Obama Weighs In To Favor Net Neutrality

'

• No blocking. If a consumer requests access to a website or service, and the content is legal, your ISP should not be permitted to block it. That way, every player ' not just those commercially affiliated with an ISP ' gets a fair shot at your business.
• No throttling. Nor should ISPs be able to intentionally slow down some content or speed up others ' through a process often called “throttling” ' based on the type of service or your ISP's preferences.
• Increased transparency. The connection between consumers and ISPs ' the so-called “last mile” ' is not the only place some sites might get special treatment. So, I am also asking the FCC to make full use of the transparency authorities the court recently upheld, and if necessary to apply net neutrality rules to points of interconnection between the ISP and the rest of the Internet.
• No paid prioritization. Simply put: No service should be stuck in a “slow lane” because it does not pay a fee. That kind of gatekeeping would undermine the level playing field essential to the Internet's growth. So, as I have before, I am asking for an explicit ban on paid prioritization and any other restriction that has a similar effect.

'

Obama's Plan, supra.

The President calls on the FCC to use its power under the Telecommunications Act of 1996 (TCA) to classify broadband Internet services as a Title II telecommunications service. “[T]he time has come for the FCC to recognize that broadband service is of the same importance and must carry the same obligations as so many of the other vital services do,” the President's says. “To do that, I believe the FCC should reclassify consumer broadband service under Title II of the [Communications] Act ' while at the same time forbearing from rate regulation and other provisions less relevant to broadband services. This is a basic acknowledgment of the services ISPs provide to American homes and businesses, and the straightforward obligations necessary to ensure the network works for everyone ' not just one or two companies.”

Obama concludes by calling the Internet “one of the greatest gifts our economy ' and our society ' has ever known,” and says that the FCC has “no higher calling than protecting an open, accessible and free Internet.”

The revised rules were originally scheduled for a vote at the FCC's December meeting, however, as of this writing, such a vote is not on the agenda for that meeting.

Reactions

President Obama's statement will undoubtedly warm the hearts of bloggers and online gamers, but preserving net neutrality might not be the slam dunk that the President's statement makes it out to be.

“The statement also serves to politicize the debate further and fails to dispel much of the confusion surrounding this debate,” according to Earl W. Comstock, of Eckert Seamans Cherin & Mellott, LLC in Washington, DC. Comstock was one of the lead Senate staff who drafted the TCA and worked on other major communications legislation, including the 1992 Cable Act, the 1998 Internet Tax Freedom Act, and the 2000 Orbit Act. He also represented Data Foundry in the 2010 net neutrality proceedings. “The President's support will further increase pressure on the new Republican majority to enact legislation blocking FCC action,” Comstock says, which Obama would then have to veto.

To that end, Senator Mitch McConnell (R-KY), who is expected to become the Senate Majority Leader next year, called the President's proposal “heavy-handed regulation that will stifle innovation and concentrate more power in the hands of Washington bureaucrats,” “a terrible idea” ' that “[t]he Commission would be wise to reject.” See , http://1.usa.gov/1ulFs3G. And House Speaker John Boehner (R-OH) said in a statement that “' net neutrality is a textbook example of the kind of Washington regulations that destroy innovation and entrepreneurship. Federal bureaucrats should not be in the business of regulating the Internet ' not now, not ever.” He continued that the newly elected Republican majority in Congress “will continue our efforts to stop this misguided scheme to regulate the Internet, and we will work to encourage private-sector job creation, starting with many of the House-passed jobs bills that the outgoing Senate majority ignored.” See, http://1.usa.gov/1uEJGF4.

The country's largest ISPs, while declaring support for an open Internet, oppose Obama's plan. Comcast's Executive Vice President, David L. Cohen released a statement saying that while “Comcast fully embraces the open Internet principles that the President and the Chairman of the FCC have espoused ' transparency, no blocking, non-discrimination rules, and no 'fast lanes,' ' [w]e continue to believe ' that section 706 provides more than ample authority to impose those rules.” See, http://bit.ly/1xvmaLG. Cohen pointed to a strong negative reaction by the stock market following Obama's statement and says that reclassifying broadband would “be a radical reversal that would harm investment and innovation.” Id.

Verizon has also come out in opposition to the reclassification, releasing a statement on its Public Policy Blog:

Reclassification under Title II, which for the first time would apply 1930s-era utility regulation to the Internet, would be a radical reversal of course that would in and of itself threaten great harm to an open Internet , competition and innovation. That course will likely also face strong legal challenges and would likely not stand up in court.

See, http://vz.to/1v0XYBS'(emphasis in original).

In support of the President's plan, The Internet Association's President and CEO Michael Beckerman said in a statement that “the FCC must adopt strong, legally sustainable rules that prevent paid prioritization and protect an open Internet for users. Using Title II authority, along with the right set of enforceable rules, the President's plan would establish the strong net neutrality protections Internet users require.”

FCC Chairman Tom Wheeler also came out in support of the President's plan, well, sort of: “Like the President, I believe that the Internet must remain an open platform for free expression, innovation and economic growth. We both oppose Internet fast lanes. The Internet must not advantage some to the detriment of others. We cannot allow broadband networks to cut special deals to prioritize Internet traffic and harm consumers, competition and innovation.”

Wheeler couched his support of Obama's plan: “The more deeply we examined the issues around the various legal options, the more it has become plain that there is more work to do. The reclassification and hybrid approaches before us raise substantive legal questions. We found we would need more time to examine these to ensure that whatever approach is taken, it can withstand any legal challenges it may face. For instance, whether in the context of a hybrid or reclassification approach, Title II brings with it policy issues that run the gamut from privacy to universal service to the ability of federal agencies to protect consumers, as well as legal issues ranging from the ability of Title II to cover mobile services to the concept of applying forbearance on services under Title II.” See, http://fcc.us/1xJsBZJ.

Reclassification

Telecom lawyers following the issue say the companies are apt to argue that reclassification would be arbitrary and capricious, in violation of the Administrative Procedures Act (APA).

Broadband providers “might also argue that reclassification is an unlawful taking, in violation of the Fifth Amendment, because it makes their trillion-dollar investment in high-speed Internet, made in reliance on decades of what might be characterized as assurances that they would not be treated as common carriers, less valuable,” says McDermott Will & Emery telecom partner Paul Devinsky.

The companies also are likely to argue that reclassification misconstrues statutory definitions of what should be considered a largely unregulated information service versus a highly regulated telecommunications provider. “The chairman of the FCC does not have a magic wand he can wave and say, 'This is a telecommunications service and this is an information service.' He cannot make something a telecommunications service simply because he says it is,” says Jonathan Jacob Nadler, a telecom partner at Squire Patton Boggs. It is “virtually unthinkable,” Nadler continued, that the ability to do things like select and access movies or send e-mails or get driving directions to a destination could suddenly be deemed a telecommunications service. What the FCC in reclassification would have to do is compel broadband providers to unbundle the telecommunications service ' the transmission component ' from the Internet access service, and offer the telecom component on a regulated basis, he says.

Telecom expert and former top FCC official Scott Blake Harris of Harris, Wiltshire & Grannis name partner says the criticism of Obama's statement is unfair. “Members of Congress, of both parties and on both sides of the Hill, routinely do their best to influence FCC decisions. I can think of no reason why the president should not make his opinions known publicly on an issue of such obvious public interest,” he says. “And the FCC really is independent,” Harris continued. “It would be a grave mistake to assume that because the president expressed his view that the commission, with two smart and savvy Republicans and three smart and independent-minded Democrats, will adopt his view.”

Comstock says that the President did not go far enough in his statement, and “by calling for Title II regulation but then focusing on blocking, throttling, and paid prioritization,” Obama “missed the opportunity to educate the public on why reclassification is appropriate and lawful. It is lawful because Congress specifically amended Title II of the Communications Act in 1996 to deal with digital convergence and promote the growth of the Internet.”

More on Title II

Comstock says that the President was not technically accurate in his statement. “The term 'free Internet,' which is not found in the Communications Act, furthers a serious misunderstanding that clouds the policy debate. Internet traffic has never been delivered for free; all Internet traffic is delivered pursuant to peering arrangements (in which the two parties agree there is a roughly even exchange of traffic for delivery on each other's network), transit agreements (private contracts in which one party pays the other to deliver the traffic), or regulated interconnection agreements (which also provide for payment). So by suggesting that adopting Title II would ensure that the Internet remains 'free' is a misnomer.” What adopting Title II would in fact do, Comstock says, is “prevent unreasonable discrimination ' Comcast or Verizon could not choose to favor their own or affiliated content or services by providing them larger bandwidth or interconnection that is denied to others seeking the service and willing to pay the same price.”

Comstock says the idea should be to provide ISPs, as providers of a service, with “a financial incentive to provide more bandwidth ' the one thing they should be paid for ' as opposed to an incentive to create scarcity. The President missed the opportunity to articulate that common carrier regulation was successfully applied to the transmission component of information service for 25 years ' until 2005 ' and that common carrier regulation of the infrastructure is what led to the Internet we know and love today. It is the absence of this regulation that is leading to the changes in the Internet no one likes ' absent common carrier rules the Internet will begin to look more and more like a cable network in which the pipe owner legally controls the content and services.”

Comstock says that using Title II to regulate Internet services is “appropriate because Verizon and AT&T ' and other facilities based ISPs ' use sections 214 and 224 of the Communications Act (both squarely in Title II) to build their facilities across public rights of way and access electric utility power poles,” just as Comcast and other cable companies “use sections 214, 224 to access the public rights of way and electric utility poles. They get a major benefit from using public rights of way, so imposing an obligation to provide common carrier service to the public over those facilities is perfectly fair.”

In addition, Title II would “allow the Commission to require facilities-based ISPs to allow attachment of competitive consumer premises equipment to fiber networks,” Comstock says, which they are not doing today. Classifying Internet services under Title II would also allow the FCC to prohibit restrictions on resale of the transmission component. “It was the right to attach devices and the prohibition on resale restrictions that led to the Internet,” says Comstock. That right to attach is what allowed independent companies and universities to lease lines and attach equipment to create data networks over the Bell telephone system without their permission. “If anyone thinks that 'competition' will ensure those two rights,” Comstock continues, “just look at Verizon FIOS and Comcast cable networks today ' neither allows resale or attachment of devices without permission ' and so consumers are stuck renting a set-top box that is little changed from 1996, have little to no choice in cable modems (which they also mostly have to rent), and have no choice in who provides Internet access service over the facilities connected to their home (as compared to a choice among literally hundreds of independent ISPs in 2000).”

Comstock concludes that “by focusing on blocking, throttling, and paid prioritization the President used the trendy phrases but missed the key concepts. It is only by drawing a bright line between the communications infrastructure and the applications and services that ride over that infrastructure that we can return to a rational, enforceable legal regime that will ensure the Internet is as successful an engine of growth as it has been.”

Conclusion

Whether the FCC will follow Obama's lead or stick with Wheeler's plan, litigation is certain, says Olivier Sylvain, a professor at Fordham University School of Law who specializes in Internet and technology issues. “The hybrid plan floated by the FCC is an effort to bridge the gap between two polarized camps ' but it could be challenged on the same grounds as reclassification. Why not go all in?”

Steven Salkin, Esq., is Managing Editor and Web Editor of Internet Law & Strategy. He can be reached at [email protected] or on Twitter @ljn_online. This article includes reports from The National Law Journal.

President Obama, saying he is fulfilling a promise he made during his 2008 presidential campaign, stepped onto the “net neutrality” battlefield on Nov. 10 by releasing a statement (complete with video) calling on the Federal Communications Commission (FCC) to adopt rules that prevent Internet service providers from charging more for faster online access and that “protect net neutrality.” See, “Net Neutrality: President Obama's Plan for a Free and Open Internet.” The President's statement comes just before the FCC needs to publish revised rules and follows the Commission's request for public comment in May. The FCC had to create new rules since its attempt to revise the current rules to allow for net neutrality was struck down by the U.S. Court of Appeals for the D.C. Circuit in January.

“'Net neutrality' has been built into the fabric of the Internet since its creation ' but it is also a principle that we cannot take for granted. We cannot allow Internet service providers (ISPs) to restrict the best access or to pick winners and losers in the online marketplace for services and ideas,” the President says in the statement.

While emphasizing that the FCC is an independent commission, Obama lays out a four-point plan for the new rules:

'

• No blocking. If a consumer requests access to a website or service, and the content is legal, your ISP should not be permitted to block it. That way, every player ' not just those commercially affiliated with an ISP ' gets a fair shot at your business.
• No throttling. Nor should ISPs be able to intentionally slow down some content or speed up others ' through a process often called “throttling” ' based on the type of service or your ISP's preferences.
• Increased transparency. The connection between consumers and ISPs ' the so-called “last mile” ' is not the only place some sites might get special treatment. So, I am also asking the FCC to make full use of the transparency authorities the court recently upheld, and if necessary to apply net neutrality rules to points of interconnection between the ISP and the rest of the Internet.
• No paid prioritization. Simply put: No service should be stuck in a “slow lane” because it does not pay a fee. That kind of gatekeeping would undermine the level playing field essential to the Internet's growth. So, as I have before, I am asking for an explicit ban on paid prioritization and any other restriction that has a similar effect.

'

Obama's Plan, supra.

The President calls on the FCC to use its power under the Telecommunications Act of 1996 (TCA) to classify broadband Internet services as a Title II telecommunications service. “[T]he time has come for the FCC to recognize that broadband service is of the same importance and must carry the same obligations as so many of the other vital services do,” the President's says. “To do that, I believe the FCC should reclassify consumer broadband service under Title II of the [Communications] Act ' while at the same time forbearing from rate regulation and other provisions less relevant to broadband services. This is a basic acknowledgment of the services ISPs provide to American homes and businesses, and the straightforward obligations necessary to ensure the network works for everyone ' not just one or two companies.”

Obama concludes by calling the Internet “one of the greatest gifts our economy ' and our society ' has ever known,” and says that the FCC has “no higher calling than protecting an open, accessible and free Internet.”

The revised rules were originally scheduled for a vote at the FCC's December meeting, however, as of this writing, such a vote is not on the agenda for that meeting.

Reactions

President Obama's statement will undoubtedly warm the hearts of bloggers and online gamers, but preserving net neutrality might not be the slam dunk that the President's statement makes it out to be.

“The statement also serves to politicize the debate further and fails to dispel much of the confusion surrounding this debate,” according to Earl W. Comstock, of Eckert Seamans Cherin & Mellott, LLC in Washington, DC. Comstock was one of the lead Senate staff who drafted the TCA and worked on other major communications legislation, including the 1992 Cable Act, the 1998 Internet Tax Freedom Act, and the 2000 Orbit Act. He also represented Data Foundry in the 2010 net neutrality proceedings. “The President's support will further increase pressure on the new Republican majority to enact legislation blocking FCC action,” Comstock says, which Obama would then have to veto.

To that end, Senator Mitch McConnell (R-KY), who is expected to become the Senate Majority Leader next year, called the President's proposal “heavy-handed regulation that will stifle innovation and concentrate more power in the hands of Washington bureaucrats,” “a terrible idea” ' that “[t]he Commission would be wise to reject.” See , http://1.usa.gov/1ulFs3G. And House Speaker John Boehner (R-OH) said in a statement that “' net neutrality is a textbook example of the kind of Washington regulations that destroy innovation and entrepreneurship. Federal bureaucrats should not be in the business of regulating the Internet ' not now, not ever.” He continued that the newly elected Republican majority in Congress “will continue our efforts to stop this misguided scheme to regulate the Internet, and we will work to encourage private-sector job creation, starting with many of the House-passed jobs bills that the outgoing Senate majority ignored.” See, http://1.usa.gov/1uEJGF4.

The country's largest ISPs, while declaring support for an open Internet, oppose Obama's plan. Comcast's Executive Vice President, David L. Cohen released a statement saying that while “Comcast fully embraces the open Internet principles that the President and the Chairman of the FCC have espoused ' transparency, no blocking, non-discrimination rules, and no 'fast lanes,' ' [w]e continue to believe ' that section 706 provides more than ample authority to impose those rules.” See, http://bit.ly/1xvmaLG. Cohen pointed to a strong negative reaction by the stock market following Obama's statement and says that reclassifying broadband would “be a radical reversal that would harm investment and innovation.” Id.

Verizon has also come out in opposition to the reclassification, releasing a statement on its Public Policy Blog:

Reclassification under Title II, which for the first time would apply 1930s-era utility regulation to the Internet, would be a radical reversal of course that would in and of itself threaten great harm to an open Internet , competition and innovation. That course will likely also face strong legal challenges and would likely not stand up in court.

See, http://vz.to/1v0XYBS'(emphasis in original).

In support of the President's plan, The Internet Association's President and CEO Michael Beckerman said in a statement that “the FCC must adopt strong, legally sustainable rules that prevent paid prioritization and protect an open Internet for users. Using Title II authority, along with the right set of enforceable rules, the President's plan would establish the strong net neutrality protections Internet users require.”

FCC Chairman Tom Wheeler also came out in support of the President's plan, well, sort of: “Like the President, I believe that the Internet must remain an open platform for free expression, innovation and economic growth. We both oppose Internet fast lanes. The Internet must not advantage some to the detriment of others. We cannot allow broadband networks to cut special deals to prioritize Internet traffic and harm consumers, competition and innovation.”

Wheeler couched his support of Obama's plan: “The more deeply we examined the issues around the various legal options, the more it has become plain that there is more work to do. The reclassification and hybrid approaches before us raise substantive legal questions. We found we would need more time to examine these to ensure that whatever approach is taken, it can withstand any legal challenges it may face. For instance, whether in the context of a hybrid or reclassification approach, Title II brings with it policy issues that run the gamut from privacy to universal service to the ability of federal agencies to protect consumers, as well as legal issues ranging from the ability of Title II to cover mobile services to the concept of applying forbearance on services under Title II.” See, http://fcc.us/1xJsBZJ.

Reclassification

Telecom lawyers following the issue say the companies are apt to argue that reclassification would be arbitrary and capricious, in violation of the Administrative Procedures Act (APA).

Broadband providers “might also argue that reclassification is an unlawful taking, in violation of the Fifth Amendment, because it makes their trillion-dollar investment in high-speed Internet, made in reliance on decades of what might be characterized as assurances that they would not be treated as common carriers, less valuable,” says McDermott Will & Emery telecom partner Paul Devinsky.

The companies also are likely to argue that reclassification misconstrues statutory definitions of what should be considered a largely unregulated information service versus a highly regulated telecommunications provider. “The chairman of the FCC does not have a magic wand he can wave and say, 'This is a telecommunications service and this is an information service.' He cannot make something a telecommunications service simply because he says it is,” says Jonathan Jacob Nadler, a telecom partner at Squire Patton Boggs. It is “virtually unthinkable,” Nadler continued, that the ability to do things like select and access movies or send e-mails or get driving directions to a destination could suddenly be deemed a telecommunications service. What the FCC in reclassification would have to do is compel broadband providers to unbundle the telecommunications service ' the transmission component ' from the Internet access service, and offer the telecom component on a regulated basis, he says.

Telecom expert and former top FCC official Scott Blake Harris of Harris, Wiltshire & Grannis name partner says the criticism of Obama's statement is unfair. “Members of Congress, of both parties and on both sides of the Hill, routinely do their best to influence FCC decisions. I can think of no reason why the president should not make his opinions known publicly on an issue of such obvious public interest,” he says. “And the FCC really is independent,” Harris continued. “It would be a grave mistake to assume that because the president expressed his view that the commission, with two smart and savvy Republicans and three smart and independent-minded Democrats, will adopt his view.”

Comstock says that the President did not go far enough in his statement, and “by calling for Title II regulation but then focusing on blocking, throttling, and paid prioritization,” Obama “missed the opportunity to educate the public on why reclassification is appropriate and lawful. It is lawful because Congress specifically amended Title II of the Communications Act in 1996 to deal with digital convergence and promote the growth of the Internet.”

More on Title II

Comstock says that the President was not technically accurate in his statement. “The term 'free Internet,' which is not found in the Communications Act, furthers a serious misunderstanding that clouds the policy debate. Internet traffic has never been delivered for free; all Internet traffic is delivered pursuant to peering arrangements (in which the two parties agree there is a roughly even exchange of traffic for delivery on each other's network), transit agreements (private contracts in which one party pays the other to deliver the traffic), or regulated interconnection agreements (which also provide for payment). So by suggesting that adopting Title II would ensure that the Internet remains 'free' is a misnomer.” What adopting Title II would in fact do, Comstock says, is “prevent unreasonable discrimination ' Comcast or Verizon could not choose to favor their own or affiliated content or services by providing them larger bandwidth or interconnection that is denied to others seeking the service and willing to pay the same price.”

Comstock says the idea should be to provide ISPs, as providers of a service, with “a financial incentive to provide more bandwidth ' the one thing they should be paid for ' as opposed to an incentive to create scarcity. The President missed the opportunity to articulate that common carrier regulation was successfully applied to the transmission component of information service for 25 years ' until 2005 ' and that common carrier regulation of the infrastructure is what led to the Internet we know and love today. It is the absence of this regulation that is leading to the changes in the Internet no one likes ' absent common carrier rules the Internet will begin to look more and more like a cable network in which the pipe owner legally controls the content and services.”

Comstock says that using Title II to regulate Internet services is “appropriate because Verizon and AT&T ' and other facilities based ISPs ' use sections 214 and 224 of the Communications Act (both squarely in Title II) to build their facilities across public rights of way and access electric utility power poles,” just as Comcast and other cable companies “use sections 214, 224 to access the public rights of way and electric utility poles. They get a major benefit from using public rights of way, so imposing an obligation to provide common carrier service to the public over those facilities is perfectly fair.”

In addition, Title II would “allow the Commission to require facilities-based ISPs to allow attachment of competitive consumer premises equipment to fiber networks,” Comstock says, which they are not doing today. Classifying Internet services under Title II would also allow the FCC to prohibit restrictions on resale of the transmission component. “It was the right to attach devices and the prohibition on resale restrictions that led to the Internet,” says Comstock. That right to attach is what allowed independent companies and universities to lease lines and attach equipment to create data networks over the Bell telephone system without their permission. “If anyone thinks that 'competition' will ensure those two rights,” Comstock continues, “just look at Verizon FIOS and Comcast cable networks today ' neither allows resale or attachment of devices without permission ' and so consumers are stuck renting a set-top box that is little changed from 1996, have little to no choice in cable modems (which they also mostly have to rent), and have no choice in who provides Internet access service over the facilities connected to their home (as compared to a choice among literally hundreds of independent ISPs in 2000).”

Comstock concludes that “by focusing on blocking, throttling, and paid prioritization the President used the trendy phrases but missed the key concepts. It is only by drawing a bright line between the communications infrastructure and the applications and services that ride over that infrastructure that we can return to a rational, enforceable legal regime that will ensure the Internet is as successful an engine of growth as it has been.”

Conclusion

Whether the FCC will follow Obama's lead or stick with Wheeler's plan, litigation is certain, says Olivier Sylvain, a professor at Fordham University School of Law who specializes in Internet and technology issues. “The hybrid plan floated by the FCC is an effort to bridge the gap between two polarized camps ' but it could be challenged on the same grounds as reclassification. Why not go all in?”

Steven Salkin, Esq., is Managing Editor and Web Editor of Internet Law & Strategy. He can be reached at [email protected] or on Twitter @ljn_online. This article includes reports from The National Law Journal.