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'Restoring Internet Freedom', Or the End of Net Neutrality?

Submitted on December 1, 2017

McBeath
McBeath

You’re reading the Benton Foundation’s Weekly Round-up, a recap of the biggest (or most overlooked) telecommunications stories of the week. The round-up is delivered via e-mail each Friday.

Round-Up for the Week of November 27 - December 1, 2017

On November 22, the day before Thanksgiving, Federal Communications Commission Chairman Ajit Pai released his “Proposal to Restore Internet Freedom.” Chairman Pai’s proposal sets the stage for a “repeal and (barely) replace” of the FCC’s 2015 open internet rules -- rules that provide broadband internet access consumers protections so they can access the content and applications they want to regardless of the source, and without their broadband provider favoring or blocking particular products or websites.

Chairman Pai portrays himself as a steward of Internet freedom, saving the “greatest free-market success story in history” from “burdensome regulation” that has “failed consumers and businesses alike.” An FCC “fact sheet” on Pai’s proposal reads, “This Declaratory Ruling, Report and Order, and Order would return to the bipartisan consensus on light-touch regulation, ending utility-style regulation of the Internet. This will promote future innovation and investment. And more investment in digital infrastructure will create jobs, increase competition, and lead to better, faster, cheaper Internet access for all Americans, especially those in rural and low-income areas.”

Pai’s proposal sparked a huge backlash across the country. Below, we unpack Chairman Pai's proposal, highlight criticisms, and explain what to expect will happen after the FCC votes to adopt the new rules on December 14. 

Chairman Pai’s fact sheet says his proposal will: 


FCC Chairman Ajit Pai

  1. End Utility-Style Regulation of the Internet
    • Restore the classification of broadband Internet access services as an “information service”
    • Reinstate the private mobile service classification of mobile broadband Internet access service
    • Clarify the effects of the return to an information service classification on other regulatory frameworks, including the need for a uniform federal regulatory approach to apply to interstate information services like broadband Internet access service.
  2. Provide a Light-Touch Framework
    • Adopt a transparency requirement that ISPs disclose information about their practices
    • Restore the Federal Trade Commission’s ability to protect consumers online from any unfair, deceptive, and anticompetitive practices without burdensome regulations, achieving comparable benefits at lower cost
    • Eliminate the vague and expansive Internet Conduct Standard, under which the FCC micromanaged innovative business models, along with the bright-line rules

Translation and Criticism

If you are at all familiar the long-running net neutrality debate, you know Washington freaked out with the release of Pai's proposal. Below are three big sources of outrage. 

I. The proposal eliminates all current net neutrality rules with the exception of a modified transparency rule

The proposed rules will allow broadband providers to block, speed up or slow down websites, applications, and services; charge online companies for access to the provider’s customers and block those that don’t pay; and to enter into deals with online companies to put them in a fast lane to the broadband provider’s customers. Broadband internet access service providers will have to tell their customers that they are engaging in these practices. But providers will also be free to favor some applications over others by exempting them from their customers’ data caps, a practice called “zero-rating” that the 2015 net neutrality protections left for the FCC to evaluate case-by-case. 

In doing away with the 2015 rules, Chairman Pai has radically departed from bipartisan FCC precedent. In an op-ed for Fortune, Stanford Law School Professor Barabara van Schewick wrote, “In sharp contrast to Pai, past Republican chairmen have recognized the threat broadband providers can pose to the Internet’s unparalleled openness and acted decisively to prevent interference by these gatekeepers.” Others have pointed out that Chairman Pai is also breaking with previous FCC Republicans with his attempt to downplay the importance of the Comcast/BitTorrent decision (when the FCC decided to punish Comcast for throttling BitTorrent's peer-to-peer file sharing). 

II. Re-reclassifying broadband internet access service as a Title I “Information Service” 

In 2015, after a couple of tries at enacting net neutrality protections that courts rejected, the FCC decided to classify broadband internet access service as a "telecommunications service" under Title II of the Communications Act. Title II gives the FCC the legal power to protect consumers from fraudulent billing, price gouging, privacy violations, and other anticompetitive behavior. Chairman Pai's proposal "re-reclassifies" broadband internet access service as a Title I "information service." Chairman Pai says the Federal Trade Commission is the right agency to do this enforcement, but telecommunications services, by law, are exempt from FTC jurisdiction.

Chairman Pai says the FTC “will once again be able to police ISPs, protect consumers, and promote competition, just as it did before 2015.” What he doesn’t say is that the FTC, unlike the FCC, doesn’t have the power to make rules that protect consumers and innovators before they are harmed. Nor does he say that the FTC’s authority wouldn’t prohibit fast lanes, blocking, or throttling so long as the broadband provider tells you it’s engaging in those practices. 

Gigi Sohn, former Counselor to FCC Chairman Tom Wheeler, said:

"There’s nothing the FTC can do if one day your broadband provider decides to double its prices. As FTC Commissioner Terrell McSweeny testified earlier this month: '[i]t is wrong to assume that a framework that relies solely on backward-looking consumer protection and antitrust enforcement can provide the same assurances to innovators and consumers as the forward-looking rules contained in the FCC’s Open Internet Order.' Moreover, it’s unclear whether the FTC will be able to police some broadband providers at all. Still pending in the 9th Circuit Court of Appeals is a case that holds that if a broadband provider also provides a service regulated under Title II (for example, landline and mobile phone service), then the FTC has no legal authority to oversee its practices. Should that case stand, broadband providers, nearly all which provide some Title II services, would be entirely free of oversight from both the FCC and FTC."

III. Preemption: Banning states from adopting any net neutrality rules of their own

In some circumstances, a federal agency like the FCC can “preempt” state and local laws and rules when they are inconsistent with federal laws and rules. Cities across the country are trying to build their own broadband networks, and some states, like California, are trying to pass consumer privacy legislation. Instead of letting those locales decide for themselves, Comcast, Verizon, and other industry players asked the FCC for preemption.

In a speech this week, FCC Commissioner Michael O'Rielly said:

As we take this action, we must include a thorough preemption analysis, setting forth the technical facts and legal basis for our exclusive federal jurisdiction over broadband. By doing so, we establish a uniform, national framework that promotes investment and innovation. It is critically important to be explicit that the service is interstate even though that may seem obvious. The draft order does just that. States and localities must be precluded from adopting a patchwork of regulations that would deter broadband investment by private businesses and undermine our own federal policies to facilitate deployment. Without this much-needed clarity, the FCC and businesses would end up wasting valuable time and resources playing defense in state legislatures, public utility commissions, and the courts to stamp out inconsistent laws and regulations. Moreover, we have seen the damage that opportunistic state regulators can try to inflict when the FCC has refused to resolve questions of classification and jurisdiction.

Chairman Pai is proposing to prohibit states and localities from adopting their own broadband consumer protection laws, including laws that protect consumer privacy. 

Public interest advocates are criticizing this effort. Gigi Sohn said:

The hypocrisy is staggering. When the FCC in 2015 voted to help consumers by pre-empting the laws of two states that prohibit communities from expanding and building their own broadband networks, Pai dissented vociferously. In this case, where the FCC is removing pro-consumer protections, Pai is delighted to preempt the states from ensuring that their citizens are protected from anti-consumer and anti-competitive practices of broadband companies. The result? Broadband providers win and you lose.

Harold Feld, senior vice president at Public Knowledge, wrote:

Chairman Pai claims to be able to simultaneously divest the FCC of authority while claiming unlimited power to preempt the states as well. Under Chairman Pai’s expansive theory of preemption, the FCC could -- in theory -- preempt every state law applicable to Google, Facebook, or any other information service. For a man claiming to correct the previous administration’s ‘overreach,’ this is an astonishing claim to unlimited power to advance corporate interests at the expense of the public.

[The debate as to whether the FCC can and should preempt (i.e., invalidate) state laws has tremendous implications. Benton Senior Counselor at the Public Interest Communications Law Project at Georgetown University Law Center Andrew Schwartzman discussed this debate in The Question of Preemption: The FCC Considers Lifting Municipal Broadband Restrictions.]

What's Next

  1. FCC Vote on December 14: For the next week or so, FCC commissioners will take meetings with DC lobbyists and, perhaps, tweak the draft order. Then, one week before the December 14 meeting, the FCC will go into its “Sunshine” period, halting public comment. The proposal is expected to pass on Dec 14 on a 3-2 party-line vote, as both Commissioners O'Rielly and Carr confirmed in speeches on Nov 28 their intention to approve the order.
  2. What happens after December 14 at the FCC? Back in 2015, Andrew Jay Schwartzman wrote So They’re Voting On Network Neutrality, But What Happens Next? outlining what happens to FCC rules after they are adopted. Expect a similar cascade of events this time around, too.
  3. Court Review Once approved, Pai's proposal will end up in court. And some have noted that the proposal may be facing an uphill battle. "Because he is killing net neutrality outright, not merely weakening it, he will have to explain to a court not just the shift from 2015, but also his reasoning for destroying the basic bans on blocking and throttling, which have been in effect since 2005 and have been relied on extensively by the entire internet ecosystem. This will be a difficult task," wrote Columbia law professor Tim Wu. "So drastic is the reversal of policy...and so weak is the evidence to support the change, that it seems destined to be struck down in court."
  4. Congressional action? Even with this (near) complete victory for Pai and Republicans, there are still calls from Republican lawmakers for legislation. House Commerce Committee Chairman Greg Walden (R-OR) and Communications Subcommittee Chairman Marsha Blackburn (R-TN) issued a statement saying they, "remain committed to ensuring clear, permanent net neutrality rules through the legislative process, encouraging investment in broadband buildout, and closing the digital divide across America.” Sen Brian Schatz (D-HI) said, "Whether we’re winning the battle in the moment, as we were under [former FCC Chairman] Tom Wheeler, or losing the battle in the moment, as we are during Chairman Pai’s tenure, it’s always better to settle this public policy fight in the Commerce Committee, so I continue to be open to the possibility of legislating. I think the courts are significant, but I don’t think they will determine whether we move forward on legislation.” Harvard law professor Susan Crawford suggested that Chairman Pai is hoping to use outrage over net neutrality to drive a rewrite of the nation’s telecommunications laws. In a similar vein, Harold Feld said when the proposal was released, “It would seem more likely, as some have suggested, that Chairman Pai and Congressional Republicans have released this Order to create a crisis atmosphere and push through legislation authored by the cable companies rather than in a serious attempt at policy."

There is sure to be much, much more news in the days and weeks ahead. All the while, you can be sure to follow along through Benton's daily Headlines. 

Like many others in our field, we are shocked and disgusted by reports of threatening, racist, and xenophobic messages sent to policymakers in recent days. Benton promotes constructive conversations and more inclusive debate around communications policy to help bridge our divides, not widen them.

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