I have a confession to make. Every time I read a new net neutrality squib advocating for Title II reclassification of Internet Service Providers (ISPs), I cannot help but think that the author is really Vizzini from the movie The Princess Bride. If you haven’t seen it, you are in for a treat; if you have you know it is one of the most quotable films (0) of all time. But to get back to my point, “[l]et me explain… no, there is too much. Let me sum up.”
The Federal Communications Commission has proposed a set of “net neutrality” rules that will not prohibit your ISP (e.g. Comcast and Verizon) from doing what it has done for some time now – enter into direct carriage contracts with application or content providers (e.g. Google and Netflix). These rules are not to be confused with the prior net neutrality rules that were struck down as outside the scope of the agency’s power (i.e. legally prohibited) or the FCC net neutrality rule before that which was likewise struck down.
However, some advocates don’t think these proposed rules go far enough. They say the rules will “permit” fast lanes and slow lanes on the Internet. Further, they argue the only way that small businesses can compete with Google is to reclassify ISPs the same way we classified Ma Bell – under Title II of the Communications Act (if you don’t know Ma Bell then you already can appreciate how outdated Title II is). The New York Times (1) editorial board raves that Title II will “prohibit phone and cable companies like Verizon and Comcast from engaging in unjust or unreasonable discrimination against content.”
That quote is exactly what I would expect from Vizzini. Vizzini, the self-loving, smug Sicilian, kidnaps the princess and is confounded when his perfect escape plan is marred by a masked man’s pursuit. When the masked man is able to gain on Vizzini in open water, Vizzini finds it “inconceivable.” When the masked man is able to follow Vizzini and his group up a high cliff, again Vizzini finds it “inconceivable.” Finally Vizinni’s companion Inigo turns to Vizinni and says “You keep using that word. I do not think it means what you think it means.”
So I say to you NYT, and others under the same misted view of Title II, “I do not think it means what you think it means.” Title II treats telephone services as a common carrier. It is not about content, it is about prices – namely the regulation of prices. The “unjust and unreasonable” language the NYT points to is about prices. For example, if the post office (the quintessential common carrier) offers shipping services to a beef producer, they have to make those services available to other beef producers. Title II does not speak to the instance where beef producers are not offered delivery services (or, by analogy, certain content not allowed), and it does not prohibit the beef producer from asking for special treatment of her beef – like refrigeration or overnight delivery.
Why does this matter? Because the same editorial states that the biggest problem with carriage contracts is that new businesses “will not be able to compete against established companies.” Again, Title II does not mean what you think it means because it will not prohibit such contracts. Yes, fast and slow lanes are permitted under Title II – or, to say it the correct way, they are not prohibited under Title II. Take the post office again: everyone knows that the postal service offers slow and various less slow delivery options. If even the post office can differentiate on quality of service, any common carrier can.
The conversation of whether differentiated services are consumer welfare enhancing is for another day, but if there is to be a real discussion, commentators should better understand what Title II is and is not.