Regulatory classification

The Trump administration’s attempt to scrap and replace network neutrality rules could open the door for internet providers like AT&T, Comcast, and Verizon to charge some companies for faster delivery of their web content or services. It’s not their stated goal, but these so-called online “fast lanes” can’t be completely outlawed under the more lenient approaches to net neutrality advocated by broadband providers at the Federal Communications Commission. Some telecom companies even questioned whether the FCC should play the primary role in enforcing net neutrality at all.

One of the proposals: Telecom giants asked the FCC to consider relying on a different part of federal telecom law to safeguard the open internet. That might sound simple enough, but the portion of law they cite could open the legal door for ISPs to start charging companies like Google or Netflix for faster delivery of their content, a practice known as paid prioritization. They argue that fears of online fast and slow lanes are “baseless,” in the words of AT&T, which further explained that a full-on ban against paid prioritization actually makes it hard for them “to support autonomous cars, remote surgery, and a growing array of other unusually latency-sensitive applications.” Comcast similarly raised self-driving cars in its comment to the FCC.

[Commentary] Recently a small group of economists (I was one) summarized the economic research on network neutrality and Title II. Limiting ourselves to economics articles in the top 300 journals and that used explicit economic models, we reviewed the answers to four basic questions:

• How would regulations restricting ISPs from offering enhanced network features, such as fast lanes, to content providers affect (a) total welfare, (b) network investment, and (c) the variety of content on the internet and content provider investment? (Note: “Total welfare” is value that consumers receive from what they purchase minus the cost of providing the products.)
• How would prohibitions on network termination fees affect total welfare?
• How would prohibiting ISPs from blocking content affect total welfare?
• Are ISPs like the telecom companies for which Congress wrote Title II?

Here is what we found, but in my own words. 1) The effects of restricting enhanced network features on welfare, ISP investment, and content depend on market conditions. 2) It appears that termination fees could be harmful when ISPs compete for providing access to content providers and an ISP would charge content providers that do not directly connect with the ISP. Otherwise, termination fees are helpful. 3) Blocking is harmful. 4) Economic research today supports the idea that internet services are quite important but has not found that ISPs have the monopoly power contemplated when Title II was created.

On July 7, 2017, the National Hispanic Media Coalition filed a Motion for Extension of Time in the above captioned proceeding. Petitioner asks us to extend the initial comment deadline until “60 days after the Commission complies with [NHMC’s] outstanding” Freedom of Information Act (FOIA) request. For the reasons set forth below, we deny the Motion.

NHMC contends that an extension is warranted to “ensure that all evidence relevant to this proceeding is available to the public, and that the public has adequate time to analyze the evidence and comment accordingly. Specifically, the Commission must produce the approximately 47,000 open Internet complaints that it has received, and documents related to the open internet ombudsperson’s interactions with internet users, all of which are the subject of an unfulfilled [FOIA] request filed by NHMC.” We find that that NHMC’s stated request does not justify the requested lengthy delay in the comment cycle in this proceeding. Under Section 1.46 of the Commission’s rules, it is the policy of the Commission that extensions of time shall not be routinely granted. For the reasons discussed below, we conclude that NHMC has not shown that an extension is warranted here.

As the period for filing public comments on the Federal Communications Commission's plans to roll back network neutrality regulations comes to a close, telecommunications companies are submitting their final arguments. On July 17, the last day to submit comments, firms such as Comcast, AT&T and trade associations representing the telecommunications industry filed statements in support of FCC Chairman Ajit Pai’s “Restoring Internet Freedom” proposal to scrap the net neutrality rules the agency approved in 2015.

In their comments, telecommunications companies reiterated their claim that they don’t do the things net neutrality rules were designed to protect against — blocking or slowing down certain types of content and websites — and that public utility style regulations aren’t necessary.

The staff of the Federal Trade Commission filed an official comment to the Federal Communications Commission in favor of Chairman Ajit Pai’s plan to scrap network neutrality regulations. In their filing, staff at the agency said that they favor Chairman Pai’s “Restoring Internet Freedom” plan, which would give regulatory authority over broadband providers back to the FTC. Under the Open Internet Order approved in 2015, the FCC currently has the jurisdiction to regulate broadband providers instead of the FTC.

The FTC is currently split with one Democrat, Commissioner Terrell McSweeny, and one Republican, acting Director Maureen Ohlhausen. In their joint comment, FTC’s Bureau of Consumer Protection, Bureau of Competition and Bureau of Economics argued that, prior to the Open Internet Order, when the FTC still regulated broadband providers it “consistently protected broadband consumers from unfair and deceptive practices, including in the privacy and data security area.”

Sen Ron Wyden (D-OR) accused Federal Communications Commission Chairman Ajit Pai of mischaracterizing his position from nearly two decades ago to justify the agency’s repeal of network neutrality rules.

In a comment filed to the net neutrality docket at the FCC, Sen Wyden said that Chairman Pai was being “willfully ignorant” when he cited a letter that the Oregon Democrat wrote in 1998 arguing against the reclassification of internet service providers (ISP) as telecommunications companies, which, in 2015, became the legal framework for the net neutrality rules. “The internet and internet access service today both are wildly different than they were in 1998,” Sen Wyden wrote in the filing. “Back then, large numbers of consumers were starting to take advantage of the whole internet, rather than just a walled-garden service." "The key difference, however, was that in 1998 consumers largely accessed the internet through third-party ISPs like AOL, or Prodigy, and those consumers used the infrastructure of the common carrier telephone system to connect to that third-party ISP,” he continued.

As Public Knowledge’s comprehensive filing of more than 100 pages makes abundantly clear, Chairman Pai’s proposal would remove consumer protections the Federal Communications Commission has explicitly and repeatedly identified as critical to protecting broadband subscribers. It would for the first time explicitly make cable companies the gatekeepers of the internet.

To attempt such a dramatic change of policy without even acknowledging the over 20 years of FCC past practice chronicled in these comments is the definition of arbitrary and capricious -- and leaves Pai’s proposal highly vulnerable to reversal in the courts. Twice opponents of Title II have pitched their alternate history of ‘light touch regulation’ to the D.C. Circuit in an effort to overturn the FCC’s existing net neutrality rules. Twice the D.C. Circuit has flatly rejected it. Chairman Pai apparently thinks that the third time will prove the charm. Hopefully, Chairman Pai will reconsider his unpopular plan to strip away net neutrality and critical consumer protections.

AT&T filed comments in support of the Federal Communications Commission’s proposal to return to a nearly two decades-old bipartisan commitment to a light-handed approach to internet services – a commitment the FCC abandoned for no good reason in 2015. Throughout this period, AT&T has supported an open internet as well as baseline requirements to ensure an open internet is protected without the regulatory baggage that comes with Title II.

We continue to support such requirements, and we continue to oppose Title II as an unprecedented regulatory overreach for which there was no economic or marketplace justification. By proposing to eliminate this abrupt and unwarranted departure from longstanding precedent, the FCC is taking an important first step. But we continue to believe that a bipartisan legislative solution is the best way to ensure an open internet that serves the interests of consumers while providing the regulatory certainty that investors demand.

Comcast filed comments in support of the Federal Communications Commission’s plan to kill the 2015 network neutrality rules. And while pretty much everything in them is expected — Comcast thinks the rules are burdensome and hurt investment, yet it says it generally supports the principles of net neutrality — there’s one telling new quirk that stands out in its phrasing: Comcast now says it’s in support of a ban on “anticompetitive paid prioritization,” which is really a way of saying paid prioritization should be allowed. Comcast doesn’t just see paid fast lanes being useful for medicine. It also thinks they might be fair to sell to automakers for use in autonomous vehicles. “Likewise, for autonomous vehicles that may require instantaneous data transmission, black letter prohibitions on paid prioritization may actually stifle innovation instead of encouraging it,” the filing says.

The American Library Association says the Federal Communications Commission under Chairman Tom Wheeler got the reading of the law right when it imposed strong network neutrality rules under Title II (common carrier) authority.

It said 120,000 libraries and their customers would be seriously disadvantaged by getting rid of the rules banning blocking traffic and degrading (the FCC's terminology is actually "throttling") traffic, and says paid prioritization is inherently unfair, especially for libraries without the money to pay for such prioritization. But the ALA breaks with some Title II fans in arguing for capacity-based pricing and excluding private networks from net neutrality rules. On capacity-based pricing of broadband service, it says ISPs "may receive greater compensation for greater capacity chosen by the consumer or content, application, and service provider." And on private networks, it says: "[T]he Commission should decline to apply the Open Internet rules to premises operators, such as coffee shops and bookstores, and private end-user networks, such as those of libraries and universities."