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The FTC Makes It Clear It Can’t, Won’t Protect Net Neutrality

When the Ajit Pai-led FCC killed net neutrality, the agency said that the FTC would step in to protect consumers. Now, that seems unlikely.

by Karl Bode
Apr 2 2019, 7:14pm

FCC head Ajit Pai. Image: Flickr/Gage Skidmore

When the Ajit Pai-led Federal Communications Commission (FCC) killed federal net neutrality rules in late 2017, the order didn’t just eliminate rules protecting an open internet—it also dramatically rolled back the FCC’s authority to rein in giant broadband providers.

At the time, the FCC stated that gutting this authority wouldn’t harm consumers because the Federal Trade Commission (FTC) would fill the void, protecting consumers from harm. But the FTC itself now says it lacks the authority to fully police bad behavior by big telecom.

In an editorial in late 2017, FCC Commissioner Brendan Carr proclaimed that with the FCC effectively sidelined, the FTC would assuredly step in and wield its antitrust authority to protect consumers against ISPs intent on abusing their positions as natural monopolies and internet gatekeepers to prioritize some services over others.

“Reversing the FCC’s Title II decision will return the FTC to its role as a steady cop on the beat and empower it to take enforcement action against any ISP that engages in unfair or deceptive practices,” Carr wrote. If a service provider decided to throttle or block web traffic from a competitor, “federal antitrust laws will apply,” Carr insisted.

Yet in a speech last week at the National Press Club first spotted by Gizmodo, FTC head Joseph Simons said the exact opposite.

"The FTC is, principally, a law enforcement agency. It is not a sector regulator like the FCC," Simons said during his remarks, adding that things like "blocking, throttling, or paid prioritization would not be per se antitrust violations.”

In his speech Simons conflated “paid prioritization”—the act of letting a company buy a speed or latency advantage from ISPs—with practices like clipping coupons, cheaper matinee movie tickets, and happy hour drink specials. The implication is that his agency is likely view such behavior favorably.

“For example, think about when you walk into a grocery store,” he said. “Some customers get lower prices because they cut out coupons. Others might get a seniors discount. Others might get 2% off with their credit card. Yet others get discounts because they have a loyalty card with that supermarket.”

None of these examples are comparable to paid prioritization, however. As the Electronic Frontier Foundation explains, there’s no discount when it comes to paid prioritization—instead, some companies pay more to sink other players. Under such a model, the biggest media companies would be able to buy a network speed and latency advantage from your ISP, leaving lesser-moneyed nonprofits, startups, and smaller businesses behind.

“A company like, say, Netflix can afford to pay a princely sum to make sure its service gets to users as quickly and cleanly as possible,” The EFF said in a primer. “The man in his dorm room that just invented a better version of Netflix in his spare time cannot. Paid prioritization favors the existing Internet landscape and hobbles innovation.”

In his speech, Simons strongly implied that the only time the FTC would likely act is if ISPs intentionally and clearly misled users.

“We could take action against ISPs if they block applications without adequately disclosing those practices or mislead consumers about what applications they block or how,” Simons said.

Reading between the lines, Simons seems to imply that ISPs will be able to engage in anti-competitive behavior like paid prioritization, provided they’re transparent about it, perhaps by disclosing those practices somewhere in lengthy terms of service.

Former FCC lawyer Gigi Sohn—who helped craft the agency’s 2015 rules—told Motherboard in an email it was nice to see the FTC admit something that critics of Pai’s proposal had been highlighting all along.

“Chairman Simons said aloud what net neutrality advocates have been saying for 2 years - antitrust laws and Section 5 of the Federal Trade Commission Act are insufficient to protect consumers and competition from discriminatory and otherwise unjust and unreasonable broadband industry practices,” Sohn said.

In 2017, former FCC boss Tom Wheeler claimed the Pai plan was a “fraud” and that telecom enforcement was designed to “get lost” in the “morass” of the FTC’s many responsibilities. “The FTC has to worry about everything from computer chips to bleach labelling,” Wheeler said.

To truly protect net neutrality, critics like Sohn say it’s essential to restore both the 2015 rules and the FCC’s authority over ISPs. There’s currently two routes toward that goal: either the Internet Freedom Act that’s currently winding its way through Congress, or the ongoing lawsuit filed against the FCC by 23 state attorneys general, which if successful would fully restore both the original rules and FCC authority over telecom.

Should both of these measures fail, ISPs will surely be free to engage in all manner of anti-competitive behavior, with little state or federal recourse to do much about it. That was, if it’s not clear by now, something the telecom sector had planned all along.

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