The Digital Divide, Net Neutrality, and the Open Internet

The digital divide has been a significant policy concern in the U.S. since 1996, which is commonly viewed as the time when the internet became a permanent social and commercial reality. It was that year that Congress and President Bill Clinton passed the Telecommunications Act of 1996. Section 706 of the law specifically addresses the potential digital divide, stating, “the [Federal Communications Commission; FCC] and each State commission with regulatory jurisdiction over telecommunications services shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.” The law further states that if, within 30 months of the enactment, a determination was made that broadband internet was not being deployed in a “reasonable and timely” fashion, the FCC would take “immediate action” to remove barriers to infrastructure investment “by promoting competition in the telecommunications market.”

While Section 706 was a laudable effort to ensure equal access to broadband, it has several weaknesses. First, what does “encourage” mean in this context? If the FCC’s responsibility is limited to encouraging deployment, which party, if any, is ultimately accountable for deployment success or failure? Second, the phrase “reasonable and timely” is ambiguous. More than 20 years after the passing of the act, according to a 2016 FCC report, 39% of residents in rural areas lack access to broadband. Have we not yet reached the “reasonable and timely” threshold? Third, it is difficult to fathom how, given the language of the act, the FCC could promote competition in the telecommunications market.

In the telecommunications market, today and at the time the act was passed, the infrastructure required for broadband internet access is the exclusive property of the ISPs. In other words, Charter, Comcast, Verizon, etc., are not simply ISPs, but they own the coaxial and fiber-optic cable infrastructure by which they deliver data to consumers. This means that any new entrant to the market would need to build its own broadband infrastructure. Would the FCC secure public funding for new infrastructure to encourage competition? Would it force ISPs to open existing infrastructure to leasing or sharing arrangements, thereby providing an opening for new entrants? The statute, as it is written, does not empower the FCC to take either of these actions.

These weaknesses resulted in a debate that has gone on for more than 20 years, primarily between the FCC and ISPs, which have conducted their businesses in what can be tersely described as a profit-centric and shareholder-value-focused manner. This has included bandwidth throttling, search redirection, encryption stripping, ad insertion, super cookie insertion, and blocking aimed at maximizing revenue to the detriment of the free movement of information. In response, the FCC in 2010 and again in 2015 issued orders to prevent these types of practices and protect the open internet or Net Neutrality.

In 2014, President Barack Obama asked the FCC to reclassify ISPs as “common carriers” as defined under Title II of the Telecommunications Act of 1934. This was an attempt, long-championed by Net Neutrality advocates, to overcome the previously mentioned weaknesses in Section 706. Reclassification as common carriers would mean that ISPs would have to lease their infrastructure to competitors. This would introduce more competition into the ISP market. It would also mean that ISPs would no longer have the power to interfere with the data transmitted across the network.

The challenge Obama faced, and that Title II reclassification continues to face, is the argument from the ISPs that exclusivity is the primary motivation behind infrastructure investment. In fact, they argue that Net Neutrality and open internet rules also inhibit investment, since such orders hinder their ability to extract the maximum value from their infrastructure investments. However, looking at the historical development of the internet, there is an obvious solution: It was created in 1969 by the U.S. Department of Defense and built by government funding. If we ever want to see a truly open internet accessible to all, then we, as a society, will need to invest in it.   

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