Tom Wheeler on Net Neutrality

Net neutrality is a term we use today to express an old legal concept: common carriage. A “common carrier’ is bound to carry goods without unjust or undue discrimination. Thus a ferry-operator, railroad, or telephone company is bound not to discriminate against your shipments in favour of his shipments. It also implies an arbitrator to determine what degrees of discrimination are acceptable and which are not.

Common carriage underlies the Telecommunications Act in Canada and Title II of the US Communications Act of 1934. Technologies change but legal principles of fairness do not; they just find new fields of application, such as the Internet.

Some years ago, under a Republican administration, the US Federal Communications Commission classified the Internet as an “information service”, exempt from regulation. Then it tried to impose net neutrality obligations on carriers. The carriers resisted, and took the issue to court, where the federal court agreed with their contention. One of the appeal court judges wrote a careful explanation for the FCC of how it could achieve net neutrality rules by classifying Internet carriage as subject to common carrier rules under Title II of the Communications Act.

(The decision in Verizon vs FCC makes for useful reading for those concerned with the importance of permissionless innovation: see pages 34-40. The Court found no controversy in the assertion that edge-provider innovation stimulated demand for higher speeds, and therefore of the development network engineering, and that carriers had rational incentives to suppress innovation to the greater harm of the economy and society generally, even if they could not thereby raise prices.)

“Broadband providers’ ability to impose restrictions on edge providers does not depend on their benefiting from the sort of market concentration that would enable them to impose substantial price increases on end users” (at p.41)


Tom Wheeler, the Chairman of the FCC, after some urging by President Obama, has proposed to classify Internet carriage as subject to common carrier rules, which ought to have been the policy from the beginning.

In his speech before the Silicon Flatirons conference, Wheeler laid out the main points of his proposed policy:

  • He would rule favourably on two applications from municipalities in order to disallow state law from preventing them from establishing municipal broadband networks, thus setting a precedent for other municipalities fighting state laws that seek to preclude municipal investment in broadband;
  • the actions of the FCC would be based on the importance of “permissionless innovation”, the cornerstone of technological innovation in networks and applications;
  • he would apply Title II common carrier regulation to Internet carriers;
  • the rulings would apply as much to wireless as to wired traffic, thus ending another artificial distinction between regulatory regimes;
  • he would assert jurisdiction over interconnection, by which I infer that pure internet companies could petition the FCC for redress, even if they had no connection to legacy telephony.

 My comments are as follows:

1) about time! Canada passed similar rulings in 2009.

2) the assertion of superior jurisdiction over state legislatures is well taken. State legislatures have been even more bought by large carriers as the Senate and House of Representatives have been at the federal level. The statutes passed against municipal broadband make about as much sense as prohibiting municipal investments in streets.

3) permissionless innovation is the technical core of the revolution that the Internet launched; while the suppression of innovation is the basic business model of the carriers, since, by “freely-negotiated” business arrangements, the strong will do what they want with the weak, and the strong crush innovation harmful to their business models, or buy into it and suppress other innovations that threaten their new acquisitions.

4) Treating wired and wireless communications the same way also breaks down a needless regulatory distinction, whose effect has been to say that one branch of the industry owed common carrier obligations, while the other, wireless side, did not.

5) asserting jurisdiction over interconnection is the only basis on which the Internet-traffic can be regulated for unlawful discriminations.

Republican Commissioner Ajit Pai says the rules are “worse than he had imagined“. I continue to be amazed at how totally, absolutely, and wholeheartedly the Republicans have sold out to carriers, conflating the rights and privileges of the mighty with the public good. As I have frequent cause to maintain, the US has the best legislation that money can buy. It also has the best techno-political agents of reaction that market ideology can animate.

A man as clever as Ajit Pai ought to know better than to side with Confederate telecom policy. He is joined by many first rate intellectuals in this policy error, alas.

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