FCC Votes to Overhaul Internet Regulation

Thomas Siracusa
Associate Editor
Loyola University Chicago School of Law, JD 2019

On May 18, 2017, the Federal Communications Commission (FCC) voted 2-1 to initiate the process of rolling back net neutrality provisions put in place by the Obama administration designed to keep the Internet open and fair. The FCC Chairman’s proposal will end the “utility-style strict regulatory approach that gives government control of the Internet.” The current FCC intends to implement market-based policies designed to preserve Internet freedom and reverse declining infrastructure investment, innovation, and options for consumers it argues resulted from the FCC’s actions in 2015.

What is Net Neutrality?

The FCC implemented net neutrality rules in 2015 to prevent speed traps on the Internet’s information highway. Speed traps are mechanisms that block access entirely or selectively speed up access to some websites while slowing down access to others. Internet service providers such as Comcast, AT&T, and Verizon—that have spent millions of dollars lobbying against net neutrality—argue that having the government manage their business is detrimental to their operations and consumers. On the other side, websites like Google and Facebook, and the Obama administration insist that the Internet is a public good and should be treated as such. They point out that service providers play favorites by deliberately speeding up access to the websites they own while slowing down access to those of their competitors. Companies can also pay service providers to obtain faster access to their websites, giving an advantage to high revenue corporations who can afford a faster pipeline over smaller ones such as startups who cannot.

President Trump officially selected Ajit Pai, an outspoken critic of net neutrality, last January to serve as the Chairman of the FCC. If net neutrality is officially rolled back, consumers could see a return to the days of Internet service providers prioritizing their own video content over competing content on another streaming service. Alternatively, telecoms could force their competitors to pay a premium to get their content onto the Internet’s fast lane. Small businesses creating new online services and new jobs without the financing, power, or relationships with service providers that protect big businesses are at the biggest risk.

What are the Implications of Net Neutrality’s Repeal?

Eliminating net neutrality could unleash a domino effect in multiple industries. Service providers will continue to charge consumers for internet access while simultaneously charging Internet companies premiums for prioritized access to those consumers. Today’s Internet consumers expect websites to function at optimal efficiency and without interruptions. Smaller companies without the deep pockets to pay those premiums will risk website functioning deficiencies, endangering their ability to maintain an audience let alone grow their business. Accumulating ad revenue is nearly impossible for a website that cannot maintain Internet traffic. More often than not, advertising loss means websites can no longer afford to create new content. Not only will this interrupt competition in the web industry, it will also reduce digital advertisement supply in an era where demand is high. Advertising companies already struggling to reach consumers would face even stiffer competition.

Public Response

Since the vote, the FCC has received nearly 22 million comments of public feedback related to its Notice of Proposed Rulemaking on their website. Over 1,000 startup companies and investors have signed an open letter to Chairman Pai opposing the proposal under the pseudonym Startups for Net Neutrality. The Internet Association, a trade organization that represents global Internet companies on public policy matters, has also openly condemned the new plan. They echo that Internet providers, consumers, and Internet companies of all sizes are thriving under the 2015 FCC regulations, and that rolling back net neutrality would stifle innovation and freedom of choice online. Groups of protestors last April demonstrated in favor of net neutrality rules at an FCC monthly open meeting where Pai was speaking. Still more advocates plan on mobilizing in D.C. later this month for two days of protest at the next open meeting and on Capitol Hill.

Given the volume of social and political problems competing for public attention, some net neutrality advocates have doubts about how effective these demonstrations will be. Others, however, hope to put enough pressure on the Republican-majority FCC that the issue becomes too much of a liability to move forward.

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