Net Neutrality — Privacy Silver Bullet, or Can of Worms?

When FCC Chairman Ajit Pai announced last week that he would eliminate the “fair play” rules known as Net neutrality, he took a step that some economists and technologists worry will eventually lead to the monopolization of Internet services in America. What, if any, impact would the elimination of Net neutrality rules have on consumer privacy? The answer, in short, is that consumers would simply be forced to pay more for it. Before I explain why, let’s get on the same page about what Net neutrality means.

Net neutrality rules currently require Internet service providers to treat all content equally, with regard to quality and throughput, regardless of its size, shape, origin, or destination. In economic terms, the rules prohibit ISPs from creating premium classes of service, or “fast lanes.” In so doing, they treat ISPs as publicly regulated utilities.

They also benefit fledgling innovation. If a startup providing a service like end-to-end encryption needed to pay a “fast lane” premium to adequately serve its customers, it might not be able to adequately invest in its product-or reach any customers. But with Net neutrality rules, a nascent business faces the same barriers to reaching potential customers as those of entrenched technology titans such as Google and Facebook.

With Net neutrality’s one-size-fits-all approach, companies ostensibly requiring more bandwidth for more complex content aren’t able to pay more for preferential ISP treatment. That doesn’t directly impact privacy. But in the long term, it could. Profits otherwise available to ISP providers, but unavailable under Net neutrality, would not be reinvested to create more effective, and potentially less expensive, encryption methods. The benefits of such research and development can be seen in other industries, including pharmaceuticals.

One stipulation of the Net neutrality rules is that carriers must “protect the confidentiality of [consumers’] proprietary information” from unauthorized use and disclosure. Whether ISPs would uphold such privacy standards absent a legal requirement would likely correspond with their competitive landscape: More competition for a certain level of service might mean more consumer pressure to provide privacy protections, and vice versa.

With less competition, ISPs likely need more regulation to ensure that they adequately protect consumer privacy. Deregulation would result in privacy becoming more of a luxury than a right. Consumers, for example, might need to pay a premium for a level of Internet access that doesn’t throttle high-speed encrypted communications. At a cheaper, throttled level, they would have fewer and lower-quality choices for apps and services.

Whether Net neutrality’s privacy benefits are outweighed by its concomitant privacy costs is another question.

The Open Internet Order from 2015 requires compliance by ISPs with the Communications Assistance for Law Enforcement Act. Under CALE, telecommunications carriers must construct their network in such a way that they can give the government a backdoor into the network for surveillance purposes when presented with a warrant.

This law coupling enables courts under the Foreign Intelligence Surveillance Act to issue warrants to tap U.S. citizens’ communications devices, all without counsel to speak on citizens’ behalf. In the first 33 years of the FISA court’s existence, judges denied only 11 requests, resulting in a staggering 99.97 percent rate of approval, according to the Stanford Law Review.

There is also nothing in CALE, nor any Net neutrality law, that mandates the use of specific technology to protect consumer information, such as encryption. A $33 million judgment levied against Comcast for unintentionally listing phone numbers it had promised to keep private wasn’t the result of breaching any specific provisions of federal law mandating specific encryption methods.

Backdoor-access provisions already neutralize the consumer privacy benefits of Net neutrality laws. To think otherwise is to naively exchange the potentially prying private eyes of corporate America, which can’t imprison you, with those that can.

Fair use in the digital house of mirrors

Fair use in the digital house of mirrors

In today’s highly digitized world, copyright infringement actions, among others, are often brought against alleged infringers using information culled from Internet service provider addresses. While fair use defenses may exist against such suits, particularly when one is doing a music mash up, a preliminary question is whether the initial source evidence is accurate.

There exist technologies wherein users can mask themselves behind other users’ Internet service provider addresses. In this way, one can be located in Timbuktu, for example, and use an Internet service provider address of a user in the North Pole. By doing such masking, some users seek to avoid infringement lawsuits by using the address of another user, in essence leaving them with the hot infringement potato.

In prosecuting civil actions for unlawful downloads of Microsoft software, for example, it becomes imperative to understand such masking methods, and their limits. Prima facie evidence of the source of the infringement, while good for the initial stages of litigation, will evaporate upon further investigation. In some cases, a case brought without sufficient evidence of the source can, upon written documentary notice that the user wasn’t responsible for the download, such as via browser history evidence, lead to a motion for sanctions against plaintiff’s counsel for bringing a frivolous case.

Even with such evidence as to source, due attention needs to be paid to the transformative nature of the use. In digital music mash ups, for example, a sample from Mr. Bob Dylan recording can be modified, and blended into a new piece, so that the old version becomes impossible to recognize. In this case, the defendant likely has a bona fide fair use defense even when the attribution of the source is correct. Thus, in prosecuting a copyright infringement action, proper steps need to be made at the outset so that a sustainable case can be made.

Antitrust should police Internet hogs, not the FCC.

Antitrust should police Internet hogs, not the FCC.

Recently, the Washington Lawyer ran a great piece called Net Neutrality: Who Should Be Minding Online Traffic?   The article goes back and forth between the extremes of: (1) heavy handed Orwellian like regulation of the Internet by the Federal Communications Commission (“FCC”), and (2) self-regulation and content discrimination by greedy Internet Service Providers (“ISP”). This seems to be a false dichotomy. Even in the absence of heavy handed FCC regulation, which can crush innovation, the Sherman Act (“Act”) is an available tool to punish unlawful Internet hogging or collusion by ISPs.

The Internet is a public good.  It was created by the government.   Before, it was called ARPANET.   It was a tool of the military.    As a result, the Internet is akin to a public park.   At the same time, there are now Internet Service Providers (“ISP”) who provide Internet users with differentiated access to this public good.   Think of the ISPs as competing private tour guides in Central Park.   Some tours will be faster but more pricey than other slower tours.

The net neutrality debate wrongly omits how the Sherman Act can help police the ISP market without the need for heavy handed regulation by the FCC.   To the extent an ISP has market power and tries to keep competing companies out of the market, the essential facilities doctrine would likely apply.   To the extent that there is an oligopoly of price fixing ISPs, then there will be claims under Section 1 of the Act.   If an ISP tries to obtain too much market power through a merger, the government can oppose it.   The problem with too much regulation by the FCC is that it discourages technological innovation by ISPs who compete for customers by providing better service at a lower price.   If the FCC requires such companies to take a one size fits all approach to every customer, competitive innovation will likely suffer.  So, too, will consumers seeking faster rides through the Central Park that is the Internet.

Loneliness isn’t good for business

Loneliness isn’t good for business

Industrialization has brought us immense wealth and free time. But at what cost? University of Chicago professor John Cacioppo explores the hidden costs in his book, Loneliness, which is featured in The Nature of Loneliness.

As is more fully set forth in the article, we are mammals. We need physical connection with others as much as we need oxygen. And yet while we have become more virtually connected in today’s globalized economy, we have also become more physically isolated. People date online, do business online, and virtually live online. We have moved from the country, to the city, to the internet. Mr. Cacioppo has some very provoking thoughts about the costs of such virtual connectivity — and isolation — on our health. Workplaces who foster more physical networking and collaboration among the team often increase productivity. Perhaps that is why internet companies — such as Google, Facebook, and the like — are so successful. By collaborating with one other, their members feel more like part of the team that has a common purpose.