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FCC vote ends net neutrality after Ajit Pai shrugs off ‘hysteria and misinformation’

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The FCC is set to repeal rules that require internet providers to give consumers equal access to all content online. Here’s how it works.
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The FCC is set to repeal rules that require internet providers to give consumers equal access to all content online. Here’s how it works.

Net neutrality rules in force since 2015 ended Thursday as the Federal Communications Commission, ignoring protests and polls, voted to reduce regulation of internet service providers.

FCC chairman Ajit Pai shrugged off the public backlash and polls that show most Americans don’t want his plan.

“There’s been a lot of hysteria and misinformation frankly over the last several weeks,” Pai told The Star on the eve of the agency’s vote on his controversial proposal.

Pai cited claims by “elected officials and others” that the plan would break the internet or end the internet as we know it, and that American democracy itself is threatened.

“It’s no surprise that people become very alarmed,” Pai said. “I would be, too.”

Instead, he called Thursday’s vote by himself and four other FCC commissioners mundane.

By a 3-2 vote, split along party lines, the commissioners returned regulation of internet service providers to the “light touch” that started under President Bill Clinton and prevailed until the FCC put in place what Pai called “heavy handed” regulations under President Barack Obama in 2015.

“When people wake up Dec. 15, the internet works and everybody can see that, then calmer heads hopefully will prevail and we’ll be able to have a more rational discussion about the right way to move forward,” Pai said.

Opponents, however, are dug in over issues widely labeled as net neutrality.

The FCC vote likely won’t be the last word. Legal challenges are likely, and some hope to make net neutrality an issue in the 2018 midterm elections. Congress could overturn the FCC decision through legislation.

Mark Stanley, a spokesman for the civil liberties organization Demand Progress, said there is a “good chance” Congress could reverse it.

Many say his proposal would unleash powerful companies such as Comcast, Verizon and others that provide access to the internet. They see it hindering small companies and entrepreneurs that aspire to compete against established giants such as Google, Facebook and Netflix.

Some equate the shift in regulation to a leap of faith with serious consequences, particularly for those who lack internet access in rural and low-income markets.

“It’s like doing a trust fall with lots of peoples’ lives,” said Eze Redwood, a Kansas City entrepreneur who has worked toward closing the digital divide.

Pai too sees serious issues. He argued that a lighter regulatory burden on internet service providers is the surest way to get a better, faster, cheaper internet in the hands of more people and especially to those without service now.

And he’s got company in that belief among some in the Kansas City area.

Opposition

Kansas City Mayor Sly James took up the debate this week. He issued an essay that said Pai’s plan would severely hamper the city’s Digital Equity Strategic Plan.

Internet access, the mayor wrote, “has become a necessity for survival in our interconnected world.” The internet is how people apply for jobs, seek affordable housing and job permits, find public transportation routes, learn about Medicaid and Medicare and pursue better education for their children, his statement said.

James chided the FCC for changes to subsidized Lifeline wireless phone service that helps put the internet into low-income consumers’ hands. He also specifically challenged Pai’s plan that he said would turn internet service providers into gatekeepers of online information, allowing them “to, in effect, censor content based on their business interests.”

Kansas City attorney Chris Brown, who works with start-up companies and the KC Tech Council, raised other concerns.

He said start-ups would struggle to compete against big companies if those large rivals are allowed to buy access to faster internet speeds, a claim many who oppose the FCC proposal make. Matching those costs would weaken an upstart’s chances against established players such as Netflix or HBO, Brown said.

Concerns also stem from the other businesses that many internet service providers operate. And their rivals in those other businesses connect with their customers through the internet service providers.

Comcast, for example, sells cable television, home telephone and most recently wireless telephone services, too.

Kyle Johnson, an internet entrepreneur in Lawrence, said Comcast might decide to slow down or block completely the movies its internet customers stream on their Netflix subscriptions as a way to lure them back to Comcast cable TV.

Even if Comcast simply charges Netflix more to keep the fast speeds it has already, consumers lose, Johnson said.

“Either Netflix pays a ton of money or the consumers pay a ton of money,” Johnson said.

Pai’s competition

Pai answered most complaints by arguing that his plan will turn up the competition in internet services.

He said the 2015 FCC decision put internet service providers under the regulatory framework created in the 1930s to deal with AT&T, creating a heavily controlled monopoly before it was broken up in 1982. It meant empowering the FCC to treat internet service providers like a municipal waterworks, a power company or other basic utility.

“If you want to regulate something like a slow-moving utility, over time what you get is a slow-moving utility,” Pai said.

Small companies get squeezed out, and large companies end up spending more on “lawyers and accountants and regulatory compliance officers” than on building networks, he said.

The small companies that need relief, Pai said, are those that want to compete against the big internet service providers and to bring service to under served low-income and rural markets.

He means RG Fiber, among others.

Mike Bosch founded the Baldwin City, Kan., company when his software business couldn’t get enough capacity from its available internet service providers. Using money raised privately, RB Fiber connected fiber optic lines to 80 percent of the households in the community south of Lawrence and began to offer gigabit internet service.

Bosch said the local cable service provider, Mediacom Communications Corp., then invested to offer its own gigabit internet service.

“We had a competitive response,” Bosch said. “I’m biased. I think ours is a lot better. But the fact that consumers have choice —in a one-stoplight town — of two gigabit providers, that’s exactly what should happen in the other 34,000 small towns across the U.S.”

Bosch said RG Fiber wants to expand its services to other communities, and he has some innovative ideas he’d rather not divulge. But he feels hampered by the rules Pai plans to overturn and others claim are needed to keep big companies in line.

He balks at the costs of reading and keeping up with growing regulations, concerns the FCC could regulate prices and what he considers vague FCC powers over internet conduct.

“I’m subject to the same punitive rules that people are trying to push on Comcast because of the fear of Comcast,” Bosch said.

Blocking and throttling

As for fears any large internet service providers would block or throttle companies’ internet speeds, Pai’s plan turns the matter over to the Federal Trade Commission.

“They’re the nation’s premier consumer protection and competition authority,” Pai said.

The FTC would become the enforcer against anti-competitive behavior, a role it plays in other industries. It would deal with complaints after the fact, if they happen, rather than — in Pai’s words — “declaring everybody in the U.S. a bad apple at the FCC.”

Johnson, whose Lawrence-based company Bixy provides a loyalty app to help consumers eliminate unwanted ads, doubts the shift would protect consumers.

“Why would you get rid of rules and say the FTC is going to take care of that?” Johnson said. “Personally, I don’t buy it.”

Another Kansas City entrepreneur said fears of anti-competitive blocking and throttling are unfounded.

Tim Sylvester, CEO of Integrated Roadways in Kansas City, said Netflix subscribers would punish an internet service provider that blocked or slowed their video streaming. And the providers know there’s no money in that.

Sylvester acknowledges that his support for Pai’s proposal confounds most other entrepreneurs who take up the debate with him. He sees the 2015 regulation as inhibiting investment in fiber optic networks that could provide new sources of internet service.

His company relies on internet service providers to handle the data that Integrated Roadways generate. It would help if the company had services competing for his business.

“Two-thirds of the nation don’t have that,” Slylvester said.

The Associated Press contributed to this report.

Mark Davis: 816-234-4372, @mdkcstar

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