DGA Quarterly

Spring 2018

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50 DGA QUARTERLY independent fi lmmakers, did care about access and prioritization issues because their content was traveling over the network. And in addition, they were concerned that much of that content was being pirated. So, like it or not, government regulation of the way information is distributed on the Internet mattered. Television and movie folk should, of course, have been able to easily imagine a future in which the prioritization of video ensures higher quality delivery to consumers. "That's what we have today," dryly notes a December 2017 report by the independent analyst fi rm Mo ettNathanson. "It's called cable TV. ESPN gets a dedicat- ed 'channel,' YouTube doesn't. ESPN works better as a result. It's not clear that, that is anything to be afraid of." In contrast, organizations like the public interest group Free Press had suggested that we should, indeed, be afraid—very afraid—of the prioritization of video content. Hiding behind the mantle of "free culture" and democratic Internet access (and fi - nanced, in part, by the FANGs)—groups like Free Press stated that the ISPs were supposedly trying to shut down the internet or cre- ate "fast lanes" that would discriminate against the little guy, in- hibit free speech and transform the Internet into a digital version of cable TV. O L E T ' S FA S T- F O R W A R D T O the pres- ent. How di erent is the state of play in this war today from back then? In one sense, absolutely nothing at all has changed. The principles and stakes of this war remain entirely the same. The battle remains between the ISPs and the edge pro- viders over whether or not companies have the legal right to charge carriage for data traveling over their pipes. The trench warfare between buyers and sellers of interconnectiv- ity has barely budged over the last eight years. "Indeed stripped of its high-minded rhetoric about the First Amendment and freedom of speech," net neutrality is really in large part "a commercial dispute over interconnection pricing," reports Mo ettNathanson, exposing the simple truth about the discord. "Would-be buyers of interconnection want the price to be set at zero (or close to it). Would-be sellers want there to be a real price." And, yet, in another sense, absolutely everything has changed between 2010 and 2018. Over the last eight years, both the mak- ing and undoing of net neutrality regulation has been frequently in the headlines, especially in terms of its supposed threat to the romantic ideal of an open Internet. Let's remember the emotional rallying cry of 2010—"The Internet wants to be free!" The problem with that statement is that it wasn't true then and it is even less true now. The Internet has never been free and never will be. Consumers just aren't pay- ing in cash for their online products and services—not back in 2010 and certainly not now. Most winner-take-all platforms like Google and Facebook are ad-supported. Of the $89.46 billion in Google's 2016 annual revenue, for example, $79.38 billion was generated by advertising revenue. Google's search engine controls some 90% of all searches—then their algorithms o er up prioritized results with their advertiser content at the top. How is this di erent, in terms of a supposed level informational playing field, from the paid prioritization concerns regarding the ISPs? Certainly there's nothing either free or fair about this digital economy. It's just that the tolls paid for the Internet's dominant products and services are cleverly disguised. But these tolls do actually exist and, every time we use Google, for example, we are additionally paying with our personal data, which is being used to target those advertisers. Our search history and what websites we visit are all part of the toll paid to use these "free" services. Google has transformed the consumer into the product. We—our appe- tites, our desires and our shopping habits—make up that almost $80 billion of annual personal data that the search engine sells to advertisers. As recognition of these concerns increases, much has actu- ally happened over the last eight years. The real action has been political and has taken place in Washington, D.C., at the Federal Communications Commission (FCC), the agency charged with regulating this issue. Back in 2010, the chair of the FCC was Julius Genachowski, an old Harvard Law school classmate of then President Barack Obama and a supporter of net neutrality. At that time, Comcast sued the FCC over a cease-and-desist let- ter concerning its management of network tra c. The D.C. Circuit Court of Appeals ruled that the FCC did not, in fact, have the au- thority to regulate Title I broadband services. Genachowski tried to reclassify broadband as a Title II service—which would have al- lowed the FCC to regulate ISPs as "common carriers" in the same manner that the FCC regulates telephone companies. But after a series of legal threats from the ISPs, Genachowski retreated, and we were, once again, back to square one. Then, Tom Wheeler took over from Genachowski as the Democratic chair of the FCC in April 2014, and the following year, like Genachowski before him, he declared ISPs to be common car- riers, or Title II services, and subject to the laws associated with public utilities. And once again, the ISPs sued the FCC, this time orchestrated by Verizon. But once Donald Trump was elected to the White House, the FCC reverted to Republican control under the chairmanship of Ajit Pai. And Pai—much to the outrage of the net neutrality lobby— e ectively reversed Wheeler's 2015 reclassifi cation of broadband as a Title II service and overturned all the rules giving the FCC ju- risdictional power over net neutrality. So, in 2018, it's back to the future all over again. In spite of all the political power grabs and public outrage, little appears to have changed and there doesn't seem to be a clear political path to a regulatory compromise over net neutrality. And yet the zeitgeist has begun to shift in the public's percep- tion of the threat of Big Tech, particularly in terms of the need for regulation on data privacy, and concerns raised about the lack of transparency surrounding political advertising on Facebook in the 2016 presidential election. As a result of these fears, the tech community has become increasingly nervous about possible gov- ernment regulation of its broader business practices. Thus Silicon Valley has toned down its support for the net neutrality lobby and is seeking a lower profi le on the issue, with fewer Big Tech fi rms fi nancing interest groups like Free Press. "The leading Internet content companies have largely checked out," confi rms best-selling author and technology law expert Larry S S S S S

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