Netflix

With due credit to "Ripley's Believe it or Not!^®,"so much odd and bizarre is happening at the FCC in the "name" of “privacy” that the topic calls for its own collection of: "Believe it or Not!^®" oddities.

Title II Privacy Proposed Rules

The FCC claims consumer privacy is important, but preempted existing FTC privacy regulation of broadband providers before they had any replacement privacy protections in place, so U.S. broadband consumers have been left without any federal privacy protection for over a year! 

Summary: It is rare for an FCC proceeding to be so wrong-headed and ill-conceived that it has seven huge flaws. Tellingly this one does.

1. The FCC is trying to force-fit inherently-irreconcilable, telephone closed-ecosystem privacy rules into its opposite -- a broadband open-system Internet.

2. This approach is so convoluted and confusing there is no way for an average consumer to understand what part of their privacy is or is not now protected by the FCC and what part is or is not protected by the FTC.

3. For privacy, the FCC’s Title II decision has been perversely subtractive in eliminating all FTC broadband consumer privacy protections, during the year-plus period while the FCC tries to figure out what FCC consumer privacy protections will be.  

The epic flaw in the FCC’s Title II privacy NPRM is that it purports to best protect consumers’ private information by only regulating broadband providers’ use of that private information, while emphatically protecting dominant edge platforms from FCC privacy regulation when they use that same FCC-regulated private information indiscriminately without consumers’ meaningful knowledge or consent.

Yes you read that right.

Apparently the FCC thinks it is more important to protect dominant edge platforms from FCC privacy regulation, than it is to protect consumers’ private information.

The issue of privacy lays bare the FCC’s contorted and arbitrary logic of both its Title II cleave that only ISPs can be gatekeepers, and that the goal of net neutrality, protecting dominant edge platforms from ISP interference, is logical and appropriate to apply to privacy. If it was, that would perversely mean that the purpose of the FCC’s privacy rules should be to protect edge providers’ businesses, not consumers’ privacy.  

If you want to see a visual representation of this problem, please see the attached one-page graphic here.

For the last several years that Netflix has relished the role of Grand Net Neutrality Inquisitor accusing ISPs of throttling Internet traffic in alleged violation of net neutrality, Netflix actually has been secretly throttling its Internet-leading traffic in ways that it never disclosed to either its users, the public, or to the FCC/FTC.

This incredible net neutrality revelation could have lots more repercussions than many appreciate at first glance.  

We learned of this extraordinary duplicity from a WSJ story this week where Netflix was forced to fess up “that for more than five years it has limited its video speeds to most wireless carriers across the globe, including AT&T and Verizon…  Netflix said it doesn’t limit its video quality at two carriers: T-Mobile and Sprint because “historically those two companies have had more consumer-friendly policies.”     

Consider these under-appreciated repercussions.

Square peg meet round hole.

The FCC is poised to try and force-fit inherently-irreconcilable, telephone closed-ecosystem privacy rules into a broadband open-system Internet. Good luck with that.

Expect the FCC to have fits trying to successfully craft workable, non-arbitrary, and legally-sustainable Title II broadband privacy rules in the year ahead.

It is a problem of the FCC’s own making.

In arbitrarily applying Title II telecommunications rules to only the ISP half of Internet communications, while politically exempting the entire edge half of Internet communications in its Open Internet order, the FCC has ensured that information that was proprietary and controllable in the closed telephone world becomes public and uncontrollable in the open Internet world.

Horses meet open barn door.

Net neutrality activists wrongly imagined that Title II was all-purpose-regulatory-authority to impose “the strongest possible” Open Internet rules they wanted, like bans on paid prioritization, zero rating or usage based pricing, despite decades of Title II and court precedents that determine many types of economic price discrimination and pricing flexibility to be just and reasonable.

Historically accurate or not, the “Spanish Inquisition” is a well-known metaphor in literature for a group of intolerant elites that demanded orthodoxy from people, under threat of extreme consequences for heresy.

The twenty first century’s new technocratic elites, who politically made up net neutrality policy over the last fifteen years, are now sadly trying to dictate net neutrality orthodoxy on all the people of the world, whether or not they use the Internet.

These net neutrality absolutists are now accusing innovators of Internet “zero rating” plans, i.e. toll-free data plans, of net neutrality heresy, which must be punished severely with PR torture and banishment, in order to set an example for the masses of what happens to those who dare to challenge the church of net neutrality absolutism.

Recently in India, today’s modern day leaders of the Zero Rating Inquisition, Access Now activists, have demonized Facebook for the net neutrality heresy of offering a free stripped-down version of Internet access called “Free Basics” to the roughly billion Indians who can’t afford Internet access.

A rational person would say Facebook’s Free Basics offering is great and a very helpful innovation, because it’s so similar to the good of a library, school, or hospital that offers free services to the poor.

However, the net neutrality absolutists, who claim to be champions of free speech, are incensed that Facebook would empower a type of Internet free speech that is not pre-approved by them.

The world is watching and taking note of the FCC’s blatant competition double standard that totally favors America’s dominant edge platforms above most everyone and everything else.  

Consider an apt and illuminating comparison between the competition U.S. wireless broadband providers face versus the competition Silicon Valley’s edge platforms face.

The FCC’s Non-Neutral Internet Competition Policy

The FCC’s 2015 Open Internet Order has an implicit blind-eye competition premise in that it reclassified the broadband provider half of Internet access, and not the “edge” platform provider half, as subject to FCC Title II common carriage regulation.

That is because the FCC focused only on broadband and concluded its level of competition required the strongest possible net neutrality regulation, while it turned a blind-eye toward “edge” platforms in uncritically assuming that “edge” platform networks were competitive and thus did not have to be neutral, open, or transparent.

Does the FCC’s concept of a “virtuous circle of innovation” mean fostering a full and true “circle of innovation,” of not only edge provider innovation, but also ISP innovations of zero-rating pricing plans that lower users’ bandwidth costs and better fund more broadband deployment?

Please consider how the FCC’s eventual treatment of the many ISP plans for zero-rating pricing innovations could impact ultimate appellate review of the FCC’s Open Internet Order.   

The D.C. Circuit Court of Appeals in Verizon v. FCC said that the FCC’s 2010 justification -- for imposing net neutrality rules via its Section 706 authority, for the purpose of promoting broadband deployment and the “virtuous circle of innovation” that fuels Internet growth -- was reasonable and justified by the evidence.  

Given that the USTelecom v. FCC appellate challenge of the FCC’s Open Internet Order is so important to net neutrality, the FCC’s authority over the Internet, and broadband providers’ future, and given that Judge Tatel’s thinking is so important to the outcome of this case, wouldn’t it be important to better understand Judge Tatel’s personal reasoned public explanation of how courts adjudicate cases just like USTelecom v. FCC?

The central overriding question in the USTelecom v. FCC case challenging the FCC’s Open Internet Order may be: did the FCC read Judge Tatel right in that he de facto guided the FCC to pursue Title II to create the most solid legal foundation for net neutrality? That has been the public legal mantra of the FCC and the net neutrality movement for well over a year.

In the oral arguments last Friday before the D.C Circuit Court of Appeals, what did Judge David Tatel potentially signal about the Title II over 706 legal premise of the FCC’s case?