A Wolf in Sheep’s Clothing: The Title II Farce (Opinion)

February 10, 2015

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As those following the net-neutrality debate surely already know, FCC chairman Tom Wheeler recently announced his net neutrality proposal. On the surface, it appears that the once-telecom-lobbyist had an abrupt change of heart, recounting a heart-felt story of how a closed internet doomed his startup, and embraced the democratic spirit by giving the people what they want: Title II.

But there is one major problem-In addition to reclassifying broadband providers, he also has reclassified Title II:

 

“To preserve incentives for broadband operators to invest in their networks, my proposal will modernize Title II, tailoring it for the 21st century, in order to provide returns necessary to construct competitive networks. For example, there will be no rate regulation, no tariffs, no last-mile unbundling”

Last-mile unbundling (sometimes called local-loop unbundling) is one of the most important clauses of Title II. It mandates that the owners of infrastructure must lease their terminal connections (in this case, the cable from the street to a home) to competitors at reasonable rates. Last-mile unbundling allows for new companies to enter the broadband market without ripping up the street and running new wires into users’ homes, and when last-mile unbundling is enforced, options grow and prices drop. The UK, for example, saw a substantial drop in prices and a variety of new plans tailor suited to different user needs. The United States could see an equally dramatic drop, as some analysts estimate that cable companies have an operating margin of over 95% for web services. Unfortunately, Tom Wheeler’s plan does nothing to help Americans gain faster or more affordable Internet. In fact, Tom Wheeler’s own startup NABU would fail yet again under his proposed legislation because it requires last-mile unbundling to operate. Without enforced last-mile unbundling, most Americans will still have only one option for broadband Internet access.

A Step Backward

 

Although stopping paid prioritization benefits Internet content providers, government regulation may actually hurt service in some situations. Imaginably, Wheeler’s Title II regulations may abolish innovations that improve the quality of various services, such as Netflix’s Open Connect appliance. Some people may even prefer an ISP that practices packet prioritization because it means their streaming video files are unimpeded by lower-priority traffic like email and web browsing. In fact, the entire paid prioritization issue becomes completely irrelevant if there were competition through last-mile unbundling: Users who disapproved of their ISP’s behavior could simply switch to one that followed better policies. The new regulation Wheeler proposed does not empower users-it empowers the government:

 

“Under that authority my proposal includes a general conduct rule that can be used to stop new and novel threats to the internet.”

What these threats are remains unclear, but they vagueness of these powers should concern anyone in favor of a free and open Internet. Granting the government power to control the Internet could create a safer web, or could stifle innovations such as the BitTorrent protocol, Tor network, or Bitcoin. Although some aspects of Wheeler’s proposal may provide a better Internet experience for Americans, it is far from a perfect solution. Advocates of an Open Internet should scrutinize Wheeler’s plan (which has not yet been released) with great care to see if it provides positive change for Americans, or is a wolf in Title II’s clothing.