Tales of the Sausage Factory

What You Need To Know About Repealing The Repeal of Net Neutrality — How The CRA Works.

There is a great deal of excitement, but also a great deal of misunderstanding, about the effort to “repeal the repeal” of net neutrality using the Congressional Review Act (CRA). On the one hand, we have folks who are confused by the enormous progress made so far and think that we are just one vote shy of repealing the repeal. On the other extreme, we have the folks declaring the effort totally doomed and impossible from the start.

 

You can read the relevant statutory provisions here at 5 U.S.C. 801-08. Briefly, a “Resolution of Disapproval” (which we refer to as a “CRA” rather than a “CRD” just to confuse people) must pass both the Senate and the House (in either order) and then be signed by the President like any other piece of legislation. If the President vetoes Congress may override the veto with a 2/3 vote as it can with any other vetoed legislation. You might think that this makes it impossible for the minority party to get legislation passed. But the CRA was designed to allow a majority of members to pass a Resolution of Disapproval over the objections of the leadership and on a bare majority (so it circumvents the filibuster). And while yes, it must still get past the President, there are reasons to think that is not as impossible as some folks think.

 

 

Right now, the action has been in the Senate, where Minority Leader Chuck Schumer has announced that all 47 Democrats (and the 2 independents who caucus with them) will vote for the CRA. With Republican Susan Collins (R-ME) joining her fellow Senator from Maine Angus King (I-ME), that makes the total number of yes votes 50. So if Dems find one more “yes” vote in the Senate, they can clear that hurdle. But while this is extraordinary news in a very short period of time (technically, it is still too early to even introduce a CRA on the FCC’s net neutrality vote, since the item has not been published in the federal register) — we still have a long way to go to get this over the finish line.

 

But, just to provide some historic perspective. Back in 2003, the nascent (and totally unanticipated by anybody — especially anybody with any experience in media policy) media reform movement rose up against the roll back of all media ownership rules by then-FCC chair Michael Powell. Republican FCC, Republican Congress, Republican President — all supportive of the roll back and big deregulators. Nevertheless, against all odds, we managed to push through a partial roll back by freezing the national ownership limit at 39% (which, not by coincidence, was the ownership level of the largest holding companies — News Corp. and Viacom — as seen in this West Wing episode). So yeah, sometimes the universe give us some long-shot unexpected surprises.

 

I discuss the details of a CRA, and why I think we can win this (and even if we don’t, why it still works in our favor overall), below. In the meantime, you can go to this Public Knowledge resource page to contact your Senators and Representative directly and push them to vote for the Net Neutrality CRA.

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Tales of the Sausage Factory

The History of Net Neutrality In 13 Years of Tales of the Sausage Factory (with a few additions). Part I

I keep being asked by people “Harold, can you please summarize the last 20 years of net neutrality for me while I stand on one foot?” Usually I answer: “do not do unto other packets what you find hateful for your favorite bitstream. The rest is commentary — located at 47 C.F.R. Part 8.” Alternatively, I send them to John Oliver’s 2017 piece on net neutrality. Or, if you want the longer story going back to the 1960s/70s, you can read this excellent piece by Tim Wu (who invented the term “net neutrality” in the first place).

 

But, as I’ve mentioned more than a few times in recent weeks, I’ve been doing this issue for a very, very long time. In fact, pretty much since the first time the question of how to classify cable modem service came up in 1998. So, in the spirit of “end of year montages,” I will now take you on a brief tour of the history of net neutrality at Tales of the Sausage Factory (with a few outside link additions) from my first post on the Brand X case back in 2004 to June 2016, when the D.C. Circuit affirmed the FCC’s 2015 Reclassification and Net Neutrality Order.

 

Although I suppose you could read the version I wrote about this in December 2015 to bring everyone up to date before the last court fight. Have I mentioned I’ve been doing this for a long, long time now and am repeating myself an awful lot? That’s why I spend more than 5000 words here and only get up to the beginning of 2009.

 

Prepare you favorite montage music and see more below . . .

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Tales of the Sausage Factory

The 5 Weirdest Things About That Ajit Pai Video.

Federal Communications Commission (FCC) Chairman Ajit Pai has made one of those “break the ‘net” videos — but not in the usual way. In an apparent effort to either pump up his base or win over undecideds, Pai made a video called “Seven Things You Can Still Do On the Internet After Net Neutrality.

 

If the intent was to win over critics by showing how opponents are needlessly “fear mongering” (a favorite term thrown around by defenders of Pai’s net neutrality repeal), it backfired badly. But whatever its intent, I can say unequivocally as someone doing this for 20 years, this video is truly bizarre in the annals of FCC history for a number of reasons. While most of the attention has gone to the copyright issues or the Twitter fight between Mark Hamill and Ted Cruz, the genuinely weirdest thing about this video is that it ever got made in the first place.

 

So here are my picks for the Top 5 Weirdest Things About Ajit Pai’s ‘Seven Things’ Video.

 

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Tales of the Sausage Factory

No, the Draft Net Neutrality Repeal Does Not “Restore Us To 2014” — And 2014 Wasn’t Exactly Awesome Anyway.

In my ongoing series debunking the nonsense from Pai & Friends on what the draft net neutrality repeal/reclassification Order does and doesn’t do, I will now take on yet another cherished talking point that gets repeated ad naseum. “We are just winding back the clock to before 2015, when the Internet flourished and — to paraphrase  a popular song of the time from a different Lord Business — everything was awesome! Everything was cool when you were part of the team (cable)! ”

 

Like “the FTC, antitrust law and state law can handle net neutrality” and “the FTC can stop ISPs from blocking content/services,” this talking point is intended to be a “technically true but totally not the way you think/we imply” statement that lawyers, politicians and demons selling you wishes in exchange for your soul love to tell you to get you to sign on the dotted line. In this case, however, this statement turns out to be literally false to fact as well as false by implication. Below, I compare the regulatory regime in place on January 17, 2014 (the day after Verizon v. FCC) and the anticipated regulatory regime as it will exist on January 17, 2018, and explain the Top 3 Ways They Are Totally And Completely Different In Ways That Make Consumers Worse Off.

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Tales of the Sausage Factory

No, the FTC CANNOT Have A Ban On All ISP Blocking.

In my last post, took the 4 most famous net neutrality violations to see how they would come out under the current rules adopted in 2015 v. how they would come out under the regulatory framework following the FCC vote to repeal net neutrality rules, based on the draft Order. To condense the approximately 5500 word analysis — all 4 incidents are addressable under the 2015 rules. None of the incidents are addressable under the combined Federal Trade Commission (FTC) and antitrust regime that remains after the vote to repeal the rules, with the exception of Comcast’s deliberate deception about their blocking peer-2-peer protocols in 2007-08.

 

Since most folks won’t plow through 5500 words of legal analysis, I’ve gotten some requests to specifically address the claims by FCC Chairman Ajit Pai and others that the FTC can address blocking as easily as the FCC and prevent any ISP from blocking any content or application. My short answer is: “No. The FTC CANNOT have a “no blocking” rule like the FCC has today. The FTC may stop an ISP from blocking content or services when it can prove that the blocking violates the antitrust laws, or that the blocking violates the ISP’s published terms of service, or if the ISP blocking causes (or is likely to cause) substantial harm to consumers and is not outweighed by countervailing benefits. And, as I covered extensively in my previous post, proving these things can be hard.

 

My somewhat longer answer, laid out in more detail below, is that Section 5 of the Federal Trade Commission Act, 15 USC 45, simply cannot do what Section 201(b) and Section 202(a) of the Communications Act (47 U.S.C. 201(b) & 202(a)) can do. The two statutes are designed and interpreted very differently. The FTC has very broad jurisdiction but fairly limited authority because it is a very generalist agency. More importantly, it is purely an enforcement agency — designed to prosecute companies from doing what I will refer to here as “bad stuff.” Note, it is not even designed to prevent companies from doing the bad stuff in the first place. It is designed purely to enforce a fairly general consumer protection statute. In particular, the FTC Act Amendments of 1994 severely limited the FTC’s enforcement authority by adding Section 5(n), which requires the FTC to overcome certain obstacles before it can find conduct “unfair” and thus unlawful under Section 5(a).

 

By contrast, Congress designed the FCC to ensure that our critical communications infrastructure functions in a consistent and stable manner and to explicitly promote all kinds of industrial policy like innovation, universal service, affordability, and to ensure that telecommunications services operate in a manner that serves “the public convenience and necessity.” This is critical because we don’t generally require businesses to serve the public interest, we limit this requirement to a fairly small number of specific industries that are absolutely critical to the functioning of our economy and important in our daily lives. As a result, in contrast to the FTC, the FCC has very broad authority over telecommunications services but virtually no authority over other stuff — like information services.

 

As I explain below, this makes it literally impossible for the FTC to simply prohibit blocking (let alone prohibit “fast lanes” or “slow lanes”) as the FCC does. To the contrary, under the FTCA, the FTC cannot prevent a broadband carrier from blocking any website, application or service it chooses unless it can prove that this blocking (a) causes (or is likely to cause) “substantial injury” to consumers, (b) there is no other way the consumer could reasonably avoid the harm, and (c) there are no countervailing consumer benefits. While Section 5(n) does allow the FTC to consider “established public policies as evidence to be considered with all other evidence. Such policy considerations may not serve as the primary basis” for a finding of unfairness. So even if we assume that there is an “established public policy” against blocking, that alone does not allow the FTC to stop a broadband provider from blocking content or applications.

 

And all this, of course, assumes the FTC even has authority to deal with broadband carriers reclassified as information services, which remains up in the air at the moment pending the Ninth Circuit resolution of the en banc rehearing of FTC v. AT&T Mobility.

 

I explain all this in more detail below . . .

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Tales of the Sausage Factory

Can the FTC Really Handle Net Neutrality? Let’s Check Against the 4 Most Famous Violations.

I have been personally involved in just about every major network neutrality issue since this began as “open access” in 1998. It gives me a somewhat different perspective than others, I expect. For one thing, I actually remember the various network neutrality violations we’ve had over the years — and how the FCC previously expected to address them.

 

FCC Chairman Ajit Pai’s proposed draft Order repealing net neutrality is, without doubt, the most dramatic and radical about face committed on this matter in the almost 20 years this issue has percolated. Among other things, it completely renounces any FCC oversight over the behavior of broadband providers. Back in 2002, when Chairman Michael Powell’s FCC issued the Cable Modem Declaratory Ruling, defenders of the FCC’s action dismissed the claim that the FCC was abandoning all regulatory oversight of broadband as “fear mongering.” Now, of course, Pai insists that the draft Order simply resets the clock to the golden age of 2014, and that those who insist the FCC ever exercised authority over last-mile broadband are “fear mongering.” To paraphrase Inigo Montoya of the Princess Bride, ‘you keep using that phrase. I do not think it means what you think it means.’

 

In particular, Pai and defenders of the draft Order insist that a combination of the Federal Trade Commission (FTC) Section 5 (15 U.S.C. 45), state consumer protection law, and anti-trust law will provide more than adequate protection for consumers and anyone who doubts this is — you guessed it — fear mongering. Happily, we do not need to speculate on this entirely. We can simply apply the proposed rules in the draft Order and the protections cited by the draft Order and its defenders and apply them to the four most significant network neutrality violations on record.

 

(1) The 2013-14 “peering dispute” between Netflix and the four largest broadband Internet access service (BIAS) providers — Comcast, Time Warner Cable (now Charter), AT&T and Verizon;

(2) The 2012 decision by AT&T to limit Facetime to the highest tier plan on its mobile service;

(3) The 2007-08 blocking of peer-2-peer (p2p) applications such as BitTorrent by Comcast;

(4) The 2005 blocking of Vonage VOIP calls by the ISP Madison River.

 

It’s worth noting as we begin the analysis that, while the draft Order does not discuss the Netflix/BIAS peering dispute at all, it does discuss the other 3 and explain why they were (a) not a big deal, and (b) would probably be permitted under the FCC’s new approach. But lets run through the exercise on our own. As discussed below, under the existing 2015 rules, the FCC can address and resolve each of these. Under the FTC/State consumer protection law/Sherman Act approach, the only one of these actions subject to any sanction is the 2008 Comcast/BitTorrent blocking, and even then only for the misrepresentations to customers denying its “network management” decision to disrupt p2p traffic. Assuming Comcast actually admitted to blocking/degrading p2p traffic when initially confronted in 2007, neither the FTC nor any of the other proposed remedies would have ended Comcast’s “network management practice.”

 

This result should not surprise us. After all, not only does the draft Order explicitly cover the 2012 AT&T/Facetime, 2008 Comcast/p2p fight, and the 2005 Madison River VOIP blocking and explain why they should have been permissible rather than subject to “heavy handed” FCC enforcement, but those defending the current draft Order as the Nirvana of “light touch” regulation defended each of these BIAS actions as entirely within the rights of the BIAS provider and an unwarranted interference on the part of the FCC. Whether or not one agrees that these actions were appropriate network management/market negotiation decisions by broadband providers, no one can deny the rules adopted in 2015 expressly prohibits these four incidents whereas the rules in the draft Order expressly permit them.

 

More detail below . . .

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Tales of the Sausage Factory

Our Modern Thanksgiving Celebrates The End of Slavery, Not Plymouth Rock.

I have written previously in defense of remembering the First Thanksgiving, and the brief period that followed when the new immigrants and the Massachusetts tribes lived together in mutual respect and tolerance.  As I said then, I believe that ignoring the first 30 years in which the Wampanoag tribes and the original English settlers of Plymouth Colony strove to work together ignores both that a better world was possible and that we can chose to create a better world.

 

But for those who dislike celebrating the First Thanksgiving, I draw your attention to the fact that our modern holiday of Thanksgiving has nothing to do with the First Thanksgiving at Plymouth Colony and is instead the result of Lincoln’s proclamation calling for a Day of Thanksgiving following the Union victory at the Battle of Gettysburg.

 

Gettysburg was the definitive victory of the Union in the Civil War — although that was by no means clear at that time. it marked the high water mark of Confederate military advance and the beginning of consistent Union counter-attack. Ultimately, it was critical to the end of slavery in the United States.

 

For all the failures of Reconstruction, for all that racism and the legacy of slavery persists to this day, there can be no doubt that the victory of the Union over the Confederacy and the end of the institution of slavery in the United States is a cause for which to be thankful. Whether you focus on the slaves who escaped to join the Union army, or the free black volunteers who endured discrimination in the ranks, or simply because our nation survived what Lincoln rightly called the test of whether any nation conceived in Liberty and dedicated to the proposition that all men are created equal, there is much for which to be thankful. It is the counsel of cynicism and bitterness to reject the good — or fail to acknowledge it — because evil and injustice have not been banished from the Earth. For if the defeat of the Confederacy and the end of slavery are not causes for which we should all be thankful, then that word has no meaning.

 

Stay tuned . . .

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Tales of the Sausage Factory

The DOJ’s Case Against AT&T Is Stronger Than You Think — Again.

I want to start by applauding Randal Stephenson for coming out quickly and denying the rumors that DoJ asked them to sell CNN as the price of getting the merger done. At the same time, however, he acknowledged that negotiations were “complicated,” and that he and recently confirmed Asst A.G. for Antitrust Makan Delrahim were still “getting to know each other” and “figure out the ask on the other side of the table.” He also made it clear that, if DoJ does challenge, AT&T is prepared to go to court and are confident they will win.

 

AT&T is generally pretty good at persuading everyone that DoJ doesn’t really have a case against them. As folks may recall, despite the fact that the proposed AT&T/T-Mo transaction violated just about every basic tenant of existing antitrust law, AT&T managed to convince everyone for the longest time that DoJ was just playing hardball with them and didn’t really mean it because DoJ didn’t really have a case. While Stephenson refused to discuss what was negotiated, the rumors suggest it was a demand to divest either DIRECTV or the Turner Broadcasting cable channels (which include CNN, as well as TNT, HBO and a bunch of other real popular programming.) Once again, you have antitrust experts who do not have any particular experience with cable mergers shaking their heads and predicting that DoJ has no case.

 

In  fact, demanding divestiture of either the must have content or the DIRECTV distribution platform is precisely the remedy you would expect if you believe the deal presents significant harm because of the vertical integration issues. That’s been the position of my employer, Public Knowledge, which has opposed the transaction since AT&T announced the deal. (That predates Trump’s election, for those of you wondering.) If you want a more detailed understanding of the theory of the harms, you can find it in my boss Gene Kimmelman’s testimony to Congress here. While generally true that vertical deals are hard to challenge, the cable industry has long been something of an exception, and the remedy here is similar to what the FTC imposed on the AT&T/Turner deal in 1996, where the FTC imposed stock divestitures and restructuring to eliminate the voting interest of John Malone and Liberty Media because of Malone/Liberty’s ownership TCI, which was then the largest cable operator in the United States (25% national market share). Given the massive criticism of “behavioral” remedies and a call to return to “structural” remedies from the right and the left, it’s unsurprising that DoJ would want actual divestiture rather than go the Comcast/NBCU consent decree route.

 

But as Stephenson noted, negotiations have only just begun in earnest, so we may end up with behavioral remedies after all. We’ll see.

 

I dig into details below . . . .

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Tales of the Sausage Factory

How DEA Got It’s Revenge For Getting Called On Abusing Authority — And Why This Will Make Things Like Civil Asset Forfeiture Reform Harder

I love neither DEA or PhARMA, but the business about Congress passing a last year to make it “harder for DEE to stop drug companies selling drugs to drug dealers” is a load of crap. Or, perhaps more accurately, it is a brilliant example of how the DEA and other police organizations retaliate against lawmakers who curb their authority when they abuse it, and how an easily manipulatable press and easily manipulatable public eats it up with a spoon.
 
Here’s the infamous 2016 final statute. If you click through to the text, and then look at the statute amended (21 U.S.C. 824), you will observe that what the 2016 statute did was require that before DEA arbitrarily stripped companies of their license to ship controlled substances (like opioids), they had to (a) identify what law they thought was being broken, and (b) had to show that there was a real likelihood the drugs would be diverted for misuse, rather than just arbitrarily decide that hospital X or pharmacy Y had already received “too much” Oxycontin for the month. 
 
As usual, explaining something like this is complicated. Short version, the bill curbed a bunch of nasty abuses by the DEA. Of course PhARMA spent millions to get it passed. DEA is obscenely powerful and their abuses in this regard are fairly disruptive and legendary in the pharmacy and hospital world. And the thorough nature of their revenge here shows how DEA gets away with it. By spinning a bill that curbed DEA’s extra-legal abuses as a corrupt bargain between the hated drug makers and corrupt members of Congress, DEA has made it very clear what happens when you cross them. If you wonder why so few lawmakers want to take on issues like police brutality, civil asset forfeiture, or even horrendously price gouging prison phone rates, this is why.
I explain in great detail below.

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Tales of the Sausage Factory

What You Need To Know About the 2017 Wireless Competition Report.

Federal Communications Commission Chairman (FCC) Ajit Pai has put the 20th Wireless Competition Report on the agenda for the FCC’s September Open Meeting. Technically, the Wireless Competition Report is a non-rulemaking agency report to Congress, similar to the many reports the FCC does on everything from the prices paid for cable services to the state of the Satellite industry. But the Wireless Competition Report has become something of a big deal in recent years, owing to the refusal of the FCC since 2010 to find whether or not there is “effective competition” in the wireless industry. At the same time, then-FCC Chair Julius Genachowski moved the Wireless Competition Report (along with a number of other reports) from being a Commission-level item voted on by the full Commission to a Bureau-level item. This torked a bunch of people off. Those who regarded the wireless market as obviously not competitive saw all this as a failure of courage to call out the wireless market for its lack of competition. OTOH, those who consider the wireless market a paragon of competition derided this as a means for the regulation-mad Obama Administration to impose regulation on a clearly competitive and functioning market.

 

Either way, Pai is now putting it back at the Commission level and the Report is once again finding that we have “effective competition” — whatever that means. So it seems like a good time to run through the Wireless Competition Report, what it is, what it means, what it doesn’t mean, and how it gets used and/or abused. And, of course, how it relates to net neutrality, since everything in the freaking world relates to net neutrality these days.

 

Short version: the Report is non-binding on anything but overall provides a picture of the wireless industry by the expert agency charged by Congress to oversee the industry. It is therefore useful evidence for a lot of things ranging from merger approval to future regulatory initiatives. This years report also finds (surprise!) that although speeds have dramatically improved for mobile broadband, as has deployment generally, the level of investment by carriers dropped 9% from 2015 to 2016. How to measure this investment and how this should or should not impact the Title II debate I have dealt with extensively in this blog post, and therefore won’t spend too much time on it here.

 

Longer version below . . .

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