The Open Internet Goes to Court

This afternoon the New America Foundation held a panel discussing the upcoming court case that pits Verizon against the Federal Communications Commission (FCC). The case began back in 2010 and has moved slowly, but oral arguments are finally scheduled to begin on Monday. Verizon is challenging the FCC’s “Open Internet Order,” particularly the non-discrimination rules that are in it. Those rules prevent internet service providers (ISPs) from blocking access to content or applications, unless they were unlawful. In laymen’s terms, Verizon and Comcast are both ISPs that compete with one another and both have incentives to prevent consumers from accessing their competitors products and related applications. The non-discrimination rules ensure that they cannot do that or restrict access to any other domain of the web.

Verizon is challenging the FCC’s authority to implement those rules, arguing that the commission is infringing on the company’s freedom of speech. Effectively, Verizon is saying that it’s ability to block applications and content is speech and is protected by the First Amendment. Not surprisingly, the FCC disagrees with Verizon’s claims, saying that the telecom network is just a carrier of speech.

The panel was moderated by Sarah Morris, the Senior Policy Counsel for the Open Technology Council at New America. After a brief introduction, Susan Crawford, the Former Special Assistant for Science Technology and Innovation Policy to President Obama and a professor at Benjamin N. Cardozo School of Law, lit into Verizon’s claim, calling it an “astonishing and laughable argument.”

“The D.C. Circuit must firmly squash Verizon’s First Amendment claim that any oversight of its high-speed internet access service would be unconstitutional,” she said. “The D.C. Circuit must stop this argument in its tracks. Verizon says that in its capacity – when it’s wearing that hat as a high-speed internet provider – it is the same as the Washington Post and that any effort by government to constrain its ability to slice and dice and prioritize and make deals with content providers about that high-speed internet access should be found unconstitutional under the First Amendment.

“Verizon’s goal here is to make this sound like a serious, legitimate, constitutional argument,” she continued. “If they get there, that’s a win. If it sounds serious, that’s a win for them.”

Matt Wood, the Policy Director for Free Press, elaborated on his organization’s goal of net neutrality, meaning that ISPs treat all information on the internet equally (aka they can’t discriminate).

“Net neutrality isn’t some sort of content regulation,” he said. “It isn’t regulating the internet even though people will try that tired line on you even today. What it is is a simple statement that the person you pay to ship something can’t mess with the contents they’re carrying for you. Contrary to Verizon’s claim, ISPs can’t edit the internet. They can’t edit your email messages. They can’t tell you which websites you can go to and which ones you can’t go to.”

All the panelists supported the FCC in the case and agreed with Crawford and Wood’s position that Verizon’s claim was unsubstantiated.

A former legal advisor to FCC Chairwoman Mignon Clyburn, Angie Kronenberg, adamantly supported her old employer’s rule, emphasizing that the rule was made years ago now and it was time for Verizon to move on.

“This is not a First Amendment right that Verizon has,” she said. “The commission must address larger issues.

“We need to be having a different discussion. It’s time.”

However, no one made the argument as clearly as Crawford did, comparing Verizon’s role as a communications transport network to that of a sidewalk.

“The sidewalk is different from the conversation,” she said. “Right now we’re worried about the sidewalks unconstrained power to rise up and make more money by picking and choosing the particular conversations of which it approves.

“Indeed, the First Amendment and its protection of dissent and freedom of the press is demeaned by Verizon’s argument in this case.”

With oral arguments starting Monday, we’ll soon find out if the D.C. Circuit agrees.

Today’s Fast Food Strike is Mistimed

You may have heard about workers at McDonald’s, Burger King and other stores staging strikes today in 60 different cities. They want a minimum wage of $15 and increased benefits. Obviously, a minimum wage that high is a pipe dream at this point, but The Atlantic’s Derek Thompson is even more pessimistic of the strike’s potential. He presents a graph that shows the change in share of total employment in the retail, manufacturing and food service industries. Retail has stayed steady over the past 25 years while manufacturing has plummeted and food service has skyrocketed. Here’s Thompson:

This graph doesn’t tell us everything you need to know about why low wages in food services are probably here to stay. But it does suggest that the collapse of middle-income stalwarts like manufacturing has left a glut of young low-skill workers who are rushing into to fill local service-sector needs at big-box stores and fast-food chains. And that, to me, suggests another thing: That there are more people willing to do these jobs than there are people willing to strike.

This is the key point. When there are other workers capable of performing the job, workers have no leverage to demand higher wages. The one exception, as Thompson notes, is if consumers boycott the fast food chains, but that doesn’t seem likely to happen anytime soon. Even negative PR is likely to do little to help the workers’ cause. After all, a small increase in the minimum wage can cut into the companies’ (plentiful) profit margins. Some negative media coverage isn’t going to be enough to pressure the stores into accepting reduced profits.

That’s what makes the timing of this strike too early in the recovery. We still have an unemployment problem and that means there are replacement workers available to firms. Fast food workers have no leverage right now. In a couple of years, when we’re (hopefully) back to full employment and have a tight labor market, then workers can strike and extract concessions from companies. But not right now. It’s not just a waste of energy. It’s counterproductive.

I’m very sympathetic to the impatience of fast food workers. Their wages are tiny and the recovery has been very slow. They’re sick of waiting for the right time to demonstrate their anger. That’s why it would’ve been nice for Congress to help them out in the meantime (like, say, extending the payroll tax cut last January or increasing the Earned Income Tax Credit). But, unfortunately, that help hasn’t come and isn’t coming from this Congress. But that doesn’t mean workers should rush into a premature strike. In the end, I agree with Thompson that this strike is doomed. What’s even worse is that the next time workers look to fight for a higher wage, they may find that many of their coworkers are too discouraged and hesitant to strike again. They may find a media that’s less interested in covering the story. That’s what makes today’s staged strike counterproductive. It has little chance of producing concessions now, but may reduce the potency of future strikes. It’s a bleak outlook all around.

Fiscal Cliff v2.0

Just a quick post with my thoughts on Treasury Secretary Jack Lew’s announcement today that by mid-October the U.S. will only be able to make payments with the cash it as each day. In other words, we’re hitting the debt ceiling a couple of months early. Kevin Drum posits that this means negotiations over the budget are going to be lumped in with the debt ceiling:

If mid-October really is the drop-dead date, it means that budget negotiations in late September and debt ceiling negotiations in early October pretty much run right into each other. It’s Fiscal Cliff v2.0.

I don’t quite know what this does to John Boehner’s fragile attempts to keep the lunatic wing of his party under control. Nothing good, probably. I’m also not sure what it does to President Obama’s promise not to negotiate over the debt ceiling. If all of this stuff get munged together, then everyone’s going to get mighty hazy mighty fast about what exactly is being negotiated.

The budget negotiations and debt ceiling running into each other will hurt President Obama and Democrats on both those issues. Raising the debt ceiling should be a technicality that no American would consider holding hostage. We know that House Republicans don’t believe that though. We also know that most Americans don’t follow politics closely and asking them to differentiate between Obama’s willingness to negotiate over the budget, but refusal to do so over the debt ceiling is difficult. Most aren’t going to understand the difference. and will expect Democrats and Republicans to compromise since there are two issues.

If the two were separate, Democrats could bargain with Republicans over the budget and come to a deal (or a continuing resolution). Then, a few months later, they could refuse to negotiate over the debt ceiling and explain to the public that this isn’t debatable. We don’t debate paying our bills. The two issues running into each other just muddies the water. That will allow Republicans to escape some blame on both topics and give the GOP more leverage in negotiations. It may even force the President to bargain over the debt ceiling (or do so subtly). Either way, Republican elites should be pleased with this outcome. It may make their party a bit harder to control during the process, as Drum points out, but the increased leverage they have over the President is a worthwhile tradeoff. As for Democrats, there’s nothing good about this at all. Get excited for Fiscal Cliff v2.0.