On February 26, 2015, the Federal Communications Commission made its biggest announcement in years: The so-called open Internet and the related concept of net neutrality were to be enshrined in law.
In the simplest terms, the FCC would now forbid Internet service providers (ISPs) to engage in three controversial practices: “throttling” content by slowing its delivery to individual Web users, selling “fast lane” service to corporations, and blocking access to legal content of any sort. The FCC’s authority to prohibit these activities, however, rested on an extraordinarily broad-reaching decision: Internet service, the FCC ruled, would henceforth be classified as a utility, much as telephone service is. Halfway through the second decade of the 21st century, the American Internet had fallen under the control of Title II of the federal Communications Act — which was enacted in 1934.
The FCC decision was met with delight on the left and in the Obama White House, which, after years of studiously saying nothing committal about net neutrality, had begun advocating it in the fall of 2014. By contrast, most of the big ISPs (Comcast, AT&T, and Time Warner are the largest) greeted the new rules with resignation. They would mean more red tape but were no threat to the companies’ practices or profits.
Anti-regulation pundits predicted doom, of course, but when the new rules failed to produce any serious corporate upheaval, the naysayers piped down.
And so it’s surprising and also inspiring that the most consistent and convincing critic of the new rules has emerged from within the ranks of the FCC itself: Commissioner Ajit Pai.
“Net neutrality is a solution that won’t work in search of a problem that doesn’t exist,” he told me when I asked him to summarize his dissent. Pai, a youthful 42, knows how to deliver a point sharply, but he does so with an oratorical zest that softens the edges. It’s an appealing style, and a winning one: Just look at the man in the Oval Office. More than once I found myself reminded of President Obama as Pai spoke with me. The men have a similar background (stints at Harvard and in Chicago, top-shelf law degrees), a similar sunniness when in the public eye, and a similar lawyerly regard for the killing phrase delivered with a smile. And as with Obama, Pai’s multicultural bona fides are incontestable. His is a classic immigrant success story: In 1972, his parents moved from India to Buffalo, N.Y., where Pai was born. When he was in preschool, the family moved to Parsons, Kan., where he lived until he left to attend Harvard.
As a political appointee, however, and one of only two conservatives on the five-member FCC leadership panel (the other is Michael O’Rielly), Pai is at the other end of the spectrum from Obama. He regards the president as the damnable mastermind of the left-wing “solution that won’t work.” And he is bracingly direct about it. In his dissent to the net-neutrality decision, he writes:
This is not only a radical departure from the bipartisan, market-oriented policies that have served us so well for the last two decades. It is also an about-face from the proposals the FCC made just last May. So why is the FCC changing course? Why is the FCC turning its back on Internet freedom? Is it because we now have evidence that the Internet is not open? No. Is it because we have discovered some problem with our prior interpretation of the law? No. We are flip-flopping for one reason and one reason alone. President Obama told us to do so.
Specifically, Pai contends that FCC chairman Tom Wheeler allowed the White House to write the net-neutrality order directly — with exclusive input from left-leaning groups including Daily Kos and Demand Progress. If true, that would be a flagrant violation of the FCC’s rule-making policy. Proposed FCC orders must be opened to the public for comment, and, indeed, in May 2014 the FCC did release a proposal on net neutrality. But the proposal’s scope differs so greatly from the order passed this February, says Pai, that the two bear no relation. In effect, he contends, the public was scammed. Individuals, corporations, and interest groups were commenting on a decoy proposal while the White House worked out the real thing in secret.
Pai points to extensive reporting by the Wall Street Journal that revealed that Obama’s aides, in the aftermath of the Republican success in 2014’s midterm elections, sought an issue, in Pai’s words, “where they could make a political march on the president’s behalf.” They settled on net neutrality, and a week after Election Day, President Obama delivered a speech calling for its swift adoption. “There’s no question, if you look at the trajectory of this issue, that the FCC proposed one thing last May, the president proposed something very different on November 10, and without revisiting its May proposal, the agency decided to do exactly what the White House wanted,” Pai says. “I don’t think any reasonable person could look at this issue and suggest anything other than that the president’s pronouncement was a sine qua non.”
Pai believes that these events alone mean that the February net-neutrality order will be challenged in court and struck down. There are other reasons, too. With many of its provisions, such as those that preempt state laws restricting municipal broadband, the order raises serious questions of jurisdiction and constitutionality. (Municipal broadband networks are publicly owned ISPs. Some states have outlawed them, based on the charge that they are anti-competitive.)
And beyond points of legality, many critics note that the order is so complex — it’s 317 pages long — and relies on such a cherry-picked tangle of jurisdictional and regulatory precedent that it will be impossible for ISPs to interpret it and prove they are adhering to the rules, and impossible for the FCC to enforce compliance. (In this criticism, Pai is joined by the Electronic Frontier Foundation, which otherwise cheers the order’s open-Internet and privacy regulations.)
These devilments, Pai says, are the offspring of a self-serving political gambit by the Obama administration, and that angers him. Referring to himself as “somebody who cherishes this agency, who has worked as a staffer and now as a commissioner,” he declares that he values the FCC’s “independence” — which mean that the agency “should make judgments based on the law and the facts, not on extraneous political considerations.”
But these are all questions of process. What of the order’s promises of beneficial change, among them greater competition among Internet-service providers, lower costs to consumers, and protections against threats to free expression from broadband businesses? Here, too, Pai scoffs.
Almost 20 years ago, the Clinton administration orchestrated passage of the bipartisan Telecommunications Act of 1996, which classified the Internet as an information-delivery service rather than a form of communication. The effect was to render ISPs free of the utilities-style regulation that governs the traditional telephone industry — and that to date has governed European Internet policy.
Evidence for the wisdom of the U.S. approach, Pai points out, is overwhelming. Google, Facebook, YouTube, Netflix, eBay, Twitter: These titans of online business have been born here, and one little-remarked reason for this is the superiority of the American broadband network. Sufficient bandwidth is the prerequisite for any Internet-based business, all the more so as data-heavy video services become more widely used. And despite persistent claims to the contrary, the United States has among the fastest, most reliable, and most widely available broadband in the industrialized world.
As of 2012, 82 percent of U.S. households had access to high-speed Internet (25 megabits per second or more), versus 54 percent of European households. Even more impressively, broadband coverage in the rural United States was significantly better than in rural Europe — nearly 50 percent versus 12 percent — even though the U.S. has much more countryside to hook up. And American investment in networks was vastly greater than that in Europe: $562 per household, more than double Europe’s $244. These differences, Pai says, are explained by the fact that the U.S. allowed the free market to develop the national networks rather than taking a utility-based approach.
“The Internet is the greatest free-market innovation in history,” he says. “This is in part due to the bipartisan consensus started during the Clinton administration. By jettisoning that consensus and regulating ISPs as utilities . . . the FCC, acting at the behest of the White House, is putting our Internet economy, which is the envy of the world, at risk.”
Finally, there’s the matter of Pai’s “problem that doesn’t exist.” In a word: monopolies. Proponents of net neutrality accuse the major ISPs of controlling too much of the market. But Pai vigorously disputes this. For one thing, the rise of wireless Internet service, in particular fourth-generation LTE service (a process for high-speed data, where, again, the U.S. ranks far ahead of Europe), increasingly challenges the dominance of landline-based ISPs. Moreover, if ISPs were monopolies, one would expect to see evidence of abuse. But, as Pai notes in his dissent, the FCC struggles to provide any: “A small ISP in North Carolina allegedly blocked VoIP [i.e., Internet-based] calls a decade ago. Comcast capped BitTorrent [i.e., file-sharing] traffic to ease upload congestion eight years ago. . . . Examples this picayune and stale aren’t enough to tell a coherent story about net neutrality. The bogeyman never had it so easy.”
In fact, rather than fostering competition among ISPs, the regulatory burden of the new order will stifle it, Pai predicts, by imposing compliance costs that none but the largest firms can surmount. He has already begun to hear from small firms that this is indeed the case — firms including Galen Manners, owner of tiny Wave Wireless, which keeps his parents connected in little Parsons, Kan.
But the thing is done — the FCC has issued its rule, and it stands, at least for now. Despite his opposition, Pai plans to remain at the FCC, arguing for reforms that will do what the February order does not: ensure competition and promote better, freer Internet for all. He proposes, among other things, that the FCC allow money in the Universal Service Fund (collected from every landline telephone customer) to be spent on rural Internet development rather than rural phone service, and that it fast-track wireless-Internet projects in municipalities across the country. Given that Democrats outnumber Republicans on the FCC leadership panel, success is not a given. But the balance may change after November 8, 2016. If it does, Pai will find himself in the ascendancy — and able to address America’s real Internet problems with solutions that really will work.
– Mr. Heffernan writes about infrastructure and industry for The Atlantic and other magazines.