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On Wednesday's show I walked Scott through the history of Net Neutrality and I thought it might be useful for folks to have that written out in an easy-to-read format so you could share it with others. With that in mind, this post will be available to the general public, so you can share the link to the page on Patreon if you like.
CLOSER LOOK - First you have to understand the two main definitions of the US Telecommunications Act of 1996 that have been used to categorize the Internet.
Telecommunications Service - “The transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sent and received.” This is like your phone. You choose who to call and what you say, not the phone company. The phone company just connects you.
Information Service: “The offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications, and includes electronic publishing, but does not include any use of any such capability for the management, control, or operation of a telecommunications system.” This is cable TV. They store and provide the TV channels. You get to switch between the ones they choose to offer.
In the 1990s ISPs were regulated as telecommunications providers. Most ISPs ran over dial-up so this seemed to make perfect sense. Because of telecommunications regulations, telcos had to offer their Internet networks wholesale to other service providers. Hence multiple DSL providers running over the same wires.
Cable companies started providing Internet service but did not want to open their networks wholesale to other ISPs. They claimed they were an information service, as they were as a cable TV service, and so should not have to follow telecommunications regulations.
March 14, 2002 - At the behest of Cable TV providers, the FCC determined that Cable modem service is an information service and not subject to common carrier regulation. Lawsuits begin!
June 27, 2005 - The US Supreme Court upheld FCC ruling that cable modem service is an “information service.”
A few days later...
August 5, 2005 - The FCC classified wireline broadband internet access services as information services and gave telcos one year to wind up the deals that had required them to open their networks to other service providers. The FCC also removed the restriction on providing “enhanced services.” Telcos (and cable TV services) could now monetize their networks by charging companies more to reach the customers of their ISPs with faster or more reliable connections. They could throttle, they could do paid prioritization if they so chose.
And they chose.
Knowing public opinion might go against them, telco executives began trying to cast big Web companies as the villain.
October 2005 - SBC CEO Ed Whitacre "Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes? The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!"
This made sense if you didn't know that the governments of the US (Federal, State and local) had assisted and sometimes subsidized the rollout of these networks. You also should keep in mind that the telcos did not run the entire Internet just the portion that led to their ISP customers, who often didn't and still don't have much choice to use somene else. And of course keep in mind that Google, Yahoo, Vonage and every other Web company paid to access the internet in some way just as much as AT&T. This was not about a free lunch.
February 2006 - John Thorne, a Verizon senior vice president and deputy general counsel, ""The network builders are spending a fortune constructing and maintaining the networks that Google intends to ride on with nothing but cheap servers. It is enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers.
See above. Also, those servers are just as cheap as Verizon's. And if they weren't Verizon should have been buying their servers from the same place as Google!
In 2007 Comcast was caught interfering with Bittorrent packets. Let's assume for this exercise that at least some of those packets were legitimate and legal information. The FCC (under President George W. Bush) voted to punish Comcast for "discriminatory network management practices." Comcast got the decision overturned in court because the FCC had no legal basis to discipline an information service for such a practice.
So the FCC began looking for justification to do so.
In 2010 the FCC used a section of the Telecommunications act that charged it with encouraging universal access, to create rules against blocking throttling and paid prioritization. The FCC argued that even an information service was required to abide by this provision and this gave the FCC the authority to do so. This time, Verizon sued and got the rules thrown out for having an improper legal basis. The court basically said that as long as Verizon was an information service it had the leeway to do what it want. The court also said that if the FCC reclassified Verizon's Internet service as a telecommunications service, it could enforce the restrictions.
In February 2015 the FCC reclassified ISPs as telecommunications services which gave it the appropriate legal basis recommended by the courts.
FCC used forbearance for most of the telecommunications restrictions like rate regulation, tariffs, and even the requirement of wholesale access to networks which was one of the main reasons for classifying ISPs as information services in the first place.
The FCC DID regulate the following
- It prohibited ISPs from blocking or throttling lawful Internet content and to prohibit paid prioritization. The whole point of the exercise since the Comcast court victory in 2007.
- It also let the FCC prohibit an ISP "to make any unjust or unreasonable discrimination"" in rates, practices, or offering of services, as well as only charge “just and reasonable” rates. Customers could ask FCC to intervene and could sue in court if the FCC did not.
And we went back to court.
Trade groups and ISPs sued the FCC in 2015 about the justification for the reclassification. This time they lost. A precedent cited in the court decision held the FCC, “need not demonstrate to a court’s satisfaction that the reasons for the new policy are better than the reasons for the old one.” In other words the FCC got to decide if an ISP was an information service or a telecommunications service.
In 2017 on May 18 - The FCC proposed rescinding the classification of ISPs as a telecommunications service and take ISPs back to being information services. The FCC recommends the FTC handle consumer complaints. There does not seem to be a clear plan to block paid prioritization and throttling.
The FCC plans to take comments until August 16
So. in the end we have two definitions that do not fit Internet service well, and nobody can agree which definition should prevail. In those cases the way government is supposed to work is to create legislation for the new category. That's what the telecommunications act of 1996 did in recognizing cable TV and the category of information services.
John Thune, Senator from South Dakota et. al drafted legislation in 2015 that “would have outlawed the online practices of blocking, throttling and paid prioritization of legal content over broadband cable and wireless connections.” Senator Thune added “corporate owners of broadband infrastructure couldn’t use their role to manipulate the internet experience.” He would still like to pursue a bipartisan bill along those lines.
Audi announced it’s first production vehicle with autonomous driving capability. The 2018 A8 will have Level 3 capability meaning the car can drive itself in some driving modes, though a human must be ready to take over. The A8 features a traffic jam pilot that can take over at speeds up to 60km/hour or 37.3 mph. The A8 has more sensors than Tesla’s Autopilot uses. Autopilot is considered Level 2. The Audi A8 will start at 90,600 EUR ($103,243) coming to Germany in late autumn and the US mid-2018. http://mashable.com/2017/07/11/2019-audi-a8/#83ZqqspGdOqF
Uber has agreed to merge its Russian ride-hailing business with Yandex. The combined company will cover 127 cities in 6 countries, including Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan. Yandex will own 59.3% of the combined company and Uber will keep 36.6% with the rest owned by employees. Yandex estimates the combined company will start with 5-6% of the Russian taxi business.
Several tech sites and apps added messages to their services Wednesday urging customers to object to an FCC proposal to eliminate Open Internet Guidelines established in 2015. Many sites link to the FCC which is taking comments on its proposal. The guidelines in question classify US ISPs as common carriers in order to enforce rules against favoring one kind of traffic over another in delivering Internet service. http://fortune.com/2017/07/12/net-neutrality-day-of-action/
6 million Verizon subscriber records, including PIN codes were exposed on an unprotected Amazon S3 server by an employee of Israel’s Nice Systems. Nice provides customer engagement and anti-fraud services to 85 of the Fortune 100 companies and works closely with surveillance and phone cracking companies. Chris Vickery of security company UpGuard found the data in mid-June and privately told Verizon. He initially estimated 14 million records but Verizon has clarified that it is 6 million. The data was secured a week later. The data came from a log file of calls to Verizon customer service which was being analyzed by Nice Systems. https://www.pcmag.com/news/354901/6m-verizon-customer-account-details-exposed
The World Wide Web Consortium approved the Encrypted Media Extensions for handling DRM-protected video natively in a browser without the use of plugins. The Electronic Frontier Foundation plans to appeal W3C's adoption of the standard, stating accessibility, competitive, and legal concerns about the standard. A working version of EME has been supported by major browsers since 2015, and is already in use by some streaming services. https://www.theverge.com/2017/7/8/15942238/web-drm-standard-eme-approved-controversy
The Electronic Frontier Foundation has released its annual “Who has your back” report which grades tech companies on how they handle government data requests. Criteria include transparency and disclosure to users, supporting reform, and committing to have a judge review National Security Letters. Adobe, Credo Mobile, Dropbox, Lyft, Pinterest, Sonic (ISP), Uber, Wickr (a software maker) and Wordpress all got perfect scores. Apple , Google, Facebook and Microsoft each got four out of five stars. Amazon and WhatsApp got two stars and AT&T, Comcast, T-Mobile and Verizon all got one star. https://www.engadget.com/2017/07/11/eff-who-has-your-back-report/
Apple is partnering with China’s Guizhou on the Cloud Big Data to establish its first data center in China. The data center will help improve icloud services for Chinese users as well as comply with regulations requiring data on Chinese users be stored within China. https://www.bloomberg.com/news/articles/2017-07-12/apple-to-build-first-china-data-center-to-comply-with-local-law
Microsoft confirmed it plans to cut thousands of jobs as part of a reorganization. CNBC reports the number at about 3,000 jobs, that's about 10% of the salesforce, though Microsoft will not confirm the number. Microsoft's last major reorganization took place a year ago after former Chief Operating Officer Kevin Turner left the company. Microsoft’s cloud and server businesses have been fueling revenue recently, with server products and cloud services revenue up 15 percent and Azure revenue itself growing by 93 percent in the recent quarter. http://www.zdnet.com/article/microsoft-to-lay-off-up-to-3000-employees/
Samsung projects its highest operating profit ever in Q2 at 14 trillion won (US$12.11 billion). Samsung has not yet provided details but analysts believe strong sales of the S8 phone, RAM, processors and display components led to the strong quarter. https://www.engadget.com/2017/07/06/samsung-q2-2017-earnings/
The Verge verified a report by The Information that Jawbone has entered into liquidation proceedings. Jawbone co-founder and CEO Hosain Rahman reportedly started a new company, Jawbone Health Hub, which will focus on health-related services, and provide support for legacy Jawbone devices. https://www.theverge.com/2017/7/6/15931080/jawbone-going-out-of-business-report
At its Inspire conference, Microsoft announced a new program called Microsoft 365 Enterprise launching August 1st, letting businesses buy Office 365 Enterprise, Windows 10 Enterprise, and Microsoft’s Enterprise Mobility and Security features as a single subscription. A second bundle called Microsoft 365 Business will go into public preview August 2nd, combining Office 365 Business Premium with security and management features for Office and Windows. It will eventually run $20 per user per month. Microsoft also launched its Azure Stack Monday, letting companies buy equipment from Dell, HP, and Lenovo to run Azure internally, shipping in September. https://www.thestreet.com/story/14221049/1/microsoft-is-making-major-moves-in-the-cloud.html
Microsoft is outlining a program to take unused TV spectrum- aka White Spaces— and use it to provide high-speed Internet service in rural areas of the US. The plan aims to cover 2 million people in 12 states over the next five years. Around 23 million people in the US have no access to fast Internet. http://fortune.com/2017/07/11/microsoft-to-bring-internet-access-to-rural-us/