Italian historian Giambattista Vico pioneered the notion of the circles of history. In the history of net neutrality, the circles have been short, predictable and avoidable: the leitmotif has been that of Internet Service Providers (“ISPs”) inflicting injury upon themselves, through a succession of court defeats, half-defeats and half-victories, where the half-victories have been more damaging than the defeats. Even King Pyrrhus would have blanched at the devastation.
The upshot is that today ISPs may not be able to engage in any zero rating—the practice of exempting online video from their customers’ data caps—even though certain zero rating arrangements may have been acceptable under the 2014 net neutrality rules, enacted under the supposedly dreaded Title II—the ISPs’ boogeyman. Suppose you are on your commuter train, and you really want to catch the final moments of Nicole Kidman’s superb acting in The Undoing. If you have reached your data cap, you will miss them, be greeted with a strangely distorted version of Ms. Kidman’s face, or perhaps have to pay extra to upgrade your plan.
Boy, I bet Verizon regrets having taken the net neutrality rules to court. So joked then Chairman Tom Wheeler at the 2015 FCBA Chairman’s dinner. It was a safe bet. Here are the cliff notes of the net neutrality litigation history: in 2010, the FCC enacts a ban on blocking, throttling, and discrimination, without classifying broadband access as a telecommunications service. Verizon appeals, challenging, first and foremost, the Commission’s authority to make any net neutrality rules, and second, the rules themselves. Verizon loses on authority, but wins on the rules—they look too much like telecommunications service rules, the court says. The consequence, unintended by Verizon, is not that unpredictable: in 2015, the FCC uses the authority affirmed by the Court, and also goes ahead and classifies the service as a telecommunications service, leaving it free to impose telecommunications-service-like rules. It enacts bans on blocking, throttling, and pay-to-play, as well as a general conduct rule. Crucially, under the general conduct rule, the practice of zero rating is not per se unlawful. Rather, it is subject to a case-by-case analysis. The ISPs appeal again, and lose resoundingly in 2016.
In comes the Trump administration, with abolition of the substantive net neutrality rules at the top of the new FCC’s agenda. The FCC does so. A wide coalition of pro-net neutrality parties sues, and the DC Circuit rules on October 1, 2019. The ISPs trumpet a win. Well, not quite. The court remands part of the FCC’s action, including on the ground that the FCC failed to do justice to the paramount factor of public safety. As for the rest of the FCC’s action, the court does not like it either: two of the three judges believe it to be wrong, too, but they do not throw it out only because they believe their hands are tied by the Supreme Court’s decision in Brand X.
In comes California, one of a number of states to step into the void left by the federal abolition of net neutrality. California makes its own net neutrality rules. They look like the abolished 2015 rules with one important difference: zero rating is no longer subject to a case-by-case evaluation. It is restricted more heavily.
A federal district court (for the Eastern District of California) denies the ISPs’ motion for a stay. And so we come to AT&T’s decision to end zero rating across the country.
What was that zero rating plan? AT&T’s subscribers could watch AT&T video programming packages such as HBO Max, DIRECTV Now, or AT&T Now on their phone or tablet using their cellular packages, without those data counting against their data caps. That particular program would have probably been ruled unlawful even under the case-by-case standard of the previous rules. The Wheeler FCC had started investigating it, and had found that, when online video distributors that were not named AT&T asked to be included in the plan, AT&T had asked them to pay AT&T more than subscribers paid for the video package in the first place. This sounded like, and was, an undiplomatic way of saying no, we will not zero-rate for anyone other than ourselves. But AT&T could have restructured that program by making it genuinely open to all online video distributors. Under the 2014 rules, such a plan may have passed muster. Consumers would have been able to choose a service—Hulu, Netflix, Sling, as well as AT&T’s packages, without AT&T’s heavy thumb on the scale favoring its own product.
What will the FCC do next? Net neutrality was not always a narrowly partisan issue. Both the Powell and Martin FCCs, especially the latter, took important steps in the direction of protecting consumers and online providers from behavior enabled by the bottleneck control of the ISPs over last-mile facilities. Justice Scalia was another sympathetic conservative voice. Chairwoman Rosenworcel will certainly see past the ping pong of dogmatism that the Pai FCC commenced, cheered on by the ISP community. But the ISPs’ litigation strategy to date unnecessarily maligns the ISP community itself: many of the ISPs’ deeds in the area of net neutrality have been better than some of their words. Over the last ten years, it has become clear that compliance with reasonable net neutrality rules need not affect the ISPs’ bottom line, while protecting the public and the so-called “edge” of the Internet, where the edge of creativity has continued to reside. And so, the ISPs may consider not just recalibrating their strategy, but jettisoning it and starting afresh, lest the next net neutrality rules result in what they will decry as an even hotter fire.