FCC Likely to Start Process of Repealing Title II With NPRM in Next 2 Months

FCC Chairman Ajit Pai's efforts to take on net neutrality could start with an NPRM in a few months, we're told. Approving new rules could take as long as a year, current and former commission officials said Friday. Pai and staff have started talking to industry representatives about the process of taking on net neutrality and repeal of broadband classification as a Communications Act Title II service. A staff team within the FCC has been working on an NPRM, agency officials and others said Friday. The goal apparently is to seek a vote by the June 15 commissioners’ meeting, since Commissioner Mignon Clyburn’s term expires June 30, they said.

Clyburn voiced concerns about the apparent plans. "As the recent battle over broadband privacy has demonstrated, this Administration has made it a priority to adopt communications policies that are the antithesis of #ConsumersFirst," she said in an emailed statement. "If recent press reports are true, Chairman Pai's plan to roll back open internet protections will leave consumers and competitors without a cop on the beat and vulnerable to the anti-competitive practices of the nation's largest broadband providers." She didn't comment on how long she plans to stay at the agency. By law, she must leave by the end of this Congress if not reconfirmed. That would be somewhere near the end of 2018. An FCC spokesman and Commissioner Mike O'Rielly didn't comment.

Pai is looking to repeal the 2015 FCC broadband reclassification from Title I to Title II, an action that strengthened the agency's authority to impose net neutrality rules on telco and cable ISPs. He's considering ways to prod or require ISPs to include open internet principles in their terms of service, which would then be subject to FTC enforcement, said one industry representative, who believed some ISPs are wary of such a framework. "ISPs are not entirely comfortable with this" because "it's not without risk for them," but Pai's "not just going to repeal Title II and let them go on their merry way," the representative said.

One former FCC official said Pai could seek a declaratory ruling to repeal Title II without completing a rulemaking. "Doing this through a declaratory ruling rather than a rulemaking would be rather clever, because then the FCC doesn't provide proponents of the rules an opportunity to build a huge record in favor of the rules that then would have to be addressed in any rulemaking proceeding to eliminate the rules," the ex-official said.

Others don't expect Pai to seek a quick declaratory ruling to repeal Title II. Instead, he's more likely to seek comment on everything in an NPRM, including the details of net neutrality principles and how oversight would be shifted to the FTC, the industry representative said. "Whatever he does, I would assume that it's put out for notice and comment," agreed Steptoe and Johnson attorney Markham Erickson, who has clients supportive of open internet rules. "You’re safer on appeal if you have comment, even if it's a declaratory ruling.”

The NPRM is expected to address privacy, since the FCC will have to repeal the Title II broadband classification to shift ISP privacy oversight to the FTC, the current and former FCC officials said.

Takes Time

It may take time to roll back the rules. One FCC official doubted agency action in May. Once an NPRM is released, it likely will take up to a year to seek comment and complete the process, based on history, though several officials noted that the net neutrality dissents by Pai and Commissioner Mike O’Rielly were essentially legal briefs that can form the basis for new rules.

“I expect we’ll see an NPRM within a couple of months in order to get the process started,” said Randolph May, president of the Free State Foundation. “There are ways to curtail the overreach of the current rules while still retaining a meaningful commission oversight role with regard to ISP practices. A key aspect of the revised rule, which would not be that far apart from [former FCC Chairman] Tom Wheeler’s original ‘commercial reasonableness’ proposal before it was hastily withdrawn, should be some sort of showing of market failure and consumer harm as a prerequisite for FCC sanctions.”

“Pai and O’Rielly have always been clear that they reject the FCC’s claims to authority over broadband via Title II and Section 706," said Berin Szoka, president of TechFreedom. "Expect them to reverse both, which will hand broadband back to the FTC, state attorneys general and private plaintiffs. The FTC will have broad power to protect consumers from both privacy invasions and genuine net neutrality problems. But an industry code of conduct will make the FTC’s job easier because it will be able to punish any deviations from the code directly, under its 'deception' power.”

Code of Conduct

Pai appears to be pushing ISPs to adopt a code of conduct, many agreed. That shouldn’t be a “heavy lift,” Szoka said. “ISPs have always agreed to the core of net neutrality. The Google-Verizon legislative framework is probably the political baseline for any deal, except the FTC, not the FCC, would be the federal cop on the beat. And any new deal will likely cover wireless services equally, as the 2015 rules did. That will work so long as the rules are flexible enough to account for the obvious differences in services. Most notably, the Google-Verizon framework banned prioritization that harmed users or competition.”

“The most logical approach to net neutrality issues has always been to allow companies and customers to find valuable service arrangements in a dynamic environment, while dealing with any anti-competitive [action] that might arise on an ad hoc basis,” said Mark Jamison, a member of the Trump FCC transition team and American Enterprise Institute scholar. “Dropping Title II allows the FCC and the FTC to pursue this approach.” The new arrangement should allow “fast lanes,” Jamison said. “Some of the large providers, like Netflix, often bypass the internet by connecting directly to ISPs. These large so-called edge providers create their own private fast lanes. New startups cannot afford that, so internet fast lanes would be their only option for achieving something equivalent to [what] the big guys can do for themselves.”

“It is valuable to get industry to put skin in the game,” said Roslyn Layton, AEI scholar and member of the Trump transition FCC landing team. “If consumers in fact value net neutrality, then it should be a competitive parameter on which broadband providers can perform." Layton, seen as a leading candidate to become an FCC commissioner (see 1704040057), said that "providers can make a contract with their customers to uphold a set of practices. Customers can judge for themselves whether they are satisfied. If harm emerges, it can be addressed by the FTC.” Voluntary industry commitments are part of some of the “longest-running and most successful net neutrality regimes,” especially in the Nordic countries, she said. Since 2009, broadband providers in Denmark, Sweden and Norway have made voluntary pledges “as proof of their commitment to uphold an open internet,” she said. “In the Danish case, the broadband providers offer a quality guarantee as part of their net neutrality commitment, a provision beyond what most regulators require.”

In changing how ISPs were regulated, the last FCC used the “nuclear” option and made the U.S. an outlier among other nations, Layton said. “Apart from the U.S., there is no country in the world that takes rules written in 1934 for the rotary telephone and applies them to the internet.” The FTC does “the lion’s share” on consumer protection, she said. “The FCC gambit of net neutrality was its way to expand its regulatory authority without congressional authorization, to invent a justification to extract remedies from merger reviews, and otherwise to freelance in chilling forms of social regulation,” she said.

Criticism

Net neutrality backers were critical. Sen. Ed Markey, D-Mass., slammed the possible FCC move. "The only way to protect a free and open internet is with strong net neutrality rules of the road -- not voluntary guidelines -- that ensure businesses, innovators and families can use the world’s greatest platform for commerce and communications," he said in a statement. "Chairman Pai’s proposal would put the future of an open and free internet in the hands of big corporations and the powerful few at the expense of consumers.”

Several public interest groups, major supporters of Wheeler net neutrality rules, urged the FCC to keep the current regulatory regime. “If these reports are true, Chairman Pai is preparing to give dominant cable and telecommunications companies what their D.C. lobbyists have dreamed of for years: voluntary net neutrality ‘rules’ where consumer protection is no more than ‘trust your cable or internet provider,’” said Chris Lewis, vice president at Public Knowledge, in a statement.

“Ajit Pai is conspiring with cable and phone lobbyists to take away fundamental safeguards that keep the internet open and free,” said Free Press CEO Craig Aaron in a statement. “The idea of replacing landmark Net Neutrality rules with voluntary conditions is an outrage and an insult to the millions who fought for them. It’s clear Pai thinks his real constituents are Comcast and Verizon, not the American people.” Free Press Policy Director Matt Wood slammed the net neutrality dissents by the two FCC Republicans: “People who fool themselves into thinking that those incoherent dissents were some kind of brilliant legal briefs mustn't have read many good legal briefs."

“Kicking broadband authority to the FTC is an imperfect, but necessary, interim step toward legislative efforts to determine the scope of FCC broadband jurisdiction long-term,” said Doug Brake, telecom policy analyst at the Information Technology and Innovation Foundation. “An NPRM seeking comment on those steps makes sense. ... We have to find a home for open Internet protections that doesn’t leave the fundamental regulatory structure open to dramatic swings from shifting political winds.” Brake said as the FCC moves away from Title II for ISPs, “the outrage machine will be cranked to 11 every step of the way.” That's likely to have little effect, Brake said.

Some think Congress is the right venue for further debate. “If the activist crowd thinks they can preserve broadband under Title II, they are kidding themselves -- their efforts would be much better spent on helping craft a legislative package," said Brake. NetCompetition Chairman Scott Cleland said that "if net neutrality is truly a principle worth keeping and following, net neutrality supporters should negotiate a compromise in legislation with Congress where there is strong willingness to craft a bipartisan permanent legislative solution.”