Net Neutrality Legislation Likely Imminent and Facing Tough Battle

Expect any legislative response to the Verizon v. FCC court ruling to face a steep uphill battle, observers and lobbyists told us last week. Capitol Hill roared to life following the Jan. 14 court decision. Republican lawmakers cheered the decision as Democratic lawmakers lamented the loss of such net neutrality protections (CD Jan 15 p1). The ruling will stir up the telecom debate in 2014, lobbyists and others said, pointing to a potential increase in lobbying and scrutiny as lawmakers watch what happens next at the FCC.

After the court decision, multiple Democrats said they would potentially introduce bills in response, although several members of the party emphasized the FCC already has authority to move forward with reinstating net neutrality rules and did not mention legislation in their responses. In the House, Eshoo said she “will utilize every arrow in my quiver, including legislation, to make sure the FCC can carry out this critical mission effectively.” Markey decried the ruling and said, “I plan to introduce legislation in the coming days that makes this crystal clear, and look forward to working with the Commission to ensure consumers are protected.” Sen. Maria Cantwell, D-Wash., said she will “work with my colleagues on legislation to fix this ruling and restore the protections of an even playing field for American consumers and entrepreneurs.”

Most of those we interviewed did not know whether any legislation may be pending, and the members of Congress proposing legislative responses all declined to weigh in. Spokespersons for Markey, Waxman and Eshoo would not confirm or deny that a bill may be introduced this week and declined to give details about what would be in such a bill.

Public Knowledge is hopeful that net neutrality may be preserved in some fashion, potentially through Capitol Hill response. Members of Congress could propose legislation restoring net neutrality rules either by writing the rules directly into the current statute or by deferring to the Communications Act Section 706 authority over broadband that the court ruling affirmed, said Public Knowledge Vice President-Government Affairs Chris Lewis, calling net neutrality one of the “core values” of communications. To reclassify broadband as a Title II service would be “a highly partisan, highly controversial stance to take” but deferring to Section 706 authority may be less controversial, he said. “It’s yet to be seen what members of Congress necessarily think about that.” Many net neutrality defenders are waiting to see how the FCC reacts, Lewis said.

Lewis wants to know what members who previously had been opposed to Title II reclassification think about a net neutrality approach using the Section 706 authority: “What do they want to see? Do they believe in the open Internet?”

Is a Bill Needed?

Legislation is unnecessary, said a telecommunications industry lobbyist who has lobbied in favor of the net neutrality rules. But it’s possible the right bill could serve as a message to regulators and other stakeholders, the lobbyist reflected. It may be possible for a bill to have decent prospects, but such a bill hypothetically would be narrow and simply clarify the court ruling to reduce regulatory and litigation risks surrounding net neutrality, he added. The lobbyist is doubtful such a bill could come together because it would be hard to pull together unanimity within industry.

"There’s certainly plenty of supporters of the open Internet on the Hill,” said Computer & Communications Industry Association Vice President-Government Relations Cathy Sloan, a backer of such principles. But she doubts “there'll be anything that moves” legislatively in that sphere, she said, pointing to the FCC as the place where the issue will really be decided. “When a legislator sees something they see is unhealthy, of course they're going to say they want to do something about it. But to pretend that legislation will be likely to pass is probably wrong.”

Any bill touching net neutrality would be extremely unlikely to move, said a cable industry lobbyist who favors an industry approach to net neutrality questions. He sees the prospects of anything advancing as “close to zero percent,” largely due to the divided chambers. Any bill that promotes net neutrality rules is unlikely to escape the Republican-dominated House, and any bill that restricts net neutrality powers would unlikely escape the Democratic-dominated Senate, he said. The strength of any bills introduced would depend partly on how many backers they get, he said, reflecting back to past net neutrality defenses that included scores of Democrats signing on. A broadcast industry lobbyist agreed, saying lobbyists will watch with interest, that it will add to the debate and the noise, but the working assumption is it won’t go anywhere.

Any backers of net neutrality legislation would likely look to include it in the reauthorization of the Satellite Television Extension and Localism Act, the media industry lobbyist speculated. That act expires at the end of 2014 and is widely considered must-pass legislation.

Reclassification Debate

Multiple public interest groups have, since the court decision, lobbied for the FCC to reclassify broadband as a Title II common carrier service. The court struck down the net neutrality rules because they seemed to fit with Title II common carriage regulation rather than Title I. “The FCC should reclassify, and legislation doesn’t necessarily speak to that,” Free Press Policy Director Matt Wood said.

"Personally, I think that’s a dead end,” said John Sununu, a former Republican senator from New Hampshire and now honorary co-chair of Broadband for America and adjunct senior policy adviser at Akin Gump. “I think people realize that’s not going to happen.” Capitol Hill lawmakers aren’t likely to meddle in net neutrality in a substantive way, its biggest defenders defeated in the 2010 midterm elections, said Sununu, a critic of net neutrality regulation. He called reclassification “the ultimate” in taking a dynamic industry and strapping outdated regulations on it. Sununu pointed to an amendment introduced by Markey in 2006, then a House member, protecting net neutrality. That amendment, issued amid widespread net neutrality debate, failed in a 269-152 vote on the House floor.

"The role of Congress in the short term will be to provide guidance,” said TechFreedom Strategic Director Jon Henke. It’s hard to imagine Wheeler trying to fight Congress and the courts on this issue, he added. Perhaps there is room for “a narrowly tailored bill to address oversight of anti-competitive behavior through anti-trust principles rather than the FCC’s new-and-uncomfortably broad 706 authority,” Henke reflected.

Lobbying Uptick

Net neutrality features as a priority in Capitol Hill lobbying for many stakeholders. Lobbyists explicitly cited net neutrality, by one name or another, in Q4 lobbying disclosure reports.

Netflix’s Q4 lobbying report clocked in at $300,000 and named “Internet non-discrimination” as a concern of its two lobbyists. Netflix has slammed the court decision in recent weeks. Verizon pays millions for its own lobbyists and lobbying firms and pays attention, such as in the $30,000 Q4 report Polaris Government Relations filed on its behalf, naming net neutrality. The Free Press Action Fund also focused on the issue. Its Q4 report, which listed Wood and Associate Policy Director Chancellor Williams as lobbyists, cited the open Internet and IP transition and said Free Press “discussed possibility of paid prioritization schemes in wake of DC Circuit decision on Open Internet rules, as well as threats to public communications network if FCC authority for broadband communications is ignored,” according to its Q4 report of $16,126. The Writers Guild of America-West paid lobbyist Michael Forscey $30,000 in Q4 to, among other issues, lobby in favor of the FCC’s net neutrality rules. Free Press also discussed the implications of the Verizon v. FCC court case before it was decided, it said. Steptoe & Johnson, which AOL paid $60,000 in Q4, listed net neutrality as a lobbying issue. Google’s $3.98 million Q4 report listed “open Internet access” as one of its lobbying priorities. Google also paid Dutko Worldwide $50,000 to lobby on “net neutrality issues and legislation,” another Q4 report said.

Watch for how the pipe owners will react to the net neutrality court decision and their lobbying efforts before Congress, a different telecommunications lobbyist told us. The decision will create additional scrutiny among both lawmakers and regulators, the lobbyist said. But these effects may not come to fruition for the first six months of 2014, he added.

Capitol Hill focus on net neutrality, especially with any bill potentially on the table, will inevitably rise even if not “a full-on lobbying effort, necessarily,” Lewis observed. The cable industry lobbyist also predicted a potential uptick in hearings, letters and the introduction of bills on the topic, all to rally support for one position or another, but he was not sure what the timing of that might look like in 2014. The Communications Act overhaul efforts in the House are “just beginning” but the debates surrounding net neutrality and the IP transition both point to values that should be enshrined in a new act, Lewis said.