Three Reasons Why Net Neutrality Matters for Cities

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On November 22, Federal Communications Commission (FCC) Chairman Ajit Pai announced plans to roll back net neutrality regulations. The current regulations, which were adopted by the FCC in 2015, classified internet service as a “telecommunications service,” and required that all internet traffic be treated equally, without blocking, throttling (slowing down), or paid prioritization (so-called “fast lanes”) of certain services or websites.

The FCC is expected to approve this rollback plan during its open meeting on December 14. Here’s why this decision and its implementation matter for cities:

  1. It directly preempts local authority.

The net neutrality rollback was anticipated, as overturning net neutrality has been a long-held priority of Chairman Pai and was one of his first stated goals when he took over as chairman this year. However, when the proposal was released shortly before Thanksgiving, it contained an unfortunate addition: provisions preempting state and local governments from enacting their own protections around net neutrality

This means that not only will the federal government lack meaningful tools to protect consumers from throttling, paid prioritization, and other anti-consumer practices by internet service providers (ISPs), state and local governments will also be prohibited from protecting their residents. In 2015, Chairman Pai dissented against an FCC preemption action that would have overturned state laws prohibiting municipal broadband. Now that the preemption is focused on limiting consumer protections, he is championing it.

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  1. It hurts local broadband choice.

A major component of this proposal is returning broadband from a “Title II” service to a “Title I” service under the Communications Act, meaning that it will be regulated as an information service instead of a telecommunications service. Telecommunications services are subject to more stringent common carrier requirements, originally created to allow smaller telephone companies to compete and interconnect with larger ones. Without those requirements, smaller ISPs, including municipal broadband networks, will face more competitive disadvantages against larger ones.

Municipal broadband has already come under fire in well over a third of states, and even in states where it is provisionally allowed, ballot initiatives have faced high-dollar public campaigns from incumbent providers. In those areas where municipal networks can only connect to one incumbent carrier for backhaul, incumbents newly freed from net neutrality rules may apply whatever anticompetitive restrictions they like to those connections.

  1. It hurts consumers.

Practices like blocking, throttling, and paid prioritization limit consumer choice. Without net neutrality protections, these practices will only be stopped by voluntary commitments by ISPs not to engage in them, and enforcement by the Federal Trade Commission (FTC) of those voluntary commitments.

That also means that ISPs would be allowed to prioritize delivery of their own products and services, or those that they are paid to prioritize, at higher speeds than products and services from competitive startups or small businesses. In a digital market where speed matters, charging more for or slowing down certain websites or services harms consumers, harms small businesses, and harms local efforts to ensure affordable, reliable, high-quality broadband service for all.

The FCC has stated that it believes enforcement of internet regulations should be handled by the FTC, rather than the FCC, and that enforcement will return to the FTC after the December 14 vote. The change in rules would require ISPs to disclose blocking, throttling, and paid prioritization, but would not limit their ability to do so. Further, because of a recent court decision, the FTC would be blocked from enforcing its consumer protection laws against any company that also provides mobile or standard fixed telephone service due to a “common carrier exemption,” which can only be overturned by Congress.

FTC Commissioner Terrell McSweeny has also expressed concern about the FTC’s ability to adequately take those enforcement actions it does have within its authority. The FTC focuses primarily on cases where consumers have already been deceived, or companies engage in antitrust behavior, leaving a large swath of anticompetitive and anti-consumer actions ungoverned and ungovernable.

What Can City Leaders Do?

City officials can express opposition to this proposal until the FCC enters a “sunshine period” prior to the December vote. To join this mayors’ letter, led by the City of Boston, to the FCC, email Anne Schwieger no later than December 5, 2017.

About the Author: Angelina Panettieri is the Principal Associate for Technology and Communication at the National League of Cities. Follower her on twitter at @AngelinainDC.

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