FCC Adopts Net Neutrality NPRM

May 15, 2014. The Federal Communications Commission (FCC) adopted and released a Notice of Proposed Rulemaking (NPRM) that once again proposes rules for the regulation of the network management practices of broadband internet access service (BIAS) providers.

The Commission divided 3-2 along party lines, as it did when it adopted rules in 2010. The U.S. Court of Appeals (DCCir) vacated the key parts of those rules. Tom Wheeler, Mignon Clyburn and Jessica Rosenworcel supported this NPRM. Ajit Pai and Michael O'Reilly opposed it.  Representatives and Senators also divided along party lines.

The deadline to submit initial comments is July 15, 2014. The deadline to submit reply comments is September 10, 2014.

See also, related stories titled "Summary of the FCC's Proposed Net Neutrality Rules" and "Net Neutrality NPRM and Pay for Priority Agreements" in TLJ Daily E-Mail Alert No. 2,659, May 19, 2014. 

Summary. This NPRM includes the text of proposed rules. These would reinstate much of the text contained in the rules adopted in December of 2010. See, December 2010 Report and Order (R&O) [194 pages in PDF]. See also, related story in this issue titled "Summary of the FCC's Proposed Net Neutrality Rules".

The asserted authority for these rules remains Section 706 of the Communications Act, which is codified at 47 U.S.C. § 1302. This section merely contains the policy statement that the FCC and state commissions "shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability".

However, the NPRM asks for comments on the alternative approach of reclassifying BIAS as a Title II (common carrier) service.

The 2010 rules banned the undefined practice of "discrimination". The Court of Appeals vacated that part of the 2010 order, but suggested that the FCC might have authority to regulate commercially unreasonable practices by BIAS providers without reclassification. See, January 14, 2014 opinion in Verizon v. FCC, and December 4, 2012 opinion in Cellco Partnership v. FCC, which upheld the FCC's data roaming rules, and created a "commercially reasonable" standard.

The new rules do ban commercially unreasonable practices, but provide no definition or explanation of what this means. The proposed rules not state, for example, whether and when pay for priority agreements between BIAS providers and edge providers are commercially unreasonable practices. See also, related story in this issue titled "Net Neutrality NPRM and Pay for Priority Agreements".

The 2010 rules banned certain blocking. The Court of Appeals also vacated that. The new rules reinstate the vacated rules.

The 2010 rules imposed certain disclosure requirements. The Court of Appeals affirmed that. The new rules would expand the data disclosure mandates imposed upon BIAS providers, to put the public on notice regarding the nature of their services, and their business practices. The rules label this "transparency".

Transparency, in the context of government regulation, entails written disclosure of the rules in a manner that puts the public on notice regarding what is or is not prohibited. To the extent that these rules are full of undefined terms of uncertain meaning, the FCC is itself failing to act with transparency.

The proposed rules would impose a less regulatory regime for wireless BIAS than for fixed BIAS. The ban on commercially unreasonable practices would only applies to fixed BIAS providers, and the ban on blocking would be applied in a less burdensome manner for wireless BIAS providers.

Many Congressional Republicans criticized the FCC for once again pursuing an unnecessary regulatory regime. In contrast, many Congressional Democrats praised the FCC for promoting an open internet. Some of these also urged the FCC to go further and regulate BIAS providers as common carriers.

FCC Commissioners and Members of Congress offered  vastly different interpretations of this FCC NPRM.

FCC Chairman Tom Wheeler (at right) wrote in his statement that "Today we take another step in what has been a decade -- long effort to preserve and protect the Open Internet. Unfortunately, those previous efforts were blocked twice by court challenges by those who sell Internet connections to consumers. Today this agency moves to surmount that opposition and to stand up for consumers and the Open Internet."

FCC Commissioner Ajit Pai wrote in his statement that "A dispute this fundamental is not for us, five unelected individuals, to decide. Instead, it should be resolved by the people’s elected representatives, those who choose the direction of government -- and those whom the American people can hold accountable for that choice. I am therefore disappointed that today, rather than turning to Congress, we have chosen to take matters into our own hands. It is all the more disappointing because we have been down this road before. Our prior two attempts to go it alone ended in court defeats. Even with the newfangled tools the FCC will try to pull out of its legal grab-bag, I am skeptical that the third time will be the charm."

Pai argued that whether the FCC relies on Title II or Section 706, the consequence will be to "wreak havoc on the Internet economy".

He lamented that "we are going to act like our own mini-legislature" and "usurp Congress's role".

Another view would be that it is the Congress and President who have constituted the FCC to act in a legislative manner. It is not usurpation. It is delegation. It is hard to pass a bill. There are not enough votes to pass a net neutrality act. Proponents have tried and failed many times. Yet, most House and Senate Democrats, and President Obama, favor some sort of net neutrality regime. The FCC is acting as their agent, not their usurper, doing for them what they cannot do through the Constitutionally ordained legislative process. Congressional Republicans employed the FCC is a similar manner in other rule making proceedings during the Bush administration.

The White House news office released a statement that once again discloses that President Obama does not view the FCC as an independent expert agency. It states that "we will carefully review their proposal", and that "we are pleased to see that" Chairman Wheeler "is keeping all options on the table." This statement concludes that "The President ... will consider any option that might make sense."

Congressional Statements. Sen. John Rockefeller (D-WV), Chairman of the Senate Commerce Committee (SCC), stated in a release that "The FCC took an important step forward today to preserve an open Internet. The American people do not care what magic words the FCC uses to assert its authority, they just want the assurance that the Internet will remain free and open. That is why I am glad that all options are on the table, including Title II. It is critical for the FCC to use its full authority to reinstate these critical consumer protections for the Internet."

Sen. John Thune (R-SD), the ranking Republican on the SCC, and Sen. Mitch McConnell (R-KY) and the rest of the Senate Republican leadership, sent a letter to FCC Chairman Wheeler on February 13 in which they opposed this NPRM.

Sen. Thune (at right) "Unfortunately, you have chosen to have the FCC again undertake a politically corrosive rulemaking, relying upon new and untested court-defined powers rather than upon clear Congressional intent and statutory authority."

They continued that "Of even greater concern would be using Title II of the Communications Act to regulate broadband, which some voices have called for in recent days. So-called ``net neutrality´´ restrictions are unnecessary, but using Title II reclassification to impose them would create tremendous legal and marketplace uncertainty and would undermine your ability to effectively lead the FCC."

Rep. Fred Upton (R-MI) and Rep. Greg Walden (R-OR), the Chairman of the House Commerce Committee (HCC) and the HCC's Subcommittee on Communications and Technology (SCT), stated in a joint release that "Free from regulation and government meddling, the Internet as we know it has thrived. Sadly, these unnecessary rules the commission proposed today will have a chilling effect on job creation and innovation without any corresponding consumer benefit. These rules are a solution in search of a problem. Worse still, any attempt to reclassify broadband Internet embarks on a worrisome course for its future ... With so much at stake, Chairman Wheeler has ignored the bipartisan congressional calls for caution."

Rep. Anna Eshoo (D-CA), the ranking Democrat on the HCC's SCT, stated in a release that "the proposed rules must be strong enough to prevent online gatekeepers from creating fast and slow lanes, and stand on strong legal ground to avoid yet another round of legal challenges." She added that "I specifically welcome the Commission's consideration of a stronger legal framework -- Title II -- that reclassifies broadband as a common carrier."

Proponents of Title II Common Carrier Regulation. Ed Black, head of the Computer and Communications Industry Association (CCIA), stated in a release that "We appreciate that the Commission has kept an open mind about the best way forward in terms of a legal framework for guarding Internet openness. Wheeler called the Internet a national asset that he will not allow to be compromised. We hope that strong verbal commitment indicates the FCC is ready to in good faith explore all its options including its authority under Title II of the Communications Act to protect the Open Internet."

Michael Weinberg of the Public Knowledge (PK) stated in a release that "The FCC’s proposal still falls well short of real net neutrality rules. It would create a two-tier internet where “commercially reasonable” discrimination is allowed on any connections that exceed an unknown “minimum level of access” defined by the FCC. A two-tier internet is anathema to a truly open internet, and rules under section 706 authority are insufficient to prevent harmful paid prioritization."

He added that "only robust net neutrality rules that prevent paid prioritization, grounded in clear Title II authority, will suffice. Any rules that allow for harmful discrimination cannot truly be called net neutrality. And any rules based on creaky legal authority are just a waste of everyone's time."

Weinberg also wrote a short piece on May 16 titled "How The FCC's Proposed Fast Lanes Would Actually Work".

Candace Clement of the Free Press stated in a release that "the rules pay lip service to the idea of the open Internet while proposing solutions that would create a two-tiered Internet with fast lanes for those who can afford it -- and dirt roads for the rest of us." She added that "the FCC needs to reclassify broadband providers as common carriers under Title II".

Gabe Rottman of the American Civil Liberties Union (ACLU) stated in a release that "This proposed rule leaves the individual at the mercy of an increasingly concentrated broadband market, in which the big players will be able to act as gatekeepers for online speech, deciding what gets seen and when. Fortunately, the FCC left the door open to fix this problem by reclassifying broadband internet service as what it really is: a public utility, or in legal terms, a `common carrier,´ which we will continue to vigorously advocate for. This is a First Amendment issue because if broadband service providers are allowed to slow or block some content at will, they will be able to stifle the speech of internet users."

BIAS Providers. BIAS providers condemned the idea of subjecting BIAS to common carrier regulation.

Michael Powell, head of the National Cable & Telecommunications Association (NCTA) stated in a release that "we stand ready to work constructively with the FCC and other stakeholders -- as we did in 2010 -- to develop a balanced approach that protects the open Internet while fostering continued investment and innovation in America’s broadband networks. But as we do so, we will continue to reiterate our unwavering opposition to any proposals that attempt to reclassify broadband services under the heavy-handed regulatory yoke of Title II. Treating broadband as a utility-like Title II service would reverse years of settled precedent, dry up investment in broadband deployment and network upgrades, and result in protracted litigation and marketplace uncertainty."

Walter McCormick, head of the US Telecom, stated in a release that this NPRM "maps a path of questions and proposals that raise significant issues for the Internet and our Internet economy. We fully support a broad public inquiry on how best to maintain and improve an open and transparent Internet, and our industry remains firmly committed to open Internet principles. But we believe that even raising the spectre of regulation under Title II is ill-advised. The robust investment and rapid innovation that characterizes the Internet today exists precisely because prior administrations -- both Democratic and Republican -- have recognized the importance of keeping 19th century regulation away from 21st century technology. We believe today’s proceeding will lead to a renewed recognition of the essential role that light-touch regulation has played in creating the world’s leading Internet economy."

Steve Largent, head of the CTIA Wireless Association stated in a release that "The defining characteristics of wireless broadband are that it is fast-evolving, still-developing, and robustly competitive, and we urge policymakers to not impede the wireless industry's virtuous cycle of investment and innovation."

Largent continued that "wireless remains inherently different from other forms of broadband, whether considering that spectrum needed to fuel wireless broadband is finite, the additional network management required to provide a high quality experience in a mobile environment or the numerous competitive choices available for mobile broadband consumers. In fact, 98 percent of Americans have at least three or more providers to choose from. While we will carefully review the Commission’s Notice of Proposed Rulemaking, we are deeply concerned about proposals that would impose anachronistic Title II regulation on any broadband Internet access offerings. Rotary-phone era regulation has no place applying to next-generation, wireless broadband services and would deter investment in network infrastructure, inhibit innovation and undercut U.S. competitiveness, all to the detriment of American consumers."

Comcast is currently bound by all of the FCC's 2010 rules. It made a commitment to that effect during the FCC's review of its merger with NBCU. It has offered to extend that commitment in connection with its pending merger with Time Warner Cable.

Comcast's David Cohen stated in a release that the 2010 rules "struck the appropriate balance", but that "any proposal to reclassify broadband Internet access as a telecommunications service subject to Title II of the Communications Act would spark massive instability, create investor and marketplace uncertainty, derail planned investments, slow broadband adoption, and kill jobs in America."

AT&T's Jim Cicconi stated in a release that AT&T supported the FCC's 2010 rules, but "Going backwards 80 years to the world of utility regulation would represent a tragic step in the wrong direction. Utility regulation would strangle investment, hobble innovation, and put government regulators in charge of nearly every aspect of Internet-based services."

Randal Milch of Verizon, which successfully challenged the FCC's 2010 rules, stated in a release that "one thing is clear: For the FCC to impose 1930s utility regulation on the Internet would lead to years of legal and regulatory uncertainty and would jeopardize investment and innovation in broadband."

This NPRM is FCC 14-61 in GN Docket No. 14-28.

(Published in TLJ Daily E-Mail Alert No. 2,659, May 19, 2014.)