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Net Neutrality State Laws Are Doomed to Fail

Summary:
Internet regulation advocates lost their fight at the FCC, which voted in December 2017 to rescind the 2015 Open Internet Order. Regulation advocates have now taken their “net neutrality” regulations to the states. Some state officials–via procurement contracts, executive order, or legislation–are attempting to monitor and regulate traffic management techniques and Internet service provider business models in the name of net neutrality. No one, apparently, told these officials that government-mandated net neutrality principles are dead in the US. As the litigation over the 2015 rules showed, our national laissez faire policy towards the Internet and our First Amendment guts any attempt to enforce net neutrality. Recall that the 1996 amendments to the Communications Act announce a clear

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Internet regulation advocates lost their fight at the FCC, which voted in December 2017 to rescind the 2015 Open Internet Order. Regulation advocates have now taken their “net neutrality” regulations to the states.

Some state officials–via procurement contracts, executive order, or legislation–are attempting to monitor and regulate traffic management techniques and Internet service provider business models in the name of net neutrality. No one, apparently, told these officials that government-mandated net neutrality principles are dead in the US.

As the litigation over the 2015 rules showed, our national laissez faire policy towards the Internet and our First Amendment guts any attempt to enforce net neutrality. Recall that the 1996 amendments to the Communications Act announce a clear national policy about the Internet:

“It is the policy of the United States . . . to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation.”

In fact, that 1996 law was passed in order to encourage ISPs to filter objectionable content.

Further, regulators cannot prevent ISPs from exercising their First Amendment rights to curate the Internet. As Prof. Stuart Minor Benjamin wrote for the Harvard Law Review Forum in 2014,

“If we really want to prevent Internet access providers from being speakers, we are going to have to radically reshape the Supreme Court’s First Amendment jurisprudence and understandings.”

No radical reshaping of the First Amendment has occurred. For all these reasons, the Obama FCC attorney was forced to concede that

“If they [that is, ISPs] filter the Internet . . . the [2015 Open Internet] rules don’t apply to them.”

Even Title II supporters EFF and the ACLU acknowledge in their FCC joint filing that ISPs are speakers who can filter content and escape Title II regulation.

At the end of the day, net neutrality, having lost its original definition, is simply a re-branding of Internet regulation.

State Internet regulations, therefore, are at odds with federal law and policy. Let’s set aside federal preemption for the moment (Seth Cooper explained why preemption likely kills most of these state Internet regulations). There are other arguments for why states can’t impose baby “net neutrality” bills. 

Net neutrality bills likely violate the law

The state “net neutrality” bills and executive orders represent common carriage regulation. State officials make no attempt to hide this since they largely copy-and-paste the nondiscrimination obligations directly from the 2015 Open Internet Order. Here’s the problem for states: regulators can’t impose common carrier obligations on non-common carriers.

When nondiscrimination principles deprive operators of control of content, that amounts to common carriage. This was established in a 1979 Supreme Court case, Midwest Video II. In that case, the Supreme Court struck down common carriage obligations on cable operators, who are non-common carriers. The Court said,

“With its access rules, however, the Commission has transferred control of the content of access cable channels from cable operators to members of the public who wish to communicate by the cable medium. …The access rules plainly impose common-carrier obligations on cable operators.”

The FCC, the Court said, had no authority to transform them into common carriers.

In fact, this is why the 2010 Open Internet Order was struck down in Verizon v. FCC. There, relying on Midwest Video II, the DC Circuit held that the net neutrality principles couldn’t be enforced on non-common carriers.

State “net neutrality” regulations will likely fail for the same reason. The 2015 rules were upheld was because “broadband Internet access service” was classified as a Title II common carrier service. “Broadband Internet access service” providers will no longer be common carriers once the 2017 Restoring Internet Freedom Order takes effect. By imposing common carrier rules on non-common carriers, states run afoul of Midwest Video II and Verizon.

Net neutrality bills balkanize the Internet

State-based Internet regulation is also bad policy, and many who support net neutrality principles–like Google–oppose this legal regime. Internet regulation advocates, by encouraging regulation state-by-state and city-by-city, have finally dispensed with the fiction that “net neutrality” is about the “open Internet.” In their eagerness to have someone, anyone regulate the Internet, these advocates are willing to balkanize the US Internet into dozens, or even hundreds, of splinternets, each with a different local or state regulator.

The Montana governor, for instance, encouraged every state and city to regulate the Internet, even providing a customizable template.

Further, net neutrality rules are not easy to apply and interpret, particularly the “catch-all” Internet conduct standard. Net neutrality supporters take vastly different stances on identical ISP conduct.

One illustration: the common practice of zero rating by mobile providers. One prominent net neutrality supporter (then-FCC chairman Tom Wheeler) said T-Mobile’s zero rating was “highly innovative and highly competitive.” Another (Prof. Susan Crawford) said it is “anti-competitive,” “dangerous,” and “malignant” and should be ended immediately. There were many advocates in both camps and everywhere in between.

Given the wide divergence of views on a single issue, dozens of “net neutrality” laws would create innumerable contradictions about what is allowed and disallowed online. The fragmented Internet and legal uncertainty would be particularly damaging to small app companies and competitive ISPs, who don’t have hallways of lawyers to ensure compliance, and who use or plan to use traffic priority techniques for gamingdisability servicesVoIP, and driverless cars.

For the global, stateless Internet, having state and city CIOs create their own custom Internet regulation interpretations would destroy what made the Internet transformative–a permissionless, global network free of legacy regulations. State legislatures and governors, by ramming through “net neutrality,” are committing to waste countless taxpayer dollars in battling the federal government and telecom companies in (probably unwinnable) litigation. Their “best-case” scenario: a few states win in court and splinter the Internet.

Hopefully cooler heads will prevail and put state energies and treasure into doing something constructive about broadband, like urging reform of the $8.8 billion universal service fund or improving permitting processes and competition.

Brent Skorup
Brent Skorup is a Research Fellow in the Technology Policy Program at the Mercatus Center at George Mason University. His research topics include wireless policy, new media regulation, competition, and telecommunications.

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