Eisenach Was Right – Net Neutrality Regulates the Entire Internet

by Mike Wendy on December 26, 2016

Passing Net Neutrality in a way that was not offensive to Silicon Valley entrepreneurs always depended on ensuring that the law “wouldn’t regulate the Internet.”

Here are a couple of examples, taken from when Julius Genachowski and his partisan Commissioners jammed Net Neutrality down the Internet’s throat in late 2010:

An FCC official / spokesman – “Net neutrality is about preventing anyone from regulating the Internet.”

(Then) Representative Ed Markey – “Net neutrality is not about government regulation of the Internet. It’s about fair rules of the road for the companies that now control access.”

(Then) Public Knowledge’s Gigi Sohn – “The commission is in no way regulating the Internet. It was merely attempting to return to a modest level of traditional authority needed to safeguard the rights of Internet users.”

Sure it doesn’t, guys.

I shot the short clip below at an October 2011 Hill briefing. In it, Jeff Eisenach lays out the clearest case ever why Net Neutrality regulates not just ISPs, but the entire Internet ecosystem.

Starting at 30-seconds into the clip, Eisenach notes:

“You know, we’re in a policy disequilibrium, right? So, if you read the Commission’s Net Neutrality Order, it says “We believe that we not only have the authority, but are obligated to ensure a free and open Internet ecosystem,” okay? And it defines the Internet ecosystem specifically as including content, applications and devices. The Commission is saying, “Okay, we’ve got the broadband thing; we’ve got that under control. But, you know, it’s really just part of the rest of this market, and we’ve got to make sure that that whole thing develops in a way that we’re happy with.

“So, what it’s really doing, I think, is it’s getting ready to assert authority over the whole operation. And implicitly, it’s doing that. I mean, the Net Neutrality Order is as binding on Apple as it is on Comcast, right? It is equally forceful in saying ‘Apple, you can’t do the following contract with Comcast,’ as it is in saying to Comcast ‘You can’t do the following contract with Apple.’” (Emphasis added)

Quick translation: By banning paid priority for ISPs (among other restrictions), potential non-ISP partners can’t “play” either, no matter how bad they want to (and they do). Consequently, the rule prohibits the behavior of more than solely ISPs. It regulates the behavior of the Internet’s edge, too, meaning the whole kit and caboodle is swept up by the law.

That is a far cry from the spin which falsely averred “The commission is in no way regulating the Internet.”

Eisenach and his partners on the FCC transition team have earned the moniker “Net Neutrality haters.” If telling the simple truth is “hateful,” get ready for the Trump FCC to be one angry place for the next eight years.

{ 10 comments… read them below or add one }

Arthur Rhodes December 27, 2016 at 3:56 pm

“Jeff is good at linking big theoretical ideas to policy, and he’s been good at making money doing that,” said Mr. Weller, the former Verizon economist. “He’s been good at moving from think tank to think tank and company to company, and I don’t think he’s ever lost money doing it.”

At least a dozen times between 2007 and 2016, Mr. Eisenach published studies — including one analysis later released under the American Enterprise Institute’s banner — that were underwritten by Verizon or a Verizon-supported trade association.

So this guy is basically your idol when it comes to paid shillery?

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Mike Wendy December 28, 2016 at 2:36 pm

His / our / the movement’s ideas matter, not your ad hominem.

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Arthur Rhodes December 28, 2016 at 7:11 pm

They matter to the regional monopolies who have a great thing going right now.

Yes, I know….. cue the lobbyist line: There is plenty of competition!

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Mike Wendy December 28, 2016 at 8:59 pm

Strike two, Arthur. Address the argument made. Your ad hominem doesn’t (again).

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Arthur Rhodes December 29, 2016 at 1:46 pm

Is this what they taught you at lobbyist boot camp?

If people question industry funded “research”, deflect and say ad hominem.

What you guys are doing is no different than the coca cola funded “research” paper that said drinking soda is ok.

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Michael Elling January 25, 2017 at 11:17 am

Thank goodness the world is flat argument was debunked a little over 5 centuries ago. Because I have faith that people’s ignorance of digital networks and network effects can be overcome, including yours, Eisenach’s and the net neutrality wonks.

That’s right, we’re living in a digital policy world where everyone is debating how things should work in a flat world. It’s time you learned the world is round.

First is to understand that value in networks is always concentrated at the core and top of the informational stack, while costs are borne mostly at the bottom and edge. Second, is that value grows geometrically, while costs are mostly linear; and with Moore’s law, mostly declining except where there is analog friction (rights of way, labor, govt/institutional restrictions, etc…). Third is that networks and networked ecosystems can all be modeled in a layered and bounded system. Learn that system. Eisenach clearly doesn’t understand that system when he conflates Apple and Comcast. Fourth is that without inter-actor settlements there are no price signals providing incentives and disincentives across all those layers and boundaries.

If you, Eisenach and others learn these things, Mike, then maybe everyone will be able to get out of the net neutrality debate morass and understand how we can achieve market driven, generative and sustainable digital network ecosystems. Let’s keep America Great Mike.

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Mike Wendy January 26, 2017 at 4:38 am

Michael, I appreciate your comment. However, aside from your (not so) subtle ad hominem, you underestimate the analog “analog friction,” and grossly misrepresent the present system, which bans inter-actor settlements (among other prohibitions). Consequently, there is no “market driven, generative and sustainable digital network ecosystem” under the current rules. “Learning” conscription / confiscation as a form of “market driven” economics doesn’t sound all that motivating, sustainable, or market-driven (but, that’s just me). It just sounds like stealing, with a more “artful,” articulated spin. Perhaps there’s a better way?

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Mike Wendy January 26, 2017 at 4:42 pm

In rereading your comment, are you suggesting that Net Neutrality / Title II is no longer appropriate (at least the way the last Commission imposed it), and we move on to a closer approximation (i.e., less ex ante regulation) of marketplace economics for the holistic ecosystem?

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Michael Elling January 26, 2017 at 10:21 pm

Yes to your latter comment.

It’s time for studies as to how we achieve universal service via market mechanisms. Neither side has them, nor are willing to or capable of delivering them.

I have always considered net neutrality to be a fiction at best, a farce at worst. That’s why I said it’s an unimportant debate. That said, the edge network monopolies do not “get” network effects either and the tremendous uplift that comes with equal access; to wit, the smartphone.

Much needs to be learned about the (networked) world being round.

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Mike Wendy January 27, 2017 at 4:36 pm

I tend to agree with you, but the analog friction is the stuff that keeps people employed (sadly, myopically). I think where there’s less of that, and market mechanisms can more ably take over (or face less regulatory distortion), then healthier ecosystem growth / deployment can occur. I’m not one to suggest that government intervention is never needed, but it should be more rarely and narrowly used to reach “our” goals. I don’t think the NN “answer” rises to that.

I would add that we’re not just fighting about deployment policy, but NN / “media reform” has added social baggage – it being a tool to wage a larger cultural battle against property and the speech attached to networked system of communications. Messy stuff.

Regardless, I think here in the US, Congress should act to clear this up (to the extent it can) – it is a dereliction of their duty not to do so. Cleaning up “Chevron Deference” would also be important.

Thanks for your comments.

Reply

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