USA Today amplified a misleading op-ed claiming that proposed net neutrality regulations could cost consumers $15 billion in new user fees and taxes, a number that has been called into question by advocacy groups for faulty assumptions.
On December 12, USA Today ran an op-ed by Progressive Policy Institute's Hal Singer and Brookings Institute's Robert Litan promoting their conclusion that a vote by the FCC to reclassify the Internet as a public utility under Title II of the Communications Act could cost consumers "a whopping $15 billion in new user fees to consumer bills." The authors claimed that "[o]nce Internet access service is labeled a 'telecommunications service' under Title II, consumer broadband services could become subject to a whole host of new taxes and fees."
Singer and Litan admitted that "the Internet Tax Freedom Act pending in Congress might limit the impact of some of these taxes and fees" and that the FCC could limit service fees to consumers, but argued that such moves are unlikely and would not limit the impact of all fees.
The paper published the authors' claims despite the fact that their calculations have been criticized for relying on faulty assumptions. The nonpartisan open Internet advocacy group Free Press estimated that FCC limits and the Internet Freedom Act would reduce possible fees associated with net neutrality reclassification by nearly 75 percent, to $4 billion. The group called the notion that Internet reclassification would amount to more than $15 billion in new local, state, and federal taxes an unlikely "worst-case scenario" that fails to account for how net neutrality works in practice, as it ignores "the difference between services that cross state lines and those that exist entirely within one state":
The multimedia financial services company The Motley Fool joined a chorus of media outlets uncritically promoting the misleading claim that reclassifying broadband Internet services as a public utility could amount to a multi-billion dollar tax on the internet.
In a December 6 blog suggesting net neutrality policies could "raise your internet bill," the Motley Fool joined the Wall Street Journal and others in hyping the misleading findings of a policy brief on Internet reclassification performed by economists Robert Litan of the Brookings Institution and Hal Singer of the Progressive Policy Institute (PPI). The brief, titled "Outdated Regulations Will Make Consumers Pay More For Broadband," concluded that reclassifying the Internet as a public utility under Title II of the Communications Act would create "more than $15 billion" in new annual fees to be passed on to consumers and stifle telecommunications innovation:
We have calculated that the average annual increase in state and local fees levied on U.S. wireline and wireless broadband subscribers will be $67 and $72, respectively. And the annual increase in federal fees per household will be roughly $17. When you add it all up, reclassification could add a whopping $15 billion in new user fees on top of the planned $1.5 billion extra to fund the E-Rate program. The higher fees would come on top of the adverse impact on consumers of less investment and slower innovation that would result from reclassification.
According to the nonpartisan open Internet advocacy group Free Press, PPI's claim that Internet reclassification would amount to more than $15 billion in new local, state, and federal taxes is an unlikely "worst-case scenario" that fails to account for how net neutrality works in practice. The multi-billion dollar estimate ignores the fact that reclassification of the Internet as an interstate telecommunications public utility would remove it from most in-state forms of taxation. Correcting this methodological error would reduce allegedly burdensome fees associated with net neutrality reclassification by nearly 75 percent, to roughly $4 billion.
Further regulatory decisions by the Federal Communications Commission (FCC), coupled with legislation from Congress, "could take additional steps to remove or limit any future taxes or fees," according to Free Press. For instance, FCC fees associated with the Universal Service Fund (USF) could be suspended if the FCC deems the fees to be contrary to the USF mission of subsidizing the expansion of telecommunications to under-served communities. Furthermore, a simple congressional renewal of the Internet Tax Freedom Act could guarantee against local, state, or federal governments imposing "Internet-specific taxes."
Net neutrality is the status quo by which the Internet operates. Establishing and codifying the neutrality that has always existed is an important step to ensure free markets and fair competition for consumers and content producers.
Sunday morning political talk shows on ABC, CBS, NBC, and Fox devoted just 30 seconds of coverage to net neutrality the week after President Obama called on the Federal Communications Commission to require Internet service providers to treat all content equally. Those same programs dedicated nearly 17 minutes to helping scandalize comments made by Jonathan Gruber, an economist who helped estimate the impact of the Affordable Care Act (ACA).
From the November 17 edition of Premiere Radio Networks' The Rush Limbaugh Show:
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ABC World News Tonight with David Muir was the only one of the three broadcast evening newscasts to ignore the Obama administration's announcement supporting net neutrality. NBC Nightly News and CBS Evening News both covered the story.
President Obama issued a statement on Monday asking the Federal Communications Commission to "implement the strongest possible rules to protect net neutrality." Obama asked the FCC to put into effect "bright-line rules" that would prevent Internet providers from blocking access to services, throttling Internet speeds or forcing one service to be prioritized over another. He also asked for providers to have to be more transparent in how their services operate.
Fox News legal analyst Andrew Napolitano branded the principle of net neutrality as "Orwellian" after President Obama spoke out in favor of an open internet for consumers.
On Monday, President Obama called on the Federal Communications Commission (FCC) to adopt the "strongest possible rules to protect net neutrality," emphasizing that "[a]n open internet is essential to the American economy, and increasingly to our very way of life."
But according to Fox's legal analyst Napolitano on the November 10 edition of Fox Business' Varney & Co, Obama just "wants to take the choice of buyers and sellers out of the market." After host Stuart Varney accused the president of seeking "to regulate the internet," Napolitano concluded that the entire principle of net neutrality "is Orwellian."
From the November 10 edition of Bloomberg TV's Market Makers:
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Bloomberg TV co-host Cory Johnson called out the hypocrisy of activist telecommunications investor Jeff Pulver who misleadingly stoked fears that proponents of net neutrality advocate for regulations that would hamper telecommunications innovations. Johnson pointed out that without an open internet, the CEO might have been unable to create his own business.
Net neutrality, the basic principle that corporate internet providers should provide equal access to content for subscribers, has become a hotly debated issue among telecommunications conglomerates and internet service providers (ISP) who want to charge companies a premium for preferential access and speed for internet consumers.
On the October 21 edition of Bloomberg West, Johnson and co-host Emily Chang invited Pulver, the founder of Vonage, to respond to net neutrality advocates like Sen. Patrick Leahy (D-VT), who has called on Comcast to strengthen its commitment to net neutrality. Pulver accused net neutrality advocates of "bullying" and hyped fears that committing to neutrality would amount to onerous regulation of data and information services. Pulver also argued that regulating the telecommunications industry to ensure neutrality through Title II of the Communications Act of 1934 would lead to discrimination against businesses that seek to provide faster or more reliable access to certain data services and halt innovation.
CNBC's Closing Bell hid its own conflict of interest and the industry ties of the telecommunications industry front group Broadband for America while providing co-chairs of the group a platform to attack government regulations of the Internet and broadband access.
On the July 14 edition of CNBC's Closing Bell, host Kelly Evans interviewed Harold Ford, Jr. and John Sununu about the FCC's latest proposed regulations, introducing them as "Broadband for America honorary co-chairs," without explaining what Broadband for America was. Both Ford and Sununu insisted that the Internet should not be treated as a public utility and claimed that new regulations would slow Internet speeds and innovation.
Though Evans, to her credit, did pose challenging questions to Ford and Sununu about the possibility of companies paying internet providers to speed up customers' access to their content and the lack of competing broadband providers faced by many Americans, she failed to disclose the interest that Broadband for America and her own network's corporate parent has in limiting government regulation of broadband access.
Broadband for America has, among its members, major national broadband providers such as Comcast, Cox Communications, and Verizon. Its members list includes the National Cable & Telecommunications Association, which donated $2 million to Broadband for America in 2012.
And CNBC's parent company NBC is owned by the Comcast Corporation, which prides itself on its Comcast Cable division being "the nation's largest video, high-speed Internet and phone provider to residential customers."
Broadcast nightly news shows were silent on the Federal Communications Commission's (FCC) landmark proposal that will empower Internet providers to control online content, a decision that could dramatically -- and devastatingly -- reshape the digital landscape and the principle of net neutrality.
On April 23, the FCC announced plans to propose new rules to allow companies to pay internet providers to speed up customers' access to their websites. As the Washington Post reported, the proposal "could give high-speed Internet providers more power on what content moves the fastest on the Web based on which firms pay the most." It's an open Internet rule that could wipe away net neutrality, the principle that corporate internet providers should provide equal access to content for subscribers.
Since the FCC announced the proposal, none of the broadcast nightly news shows - neither ABC, CBS, nor NBC - have acknowledged the move. This is not the first time evening broadcast shows neglected to give airtime to this topic; on January 14 when the D.C. Court of Appeals invalidated the FCC's requirement for net neutrality that lead to the new rule proposal, these same networks did not even acknowledge the ruling in their evening broadcasts.
It's a disappointing, but not surprising, omission. NBC is owned by Comcast Corporation, which bills itself as the nation's largest high-speed Internet provider. CBS' parent company is CBS Corporation, which also owns multiple sports networks and Showtime, while ABC is part of The Walt Disney Company empire, also the owner of ESPN.
Giant corporations like Comcast win under the FCC's proposal, as Time explained:
Under the FCC's new plan, Internet service providers like Comcast and AT&T "would be required to offer a baseline level of service to their subscribers," according to an FCC spokesperson. The companies would also be prohibited from blocking or discriminating against online content, but they would be allowed to strike special deals with Internet companies like Netflix or Skype for preferential treatment, as long as they acted in a "commercially reasonable manner subject to review on a case-by-case basis."
The dismantling of net neutrality laws will allow such corporations to promote their own content at the expense of smaller competitors. As PCWorld explained:
Net neutrality advocates fear that without rules in place, big companies like Netflix, Disney, and ESPN could gain advantage over competitors by paying ISPs to provide preferential treatment to their company's data. For example, YouTube might pay extra so that its videos load faster than Hulu's on the ISP's network.
We've already seen shades of What Could Happen in AT&T's Sponsored Data and Comcast's decision to have the Xfinity TV streaming app for the Xbox 360 not count against Comcast subscribers' data caps.
Comcast could soon be even larger. The NBC parent company is currently looking to merge with cable giant Time Warner Cable Inc., and could potentially gain control of one-third of the U.S. broadband market if the merger is approved. As OpenSecrets noted, both Comcast and Time Warner Cable are against net neutrality, and "spent about $19 million and $8 million on lobbying respectively last year," making them the sixth highest federal lobbying spender.
It's not only smaller companies, but the public that will be harmed by the FCC's ruling. The New York Times noted the warning by consumer advocates that "higher costs to content providers could be passed on to the public," and could stymie startup innovation. As Vox wrote:
Allowing big companies to pay for prioritized access to consumers flies in the face of the internet's egalitarian ideals, which allow anyone or any company free access to a vibrant market free of tolls or restrictions -- allow service providers like Comcast and AT&T to start creating artificial barriers to entry, and you make it harder for the next generation of college kids to start the next Facebook or Google.
The final decision from the FCC on net neutrality rules remains to be seen. But the failure of the nation's broadcast news to acknowledge the proposed rules suggests an allegiance closer to the interests of their corporate parents than to those of their public audience.
Media Matters conducted a Nexis search of transcripts of evening network broadcast news on ABC, CBS, and NBC from April 23, 2014 through April 25, 2014. We identified and reviewed all segments that included any of the following keywords: FCC, Federal Communications Commission, internet, or net neutrality.
The following programs were included in the data: World News with Diane Sawyer, Evening News (CBS), Nightly News with Brian Williams.
From the January 15 edition of Fox News' Shepard Smith Reporting:
Broadcast nightly news shows completely ignored the day's landmark court ruling striking down federal net neutrality regulations, an omission that deals a huge disservice to the public audience and a boon to the news outlets' parent corporations.
Net neutrality -- the principle that corporate internet providers should provide equal access to content for subscribers -- was dealt a serious blow the morning of January 14 when the D.C. Court of Appeals invalidated the Federal Communications Commission's requirement that providers offer equal access to online information, regardless of the source. Prior to the ruling, the FCC prevented internet providers from blocking (or slowing down access to) content in order to benefit their own business interests.
That evening, neither NBC, CBS, nor ABC acknowledged the ruling in their evening news broadcasts.
Here's why that's important -- NBC is owned by Comcast Corporation, which bills itself as the nation's largest high-speed Internet provider. CBS' parent company is CBS Corporation, which also owns multiple sports networks and Showtime, while ABC is part of The Walt Disney Company empire, also the owner of ESPN.
This is a huge conflict of interest for the broadcast news channels, as their parent corporations all have a vested interest in striking down net neutrality laws and promoting their own content at the expense of competitors that lack an advantage in size or Internet service. As PCWorld explained:
Last week, Verizon filed a brief with the U.S. Court of Appeals for the D.C. Circuit laying out their various and sundry complaints against the Federal Communications Commission's Open Internet Order, which put net neutrality regulations in place for Internet service providers. The telecom giant is suing to have the FCC's order thrown out, and one of their legal arguments is raising more than a few eyebrows. Verizon, per the court document, considers itself your Internet editor. Or your Internet editor-in-waiting.
It goes like this: the Open Internet Order says that Verizon, as a provider of broadband Internet, can't block or slow access to (legal) online content because they disagree with its message or are being paid by an outside party to do so. This is essentially how the internet has operated since its inception, and the Open Internet Order is intended to prevent ISPs like Verizon from becoming gatekeepers. Verizon, however, argues that it has the constitutionally protected right to decide which content you, as a Verizon customer, can access -- that it is no different from a newspaper editor:
Broadband providers transmit their own speech both by developing their own content and by partnering with other content providers and adopting that speech as their own. For example, they develop video services, which draw information from, and are then made available over, the Internet. Many also select or create content for their own over-the-top video services or offer applications that provide access to particular content. They also transmit the speech of others: each day millions of individuals use the Internet to promote their own opinions and ideas and to explore those of others, and broadband providers convey those communications.
In performing these functions, broadband providers possess "editorial discretion." Just as a newspaper is entitled to decide which content to publish and where, broadband providers may feature some content over others. Although broadband providers have generally exercised their discretion to allow all content in an undifferentiated manner, Order ¶ 14 (JA__), they nonetheless possess discretion that these rules preclude them from exercising.
This argument is fraught with problems. Jeff Jarvis observes that if Verizon is asserting editorial control over the content that passes over its pipes, then that implies ownership of that content. "Does Verizon really want to be responsible for everything distributed on the net, including libel, theft, and other illegal behavior? I doubt it." Verizon cites as precedent Turner Broadcasting System, Inc. v. FCC (1994), in which the Supreme Court ruled that cable companies enjoy First Amendment protection because they exercise editorial discretion in transmitting the speech of others, and are not merely neutral pathways over which speech is transmitted without restriction or interference. Internet service providers, per Verizon's reasoning, are no different.
Cable television companies want you to watch cable television. More to the point, they don't want you to cancel your cable subscription and give that money to online purveyors of televised entertainment -- Netflix, Hulu, etc. But that's business, right? Companies compete with each other, and consumers make their choices based on quality of service.
Cable companies like Comcast and Time Warner are also internet service providers. They control the pipes, as such they have the means and the incentive to encourage you to consume cable TV, and discourage you from seeking out online streaming video. Are they engaging in such wildly anticompetitive activities? The Justice Department aims to find out.
The Wall Street Journal reported late Tuesday that DOJ "is conducting a wide-ranging antitrust investigation into whether cable companies are acting improperly to quash nascent competition from online video." What's at issue? Data caps, and the abuse thereof.