ISPs Pile Up Arguments Against Reclassification; Public Groups Advocate Return to Pre-2002

CTIA said the FCC will violate the Administrative Procedure Act if it moves directly to a rulemaking, as suggested by General Counsel Austin Schlick, rather than releasing a notice of proposed rulemaking first (CD June 21 p1). “The APA imposes significant procedural restraints on the Commission’s ability to act without first engaging in further rulemaking Proceedings,” CTIA said. “The Commission’s proposed path to adopt new rules for broadband providers runs afoul of the APA as it impermissibly seeks to use a Declaratory Ruling to both overturn existing regulation and to impose additional regulation without the benefit of a notice and comment rulemaking.” Verizon also cited the lack of notice and comment rulemaking as an obstacle. A notice of inquiry is acceptable when an agency is clarifying the law, it said, but in this case, “the Commission would be manifestly changing existing law by reversing four prior orders.”

Public interest groups that have long advocated reclassification supported Genachowski’s Third Way, unsurprisingly. Several cautioned that his forbearance proposal may go too far.

Public interest groups led by the Media Access Project said the FCC may be proposing to forbear from too many parts of the Communications Act. Under the Genachowski proposal, the FCC would forbear from all Title II provisions except Sections 201, 202, 208, 222, 254 and 255. “The Commission may not and need not forbear from any provisions that place an obligation on the Commission itself and do not constitute regulations applicable to a telecommunications carrier or telecommunications service,” they said. For example, “Section 257 does not directly regulate ‘a telecommunications carrier or telecommunications service.’ Instead, it requires the Commission to periodically review market entry barriers and report its results to Congress,” the public interest groups said. Similarly, “Section 207 of the Act confers rights on individuals to recover damages for violations of Title II by filing suit in any district court.” The Center for Media Justice, Consumers Union, and New America Foundation also signed off on the filing.

"First and foremost, the Commission must update its factual understanding of the modern broadband market,” Public Knowledge said. The order gives the FCC a chance to undo the damage from the 2002 order reregulating cable under Title I, which led to a succession of deregulatory orders, the group said. “The Commission’s poor reasoning in the Cable Modem Ruling has created a hodgepodge of inconsistent and arbitrary classifications in which some IP-enabled services are considered telecommunications services, some are considered information services, and still others remain unclassified. No clear rule provides an overarching framework for these various classification decisions.”

On the contrary, reclassification would sweep in far more services than the commission acknowledges, said AT&T. The commission coins a new term -- “broadband Internet connectivity service” -- that attempts to describe a retail service that doesn’t exist, the carrier said. Broadband providers don’t offer only transportation of information, as the FCC says, but also the ability to store, use, process, acquire, generate, make available and transform information, Verizon said. “A service without these capabilities would be a fundamentally different offering,” it said. Cable companies offer integrated packages of Internet address assignment, domain name service, caching delivery networks, network security, Web hosting, e-mail and storage, said NCTA. It’s irrelevant that some cable companies may not offer all these services, or that customers can get some of these services from third parties, it said. Despite the commission’s new “connectivity” terminology, the law’s wording would mean that reclassification would bring Internet providers like Google, Netflix, Hulu, e-readers like the Kindle, VoIP providers and cloud computing services under the Title II umbrella, AT&T said. The commission attempts to exempt most of these services by distinguishing between facilities-based and non-facilities based providers and last-mile and non-last mile providers, but “those policy-driven distinctions are entirely irrelevant to the statutory provisions that define whether a service is a ’telecommunications service’ or an ‘information service,'” it said.

Nor will reclassification help the FCC address issues related to privacy, disabled access or cybersecurity, said AT&T. The FCC doesn’t have the expertise or authority to lead on cybersecurity, and disabled access requires changes in hardware and applications more than to broadband access, it said. USTelecom said the FTC is the “expert agency” on privacy and is dealing with it thoroughly. “It cannot seriously be contended that it will serve consumers well to wrest jurisdiction over one aspect of consumers’ privacy on the Internet from the FTC,” it said.

The National Association of State Utility Consumer Advocates said transport can be separated from information service, though they aren’t necessarily presented separately. A unitary, interconnected system is necessary for the consumer to experience the Internet, it said. “The problem, however, is that whoever controls the wires is in a position to control the shape of everything that rides on the wires. So, the Commission should start with the wires.” Regulation under Title II would be a return to the situation before the “disastrous missteps” of its 2002 Cable Modem Order and later rulings, it said.

Wireless Unique

Wireless carriers and CTIA played defense in their comments. Most pointed to unique problems facing wireless carriers and their need to manage their networks given limited spectrum resources.

"Title II regulation by any other name is still heavy regulation,” CTIA said. “Even with the forbearance that has been discussed, the application of Title II to wireless broadband should in no way be construed as a light touch. Title II can be, and is, a heavy regulatory framework that is nothing like what broadband, and particularly wireless broadband, is currently operating under.” The decision to deregulate wireless under Section 332(c) of the Communications Act “was one made by Congress, not unilaterally by the FCC,” CTIA said. Wireless voice is lightly regulated at the direction of Congress, the group said. “The action the Commission seeks to take here would move broadband regulation in the opposite direction, away from the deregulatory framework that has allowed mobile broadband to flourish and back to a bygone era of monopoly regulation.”

"Reclassification would be particularly irrational and damaging in the wireless context,” Verizon said. “Wireless services are subject to particularly intense and continually growing competition, with ongoing investment and innovation that has brought tremendous benefits to consumers.”

"If, despite the important differences between wireline and wireless broadband, the Commission chooses to reclassify the transmission component of wireless broadband as a Title II service at this time, it should avoid adopting all of the obligations proposed to be imposed on wireline broadband including, in particular, one-size-fits-all network management rules,” T-Mobile said. “When wireline or cable operators need more capacity to serve their subscribers, they have the option of installing more copper, coax, or fiber, which can expand the available bandwidth by multiple-fold. Wireless operators do not have this option."

MetroPCS called the Genachowski proposal an extreme overreaction to the Comcast decision. “When read carefully, Comcast is in fact a narrow decision, finding only that, under the particular facts and circumstances of that case, the Commission failed to ’tie its assertion of ancillary authority over Comcast’s Internet service to any statutorily mandated responsibility,'” the carrier said. “The Comcast decision does not hold that the Commission is entirely unable to promulgate rules under Title I that impact the Internet under Title I."

The FCC has plenty of authority over wireless networks without changing how wireless is classified, industry commenters said. “Title III of the Communications Act already provides the Commission with authority to facilitate the realization of broadband policy goals on wireless platforms,” said Leap Wireless. “Specifically, the statute gives the Commission express jurisdiction over the use of radio spectrum, and its stated delegations of authority provide the Commission the tools it needs to accomplish its desired wireless broadband public interest objectives."

Media Comments

Many media companies opposed reclassification. Dish Network was the only pay-TV company to support that approach, as it has in the past, while the MPAA said Title II might work if efforts to fight piracy are encouraged. The third way would “provide the much-needed solid legal and regulatory footing to protect consumers, increase investment and innovation, and promote robust competitive broadband services,” Dish said. Even absent Comcast, “the lack of broadband competition, together with the incentives that flow from the convergence of web and traditional video content, underscore that there is a vital need for an FCC role to ensure that innovation, investment and growth flourish throughout the broadband ecosystem,” the satellite-TV company said.

The court decision doesn’t strip the FCC of ancillary authority over broadband, Comcast said. “The Commission today retains a number of legal tools -- including both express and ancillary authority -- to implement its broadband-related policy agenda, and particularly its plans regarding universal access to broadband.” The third-way notice “raises the specter of upheaving the Commission’s well-settled and factually grounded classification of broadband Internet access as an information service and regulating that service (or a component thereof) under Title II,” Time Warner Cable said. That proposal attempts “to reverse the presumption that legacy regulation should not apply to the Internet, while seeking to contain the regulatory effects of that decision,” the NCTA said. “The proposal’s underlying assumptions are fundamentally flawed” and such a “regulatory about-face would likely be reversed in court."

The MPAA asked the commission to give ISPs “ample guidance” that efforts made in good faith to prevent, and deter the transmission of unlawful content don’t violate open Internet principles or any Title II obligations. “MPAA shares the concerns of the Guilds and Unions that the Commission needs to ‘carefully evaluate the potential impact of Title II regulation on the ability to detect and prevent online infringement,” it said. “The Commission should make clear that content owners will continue to have the flexibility to develop innovative business arrangements with broadband providers for the delivery of digital content.”