FCC Punts on Net Neutrality

Criticized from the right and the left, Federal Communications Commission (FCC) Chairman Tom Wheeler last month tried to chart a middle path on net neutrality ' and pleased no one.

On May 15, Wheeler unveiled a formal notice of a proposed rule that could allow Internet service providers to charge more for faster content delivery, a concept vehemently opposed by a wide coalition of consumer advocates and so-called edge providers such as Netflix Inc. See, “FCC Launches Broad Rulemaking on How Best to Protect and Promote the Open Internet,” FCC.gov.

But Wheeler also left the door open to reclassifying broadband providers under Title II of the Communications Act ' the same regulatory regime applied to telephone companies. That prospect alarms Internet service providers opposed to more government oversight.

The result was something for everyone to hate. The proposal, if adopted, “could kill the free and open Internet,” ColorOfChange.org says. Another group, MoveOn.org, says the proposal would “destroy the Internet as we know it.”

Conversely, Republican Commissioner Michael O'Rielly says the proposed regulations are “unnecessary and defective,” and the National Cable and Telecommunications Association (NCTA) stressed an “unwavering opposition to any proposals that attempt to reclassify broadband services under the heavy-handed regulatory yoke of Title II.”

The FCC's Role

In part, the statements of outrage may represent posturing ' a way to keep pressure on the FCC as it moves forward with the rulemaking. But the comments also reflect how difficult it is to reach a consensus on the FCC's role in overseeing the Internet.

Wheeler “tried to thread the needle with the middle ground,” says Lawrence Freedman, a telecommunications partner at Edwards Wildman Palmer. “This is more a political issue than a legal one.”

On the eve of the vote, 36 Democratic members of Congress sent a letter urging the FCC to reclassify Internet service providers under Title II. Protesters camping out in front of the agency made the same demand. However, House Republican leaders wrote that doing so would “limit economic freedom and innovation, and threaten to derail one of our economy's most vibrant sectors.”

In a 3-2, party-line split, the FCC voted to move ahead with proposed rules, giving the public four months to comment.

During the meeting, Wheeler said his proposal would “protect and promote the Internet as an open platform” by barring Internet service providers from blocking lawful content. “Broadband consumers must have access to the content, services and applications they desire,” according to an FCC fact sheet. The proposal did not officially green-light paid prioritization ' that is, charging companies for faster or better delivery of their content. But it didn't rule it out, either. “The potential for there to be some kind of fast lane available to only a few has many people concerned,” Wheeler said. “We specifically ask whether and how to prevent the kind of paid prioritization that could result in fast lanes.”

The proposed rule also calls for enhanced transparency, requiring broadband providers to disclose “meaningful information” about how they manage their networks and “information about new practices, like any paid prioritization, to the extent that it is otherwise permitted,” according to the FCC.

The proposed rule also creates an ombudsperson to watch out for consumers and small businesses. “Internet entrepreneurs and consumers shouldn't have to hire a lawyer to call the commission's attention to a grievance,” Wheeler said.

Lukewarm Support

Wheeler's two fellow Democratic commissioners, Mignon Clyburn and Jessica Rosenworcel, were lukewarm as they voted to back the chairman. “I would have taken time for more input,” Rosenworcel says. “We moved too fast to be fair.” Clyburn says she is “on record for preferring a different legal structure” for regulation ' that is, Title II.

Republican Ajit Pai says Wheeler should have delayed the vote. Congress, he says, not the FCC, should decide how to regulate the Internet.

He describes Wheeler's rule as “a lawyerly one that proposes a minimal-level-of-access rule and a not-too-much-discrimination rule.”

“To date, no one outside the building has asked me to support this proposal,” Pai says. “It brings to mind a Texas politician's observation that there is nothing in the middle of the road but yellow stripes and dead armadillos.”

It's also not clear how Wheeler's proposal would fare in the courts. As is, the proposal retains broadband's existing classification as a lightly regulated information service and relies on the FCC's legal authority under Section 706 of the Telecommunications Act of 1996 (TCA) to proceed. The provision directs the agency to “encourage the development ' of advanced telecommunications” services and empowers the agency to take steps to accelerate broadband deployment.

In January, the U.S. Court of Appeals for the D.C. Circuit struck down the FCC's previous attempt to regulate Internet service providers under Section 706, saying that the agency could not impose Title II-style obligations on an information service. See, FCC v. Verizon, No. 11-1355 (D.C. Cir. Jan. 14, 2014). However, the court did affirm that the FCC holds general authority to act under Section 706.

Still, the new rules may face the same legal obstacles as did the old. “If as suggested, they ban paid prioritization under a commercially reasonable standard, that's bound to be struck down by the courts,” says Samuel Feder, a former FCC general counsel who now chairs the communications practice at Jenner & Block. “The blocking provision has a better chance because of the court's invitation to try again, but there are no guarantees there, as well.”

Former FCC commissioner Michael Copps, a Democrat, describes Section 706 as a “weak legal framework that so far has gotten us nowhere.” He says the “clear common-sense prerequisite for an open Internet is Title II reclassification, guaranteeing the agency's authority to protect consumers and ensure free speech online.”

Doug Brake, policy analyst with the Information Technology and Innovation Foundation (ITIF), has the opposite reaction. “It is disappointing to see the Commission entertain some of the more drastic measures put forth by certain advocates, including the potential of classifying broadband as a Title II, common-carrier service,” he says. “Title II was designed for the formal telephone monopoly of a bygone era and is not suited to the fast-paced innovation we see in IP networks.”

Jenna Greene'is a Senior Reporter with the'National Law Journal, an ALM sibling of'Internet Law & Strategy. She can be reached at'[email protected]. Follow her on Twitter'@JgreeneJenna.

Criticized from the right and the left, Federal Communications Commission (FCC) Chairman Tom Wheeler last month tried to chart a middle path on net neutrality ' and pleased no one.

On May 15, Wheeler unveiled a formal notice of a proposed rule that could allow Internet service providers to charge more for faster content delivery, a concept vehemently opposed by a wide coalition of consumer advocates and so-called edge providers such as Netflix Inc. See, “FCC Launches Broad Rulemaking on How Best to Protect and Promote the Open Internet,” FCC.gov.

But Wheeler also left the door open to reclassifying broadband providers under Title II of the Communications Act ' the same regulatory regime applied to telephone companies. That prospect alarms Internet service providers opposed to more government oversight.

The result was something for everyone to hate. The proposal, if adopted, “could kill the free and open Internet,” ColorOfChange.org says. Another group, MoveOn.org, says the proposal would “destroy the Internet as we know it.”

Conversely, Republican Commissioner Michael O'Rielly says the proposed regulations are “unnecessary and defective,” and the National Cable and Telecommunications Association (NCTA) stressed an “unwavering opposition to any proposals that attempt to reclassify broadband services under the heavy-handed regulatory yoke of Title II.”

The FCC's Role

In part, the statements of outrage may represent posturing ' a way to keep pressure on the FCC as it moves forward with the rulemaking. But the comments also reflect how difficult it is to reach a consensus on the FCC's role in overseeing the Internet.

Wheeler “tried to thread the needle with the middle ground,” says Lawrence Freedman, a telecommunications partner at Edwards Wildman Palmer. “This is more a political issue than a legal one.”

On the eve of the vote, 36 Democratic members of Congress sent a letter urging the FCC to reclassify Internet service providers under Title II. Protesters camping out in front of the agency made the same demand. However, House Republican leaders wrote that doing so would “limit economic freedom and innovation, and threaten to derail one of our economy's most vibrant sectors.”

In a 3-2, party-line split, the FCC voted to move ahead with proposed rules, giving the public four months to comment.

During the meeting, Wheeler said his proposal would “protect and promote the Internet as an open platform” by barring Internet service providers from blocking lawful content. “Broadband consumers must have access to the content, services and applications they desire,” according to an FCC fact sheet. The proposal did not officially green-light paid prioritization ' that is, charging companies for faster or better delivery of their content. But it didn't rule it out, either. “The potential for there to be some kind of fast lane available to only a few has many people concerned,” Wheeler said. “We specifically ask whether and how to prevent the kind of paid prioritization that could result in fast lanes.”

The proposed rule also calls for enhanced transparency, requiring broadband providers to disclose “meaningful information” about how they manage their networks and “information about new practices, like any paid prioritization, to the extent that it is otherwise permitted,” according to the FCC.

The proposed rule also creates an ombudsperson to watch out for consumers and small businesses. “Internet entrepreneurs and consumers shouldn't have to hire a lawyer to call the commission's attention to a grievance,” Wheeler said.

Lukewarm Support

Wheeler's two fellow Democratic commissioners, Mignon Clyburn and Jessica Rosenworcel, were lukewarm as they voted to back the chairman. “I would have taken time for more input,” Rosenworcel says. “We moved too fast to be fair.” Clyburn says she is “on record for preferring a different legal structure” for regulation ' that is, Title II.

Republican Ajit Pai says Wheeler should have delayed the vote. Congress, he says, not the FCC, should decide how to regulate the Internet.

He describes Wheeler's rule as “a lawyerly one that proposes a minimal-level-of-access rule and a not-too-much-discrimination rule.”

“To date, no one outside the building has asked me to support this proposal,” Pai says. “It brings to mind a Texas politician's observation that there is nothing in the middle of the road but yellow stripes and dead armadillos.”

It's also not clear how Wheeler's proposal would fare in the courts. As is, the proposal retains broadband's existing classification as a lightly regulated information service and relies on the FCC's legal authority under Section 706 of the Telecommunications Act of 1996 (TCA) to proceed. The provision directs the agency to “encourage the development ' of advanced telecommunications” services and empowers the agency to take steps to accelerate broadband deployment.

In January, the U.S. Court of Appeals for the D.C. Circuit struck down the FCC's previous attempt to regulate Internet service providers under Section 706, saying that the agency could not impose Title II-style obligations on an information service. See, FCC v. Verizon, No. 11-1355 (D.C. Cir. Jan. 14, 2014). However, the court did affirm that the FCC holds general authority to act under Section 706.

Still, the new rules may face the same legal obstacles as did the old. “If as suggested, they ban paid prioritization under a commercially reasonable standard, that's bound to be struck down by the courts,” says Samuel Feder, a former FCC general counsel who now chairs the communications practice at Jenner & Block. “The blocking provision has a better chance because of the court's invitation to try again, but there are no guarantees there, as well.”

Former FCC commissioner Michael Copps, a Democrat, describes Section 706 as a “weak legal framework that so far has gotten us nowhere.” He says the “clear common-sense prerequisite for an open Internet is Title II reclassification, guaranteeing the agency's authority to protect consumers and ensure free speech online.”

Doug Brake, policy analyst with the Information Technology and Innovation Foundation (ITIF), has the opposite reaction. “It is disappointing to see the Commission entertain some of the more drastic measures put forth by certain advocates, including the potential of classifying broadband as a Title II, common-carrier service,” he says. “Title II was designed for the formal telephone monopoly of a bygone era and is not suited to the fast-paced innovation we see in IP networks.”

Jenna Greene'is a Senior Reporter with the'National Law Journal, an ALM sibling of'Internet Law & Strategy. She can be reached at'[email protected]. Follow her on Twitter'@JgreeneJenna.