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FCC Hopes Third Time Is the Charm for Net Neutrality Rules

A new chapter has opened in the great “net neutrality” debate. The U.S. Federal Communications Commission has announced it intends to craft new rules to ensure ISPs in the United States maintain an open Internet, in which any Internet user can access any lawful content or service they choose regardless of whether it’s operated by their ISP, its preferred partners, or its competitors. However, for the time being, the agency does not intend to reclassify Internet providers as common carriers like telephone companies or utilities, where it has broad rule-making powers. Instead, the FCC will again make limited rules based on
existing telecommunications law — and hope, this time, they stick.

The announcement comes in the wake of a recent court decision that found the FCC could not make ISPs comply with open Internet requirements under their 2010 “Open Internet Order” (see “Net Neutrality Is Down, but Not Out,” 20 January 2014). The court essentially found that the FCC was trying to regulate ISPs as common carriers without classifying them as such, and it couldn’t have it both ways. The FCC’s decision to forge ahead with new rules means it will not defend the previous rules by appealing the January ruling; the agency is giving up and moving on.

Both consumer advocates and businesses large and small have consistently argued net neutrality has been crucial to creating a level playing field between companies, as well as supporting fundamental rights like free speech. Can the FCC’s new plan protect the strengths of an open Internet?

Meet the New Boss, Same as the Old Boss — Recently appointed FCC Chairman Tom Wheeler has proposed new open Internet rules with three main goals:

  • Strengthen transparency requirements
  • Prevent blocking of lawful sites and services
  • Create legally enforceable non-discrimination requirements to prevent broadband operators from unfairly squelching competitors

The agency hopes to have the new rules ready by mid-2014. They will represent the agency’s third attempt to require broadband operators to comply with net neutrality provisions: the first effort came in 2005 and the second in 2010.

Wheeler’s framework is largely the same “open Internet” platform the FCC has previously championed. However, of the three goals, only the FCC’s authority on the first provision — transparency — has held up in court. In this context, transparency requirements mean ISPs must disclose how they manage their networks so consumers and businesses can make informed decisions about their services. The other two goals — anti-blocking and non-discrimination — have been thrown out in court cases brought by Comcast and (most recently) Verizon. In other words, right now American Internet operators can block or discriminate against any service they like, as long as they’re upfront about it.

The FCC plans to anchor its new rules in Section 706 of the Telecommunications Act of 1996. The statute gives the agency jurisdiction over “advanced telecommunications capability.” That’s a vague phrase, but the same court that largely ruled in Verizon’s favor in January found that the FCC could issue rules governing how broadband operators treat traffic using Section 706. Chairman Wheeler characterized the court’s decision as an “invitation” to recast net neutrality provisions in terms of Section 706. Wheeler has also opened a docket for public input on net neutrality.

In some ways, the FCC’s new strategy is the same-old same-old: attempting to regulate ISPs and broadband operators without classifying them as common carriers. In the meantime, the FCC intends to hold ISPs to their promises to abide by the spirit of net neutrality rules until everything is ironed out — although it has no authority to do so.

Who’s Afraid of Common Carriers? — If the FCC could mandate net neutrality simply by declaring ISPs common carriers, why don’t they do that? One reason is that the broadband industry would fight back hard, and it would probably be a longer and fiercer battle than trying to extend more-limited regulation via Section 706. In some ways, the FCC is simply being practical.

The other side of the coin is that broadband operators and ISPs have always claimed they would be stifled if they were common carriers. That makes them less attractive to investors, which means they’d have less money to build out infrastructure, create greater broadband capacity, and introduce new services. That reduced investment would put broadband in the United States even further behind other developed nations — and one of the FCC’s top priorities is expanding Americans’ access to broadband, particularly in rural and underserved areas. To hear ISPs talk, the only reason the Internet boom happened in the United States at all is because they have not been subject to common carrier requirements.

Elements within the FCC echo these positions. The fact sheet accompanying Chairman Wheeler’s announcement focuses on massive new markets that have developed without regulating ISPs as common carriers. (This includes mobile phones and online video: heck, they even take credit for app stores and tablets.) Some FCC commissioners argue net neutrality is unnecessary anyway, saying there’s no evidence consumers have been prevented from accessing any content they like. “Net neutrality has always been a solution in search of a problem,” wrote commissioner Ajit
, appointed to the FCC by the Obama administration less than a year ago. The White House itself describes the open Internet as “vital” but says it’s going to let the FCC choose its own path.

All this said, Chairman Wheeler was at least willing to point to the FCC’s big stick, if not wave it. Wheeler noted the FCC was keeping the authority to classify ISPs as common carriers “on the table.”

Will It Work? — The FCC’s announcement has drawn sharp rebukes from both consumer and free speech advocates and staunch opponents of government regulation.

Some argue the FCC might be able to regulate broadband traffic using Section 706, but won’t be able to address issues surrounding service discrimination and freedom of expression. Free Press President and CEO Craig Aaron claims Section 706 authority will not protect free speech and says Wheeler’s announcement amounts to the FCC “pretending” it has authority to lay down open Internet rules. Conversely, Representative Marsha Blackburn (R-TN) characterized Wheeler’s announcement as a crusade to implement “socialistic regulations,” and pledged
to introduce legislation to prevent the FCC from making net neutrality rules.

Sometimes rankling all sides is a sign of a good compromise, but the Electronic Frontier Foundation notes that even the FCC’s transparency requirements — which have held up in court! — don’t necessarily make things all that transparent. After all, the Internet comprises tens of thousands of interconnected networks. Sites and services being slow or inaccessible could be caused a technical glitch anywhere along the way, rather than by deliberate throttling or discrimination by network providers. Tracing all the connections, all the equipment, and all the agreements between operators to prove or disprove discrimination is an arduous task, and
potentially gives operators a lot of wiggle room even under transparency requirements. And nobody — not even the FCC — is currently doing that footwork in a systematic way.

The bottom line is that American consumers are probably in for a long battle. The FCC has tried to mandate net neutrality twice before without declaring ISPs common carriers, only to be (mostly) struck down in court. There’s no reason to believe the FCC’s third attempt won’t be challenged — and no reason such a challenge wouldn’t take two or three years to play out. Net neutrality could be in the exact same situation in 2017 or 2018 that it is today. At that point, the FCC may have no choice but to declare ISPs common carriers, or go to Congress for express authority to regulate them.

Or, the FCC might give up on net neutrality entirely.

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