is Spectrum Sharing a Key to Broader Connectivity Goals?
• Broadband Breakfast Explainer 3 (Section 230): With Florida Social Media Law, Section 230 Now Positioned In Legal Spotlight 
• Broadband Breakfast Explainer 4 (Antitrust): Antitrust Heats Up as Biden Selects Tech Critic Jonathan Kanter for Top Enforcement Spot

What is net neutrality?

Net neutrality is the concept that traffic on networks cannot be blocked, slowed, accelerated or otherwise altered by internet service providers. In essence, it is the concept that legal internet activity must be treated equally.

The term was coined by Columbia University media law professor Tim Wu in 2003, in a paper about online discrimination. It was an extension of the longstanding concept of a common carrier, used to describe the role of telephone systems as infrastructure that simply transports traffic from one destination to the next with no influence.

The common carrier concept in common law countries says that, regardless of who is using the internet, what content is on it, the website being accessed, or the platform and application it is operating on, nothing will be discriminated against or favored more than another.

What happens when net neutrality is abandoned?

When net neutrality rules were rolled-back in 2018, the ISPs struck. According to Bloomberg, citing research out of Northeastern University and the University of Massachusetts, Amherst, wireless carriers have since slowed internet traffic to and from applications like YouTube, Netflix, and Microsoft’s Skype video chat service.

Proponents of zero-rating, the concept that includes apps not counting against users’ monthly data allowance, said it would provide for opportunities for those to experience these services without incurring cost – perhaps in overage charges. Opponents, however, argued it could possibly create an information divide, whereby the less advantaged would be forced to consume certain services and not others.

The rocky history of net neutrality

In the early 2000s, the Federal Communications Commission (FCC), a U.S. regulatory agency, required broadband providers to share their infrastructure with competing firms. In 2005, those requirements were struck down by the Supreme Court. The debate at the time was trying to determine if broadband service providers should also be considered as information services, which allows users to publish and store information online or on telecommunication services.

Watch our 2:57 minute preview video on Net Neutrality

Register to PARTICIPATE in the ‘Ask Us About Net Neturality’ Broadband Breakfast Live Online event.

The Obama administration approved net neutrality rules in 2015. This partially barred ISPs like AT&T and Comcast from purposefully increasing, sometimes called throttling, or decreasing speed access to websites based on demand or business preferences.

On the Obama White House Archives site, it says that most internet providers have treated internet traffic equally, “that an entrepreneur’s fledgling company should have the same chance to succeed as established corporations, and that access to a high school student’s blog shouldn’t be unfairly slowed down to make way for advertisers with more money.”

On February 26, 2015, the FCC voted in favor of strong net neutrality rules and on June 14, the same year, the U.S. for the District of Columbia fully upheld the FCC’s net neutrality rules. The Obama administration called it a victory for “the open, fair, and free Internet as we know it today.”

On November 21, 2017, FCC Chairman Ajit Pai, appointed by former President Trump, unveiled a plan to roll back the Obama administration rules. The plan went into effect on June 11, 2018, and on October 1, 2019, the D.C. Circuit Court of Appeals upheld the FCC’s plan to repeal most of the provisions of net neutrality but struck down a provision that would block states from implementing their own open internet rules. Chairman Pai said in a statement that the appeals’ decision was a “victory for consumers, broadband deployment, and the free and open Internet.” “The court affirmed the FCC’s decision to repeal 1930s utility-style regulation of the Internet imposed by the prior [Obama] Administration,” the statement said.

In 2018, the Senate voted to overturn the repeal of net neutrality but the resolution stalled in the House. The House then put it to a vote again in 2019 under the “Save the Internet Act,” but it was effectively dead in the water, at least until 2021.

In favor of net neutrality

Advocates in favor of net neutrality focus on providing smaller companies equal opportunity to thrive. By not allowing ISPs to determine the speed at which consumers can access certain websites or online services, smaller companies will be more likely to enter the market and create new services. Smaller companies are protected in the sense that they may not be able to afford “fast lane” access, while larger, more established companies can.

These advocates for net neutrality point out that several well-established social network websites were created without much seed capital. Had these small businesses been forced to pay extra in order to be as accessible online as their competitors, success may never have come.

Proponents of net neutrality include:

• Human rights organizations
• Consumer rights advocates
• Some software companies

These groups argue that cable companies should be deemed “common carriers,” similar to public utility companies or public transportation providers, who are by law, forbidden from discriminating among their users.

Public Knowledge, a non-profit Washington, D.C.-based public interest group focused on competition, digital choice in the marketplace, and an open standards and end-to-end internet, is in favor of net neutrality.

It says that without net neutrality rules, “ISPs like Verizon and Comcast can prevent users from visiting some websites, provide slower speeds for services like Netflix and Hulu, or even redirect users from one website to a competing website.” Public Knowledge claims that consumers would ultimately be hurt by anti-net neutrality policies, bearing the additional costs on things like their monthly Netflix bill or in the cost of goods from a local online store.

Against net neutrality

Advocates against net neutrality focus on investment incentives and cost concerns for broadband infrastructure. If ISPs are forced to treat all internet traffic equally, the government will ultimately discourage the investment in new infrastructure, and will also see ISPs be slow to innovate. Upfront costs with laying down fiber optic cable can also be very expensive. They say that not being able to charge more for more challenging areas of access will make the investment harder to pay off.

Opponents of net neutrality include:

• Conservative think tanks
• Major telecommunications providers
• Some hardware manufacturers

Telecommunication providers argue that “they must be allowed to charge tiered prices for access in order to remain competitive and generate funds needed for further innovation and expansion of broadband networks, as well as to recoup the costs already invested in broadband.”

Having less oversight on internet service by allowing some ISPs to charge for access to some content would lead to free access to certain sites, reports IT Pro. For example, if ISPs charged more money to bandwidth-hungry companies like Netflix for using their infrastructure, they could offer access to sites like Wikipedia or Facebook for free—even if a consumer had no internet contract.

Net neutrality controversies

The repeal of net neutrality rules has exposed some of the complexities of allowing ISPs to do what they wish with internet traffic. That isn’t more true than for the vertically-integrated providers, who both own the networks and content services that run on them. This has created a debate about possible anti-competitive behavior: what would stop a provider to block or slow traffic on a competing service and speed-up or eliminate data usage on their own services?

That’s exactly what happened with AT&T’s WatchTV streaming service, which was a new product in 2018, following its acquisition of Time Warner (now WarnerMedia). That year — after California backed down from cracking down on zero-rating —  the service gave subscribers the option of a subscribing to a bundle of channels with no charge against their data allotment. (After California made its net neutrality legislation law this year, AT&T axed its zero-rating practice in the state and said it would likely have to do the same with the rest of the country.)

And then there were the 2018 California wildfires, some of the worst in the state’s history.

The bombshell from that was the Santa Clara fire department alleging Verizon had throttled its services, which “had a significant impact on our ability to provide emergency services,” the department said, according to Ars Technica.

The evidence was submitted as part of a lawsuit to reinstate federal net neutrality rules.

The telehealth question

The wildfires incident may take some bite out of the argument that net neutrality rules should be loosened to allow special exemptions to emergency services, but it’s quickly becoming a hot topic for another emerging segment: telehealth.

The Covid-19 pandemic has effectively upended the traditional in-person setting for nearly everything. But it’s especially problematic for medical services.

Critics of the net neutrality law in California are reportedly concerned that a telehealth app, VA Video Connect, whose use doesn’t count against users’ data caps, may be blocked under the legislation.

Boost Mobile, seeing the emerging opportunity, recently announced that it is bundling telehealth services with its packages.

There are exemptions that can be made in state and federal laws for emergency and health services, so time will tell what those could look like.

The future of net neutrality

As the federal government still has net neutrality on the ropes, states have stepped in to guard the internet’s traffic neutrality. Both proponents and opponents of net neutrality have argued that internet freedom will prevail if their side wins.

As of January 2021, 19 states, including the District of Columbia and Puerto Rico, introduced legislation in the 2020 legislative session that supports net neutrality.

Though some have taken net neutrality into their own hands, such legislation, even on a state level, can be challenging to implement. The FCC has claimed only itself has the authority to make these kinds of regulations, and that local and state governments cannot pass laws inconsistent with federal net neutrality rules.

In October 2019, a federal appeals court ruling in October 2019 largely upheld the decision to abolish net neutrality, “but ordered the FCC to examine its effect on public safety, federally subsidized broadband services, and utility pole regulations.”

Join the Broadband Breakfast Live Online “Ask Us About Net Neutrality” on Wednesday, May 12, 2021. You can also PARTICIPATE in the current Broadband Breakfast Live Online event. REGISTER HERE.