House Bill Banning Reclassification Not Expected to Pass But Could Send Signal

At our deadline, House members were tweaking the narrow draft bill, and a staff meeting was scheduled for 5:30 p.m., another House staffer said. Democrats involved in the net neutrality discussion include House Commerce Committee Chairman Henry Waxman, D-Calif., Communications Subcommittee Chairman Rick Boucher, D-Va., and committee members Jay Inslee, D-Wash., Mike Doyle, D-Pa., Ed Markey, D-Mass., and Anna Eshoo, D-Calif., the staffer said. The narrow bill being discussed isn’t the only one that’s been worked on; another broader bill also exists, said the staffer, who didn’t provide more details. House Commerce Democrats signed off on the narrow measure and had been waiting Monday afternoon for Republican approval. “Once we get a final product, which could be as soon as today, the Republicans will review the proposal and discuss it with leadership,” House Communications Subcommittee Ranking Member Cliff Stearns, R-Fla., said.

FCC officials were still looking at the draft at our deadline. One question is whether Congress would provide FCC Chairman Julius Genachowski what is essentially an exit strategy, one source said. A second is how the chairman’s office would react to the expected outcry from public interest groups and other net neutrality advocates. Genachowski said during the press conference following last week’s FCC meeting he welcomed legislation. “I'm pleased that Chairman Waxman and other members of Congress who are involved are making a real effort to make progress on these issues,” he said. “I'm not going to comment on any of the specifics in it. It’s their process. It’s our job to be a resource."

A senior FCC official said the legislation would offer certainty on net neutrality beyond what the agency can do on its own because of the threat of legal challenge. “We would move from a world of four wireline principles that most people thought were unenforceable, to a world where they are accepting the six wireline principles the chairman outlined, plus, wireless,” the official said. “People are missing the incredible movement that acceptance of no blocking, antidiscrimination, and transparency rules reflects.” While some may view the bill as providing a “ceiling” it also offers a “floor” as carriers move forward on net neutrality, the official said: “That’s very significant."

Congress isn’t expected to pass the bill, but public interest groups worry about the message it will send to Genachowski, said a person familiar with the negotiations. The groups fear Genachowski could read it as the “ceiling” to any future net neutrality action. If the bill did pass, the political climate for net neutrality laws may be much worse when the law sunsets at the end of 2012, the official said.

Progress on the bill “could signal to Genachowski that Congress is actively engaged on net neutrality,” said Concept Capital analyst Paul Gallant in a note Friday. But the House’s bill is unlikely to become law this year, he said. The FCC is under much pressure and caught in a “messy” process, and probably would “welcome” guidance from Congress, said Medley Global Advisors analyst Jeffrey Silva. “There probably isn’t enough time to move a bill and it’s hard to imagine anything controversial having a chance even in a lame duck session,” said Potomac Research analyst Paul Glenchur. “But the bill itself, if it’s introduced, could signal that Commerce Committee leaders want to avoid reclassification at the FCC, recognizing the pushback from the Republicans and a large number of House Democrats."

The draft bill that circulated Monday morning would bar the FCC from reclassifying unless the broadband ISP “elects to provide the transmission component of such service” as a telecom service under Title II. However, the FCC could adjudicate violations case by case, and fine violators up to $2 million. The FCC would have to issue a report to Congress by Dec. 11, 2011, stating whether it needed additional authority to act on the National Broadband Plan and protect Internet consumers. The law would sunset Dec. 31, 2012, but allow the FCC to adjudicate cases filed before March 1, 2013, involving violations that happened before Jan. 1, 2013.

Network management would be “reasonable” under the draft if it’s “appropriate and tailored to achieving a legitimate network management function, taking into account the particular network architecture or technology of the provider.” Legitimate purposes include reducing congestion, securing the network, addressing harmful or unwanted traffic, meeting public safety needs, and providing “services or capabilities to effectuate a consumer’s choices, including parental controls or security capabilities.” The proposed law would require the FCC to “consider technical requirements, standards, or best practices adopted by one or more independent, widely-recognized Internet community governance initiative or standard-setting organization.” The FCC also would have to “consider the technical, operational, and other differences between wireless and other broadband Internet access platforms, including the need to ensure the efficient use of spectrum."

The draft bill would apply stricter standards to wireline than wireless. Wireline providers could not block “lawful content, applications, or services,” ban non-harmful devices, or “unjustly or unreasonably discriminate in transmitting lawful traffic over a consumer’s wireline broadband Internet access service.” Meanwhile, wireless providers would not be able to block consumers from accessing lawful website, or block lawful apps that compete with the provider’s own voice or video services.

But wireline and wireless would face the same transparency rule. All providers would have to disclose “accurate and relevant information in plain language” about services’ price, performance and network management practices. The FCC wouldn’t be allowed to require public disclosure of competitively sensitive data, or information that could hurt network security or the effectiveness of reasonable network management. “At minimum,” the FCC would require providers to display or provide links to the data on their websites, and update the information regularly to reflect changes.