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Twenty years ago today, President Clinton signed the Telecommunications Act of 1996. John Podesta, his chief of staff immediately saw the problem: “Aside from hooking up schools and libraries, and with the rather major exception of censorship, Congress simply legislated as if the Net were not there.”

Here’s our take on what Congress got right (some key things), what it got wrong (most things), and what an update to the key laws that regulate the Internet should look like. The short version is:

  • End FCC censorship of “indecency”
  • Focus on promoting competition
  • Focus regulation on consumers rather than arbitrary technological silos or political whim
  • Get the FCC out of the business of helping government surveillance

Trying, and Failing, to Censor the Net

Good: The Act is most famous for Section 230, which made Facebook and Twitter possible. Without 230, such platforms would have been held liable for the speech of their users — just as newspapers are liable for letters to the editor. Trying to screen user content would simply have been impossible. Sharing user-generated content (UGC) on sites like YouTube and social networks would’ve been tightly controlled or simply might never have taken off. Without Section 230, we might all still be locked in to AOL!

Bad: Still, the Act was very much driven by a technopanic over “protecting the children.”

  • Internet Censorship. 230 was married to a draconian crackdown on Internet indecency. Aimed at keeping pornography away from minors, the rest of the Communications Decency Act — rolled into the Telecom Act — would have required age verification of all users, not just on porn sites, but probably any UGC site, too. Fortunately, the Supreme Court struck this down as a ban on anonymous speech online.
  • Broadcast Censorship. Unfortunately, the FCC is still in the censorship business for traditional broadcasting. The 1996 Act did nothing to check the agency’s broad powers to decide how long a glimpse of a butt or a nipple is too much for Americans’ sensitive eyes.

Unleashing Competition—Slowly

Good: Congress unleashed over $1.3 trillion in private broadband investment, pitting telephone companies and cable companies against each other in a race to serve consumers — for voice, video andbroadband service.

  • Legalizing Telco Video. In 1984, Congress had (mostly) prohibited telcos from providing video service — largely on the assumption that it was a monopoly. Congress reversed that, which eventually meant telcos had the incentive to invest in networks that could carry video — and super-fast broadband.
  • Breaking Local Monopolies. Congress also barred localities from blocking new entry by denying a video “franchise.”
  • Encouraging Cable Investment. The 1992 Cable Act had briefly imposed price regulation on basic cable packages. This proved so disastrous that the Democratic FCC retreated — but only after killing a cycle of investment and upgrades, delaying cable modem service by years. In 1996, Congress finally put a stake through the heart of such rate regulation, removing investment-killing uncertainty.

Bad: While the Act laid the foundations for what became facilities-based network competition, its immediate focus was pathetically short-sighted: trying to engineer artificial competition for telephone service.

  • Unbundling Mandates. The Act created an elaborate set of requirements that telephone companies “unbundle” parts of their networks so that resellers could use them, at sweetheart prices, to provide “competitive” service. The FCC then spent the next nine years fighting over how to set these rates.
  • Failure of Vision. Meanwhile, competing networks provided fierce competition: cable providers gained over half the telephony market with a VoIP service, and 47% of customers have simply cut the cord — switching entirely to wireless. Though the FCC refuses to recognize it, broadband is becoming more competitive, too: 2014 saw telcos invest in massive upgrades, bringing 25–75 Mbps speeds to more than half the country by pushing fiber closer to homes. The cable-telco horse race is fiercer than ever — and Google Fiber has expanded its deployment of a third pipe to the home, while cable companies are upgrading to provide gigabit-plus speeds and wireless broadband has become a real alternative for rural America.
  • Delaying Fiber. The greatest cost of the FCC’s unbundling shenanigans was delaying the major investments telcos needed to keep up with cable. Not until 2003 did the FCC make clear that it would not impose unbundling mandates on fiber — which pushed Verizon to begin planning its FiOS fiber-to-the-home network. The other crucial step came in 2006, when the Commission finally clamped down on localities that demanded lavish ransoms for allowing the deployment of new networks, which stifled competition.


Good: With the notable exception of unbundling mandates, the Act was broadly deregulatory.

  • General thrust. Congress could hardly have been more clear: “It is the policy of the United States… to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation.”
  • Ongoing Review & Deregulation. Congress gave the FCC broad discretion to ratchet down regulation to promote competition.

Bad: The Clinton Administration realized that technological change was rapidly erasing the lines separating different markets, and had proposed a more technology-neutral approach in 1993. But Congress rejected that approach. The Act continued to regulate by dividing technologies into silos: broadcasting (Title III), telephone (Title II) and cable (Title VI). Title I became a catch-all for everything else. Crucially, Congress didn’t draw a clear line between Title I and Title II, setting in motion a high-stakes fight that continues today.

  • Away from Regulatory Silos. Bill Kennard, Clinton’s FCC Chairman, quickly saw just how obsolete the Act was. His 1999 Strategic Plan remains a roadmap for FCC reform.
  • Away from Title II. Kennard also indicated that he favored placing all broadband in Title I — mainly because he understood that Title II was designed for a monopoly and would tend to perpetuate it. Vibrant competition between telcos and cable companies could happen only under Title I. But it was the Bush FCC that made this official, classifying cable modem as Title I in 2002 and telco DSL in 2005.
  • Net Neutrality Confusion. The FCC spent a decade trying to figure out how to regulate net neutrality, losing in court twice, distracting the agency from higher priorities — like promoting broadband deployment and adoption — and making telecom policy, once an area of non-partisan pragmatism, a fiercely partisan ideological cesspool.
  • Back to Title II. In 2015, the FCC reclassified broadband under Title II — not because it didn’t have other legal options for regulating net neutrality, but because President Obama said it should. He made the issue part of his re-assertion of authority after Democrats lost the 2014 midterm elections. Net neutrality and Title II became synonymous, even though they have little to do with each other. Now, the FCC’s back in court for the third time.
  • Inventing a New Act. Unless the courts stop it, the FCC will exploit the ambiguities of the ‘96 Act to essentially write a new Act out of thin air: regulating way up with Title II, using its forbearance powers to temporarily suspend politically toxic parts of the Act (like unbundling), and inventing wholly new rules that give the FCC maximum discretion—while claiming the power to do anything that somehow promotes broadband. The FCC calls this all “modernization” but it’s really a staggering power grab that allows the FCC to control the Internet in the murkiest way possible.
  • Bottom line: The 1996 Act gives the FCC broad authority to regulate in the “public interest,” without effectively requiring the FCC to gauge the competitive effects of what it does. The agency’s stuck in a kind of Groundhog Day of over-regulation, constantly over-doing it without ever learning from its mistakes.

Time for a #CommActUpdate

Censorship. The FCC continues to censor dirty words and even brief glimpses of skin on television because of a 1978 decision that assumes parents are helpless to control their kids’ media consumption. Today, parental control tools make this assumption obsolete: parents can easily block programming marked as inappropriate. Congress should require the FCC to focus on outright obscenity — and let parents choose for themselves.

Competition. If the 1996 Act served to allow two competing networks, a rewrite should focus on driving even fiercer cable-telco competition, encouraging Google Fiber and others to build a third pipe to the home, and making wireless an even stronger competitor.

  • Title II. If you wanted to protect cable companies from competition, you couldn’t find a better way to do it than Title II. Closing that Pandora’s Box forever will encourage companies like Google Fiber to enter the market. But Congress needs to finish what the 1996 Act started: it’s not enough to stop localities from denying franchises video service (and thus broadband, too).
  • Local Barriers. Congress should crack down on the moronic local practices that have made deployment of new networks prohibitive — learning from the success of Google Fiber cities, which have cut red tape, lowered fees and generally gotten out of the way. Pending bipartisan legislationwould make these changes for federal assets, and require federal highway projects to include Dig Once conduits to make fiber deployment easier. That’s particularly helpful for rural areas, which the FCC has ignored, but making deployment easier inside cities will require making municipal rights of way easier to use. Instead of rushing to build their own broadband networks, localities should have to first at least try to stimulate private deployment.

Regulation. Technological silos made little sense in 1993. Today, they’re completely obsolete.

  • Unchecked Discretion. The FCC’s right about one thing: rigid rules don’t make sense either, given how fast technology is changing. But giving the FCC sweeping discretion is even more dangerous: it makes regulating the Internet inherently political, subject to presidential whim and highly sensitive to elections.
  • The Fix. There’s a simple solution: write clear standards that let the FCC work across all communications technologies, but that require the FCC to prove that its tinkering actually makes consumers better off. As long as the FCC can do whatever it claims is in the “public interest,” the Internet will never be safe.
  • Rethinking the FCC. Indeed, Congress should seriously consider breaking up the FCC, transferring its consumer protection functions to the Federal Trade Commission and its spectrum functions to the Commerce Department.

Encryption. Since 1994, the FCC has had the power to require “telecommunications services” to be wiretap-ready — and the discretion to decide how to interpret that term. Today, the FBI is pushing for a ban on end-to-end encryption — so law enforcement can get backdoor access into services like Snapchat. Unfortunately, foreign governments and malicious hackers could use those backdoors, too. Congress is stalling, but the FCC could give law enforcement exactly what it wants — using the same legal arguments it used to reclassify mobile broadband under Title II. Law enforcement is probably already using this possibility to pressure Internet companies against adopting secure encryption. Congress should stop the FCC from requiring back doors.

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Today, TechFreedom and a coalition of free-market groups urged Congress to protect Americans against malicious or frivolous litigation that threatens to stifle free speech and undermine the digital economy. In a letter to the House Judiciary Committee, the coalition called for passage of H.R. 2304, the SPEAK FREE Act, which would give defendants across the nation access to a special motion to dismiss SLAPPs (strategic lawsuits against public participation). The bill would also empower courts to shift fees, so that defendants who prevail on an anti­-SLAPP motion would not have to face legal costs.

The coalition letter reads:

Each year, a multitude of Americans fall victim to lawsuits called SLAPPs (strategic lawsuits against public participation) that are aimed at unfairly intimidating and silencing them. These kinds of lawsuits are highly effective, despite being without merit, since the legal costs, invasion of privacy, and hassle associated with fighting them is rarely considered a worthwhile use of individuals’ time.

SLAPPs threaten online free speech and the business models that thrive on consumer reviews,” said Tom Struble, Policy Counsel at TechFreedom. “Without an easy judicial mechanism to dismiss groundless lawsuits and shift fees, consumers and small businesses often have no choice but to relent to the demands of companies with deeper pockets. 28 states have already adopted anti-SLAPP standards — it’s time for Congress to do the same.”


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With great fanfare, FCC Chairman Thomas Wheeler is calling for sweeping changes to the way cable TV set-top boxes work.

In an essay published Jan. 27 by Re/Code, Wheeler began by citing the high prices consumers pay for set-top box rentals, and bemoans the fact that alternatives are not easily available. Yet for all the talk and tweets about pricing and consumer lock-in, Wheeler did not propose an inquiry into set-top box profit margins, nor whether the supply chain is unduly controlled by the cable companies. Neither did Wheeler propose an investigation into the complaints consumers have made about cable companies’ hassles around CableCards, which under FCC mandate cable companies must provide to customers who buy their own set-top boxes.

In fact, he dropped the pricing issue halfway through and began discussing access to streaming content:

To receive streaming Internet video, it is necessary to have a smart TV, or to watch it on a tablet or laptop computer that, similarly, do not have access to the channels and content that pay-TV subscribers pay for. The result is multiple devices and controllers, constrained program choice and higher costs.

This statement seems intentionally misleading. Roku, Apple TV and Amazon Fire sell boxes that connect to TVs and allow a huge amount of streaming content to play. True, the devices are still independent of the set-top cable box but there is no evidence that this lack of integration is a competitive barrier.

Continue reading →

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Today, TechFreedom joined a coalition of over 40 organizations from across the country in urging Senate leadership to permanently ban taxes on Internet access. In a letter to Majority Leader Mitch McConnell and Minority Leader Harry Reid, the coalition voiced support for a permanent extension of the Internet Tax Freedom Act (ITFA), which bans states and localities from imposing Internet access taxes and discriminatory taxes on electronic commerce. The bill is currently embedded in H.R. 644, the Trade Facilitation and Enforcement Act.

The letter reads:

After decades of progress in connecting more Americans to the Internet, the lack of a permanent ban on Internet access taxes could reverse this progress. Numerous studies continue to show that cost remains an obstacle to Internet access and, if taxes on the Internet go up, even fewer people will be able to afford to go online. This would impede our nation’s long held goal of universal Internet access.

Americans’ broadband bills shouldn’t be used as bargaining chips by Senators who want to impose online sales taxes,” said Tom Struble, Policy Counsel at TechFreedom. “For 17 years, the Internet access tax ban has helped encourage broadband adoption and investment. If Senators want an online sales tax, then pass it on the merits — but handcuffing a broadband tax with sales tax is irresponsible. Consumers are already facing the prospect of higher bills, as the FCC is likely to soon impose universal service fees on broadband as part of its Title II regime imposed in the name of ‘net neutrality.’ Let’s not make that problem worse. The Senate should act quickly to end the uncertainty and pass permanent, Internet tax freedom.”

People are excited about online TV getting big in 2016. Alon Maor of Qwilt predicts in Multichannel News that this will be “the year of the skinny bundle.” Wired echoes that sentiment. The Wall Street Journal’s Geoffrey A. Fowler said, “it’s no longer the technology that holds back cable cutting–it’s the lawyers.”

Well, I’m here to say, lawyers can’t take all the blame. In my experience, it’s the technology, too. Some of the problem is that most discussion about the future of online TV and cable cutting fails to distinguish streaming video-on-demand (SVOD) and streaming linear TV (“linear” means continuous pre-programmed and live “channels”, often with commercials, much like traditional cable). Continue reading →

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On January 11, TechFreedom joined nearly 200 organizations, companies, and experts from more than 40 countries in urging world leaders to support strong encryption and to reject any law, policy, or mandate that would undermine digital security. In France, India, the U.K, China, the U.S., and beyond, governments are considering legislation and other proposals that would undermine strong encryption. The letter is now open to public support and is hosted at

The letter concludes:

Strong encryption and the secure tools and systems that rely on it are critical to improving cybersecurity, fostering the digital economy, and protecting users. Our continued ability to leverage the internet for global growth and prosperity and as a tool for organizers and activists requires the ability and the right to communicate privately and securely through trustworthy networks.

There’s no middle ground on encryption,” said Tom Struble, Policy Counsel at TechFreedom. “You either have encryption or you don’t. Any vulnerability imposed for government use can be exploited by those who seek to do harm. Privacy in communications means governments must not ban or restrict access to encryption, or mandate or otherwise pressure companies to implement backdoors or other security vulnerabilities into their products.”

For tech policy progressives, 2015 was a great year. After a decade of campaigning, network neutrality advocates finally got the Federal Communications Commission to codify regulations that require Internet service providers to treat all traffic the same as it crosses the network and is delivered to customers.

Yet the rapid way broadband business models, always tenuous to begin with, are being overhauled, may throw some damp linens on their party. More powerful smart phones, the huge uptick in Internet streaming and improved WiFi technology are just three factors driving this shift.

As regulatory mechanisms lag market trends in general, they can’t help but be upended along with the industry they aim to govern. Looking ahead to the coming year, the consequences of 2015’s regulatory activism will create some difficult situations for the FCC.

Continue reading →

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Yesterday, the FTC reiterated its age-old formula: there are benefits, there are risks, and here are some recommendations on what we regard as best practices. The report summarizes the workshop the agency held in October 2014, “Big Data: A Tool for Inclusion or Exclusion?”

Commissioner Ohlhausen issued a separate statement, saying the report gave “undue credence to hypothetical harms” and failed to “consider the powerful forces of economics and free-market competition,” which might avoid some of the hypothetical harms in the report.

The FTC is essentially saying, ‘there are clear benefits to Big Data and there may also be risks, but we have no idea how large they are,’” said Berin Szoka. “That’s not surprising, given that not a single economist participated in the FTC’s Big Data workshop. The report repeats a litany of ‘mights,’ ‘concerns’ and ‘worries’ but few concrete examples of harm from Big Data analysis — and no actual analysis. Thus, it does little to advance understanding of how to address real Big Data harms without inadvertently chilling forms of ‘discrimination’ that actually help underserved and minority populations.”

“Most notably,” continued Szoka, “the report makes much of a single news piece suggesting that Staples charged higher prices online to customers who lived farther away from a Staples store — which was cherry-picked precisely because it’s so hard to find examples where price discrimination results in higher prices for poor consumers. The report does not mention the obvious response: if consumers are shopping online anyway, comparison shopping is easy. So why would we think this would be an effective strategy for profit-maximizing firms?”

The FTC can do a lot better than this,” concluded Szoka. “The agency has an entire Bureau of Economics, which the Bureau of Consumer Protection stubbornly refuses to involve in its work — presumably out of the misguided notion that economic analysis is somehow anti-consumer. That’s dead wrong. As with previous FTC reports since 2009, this one’s ‘recommendations’ will have essentially regulatory effect. Moreover, the report announces that the FTC will bring Section 5 enforcement actions against Big Data companies that have ‘reason to know’ that their customers will use their analysis tools ‘for discriminatory purposes.’ That sounds uncontroversial, but all Big Data involves ‘discrimination’; the real issue is harmful discrimination, and that’s not going to be easy for Big Data platforms to assess. This kind of vague intermediary liability will likely deter Big Data innovations that could actually help consumers — like more flexible credit scoring.”

Another year in the books for the Technology Liberation Front. Many developments unfolded in 2015 in the technology world and we covered much of it (on TLF and in other outlets). The most popular posts this year revolved around the Internet of Things, privacy, unlicensed spectrum, and municipal and public broadband networks. Thanks for reading, and enjoy the year in review. Continue reading →

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On December 15, the European Commission announced that it had reached agreement with the European Parliament and the Council on a new EU Data Protection regulation. The new regulation, which is not yet public, has been under negotiation since January 2012, and would replace Europe’s 1995 Data Protection directive, which left implementation up to nation states.

Europe has a collective insecurity complex about the Internet,” said Berin Szoka, President of TechFreedom. “The problem isn’t that Europeans aren’t innovative, but that Europe’s most innovativeusually leave the gray continent to start web businesses in the U.S., where innovation doesn’t require permission. Now, it seems, European governments have thrown in the towel: instead of trying to stop the digital brain drain by making Europe more open to innovation, they’re cracking down on the data flows that drive web companies. Their hodgepodge of new measures will prove either crippling, counter-productive or utterly unworkable.”

The worst idea is banning young teens from using social media without parental consent,” continued Szoka. “We already know that kids 13 and under simply lie about their age to get access to the sites they want to use. Teens will do the same, making the promise of parental control utterly illusory. That, in turn will undermine social media platforms’ efforts to offer age-appropriate experiences for their users. The only way to avoid this will be to age-verify all users, which means tyingeveryone’s Internet use to a verified identity — in short, ending online anonymity. Similarly, the ‘right to be forgotten’ sounds great, but in practice, means giving users a right to censor speech about them they don’t like.”

The new regulations will harm startups most,” concluded Szoka. “Allowing fines of up to 4% of a company’s global revenue will make all companies reluctant to experiment with new offerings that unsettle established norms. From Google’s Street View to Facebook’s NewsFeed, yesterday’s ‘creepy’ has proved to be today’s ‘awesome.’ Now, that line will be drawn by bureaucrats rather than consumers. Ironically, it’s established, American companies that will be most able to deal with the burden of compliance — which is why, of course, these heavy-handed regulations will no doubt be enforced arbitrarily. Regulatory discretion will be used as a tool of digital protectionism — yet another way for regulators to vent their frustration as Europe falls further and further behind Silicon Valley. Ordinary Europeans will be told that only tougher measures will bridge the gap, and Europe’s sad spiral of digital self-destruction will go on, and on, and on…”