Looming FCC vote could shake up Internet regulation

Looming FCC vote could shake up Internet regulation

Daily Journal

February 5, 2015

By:  Ara Jabagchourian


On Wednesday, Tom Wheeler, chairman of the Federal Communications Commission, proposed regulating Internet service as a public utility. According to Wheeler, the goal is to preserve and protect an open Internet as “a place for innovation and free expression.” With an FCC vote on the proposal set to occur at an open meeting on Feb. 26, the expectation is that lobbying interests from Internet service providers and Silicon Valley interests will be engaged at full throttle.

A “fact sheet” on the FCC’s website outlines Wheeler’s proposed rules for expanding the agency’s power to oversee Internet service providers and gives reasons for doing so. He first sets forth that an open Internet protects consumers in being able to access the content of their choosing, without the interference from broadband providers. Further, Wheeler indicates that net neutrality promotes “innovation and competition” by allowing new products and services to be offered without the fear of being blocked or throttled by service providers. The concern raised by the Wheeler is that without net neutrality, an Internet service provider may act as a “gatekeeper,” pitting the pursuit of its “own profits above the public interest.” Third, Wheeler argues that an open Internet provides innovators with “predictable rules of the road” when they introduce new products or services online.

Wheeler proposes to reclassify retail Internet service Americans purchase from cable, phone and wireless providers (e.g., “broadband Internet access service”) as a “telecommunications service” under Title II of the Communications Act of 1934. Title II, particularly Section 202, states that common carriers cannot “make unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services.” The fact sheet then goes into cursory legal analysis relating to the legal basis to support the proposal, identifying Section 706 of the Telecommunications Act of 1996. In addition, Wheeler also specifically cited the U.S. Court of Appeals for the D.C. Circuit’s Verizon v. Federal Communications Commission decision, which held that Section 706 provides an independent grant of authority to the FCC to adopt Open Internet rules. Last year, the Verizon decision struck down the FCC’s Open Internet Order of 2010 because it did not fall with its statutory grant of authority.

The fact sheet proposes three bright line rules. The first rule is “no blocking,” which would prohibit broadband providers from blocking legal content, applications, services or non-harmful devices. The second bright line rule is “no throttling.” Throttling is the practice of impairing, slowing down or degrading sought out content. Third, the proposal seeks to prohibit “paid prioritization.” This would prevent Internet service providers from favoring some content over others and to prohibit the creation of “fast lanes” for those willing to pay more.

Rather than apply all of Title II to the Internet, the Wheeler’s proposal seeks to only take applicable portions that relate to Internet and forbear from provisions that do not. The major provisions of Title II that would apply include: enforcement of Sections 201 and 202 (e.g., no “unjust and unreasonable practices”), permitting investigations of consumer complaints, and protection of consumer privacy under Section 222. The major provisions the new proposal would forbear include: no rate regulation, no contribution to the Universal Service Fund, and no new taxes or fees. The purpose of applying these selected rules and forbearing on others is “[t]o preserve incentives for broadband operators to invest in their networks.”

Wheeler sees this proposal as modernizing Title II for the 21stcentury. He further points out these regulations are less burdensome than the rules applied to wireless telecommunications 20 years ago, an industry that has since thrived.

It is likely that many Internet companies such as Netflix and Google would support such proposals, given the heavy traffic these businesses have over the broadband networks. On the other hand, companies such as AT&T and Comcast are expected to challenge the proposal, arguing that such regulation would overburden their operations. If however the proposed rules are approved, one should not be surprised to see a fierce legal battle on this issue.