Marvin Ammori

I just got off the phone with a law scholar whose research focuses on innovation. He told me that, on his desk, at the top of his short stack of new books to read, is Barbara van Schewick’s celebrated new book, Internet Architecture and Innovation. I wasn’t very surprised: it seems everyone interested in Internet law and policy or innovation is talking about the book. Harvard’s Larry Lessig recommended it in the New York Times; Cardozo’s Susan Crawford, formerly a top White House advisor, recommended it in an op-ed; Brad Burnham, a venture capitalist who was an early investor in Twitter and Flikr, praised it on his blog; and MIT engineering professor David Reed, and co-author of the original end-to-end arguments, endorses the book on its jacket.

So I wanted to flag this book even for those among you who tend not to read the latest book on Internet policy, but who would be interested more broadly in an important book on law, economics, architecture, and innovation.

I have already posted a longish review of the book for a general audience, on my (only sometimes-updated) personal blog. Mainly I explain why general readers should not be scared of an academic book–something about which I needn’t worry for law professors and law students.

The framework and arguments of the book have broader applicability to legal thinking, even beyond Internet issues.  

First, it’s the best example of a “law and architecture” book.  A few years ago, Larry Lessig published a paper called “The New Chicago School.” The paper (playfully) built on the “Chicago School,” a school of legal analysis grounded in economics. Lessig’s “new” school proposed four categories of constraints on human behavior–law, economics, norms, and architecture. He developed the importance of the last, architecture, in his seminal book about software and the Internet, called Code. By architectural constraints, Lessig meant “the world as I find it”: walls are a constraint on snooping, the weight of large objects is a constraint on stealing. (Of course, economics is also at play; if I had enough money, in theory, I could buy the wall and tear it down, or hire strong thieves. But for most of us, that’s not a realistic option.) He discussed how markets and law interact with, and shape, online architecture to yield particular constraints on individuals, or to enable particular liberties. For the Internet, architecture is even more malleable than in the real world; you can add or remove a “wall” to affect snooping with just a few key strokes. We can architect “cyberspace” (in the language of 1999) or the technologies of the Internet to promote certain social values, like free speech, innovation, or privacy. Or we can architect the technologies to undermine those values.

Barbara’s book is the best analysis built on an analysis of architecture, economics, and law. She analyzes how the original architecture of the Internet–built according to particular, open design principles–promotes one particular, important value, innovation.

Second, the book is interdisciplinary of necessity, incorporating deep insights from computer engineering (Barbara has a phd in computer science), law (she is a law professor at Stanford), management science, and economics.  Since she is expert in all these areas, she can see and make connections that other scholars, focused in one discipline, will overlook. And since she is writing for so many different audiences, her book is fascinatingly informative for all of us who wondered how the Internet actually works.

Finally, her economic analysis of innovation is among the most interesting law and economics analysis I’ve come across. It rests on the leading research in innovation economics and succeeds in disproving several economic arguments previously considered conventional wisdom to some economists, especially those discussing telecommunications. Her framework clarifies thinking on the one monopoly rent theory as well as assertions on where competition should and should not lead to optimal public interest outcomes–using the example of competition among cable and phone companies, which, she proves, should not ensure an open Internet, despite industry arguments to the contrary.

And the website for her book is here.

I usually post my media appearances here. I spoke with David Louie of ABC-7 in San Francisco yesterday, video-Skyping from Nebraska. The segment is well-done, and focuses on Silicon Valley.

There’s a new book out on Internet policy that is essential reading for anyone interested in Internet policy—and probably for anyone interested in the law, economics, technology, or start-ups. I recommend it to everyone. It’s that good.

Barbara van Schewick’s new book, “Internet Architecture and Innovation,” is one of the very few books in my field in the same league as Larry Lessig’s Code, in 2000, and Yochai Benkler’s Wealth of Networks, in 2006, in terms of its originality, depth, and importance to Internet policy and other disciplines. I expect the book to affect how people think about the Internet; about the interactions between law and technical architectures in all areas of law; about entrepreneurship in general. I also think her insights on innovation economics, which strike me as far more persuasive than lawyers’ usual assumptions, should influence “law and economics” thinking for the better.

Books this good don’t come along every day—or even every year–and I’m already late to the praise-party. Lessig, a Harvard Law Professor, sang its praises on the book jacket and in the New York Times. MIT computer scientist David Reed has joined in, and so has venture capitalist and Twitter investor Brad Burnham. There’s a reason leading legal minds, technologists, and investors are raving about a book: really, it’s that good.

For those who want to skip the review and go straight to the source, here’s the Amazon link and the book’s site, NetArchitecture.org.

The remainder of this post explains why this book is important and eye-opening for everyone who reads books, not only for those who (like me) have spent their careers in Internet policy.

The Author

Barbara van Schewick is well-known to Internet lawyers as a brilliant, extremely thorough lawyer. And engineer. And expert on innovation economics. She was (with Yale’s Jack Balkin and Harvard’s Charles Nesson) one of three academics joining consumer groups to prompt the FCC’s 2008 investigation of Comcast interferinge with peer-to-peer technologies like BitTorrent. The FCC’s 2009 open Internet proposal, in its background policy discussion, cites her scholarly work far more than any other scholar. Her law review articles advance novel, seminal critiques of what economists considered “conventional wisdom” on the one-monopoly profit principle and the role of competition in ensuring open technology platforms. This scholarship was influential not only in the US, but also in Europe and Canada’s recent Internet policy proceeding.

The Argument

The book addresses how–specifically–the Internet’s original architecture has fostered tremendous innovation in consumer and business software and therefore economic growth. The relationship between innovation and the Internet’s architecture has been central to government policy debates around the world–as well as to the business plans of entrepreneurs and investors. While others have asserted and guessed that the Internet’s architecture fosters economic innovation, she puts these assertions on solid theoretical and empirical ground, incorporating insights from engineering, management science, behavioral economics, real options theory, network economics, evolutionary economics, and legal policy. And you don’t have to know anything about these areas in advance, as she doesn’t expect the reader to be expert in one these fields. (Almost nobody could be expert in all of them.)

Each section of the book is valuable on its own terms. She begins with a straightforward technical description of the Internet that is helpful for all of us who’ve wondered how our email works. She then develops a framework for analyzing the relationship between innovation and constraints imposed by a technological architecture. She does this with what some law professors would call a “law and economics” approach. (In Wealth of Networks, Benkler also uses these economic tools for his purposes.) The upshot of her analysis is that innovation benefits from more innovators. Because the value of a particular innovation is often impossible to predict in advance, innovation benefits from many innovators, all with different experiences and worldviews, experimenting and constantly adapting. Other architectures would lead to fewer innovators and less innovation–particularly architectures that increase costs to innovators, and so eliminate much of the accidental and iterative innovation we have experienced on the Internet.

Setting out this framework for thinking about issues, she then applies the framework to the Internet, contrasting its original architecture, where anyone could innovate with few initial expenses, and without seeking permission from any government or central office, with a now-possible architecture that would require greater investment and force innovators to negotiate with the network-infrastructure-owners to bring innovative ideas to market.

She ends with a discussion of policy, identifying the features of the Internet’s architecture that we must preserve to ensure robust innovation, and discussing the proper role of government policy in preserving architectural features necessary for innovation.

My Favorite Part

This is one of those rare books where every chapter is full of novel and important ideas. But I’ll tell you about my very favorite part. In the eighth chapter, beginning with “The Value of Many Innovators,” van Schewick presents the stories of how several major technologies were born: Google, Flickr, EBay, 37Signals, Twitter, and even the World Wide Web, email, and web-based email. I had always suspected that the “accidental” beginnings and unexpected successes of these technologies were a series flukes, one fluke after another. Rather, van Schewick explains, it’s a pattern. Her models actually predict the pattern accurately–unlike other academic models like the efficient market hypothesis and theories on valuing derivatives. These entrepreneurial stories (or case studies, to academics) are eye-opening; they’re also counter-intuitive unless you consider the management science and evolutionary economics van Schewick applies to analyze them. So if you wondered what the invention of Flickr, Google, Twitter, and the World Wide Web had in common, van Schewick answers the question.

And … the Book’s Intimidation Factor

Most of you are not techies. Like me, you may have studied the humanities or law. I consider you my people.

I know some of you, among my people, will be wrongly intimidated by a book titled simply “Internet Architecture and Innovation.” (Although this is a far catchier title than my favorite article’s title: “Coercion and Distribution in a Supposedly Non-Coercive State.”)

But don’t be so intimidated by the title that you miss out on van Schewick’s important ideas.

For the terminally intimidated, I recommend beginning with van Schewick’s short, concrete, straight-forward testimony to governments (see here and here and here) and an amicus brief.

For others, I will list the things-that-I-know-scare-you-but-should-not.

1. Her name. “van Schewick.” What an intimidating, scary German name, worthy of a Dr. Strangelove scene or an Austin Powers movie. I know. But no worries. Despite her meticulous thoroughness, her  German accent, and her “van”–her academic writing is gentle and clear. It’s not turgid like those H-Germans, Habermas or Heidegger. In fact, she knows her book “crosses a number of disciplines,” like engineering, economics, and law and had consciously aimed to make it “accessible to all” of us who have different backgrounds. There are zero equations in the text. And equations can be scary to lawyers and law students.

2. Equations. Nope. No need to worry. Not one of those books.

3. The difficult concepts. van Schewick is addressing difficult questions. She is not addressing fluff. But that’s a strength. She cuts through the complexity to put her finger on the key issues, to address all counterarguments and angles, and to make sense of it for the reader.

4. Length. It is almost 400 pages. But van Schewick includes several shortcuts–like three charts of page references as guides for reading the book to  answer particular questions. (Policymakers will likely rely on those charts.) The way I look at it: the book itself is a short-cut.  It may take one or two weeks to read. To get a similar grasp of these issues, I would otherwise have had to spend ten long years locked in a library, reading and analyzing the global literature on Internet engineering, economics and innovation, legal policy, and business-managerial decision-making, all while speaking often to the top thinkers worldwide in all these areas and eating brain foods to increase my mental ability to keep up with the task. But, luckily for me, van Schewick spent a decade exploring all these issues, apparently locked in the architectural economist’s equivalent of the Room of Requirement, surrounded by books, some full of equations, and top experts.

5. Abstraction. The book at times sets forth general frameworks and arguments that go beyond, and therefore abstract from, particular stories and economic conditions. Very abstract models can be hard to wrap the mind around. But van Schewick’s models are not too abstract. Plus, a model for understanding complexity is the point of the book (and of most non-fiction books I have read, from The Tipping Point and Outliers to Freakanomics and The Origin of the Species). Such books are meant to make broader sense of particular phenomena.

So be not afraid.

And check out the book (on Amazon or NetArchitecture.org). You’ll see for yourself why so many of us are talking about the book.

[Note on digital version: MIT Press is not making the digital version available for three years.]

Today’s Room for Debate focused on network neutrality and the Verizon/Google pact.

The line-up for the debate was an all-star team of constitutional and technology lawyers including Larry Lessig, Tim Wu, and Jon Zittrain. Add to that venture investor Brad Burnham and public interest lawyer Gigi Sohn. (Others in the debate disagreed with net neutrality, and made interesting arguments, worth reading.)

I was happy to contribute a piece.  Here it is.

A lot of people have been discussing the Verizon-Google pact, including venture capitalists (on NYT’s Room for Debate) and Silicon Valley companies. Most people agree: Google does evil, calls it net neutrality.

Last week I wrote up a guide of the FCC negotiations on net neutrality, setting out all the loopholes, and noting that the carriers needed only one loophole to kill an open Internet. Verizon and Google announced their pact two days ago. Rather than including one loophole, they went down the checklist and included just about every loophole they could.

Maybe the most ridiculous one–which has received almost no attention–is something I didn’t mention last week. It’s the liability limit. The maximum fine for a violation, after all the loopholes are met, is $2 million dollars.

Limiting liability comes straight from the corporate lobbyists’ playbook to get away with whatever they want.

Let’s say you want to engage in off-shore drilling. There’s a slight chance of, um, a huge environmental disaster in the Gulf causing billions in damage, requiring billions for clean-up. No worries, says BP. Limit liability for clean up to only $75 million.

This liability limit has become a symbol of corporate greed in passing the risk of disaster to the US government and US citizens.

Yet, the BP limit is almost 40 times larger than the Google/Verizon pact.

You have to hand it to Google. Going from “Don’t Be Evil” to “Greedier than BP” overnight is a pretty impressive trick.

Let’s play this out a little.

Vuze. When Comcast blocked peer-to-peer technologies, a company called Vuze filed a petition with the FCC. Venture capitalists had invested over 20 million in Vuze. Under the Verizon-Google Pact, Comcast could violate net neutrality, after all the procedural hurdles and loopholes tying Vuze’s lawyers (and its funders) in agency litigation, Comcast would only have to pay $2 million.

Facebook. Google competes with Facebook, having a social network that was once popular in Brazil. Let’s say, through a shady deal between Google and Verizon, and no disclosure, a pure flagrant violation of net neutrality results in Facebook operating with annoying glitches. Users are frustrated. Facebook loses market share. Facebook presses its case, tries to prove Verizon is interfering. After months of litigation, Facebook manages to convince the FCC–though the FCC is usually captured by telco companies like Verizon. So the victory is great news. In fact, Facebook even gets an injunction–going forward, Verizon can’t engage in the same activity.

But what does Facebook get for months of lost market share–some of which may not return–and months of litigation? Verizon has to pay 2 million dollars.

Verizon makes 2 million dollars in revenue every 10 minutes. Verizon makes 10 million in profit every 3 hours.

Facebook, while still private, is likely valued at far over a billion dollars. It is so much cheaper for Google to pay off Verizon and mess with Facebook than to invest in a better social network, or something else useful for society. (I am assuming social networks are more useful than blocking technologies and lobbyists.)

I know: why would Verizon and Google do something so egregious? One goal of law–as we learn in law school from the first day of contracts–is to deter bad behavior. If the punishment for bank robbery was $10, we’d have more bank robberies. Google and Verizon would mess with Facebook because there is no penalty. Oliver Wendell Holmes used the example of the “bad man,” explaining we cannot assume people will act well without any penalty. Verizon and Google have a duty to their shareholders to maximize profit. Their proposal essentially says that cheating on your taxes lets you keep the taxes, if you pay 5 bucks. Of course their shareholders will expect cheating; the law makes it profitable.

Maybe that’s why Facebook opposes the pact. The pact is full of loopholes, and then, in the $2 million dollar fine, a trap door.

The same works for any other company. Amazon has billions in revenue. While interrupting Amazon, even egregiously, without disclosure, Verizon can direct consumers to its own e-commerce site. For Verizon, just three hours of profits is enough to take billions in market share from Amazon. What would stop them? This is easy money. Easier than innovating.

Amazon too opposes the pact.

Let’s say you’re a venture capitalist.  You know, one of the ones who supports net neutrality. Like all of these guys. You make an investment in a software company you think could hit big. You invest 1 to 5 million, if not more, depending on the round and nature of financing.

For three hours of profit, or a mere 2 million fine, Verizon or AT&T or Comcast can run roughshod over your company. You can bring a case–but only for wireline interference, not wireless (the biggest loophole). You bring your case to forums favoring the carriers, to be honest about the FCC. You hire lawyers who can address every loophole, who likely are specialized in the FCC.  And then, after all that, if you win (unlikely), Verizon pays the FCC a measly 2 million…

You’re better off just bribing Verizon to stop blocking you. Or paying for priority on the new, different Internet with paid priority, that is part of the pact.

But I guess, that’s probably the point. For Verizon and Google, you having to pay to play is a “feature” not a “bug” of the 2 million dollar fine. It gives them leverage.

We all know and love Mark Tushnet. Extraordinarily influential scholar. Towering intellect. Amazing teacher. Balkinization blogger. And an extremely nice and generous person.

So I wanted you to know he recently sat for an interview with the law students of Nebraska’s American Constitution Society, and the podcast is available here. It’s a great interview, especially relevant for law students and scholars, but also for a general audience.

Professor Tushnet discusses how to interpret the constitution, the role of judicial review in explicating and enforcing constitutions, the interaction between politics and the judiciary, his personal and professional thoughts on Elena Kagan, the importance recent president have placed on judicial appointments, and whether judicial experience matters for a Supreme Court nominee.

The national ACS organization also posts its own video and audio podcasts here. Discussions of UNL’s podcast series are available here and here.

Google has issued something like a denial, claiming that the New York Times (alone) misreported a story found in dozens of news reports: that Google and Verizon had hammered out a deal on network neutrality.

“The New York Times is quite simply wrong,” a Google spokeswoman said in an e-mail. “We have not had any conversations with Verizon about paying for carriage of Google traffic. …”

Verizon also denied it.

“… As we said in our earlier FCC filing, our goal is an Internet policy framework … To suggest this is a business arrangement between our companies is entirely incorrect.”

Ah… no commercial or business arrangement, just a policy framework.

So it’s like Walmart and Phillip Morris (now Atria) cutting a deal and then saying:

“No no, we have not made a deal to sell cigarettes to 9 years olds. All we’ve done is agree to try to rewrite the laws to ensure we can sell cigarettes to 9 year olds. All assertions to the contrary–in the New York Times especially– are shockingly, hugely, super, super, super false.”

Plus, that is exactly what the Times said: an agreement on a policy framework.  The Times calls the bluff: ““Google’s comment about The New York Times story refutes something The Times story didn’t say.”

Yesterday, Bloomberg reported that Verizon and Google have made a deal on network neutrality policy they’d like to see in America. That deal (surprise!) is Google can get special privileges on Verizon’s network. The Huffington Post splash page mocks Google’s slogan: “Don’t Be Evil” with an asterisk. Asterisk: “unless it’s profitable.” Josh Silver called it the end of the Internet as we know it.

I want to explain why I think this deal matters, and why it doesn’t. And it might not be for the reasons you think.

The Deal

Net neutrality is simply a proposed rule forbidding Verizon, AT&T, Comcast and other ISPs from engaging in special deals to block or favor certain content on the Internet; it’s to keep the Internet an open general purpose network equally accessed by all innovators, speakers, and businesses. Like it is today. The carriers want to turn it into a controlled medium.

Among other things, according to the New York Times, the deal essentially says that Verizon will be able to cut special deals with any company–like, um, one called Google–to prioritize that company’s traffic, giving that company an advantage online over any other content online. Google decided it could make more money getting special–or even exclusive–treatment on the Verizon network because few of their competitors could afford to get the same treatment.

(Note: Google is denying the Times report through a Tweet. I’ll spell out the implications assuming the Times is right.)

Business Examples

So, as a business matter, let’s say you use a Verizon mobile wireless card (an EVDO card) for your laptop (in addition to having a a Verizon mobile computer).

Google’s products can get priority on your laptop based on commercial deals.

• Google’s Youtube may get Verizon-special treatment denied any competing video site, from Blip.tv to Netflix. (This is the example given by the New York Times today.)
• Google’s Orkut, a social network once known only for being big in Brazil, gets better treatment than Facebook. 
• Google’s Blogger–a blogging technology–gets the Verizon-special preference denied WordPress.
• Google’s Chrome browser happens to work a lot better than Internet Explorer and Mozilla Firefox.
• Google’s GChat video gets special treatment compared to video phone services like Video Skype.
• Google’s Gmail, an email service, gets better treatment than Hotmail or Yahoo!
• Google Books gets special treatment denied any competitors.
• Google’s domain name service gets preferred treatment denied competitors like OpenDNS, which could even be blocked under the deal.
• Google’s advertising network can get Verizon network priorities.
• Google’s Froogle site gets special treatment denied everything from Groupon to Ebay to all those random “deal of the day” sites.
• Google Voice could get special treatment compared with those other online phone services.
• Google’s Picasa could get special treatment over Flikr, for photo albums.
• Google’s Buzz could somehow get special treatment over Twitter.
• Even Google Wave could get priority… Really.

So, as a business matter, the deal is important.  And, yes, it may be the end of the Internet as we know it, if the FCC blessed such deals. The deal yesterday announces that Verizon and Google open the door to all of this.

Lobbying Not Policy

This deal matters for lobbying. Essentially the business partners have agreed on how their DC lobbyists will approach a certain important issue on which they once disagreed. In some ways, it is like AIG and Goldman aligning their lobbying. Or maybe a few large fisheries joining forces with BP’s lobbyists. Or a medical society joining with the insurance companies.

Hundreds of organizations have fought for net neutrality, and though Google was honestly one of my favorite allies (a lot of talented and nice people work in the DC shop), they were only one player among very many.

And Google and Verizon do not decide how to regulate themselves. On paper, at least (and that paper is the Constitution), we have a government of the people. We have an agency, the Federal Communications Commission, charged with protecting the public interest and that has declared a policy of ensuring an open Internet for all consumers and innovators, for all businesses from Expedia to Mint.com, for all speakers from bloggers to Twitter-celebrities to emailing teens and grandmas.

How this Deal Matters for Policy

This deal only proves that the biggest corporations have incentives to disadvantage innovators–which will harm our economic growth, job creation, and global competitiveness.  It only proves that the threat to network neutrality in the market is real.  It only proves that network neutrality rules are necessary. And it only proves that the FCC’s negotiation-talks, which I discussed yesterday, receive little respect from the corporations engaged in them (maybe for good reason).

The deal does not indicate that US government policy has been decided. Especially when the Google-Verizon deal contradicts the policy position of a few people whom our Constitutional structure does imbue with authority over government-policy: President Obama (enjoy this speech at Google headquarters where he promised to take a backseat to no one on net neutrality) and the FCC Chair.  Because those two strongly support network neutrality, you’d expect policy to serve all Americans. Unless I should put an asterisk after their names as well.

A lot of people are discussing the FCC’s meetings on net neutrality. Many are discussing the process–“secret,” “backdoor,” “corporate behemoths,” or merely “stakeholder” discussions, depending on your point of view (from outside the room, or from inside). Others, noting the bizarreness of the whole process, are providing interesting psychoanalysis of the Chairman and his Chief of Staff. Though some have discussed substance, I thought it might be helpful to lay out the likely points of contention in these discussions and provide a guide for understanding, in advance, winners and losers in the negotiation.

The details probably mean more to me than most people, as I’m a telecom law professor who has spent several years litigating network neutrality issues.  (I am probably best known for being the lead lawyer on the net neutrality case against Comcast when Comcast blocked peer-to-peer technologies, and for arguing the appeal on behalf of groups supporting the FCC, working with many in the DC and academic community.) Assuming (for your sake) that you have not spent years steeping your mind in the details of net neutrality, this guide may help.

Why the details of a net neutrality deal will be confusing to the average person.

The details of the deal–like many laws and agency rules–will seem almost deliberately hard to understand. These details will be technical legal jargon penned by lobbyists–and a Chairman–who may not want the deal to be easily understood by the public. Insiders are speculating that the Chairman will endorse a hollow deal (if he doesn’t run out the clock), and then try to sell the deal as a grand victory for consumers. But that’s like speculating the sun will rise in the East. That is a standard political move; a politician names something the “Healthy Forest Initiative” or the “Clear Skies Initiative” or the “Open Internet Rule” whether or not the real legal details further your promised goal.

Whether or not the Chairman has a Hollywood mentality, he will claim any deal on his watch is a huge victory for the public interest. The Chairman is even rumored to be courting any nonprofit public interest group to to provide political cover for his deal, even if that nonprofit is significantly funded by interested corporations and never even joined the main pro-net-neutrality coalitions, SavetheInternet.com and the Open Internet Coalition, which have existed since 2006. In addition, of course, he has placed in the room favoring net neutrality not the leading nonprofit group long fighting for net neutrality (Free Press, who leads the SavetheInternet.com coalition and led the Comcast case, where I once worked), but Google, which has a commercial relationship with Verizon Wireless and is therefore likely willing to (literally) “sell out” the public on some issues of wireless net neutrality.

For those of you left who believe that a politician would never lie to you, keep in mind than many believe this FCC Chairman, Julius Genachowski, has followed the well-worn politician strategy–use legalistic details to cave to industry but fool the public–when he buckled to AT&T pressure and issued his “compromise,” loophole-riddled net neutrality proposal last October and then more recently, when he was leaning towards building net neutrality on hollow jurisdiction on jurisdiction before the Democratic base revolted and Genachowski announced the Third Way on Title II. Meanwhile, the same Chairman has repeatedly proclaimed his support for meaningful net neutrality, including this week through his press secretary, and serves under a President who promised to take a back seat to no one on the issue .

It is only well-positioned lobbyists that will know, from the details, if the Chairman is telling the truth when proclaiming a consumer victory.

But you should also know, even if you cannot afford a white shoe lobbyist.

The carriers’ bottom line in any negotiation: loopholes.

Having spent many years dealing with carriers, and reading about the negotiations, it’s clear to me that the carriers’ bottom line has not changed in five years and is very simple: they want a loophole. Of course.

Better yet, they want several loopholes, and they want to add a way to make enforcement of the deal impossible–essentially to build the loopholes on a trapdoor.

They only need one loophole, or one trapdoor, to gut the rule. So let’s say Chairman Genachowski says, in other words, “The carriers wanted 6 loopholes, but they only got one! What a great compromise.” That is not a “compromise” but a loss. It is not net neutrality but would instead authorize net neutrality violations through a loophole. The carriers need only one.

The pro-net-neutrality position is to stamp out the loopholes and ensure an open Internet. I noticed that another professor, Barbara van Schewick of Stanford, has provided a detailed analysis of some pro-net neutrality details in her recent ex parte letter. (And her recent book.) Derek Turner has done the same, to a lesser extent so far.

Eliminating the Open Internet With a Legal Dictionary

Net neutrality proponents want to prohibit ISPs like Verizon, Comcast, and AT&T from (1) blocking or discriminating for or against traffic (2) on the Internet, (3) whether consumers access the Internet through cable and DSL or wireless connections, (4) unless it is reasonable network management to ensure the operation of a nondiscriminatory network. And these advocates want (T1) a legal process that even start-ups could use, with clear rules and expedited procedures built on (T2) solid jurisdictional footing.

The carriers only need one loophole (1-4: discrimination, specialized non-Internet services, wireless, reasonable network management) or one trapdoor (T1-T2: ineffective process or lack of jurisdiction) to win. You can bet they are angling for all of them, and may “concede” one of them, to reach the goal they have spent millions trying to reach: no net neutrality. They have not suddenly found religion.

Loopholes.

1. Blocking or discriminating. The carriers may concede “no blocking,” a minor limitation when you can degrade or discriminate, and would want to define unlawful discrimination very narrowly, enabling them to engage in all the discrimination they seek. First, they want to define discriminatory to include only antitrust violations or “harm to the consumer” likely amounting to antitrust harm.  But, because antitrust law does not take into account democratic speech concerns and has extremely weak standards imposed by conservative courts, antitrust enforcement will not ensure an open Internet. Net neutrality advocates have therefore always argued against mere antitrust rules.  Second, they want the right to engage in what they call “reasonable” discrimination, and claim that charging websites for priority (aka “paid priority“) is not discrimination. For the past 5 years, net neutrality opponents opposed paid priority (using analogies to a fast lane and a toll booth) and the President has twice affirmed his opposition to paid priority. Net neutrality proponents have argued that discrimination should be prohibited, and that paid priority is an easy case that can be prohibited in advance.
2. Managed Services. As net neutrality is meant to keep “the Internet” open and free, the carriers have proposed the idea of new “non-Internet” services called specialized or managed services that enable them to end-run around net neutrality rules without oversight. It is unclear to me what the carriers believe these services to be, as different carriers say different things at different times. The whole point of this “specialized services” bucket is for carriers to take capacity on the same exact pipe that provides Internet access and allocate that capacity to pay-services where they can cut paid priority deals. This is an obvious, potential, end-run around the net neutrality rule, where wealthy content-providers (and those content-providers owned by the carriers themselves) can get special access to consumers that Internet start-ups and the rest of us would lack. Also, carriers will likely have incentives to allocate more and more capacity to these services at the expense of investing in Internet capacity–even though American networks have capacity and speeds trailing far far behind global leaders. Expect carriers to argue that the FCC currently lacks all authority over these new specialized services and that few or no rules should apply to the services. At best, expect carriers to argue that general antitrust law should apply, enforceable through the Department of Justice and Federal Trade Commission. Carriers have long argued this point. As discussed above, antitrust enforcement simply cannot ensure an open Internet, and net neutrality advocates have long opposed the notion.
3. Wireless. The carriers want to exempt wireless.  Even though the National Broadband Plan claims wireless is the future of broadband (side-stepping an inconvenient policy issue), and though the Chairman is seeking 500 MHz of spectrum for broadband and previously proposed applying the same net neutrality policy to wireless connections, and though AT&T is reportedly asking to discriminate against Youtube, you can expect the carriers to argue no rules should apply to wireless. They always make this argument, and–in light of the Chairman’s support of more spectrum for wireless broadband–you would think the argument should fall on deaf ears. The carriers claim that disclosure is enough; the public should have the right to know which applications and sites a carrier is blocking. Net neutrality advocates have always argued mere disclosure is not enough because the wireless market is not competitive enough, because of switching costs, and because the market and disclosure will not be effective to ensure wireless access to an open Internet.
4. Reasonable network management. In the Free Press-Comcast case before the FCC, Comcast argued that it could discriminate against BitTorrent so long as it could declare an activity to be “reasonable network management.” So if “discrimination” is narrowly defined, the carriers find a loophole in expansively defining the idea of “reasonable network management.” In that case, Free Press and others argued that reasonable network management includes techniques to ensure nondiscriminatory access to legal content, such as targeted security measures and acute, very temporary congestion management. In issuing the Comcast Order, the Republican Chairman proposed a strict test, requiring carefully tailored responses to critically important problems, but Genachowski’s net neutrality proposal in October did AT&T a favor and eliminated that strict test (issued by a Republican Chairman and two Democratic Commissioners), replacing it with nothing. If the FCC’s current grand deal leaves reasonable network management undefined, then it would provide no guidance to start-ups who’d be forced to litigate against AT&T’s super lawyers, before an FCC well-known to AT&T, over whether a particular practice fits within a nebulous concept of “reasonable.” Not good odds. An undefined exemption like this, built on the word “reasonable,” gives the carriers considerable leverage to engage in discrimination with impunity. Net neutrality proponents seek a very narrow standard for reasonable network management, as well as specific guidance in the law on what is clearly and what is clearly not reasonable.

Trapdoors.

1. Legal process. Start-ups need quick, clear legal procedures, as do their venture investors. So do underfinanced consumer groups. Meanwhile, carriers benefit from expensive, drawn out affairs, where they can bleed start-ups to death through legal fees and lobbyists. If a process does not have specific prohibitions but rather has completely vague standards and  rebuttable “presumptions,” start-ups are disadvantaged.  We discussed vague standards like “reasonable” above, which provide start-ups little guidance and complex legal cases. As for “presumptions,” imagine a “presumption” against paid priority. A carrier will simply try to rebut the presumption, hiring any economist-for-sale to argue that a particular paid priority deal would be good for consumers. The start-up will then have to sink huge amounts of money in economists and lawyers to respond to the carriers’ rebuttal. That financial barrier disadvantages the small innovators that provide disruptive innovations benefiting all of us. (See also van Schewick’s analysis.)
2. Jurisdiction. We need clear jurisdiction at the FCC to enforce any deal reached. But I have heard some pretty bizarre ways to enforce this deal, likely proposed by the carriers and entertained by the Chairman. Some include basing the deal in Title I of the Act (which means, after the Comcast decision, deliberately  building a house on sand, knowing it will collapse). Some suggest coupling this Title I idea with requesting an amicus brief from industry groups. (The thought of a regulator trading away the President’s core technology initiative for an industry amicus brief is something not even Hollywood could think of; I can’t believe this is seriously being considered.) Others suggest some consent decree that the FCC could, or could not, enforce, as though self-regulation could work, or the FCC could bind non-parties to the consent decree.  Another proposal includes packaging the deal for Congress. Yes, that same Congress that can’t pass anything controversial, and the one where carriers could easily stall a deal with their political might and campaign contributions. Those favoring net neutrality, which supposedly includes the Chairman, would not support any of these too-clever-by-half Rube Goldberg ideas, which appear designed to fail. Rather, a net neutrality supporter would favor a prompt Title II reclassification before the midterms, and adopt a net neutrality rule on the firmest footing of Title II. At the same time, for Congress’s benefit, the Chairman can pursue a parallel strategy encouraging Congress to codify a deal. Why place all your eggs in the Congress basket, when the Chairman has three votes at the FCC?

Which brings us back to the question of process: why is the Chairman even asking the companies he is supposed to regulate in the public interest … for their permission to regulate them?

On substance, this is the cheat sheet on technical details.  Hope it helps.

Today, Republican Commissioner Robert McDowell published an op-ed in the Wall Street Journal that would probably land any law student an F in telecom law class, if not a trip to the school psychologist.  McDowell has a long history of factually challenged op-eds on Internet deployment and net neutrality, as well as using Glenn-Beck-style rhetoric comparing everything to the fairness doctrine. He’ll just throw anything at a wall and hope it sticks.

Today’s op-ed makes some garbled, bizarre claims about the UN betraying a fundamental misunderstanding of law. His op-ed claims that (1) back in the late 1990s, nations in the International Telecommunications Union (a UN agency) decided “not to regulate” the Internet but later the ITU tried to assert jurisdiction over the Internet at two conferences (known as World Summits on the Information Society); that (2) the ITU might assert jurisdiction now as a result of the US FCC pursuing network neutrality (which requires a regulatory reclassification); that (3) the US lacks a “veto” at the ITU, making all this a big problem, and therefore that (4) US net neutrality efforts would undermine Secretary of State Clinton’s global Internet Freedom initiatives.

All of these seem dishonestly inaccurate or Ted-Stevens dump truck crazy.

I’ll begin with the most obvious–the US “veto” at the ITU. The US doesn’t need a veto. There’s no enforcement mechanism for the ITU. It’s pretty much a standard-setting and discussion body. Countries could sign a protocol making them subject to arbitration on ITU matters–but the US has refused to sign on, meaning we’re not subject to it. There is no enforcement. In any ITU treaty the US does sign, however, the US can even take a “reservation” to any part of the treaty, so that part of the treaty would not apply to us. (We do this for global spectrum coordination, as do other nations.) Finally, the US has bargaining power–the reason the ITU didn’t impose rules in the late 1990s or assert multilateral jurisdiction at WSIS was the US opposed. We have “effective” vetoes, if we needed them.

—-So, question 1: Could you clarify why you think our lack of a “veto” is so important? And do you also fear the Easter Bunny will regulate the Internet?

Also, it’s unclear what McDowell thinks the ITU will do. The ITU has a role for the Internet–it helps set standards and helps coordinate spectrum for broadband services. Nothing scary there. But he suggests the ITU will sanction global censorship based on “the public interest” (the touchstone of the US Communications Act, as though the US is some censorial dictatorial nation depicted by Glenn Beck). But, if he is right, several countries already censor–Iran, North Korea, Syria, Thailand, Afghanistan, and Venezuela.

—-Question 2: Commissioner, could you name the oppressive nations that, like you, do not understand the ITU’s limited role and are therefore patiently waiting for the ITU to greenlight censorship? How many are asking ITU permission before censoring their citizens’ Internet access? Even a short list would be appreciated.

Most of our competitive nations–where citizens enjoy freedoms–already classify their broadband providers under the same rules that apply to the phone network.

—-Question 3: Have they all–from France to Sweden–engaged in censorship?

McDowell’s story of ITU non-regulation is odd; it cobbles together things that are unrelated, while pretending they are. In the late 1990s, the ITU decided not to impose, on Internet backbone providers, the same accounting rate structure used by long distance phone companies when they pay one another for international calls. (This structure is largely lifted even for these calls today–despite ITU “jurisdiction”–because of US leadership.)  The later fight at WSIS involved the Domain Name System, primarily country codes (like .us, .ca, and .cn but not .com), and the control the US government has over the Internet root nameservers–something that is unrelated both to settlement rates and to the FCC reclassification and open Internet policies.  The open Internet policies aim neither to adopt the accounting rates nor to shift control of DNS.

—-Question 4: How are these related at all, except that in your mind they’re “regulation”?

In fact, let me try to make this concrete, as Schrodinger would.

Open Internet policies do not encourage censorship; they forbid both governmental and corporate censorship.

McDowell’s argument is much like saying… in the late 1990s, we decided not to price-regulate the sale of cats around the world (a fact); if the US imposes anti-cruelty laws for the benefit of cats, having debated and considered the issue for several years, it would therefore “impose regulation” on cats, and all regulation is just another word for the fairness doctrine. Once we regulate cats, the rest of the world will feel free to regulate cats.  They will pass pro-cruelty laws on them and torture them.

—-Question 5: Commissioner McDowell, why do you hate cats?

Finally, he suggests US rules to preserve an open Internet will undermine the State Department’s efforts for global Internet freedom.  I doubt senior State Department officials believe that. They have suggested that endorsing corporate censorship at home–by not adopting net neutrality rules–would embolden censors abroad.

—-Question 6: Commissioner, have you spoken to Secretary Clinton or her top advisors on the issue, and does the Secretary agree with you? When else are you authorized to speak for the Secretary?

Finally, McDowell’s reference to a “four-decade bipartisan and international consensus to insulate computer-oriented communications from phone regulation” is hogwash. Until 2005, in the US, DSL networks were subject to the rules traditionally applying to networks, here and abroad; before 2002, so were some cable networks, based on judicial opinions. By “reclassifying” broadband communications, we are merely going back to that logical statutory framework.