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Barbara Cherry was working at the Federal Communications Commission when the agency gave away the internet.
At least, that’s how she describes it. And she certainly knows the ins and outs of U.S. telecommunications policy. Before joining the FCC, Cherry was a governmental affairs staffer with AT&T, which means she spent her days negotiating with lawmakers and lobbyists on behalf of the telecom giant.
While she was at the FCC, the agency decided how to classify the companies that provide broadband internet access over cable TV lines and DSL phone connections. Instead of viewing them as common carrier “telecommunications services” networks—which are more strictly regulated and must provide certain levels of service to all customers—the FCC would treat them as the more-lightly regulated “information service providers.” The year was 2002, and the decision would completely change the internet landscape.
In the 90s, “common carrier” rules offered millions of people their first on-ramp to the internet. The telephone companies had been forced to open up their networks to thousands of dial-up internet service providers, including companies like AOL and Earthlink. But classifying cable and DSL connections as “information services” changed that. The move has led to limited competition in the broadband internet market, with ISPs like Comcast and Verizon dominating the landscape, and now, it may undermine net neutrality–the notion that our internet should be fair for everyone and free of tampering from meddlesome ISPs.
For many people, including Cherry and Tim Wu, the father of net neutrality, the best way to keep powerful ISPs in check is to reclassify broadband providers as common carriers. This would give the FCC the regulatory teeth needed to keep internet access open in a reasonable way to to make sure that service providers don’t grow into kingmakers—deciding which online companies can flourish on the net and which can’t.
“These companies want total freedom to determine who they serve, where they serve, and under what conditions they serve,” says Cherry. “We’ve never allowed that in this country before with a critical infrastructure.”
But, as is so often the case in the world of telecommunications policy, not everyone agrees with Cheery and Wu. In fact, even in Silicon Valley, where so many people are pushing for net neutrality, many advocates don’t back the common carrier idea. The Washington Post calls it “the nuclear option.”
How the Government Changed the Rules of the Internet
The tech industry didn’t pay much attention to that 2002 decision, but Cherry watched it all happen while she was at the FCC–working as a policy wonk with the agency’s Office of Plans and Policy. As far as the United States is concerned, it was “the most radical thing we’ve ever done in the way of regulation,” she says. “Railroads are still considered common carriers. Airlines are considered common carriers…up in Canada, broadband is still considered common carrier.”
A decade ago, the idea was that by eliminating the common carrier restrictions, the Verizons, Comcasts, and AT&Ts would have the financial cushion to build out high speed internet, spurred as they’d be by competition with each other. That hasn’t exactly panned out. High speed internet is expensive and download speeds in the U.S. are ranked 10th in the world
And to top things off, the courts say that the FCC can’t enforce its own net neutrality rules. In January of this year, Washington D.C.’s U.S. Court of Appeals ruled that the FCC could slap its net neutrality requirements on a common carrier, but not on an information service provider, effectively tying the agency’s hands. The FCC is trying to rewrite its net neutrality rules, but in May, protesters camped out on the agency’s front door, saying the agency is making things worse.
This week, Tim Wu, told WIRED that the best way to keep the internet healthy is to regulate the telecommunications as common carriers. “That should not be controversial,” he says. “Almost everyone thinks about cable and phone companies as utilities. There are some potential legal hurdles; they’ve been grossly exaggerated.” Indeed, these concepts date back hundreds of years to British Common Law, where common carrier ideas were put in place to ensure that ferrymen and innkeepers treated everyone fairly. That kind of fairness, Wu says, is what the internet needs as well.
What We Mean When We Say ‘Common Carrier’
Here in the U.S., the common carrier idea dates back to the 19th century. In 1885, Shelby Cullom, a first-term senator from Illinois who was looking for something to do on the politically inconsequential Committee on Railroads decided to form a select committee to investigate the nation’s railroad and shipping rates. Farmers from his home state had long complained of the railroads’ predatory pricing practices, and it seemed that nothing short of national legislation could change things.
In towns with no competing railroad lines, the railroads charged exorbitant rates, and they offered low-cost shipping—in the form of “rebates” to preferred customers such as standard oil. “Railroad officers became so arrogant that they assumed they were above all law,” Cullom remembered years later in his autobiography, “50 Years of Public Service”
The states had tried to regulate railway commerce, but a series of Supreme Court decisions made it clear that it was up to the federal government to find a solution. After spending nearly a year traveling the country and collecting testimony, Cullom’s committee filed its report in January 1886. That paved the way for the Interstate Commerce Act of 1887—the nation’s first codification of these common carrier ideas.
You can trace a direct line from Cullom’s 1887 act to the Communications Act of 1934—with its still-valid “Title II” definition of communications carriers–and then to the 1996 Telecommunications Act, which governs service providers in the U.S. As Cherry points out, internet service providers were thought of as common carriers when the 1996 act was written. The FCC’s 2002 decision changed this.
The Argument Against Common Carriers
Some believe the 2002 decision was a good thing. There’s a pretty good argument to be made that the FCC’s light regulatory touch has contributed to some amazing growth at the core of the internet. There, internet backbone providers such as Sprint, Level 3, AT&T, and Verizon were able to build out the infrastructure that delivers us everything from the World Cup to live video conferencing—all with virtually no regulatory oversight.
Now, Level 3 worries that its business as a middleman may be threatened by the rising power of home ISPs such as Comcast. But, for Craig Moffett, of the telecom analyst MoffettNathanson, designating the consumer internet service providers as common carriers could actually make things worse, inappropriately regulating pricing in the the fast-moving internet market. “If you reclassify broadband,” he says, “you’re essentially making it subject to all the rules and regulations of the 1934 act.” In other words, this would prevent the ISPs from expanding fast enough.
‘If you reclassify broadband,” he says, “you’re essentially making it subject to all the rules and regulations of the 1934 act’
In the past, when service providers have wanted to do crazy things like charging premium prices for routers or banning voice over IP services, public outrage has pressured them to reverse course. Moffett thinks that public pressure is really the best weapon against over-reaching by the service providers, or what John Oliver calls “cable company f**kery.”
Overall, the tech industry is still worried that federal regulations could do more harm to the internet than good. “It would subject ISPs like me to an intolerable regulatory burden,” says Brett Glass, the owner of a six-person Laramie Wyoming wireless company. “We would fold.”
“Once you have regulations in place, typically they’re very difficult to change,” says Johannes Bauer, a professor with Michigan State University’s Department of Telecommunication, Information Studies, and Media. Bauer agrees, however, that the FCC could have done a better job a decade ago in providing incentives for the big ISPs to build out broadband infrastructure while still keeping ISP competition thriving.
The Battle For the Future
Not surprisingly, the big ISPs hate the thought of being regulated as common carriers. The cable industry has invested “tens of billions of dollars” in building out its internet infrastructure since the mid-1990s. That investment “might not have ever occurred if after making that investment we simply had to resell it under a regulatory regime that was designed for a different era,” says Sena Fitzmaurice, a Comcast spokeswoman.
But if the FCC does exercise the nuclear option, it will make it harder for your cable company to refuse to provide you service, or force you to accept a bundling deal you don’t want. It will give the FCC the regulatory teeth to enforce its net neutrality plans and — depending on which services fall under common carrier requirements — it could even restore competition in the internet service provider marketplace.
You can bet that the Comcasts and the AT&Ts will fight hard–and fight shrewdly–to retain the status quo. Now a telecommunications professor with Indiana University, Cherry took away some important lessons from her decade in AT&T’s legal department. One of the most important was that companies like AT&T treat working with lawmakers and regulators as a core competency–a vital game of chess that Silicon Valley’s tech companies are still coming up to speed on. “It’s an in-house long-term expertise,” she says. “If you have to go up against them, you have no clue what they know. They have a long-term playbook.” That, she says, is what Google and Netflix and other internet pioneers are facing as they battle AT&T and other communications giants over the idea of net neutrality.
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