Wheeler’s Got Next

Since January 14, the telecom world has been asking ‘What will Wheeler do next?’ This week, Federal Communications Commission Chairman Tom Wheeler delivered his answer.

It was back in January, you’ll remember, that the United States Court of Appeals for the District of Columbia threw out the FCC’s Open Internet rules that require Internet service providers to give all traffic equal access through their networks. The court also threw out an FCC rule that barred providers from blocking Internet traffic outright. The ruling did, however, preserve the FCC’s current power to require broadband providers to disclose their activities -- in other words, to reveal how they are managing traffic. The court also acknowledged that the FCC has some authority to regulate Internet service.

At the time of the ruling Chairman Wheeler keyed in on that last point, “The D.C. Circuit has correctly held that ‘Section 706 . . . vests [the Commission] with affirmative authority to enact measures encouraging the deployment of broadband infrastructure’ and therefore may ‘promulgate rules governing broadband providers’ treatment of Internet traffic.’” In a subsequent statement, Wheeler added, “The key message is that the FCC has the authority -- and has the responsibility -- to regulate the activities of broadband networks…. The FCC’s legal ability -- its jurisdiction -- to oversee developments on the broadband networks on which the Internet depends is critically important. The Court’s decision addressed but one aspect of this authority. In the broad context, however, there is not any serious question about such authority.”

On February 19, Chairman Wheeler initiated a number of steps, based on the court’s guidance, to ensure the Internet remains a platform for innovation, economic growth, and free expression.

First, the FCC decided not to appeal the court’s ruling. Wheeler seems content with the court’s finding that the FCC has authority to issue new Open Internet rules under Section 706 of the Telecommunications Act of 1996 and to "reclassify" broadband services as common carriers under Title II of the Communications Act.

Second, the FCC opened a new docket inviting public comment on the court’s remand of the Open Internet decision. In this proceeding, the FCC will consider “the court’s decision and what actions the Commission should take, consistent with our authority under section 706 and all other available sources of Commission authority, in light of the court’s decision.” [For those scoring at home, this is GN Docket No. 14-28 -- no due dates were included in the Public Notice.]

Third, Chairman Wheeler announced the FCC will keep open a long-standing docket in which it is considering reclassifying Internet access service as a telecommunications service. Many public interest advocates – including, I should stress, the Benton Foundation -- favor this pathway, especially given the ongoing technological transitions from traditional telephone networks, that are regulated under Title II, to Internet-based networks for telephony. Many groups -- again, including Benton -- welcomed Wheeler’s announcement on Title II.

Some public interest groups were not as pleased that the Chairman did not immediately start down this path. Free Press, perhaps the loudest voice in favor of reclassification, published a critique of Wheeler’s plan on February 20. Free Press identifies what it sees as five major flaws in the course Wheeler has chosen, but its bottom line is that keeping reclassification on the table isn’t good enough -- it is the only option that will truly protect Internet users.

Fourth, Chairman Wheeler stressed the FCC will hold Internet service providers to their pronouncements to honor the safeguards articulated in the FCC’s 2010 Open Internet order until new rules are put in place (see more on new rules below).

Fifth, the FCC will look for new opportunities to enhance Internet access competition. As the FCC recognized in the 2010 National Broadband Plan, building broadband networks requires large fixed and sunk investments. Consequently, the industry will probably always have a relatively small number of facilities-based competitors, at least for wireline service. Given that approximately 96% of the population has, at most, access to two wireline providers, there are reasons to be concerned about wireline broadband competition in the United States. With this in mind and guidance from Judge Laurence Silberman in the Open Internet decision, the FCC will consider lifting legal constrictions on the ability of cities and towns to offer broadband services to consumers in their communities. (1)

Finally, the FCC is planning another formal rules making proceeding to update the Open Internet rules based on the court’s decision. The proceeding will consider how to:

• Enforce and enhance the transparency rule. The court affirmed the FCC’s transparency rule, which requires that network operators disclose how they manage Internet traffic. The FCC will consider ways to make that rule even more effective.
• Fulfill the "no blocking" goal. The court recognized the importance of the FCC’s ban on blocking Internet traffic, but ruled that the Commission had not provided sufficient legal rationale for its existence. The FCC will carefully consider how, consistent with the court opinion, it can ensure that edge providers are not unfairly blocked, explicitly or implicitly, from reaching consumers, as well as ensuring that consumers can continue to access any lawful content and services they choose.
• Fulfill the goals of the non-discrimination rule. The FCC will consider how Section 706 might be used to protect and promote an Open Internet in:
  • setting an enforceable legal standard that provides guidance and predictability to edge providers, consumers, and broadband providers alike;
  • evaluating on a case-by-case basis whether that standard is met; and
  • identifying key behaviors by broadband providers that the FCC would view with particular skepticism.

As you might easily guess, there’s been a ton of reaction to Chairman Wheeler’s announcement which we tried to capture in Headlines. We point you specifically to responses from Members of Congress, as well as public interest advocates and the telecommunications industry. Since Wheeler’s plan must make its way through the FCC, however, we include here reaction from his fellow FCC commissioners.

Commissioner Mignon Clyburn said, "I applaud Chairman Wheeler for announcing a path forward to ensure a free and open Internet. The Commission must act expeditiously to adopt clear, enforceable rules that protect the openness of the Internet while continuing to promote innovation and investment. I am also pleased that the Chairman announced that the Commission will look for opportunities to enhance broadband competition including examining restrictions on the ability of municipalities to offer broadband -- restrictions that I have long advocated be eliminated. I look forward to working with the Chairman on these important issues."

"I support an open Internet," said Commissioner Jessica Rosenworcel. "That is why I am pleased that the D.C. Circuit recognized the Commission’s authority to encourage the deployment of broadband infrastructure. I also support the actions Chairman Wheeler has announced today in light of this court decision. I look forward to working with my colleagues to develop policies that ensure the Internet continues to drive innovation, experimentation, and economic growth."

"Today’s announcement reminds me of the movie Groundhog Day. In the wake of a court defeat, an FCC Chairman floats a plan for rules regulating Internet service providers’ network management practices instead of seeking guidance from Congress, all while the specter of Title II reclassification hovers ominously in the background. I am skeptical that this effort will end any differently from the last. When Congress told us to encourage broadband deployment by removing barriers to infrastructure investment, it also established the policy of the United States to ‘preserve the vibrant and competitive free market that presently exists for the Internet . . . unfettered by Federal or State regulation.’ Whatever the Commission does as it moves forward, it must take that statutory command to heart. The Internet was free and open before the FCC adopted net neutrality rules. It remains free and open today. Net neutrality has always been a solution in search of a problem," said Commissioner Ajit Pai.

Commissioner Michael O’Rielly said, "I am deeply concerned by the announcement that the FCC will begin considering new ways to regulate the Internet. As I have said before, my view is that section 706 does not provide any affirmative regulatory authority. We should all fear that this provision ultimately may be used not just to regulate broadband providers, but eventually edge providers. It appears that the FCC is tilting at windmills here. Instead of fostering investment and innovation through deregulation, the FCC will be devoting its resources to adopting new rules without any evidence that consumers are unable to access the content of their choice."

There will be a great deal of activity in the weeks and months ahead as the FCC moves forward to implement Chairman Wheeler’s plan. You can follow along step-by-step with our coverage in Headlines. And we leave you with Chairman Wheeler’s rationale on why this debate must continue:

“When the earlier rules were adopted in 2010, some predicted that they would stifle investment and innovation. They were wrong. In fact, investment increased for both edge providers and in broadband networks. In particular, since 2009, nearly $250 billion in private capital has been invested in U.S. wired and wireless broadband networks. The FCC must stand strongly behind its responsibility to oversee the public interest standard and ensure that the Internet remains open and fair. The Internet is and must remain the greatest engine of free expression, innovation, economic growth, and opportunity the world has ever known. We must preserve and promote the Internet."

Notes:

1. In spirit of disclosure, in 2012, the Benton Foundation and the Institute for Local Self-Reliance (ILSR) released “Broadband at the Speed of Light: How Three Communities Built Next-Generation Networks”, a report that highlights municipal network success stories.