Pai, O'Rielly Seen as Mostly in Agreement as FCC Releases Net Neutrality Draft
The FCC offered additional details Thursday on a proposal to scrap Title II broadband classification under the Communications Act and revisit net neutrality rules, building on a speech by Chairman Ajit Pai Wednesday (see 1704260054). Pai, as promised, released the draft NPRM. A senior FCC official said on a call with reporters that even if there's significant public blowback against the NPRM the FCC doesn’t make decisions based on taking the public's temperature. By our count, the draft asks for responses to more than 150 questions. It proposes a deadline of July 17 for initial comments, Aug. 16 for replies.
“Today, we propose to reinstate the information service classification of broadband Internet access service and return to the light-touch regulatory framework first established on a bipartisan basis during the Clinton Administration,” the draft NPRM states. Title I information services have few regulatory mandates, unlike Title II telecom services provided by common carriers. “We also propose to reinstate the determination that mobile broadband Internet access service is not a commercial mobile service.”
Pai and Commissioner Mike O’Rielly are mostly on the same page, though differences of opinion could surface as work on the rules gets underway, communications lawyers said. A former senior FCC official noted O’Rielly made clear this week at NAB he didn’t want many, if any, restrictions on paid prioritization. O’Rielly “has said that before, but that could be one area for debate between the two,” the former official said.
“There may be some issues on the margin, but I expect there will be broad agreement between the majority commissioners about the basic contours,” said Gus Hurwitz, co-director of the Space, Cyber and Telecom Law Program at the University of Nebraska College of Law. “The bigger issue is the question marks, which will affect the final rules,” Hurwitz said. “My takeaway from the proposed NPRM is that it is both an opportunity and a request for Congress to end this largely trivial and overwhelmingly distracting and destructive fight over net neutrality. If and what Congress does on this issue will have more effect than anything else, and that is entirely out of the commission's hands.”
“Reversing the Title II classification is definitely going to be most important, and, therefore, it will be subject to ferocious, albeit misguided attack,” said Randolph May, president of the Free State Foundation. “It’s going to be important to explain carefully why the commission possesses the authority to return to the determination that was upheld by the Supreme Court and which actually comports with the reality of the way consumers perceive Internet access as an integrated information service. Changing the ban on so-called paid prioritization obviously will be contentious, but there needs to be a revision that moves away from an absolute ban to a test that is more nuanced and takes into account marketplace considerations."
The biggest question is whether Pai and O’Rielly are willing to accept Section 706 of the Communications Act as an affirmative grant of authority “and try to put in some enforceable rules in the gray area between common and private carriage,” said Doug Brake, senior telecom policy analyst at the Information Technology and Innovation Foundation. “Though it probably won’t compare to the Title II conflagration, this debate, what is left after Title II, will have important ramifications for the political sustainability of these rules and the likelihood of a bipartisan legislative solution.” Bipartisan legislation is the preferred course, Brake said. “I hope we see a willingness for a middle ground approach, lest this issue get too toxic for what I think most agree is the best possible future, legislation. Otherwise we likely won’t have heard the last of Title II.”
The draft NPRM starts with traditional arguments against the 2015 net neutrality rules, arguing that under the previous light-handed regulation ISPs invested more than $1.5 trillion in the Internet ecosystem. “Businesses developed in ways that the policy makers could not have fathomed even a decade ago,” the draft says. “Google, Facebook, Netflix, and countless other online businesses launched in this country and became worldwide success stories.”
FCC Changed Course
But then in 2015, the FCC changed course, reclassifying broadband as a Title II service, the draft says. “The Commission’s Title II Order has put at risk online investment and innovation, threatening the very open Internet it purported to preserve," it says. "Investment in broadband networks declined. Internet service providers, have pulled back on plans to deploy new and upgraded infrastructure and services to consumers.” The draft argues that text and structure of the Communications Act itself dictates that broadband be construed to be an information service, rather than a traditional telecom service subject to common carrier rules.
“We seek comment on the text, structure, and purposes of the Communications Act and the Telecommunications Act, as well as any additional facts about what Internet service providers offer, how broadband Internet access service works, and what broadband Internet users expect that might inform our analysis,” the draft says. It also argues that FCC precedent supports regulating broadband as a Title I information service. “For two decades, a consistent bipartisan framework supported a free and open Internet,” the draft says. “That same consensus led to six separate Commission decisions confirming that Internet access service is an information service, subject to Title I.”
The draft NPRM proposes to eliminate an internet conduct standard, which Pai slammed Wednesday. "We propose not to adopt any alternatives to the Internet conduct rule, and we seek comment on this proposal," the draft says. "Is there a need for any general non-discrimination standard in today’s Internet marketplace? If so, what would that general non-discrimination standard be? The 2014 Notice proposed prohibiting 'commercially unreasonable practices.' Should we consider that alternative? Or should we consider another general rule and framework (such as Commission adjudication of non-discrimination complaints)?"
Rule Questions, Interconnection Retreat
The draft asks whether the FCC "should keep, modify, or eliminate" rules covering broadband providers: transparency rules and the three bright-line open internet rules against ISP blocking, throttling and paid prioritization of traffic. As suggested by Pai Wednesday, the draft doesn't appear to make specific proposals on how to deal with those rules. But if the commission follows through on the draft proposal to repeal the Title II broadband classification, its authority to impose those rules would be undermined, particularly for the paid prioritization ban, given court precedent.
The document asks a battery of questions about the rules. “Is there any evidence of market failure, or is there likely to be, sufficient to warrant pre-emptive, comprehensive regulation?” the draft asks. “Must we find that market power exists to retain rules in this space, and if so must the rules only apply to providers that have market power? Further, should any approach we adopt -- whether ex ante rules, expectations regarding industry self-governance, or ex post enforcement practices -- vary based on the size, financial resources, customer base of the broadband Internet access service provider, and/or other factors?”
The draft appears to make no references to ISP open internet voluntary commitments that the FTC could enforce, one possible FCC approach that received considerable speculation in the press in recent weeks. A senior FCC official on the call said that wasn't the plan the draft puts on the table, though another senior official noted that undoing the Title II classification -- and common carrier regulation -- would reinstate FTC authority to police broadband ISP practices. The draft specifically proposes to return jurisdiction over ISP privacy practices to the FTC.
The NPRM would propose to relinquish FCC authority over internet interconnection. The draft said the FCC in 2015 "deviated" from its precedent by extending its authority over "Internet traffic exchange or 'interconnection,' an area historically unregulated and beyond" the agency's reach. "We believe Internet traffic exchange, premised on privately negotiated agreements or case-by-case basis, is not a telecommunications service," the draft says. "Moreover, we find nothing in the Act that would extend our jurisdiction as previously suggested by the Title II Order. We further do not believe there exists any non-Title II basis for the Commission to exercise ongoing regulatory oversight over Internet traffic exchange. We accordingly propose to relinquish any authority over Internet traffic exchange." It seeks comment on "consequences and implications" of the proposal.
The draft contains only a few actual proposed rule changes: to amend the definitions of "commercial mobile radio service," "interconnected service," and "public switched network." Such terms were highly litigated in the U.S. Court of Appeals for the D.C. Circuit's review of industry challenges to the 2015 open internet order. That order was upheld by a three-judge panel of the court in June; petitions for en banc rehearing are currently before the D.C. Circuit and a decision could come any day.
The NPRM would open a new docket 17-108 and wouldn't list the previous one, 14-28, in its heading. Explaining recent meetings with industry parties, Pai said April 20 he didn't discuss the merits of any pending proceeding (see 1704260002).
Clyburn, McSweeny Respond
FCC Democrat Mignon Clyburn and FTC Democrat Terrell McSweeny issued a joint statement defending the 2015 rules. “The FCC’s majority would have you believe they are supporters of a free and open internet,” they said. “Make no mistake, this proposal is net neutrality in name only. Here is what the proposal would really do. It would allow broadband providers to erect barriers or charge tolls to any application, connected device, or website that the broadband providers’ customers want to reach. It would allow broadband providers to favor their own content over others, and pick winners and losers on the internet. It would also create an environment where neither the FCC nor FTC could protect the privacy of the customers of some of our largest broadband companies.”
On the call a senior FCC official disputed a suggestion that 4 million public comments already were filed supporting reclassification, before the 2015 order. “A significant portion” were filed in opposition, the official said, also noting the FCC will take all arguments into account. “At the same time, certainly, a comment process does not function as the equivalent of a public opinion survey or poll and what matters is the quality of the argumentation presented, the facts that are entered into the record, the legal arguments,” the official said.
The FCC always has had a difficult time finding authority to justify regulating the internet under the Communications Act, which uses the term the internet exactly once, said Joan Marsh, AT&T senior vice president-federal regulatory. Expect hyperbole, Marsh said in a Thursday blog post. “In the coming weeks and months, the death of the open internet will no doubt be greatly and repeatedly exaggerated,” she wrote. “Indeed, such proclamations are already being made, even before the FCC inquiry is officially launched. But the question of this moment is not whether the internet will remain open -- it undoubtedly will. The question is how, as a country, we will regulate the Internet ecosystem -- including not only ISPs and the broadband infrastructure they deploy, but the tech companies that now dominate the Internet experience.”
Free Press Policy Director Matt Wood fired back at Pai who said in his speech Wednesday that Free Press’ goal was for the government to assume control of the internet. “I suppose that since the Chairman has no response to our thousands of pages of substantive legal and economic filings, he feels like his only option is to resort to ad hominem attacks and red-baiting,” Wood emailed. “We call for greater competition in the market along with the enforcement of basic nondiscrimination rights written into the statute by Congress. How radical! In sum, Pai's attacks on our credibility only show how little credibility he has himself.”