Still No Time For Party Hats -- The Net Neutrality Vote In The FCC Commissioners' Own Words

Still No Time For Party Hats
The Net Neutrality Vote In The FCC Commissioners' Own Words

Commissioner Ajit Pai, Commissioner Mignon Clyburn, Chairman Tom Wheeler, Commissioner Jessica Rosenworcel and Commissioner Michael O’Rielly

We’re probably not the first to tell you that on May 15, the Federal Communications Commission voted to launch a rulemaking seeking public comment on how best to protect and promote an open Internet. The Notice of Proposed Rulemaking (NPRM) starts with a fundamental question: “What is the right public policy to ensure that the Internet remains open?” – That is, open to new content, new products and new services, enabling consumers to choose whatever legal content, services and applications they desire.

Although you never hear anyone publicly say ‘I’m against an open Internet’ or 'I’m for a closed Internet’, there is a great deal of debate about the FCC’s role in ensuring an open Internet and the methods it uses to do so. Ultimately, the public should and, we believe, will determine the FCC’s course of action. The NPRM adopted May 15 is the starting point for the public’s official chance to tell the five FCC commissioners what to do. So this week, we look at how FCC Chairman Tom Wheeler and Commissioners Mignon Clyburn, Jessica Rosenworcel, Ajit Pai, and Michael O’Rielly justified their votes on Thursday.

FCC Chairman Wheeler is both credited and blamed (it comes with the territory) for the direction of the NPRM. He stressed as he opened his remarks that he “strongly supports an open, fast and robust Internet.” “Protecting the Open Internet is important both to consumers and to economic growth. We are dedicated to protecting and preserving an Open Internet.” He positioned the FCC as standing up for consumers against Internet Service Providers who have blocked efforts to protect an open Internet. “The speed and quality of the connection the consumer purchases must be unaffected by what content he or she is using.”

Wheeler said he is against any kind of paid prioritization that could result in “fast lanes” on the Internet. He harkened back to his recent speech to the National Cable and Telecommunications Association when he said, “If someone acts to divide the Internet between ‘haves’ and ‘have nots,’ we will use every power at our disposal to stop it.” He said any squeezing out of smaller voices is unacceptable and “we have proposed how to stop that from happening.” He said, “there has to be a level playing field of opportunity for new ideas. Small companies and startups must be able to effectively reach consumers with innovative products and services and they must be protected against harmful conduct by broadband providers. The prospect of a gatekeeper choosing winners and losers on the Internet is unacceptable.”

Chairman Wheeler said his goal is to get to rules that work like this [emphasis his]:

  • If the network operator slowed the speed below that which the consumer bought (for reasons other than reasonable network management), it would be a commercially unreasonable practice and therefore prohibited,
  • If the network operator blocked access to lawful content, it would violate our no blocking rule and be commercially unreasonable and therefore doubly prohibited,
  • When content provided by a firm such as Netflix reaches the consumer’s network provider it would be commercially unreasonable to charge the content provider to use the bandwidth for which the consumer had already paid and therefore prohibited,
  • When a consumer buys specified capacity from a network provider he or she is buying open capacity, not capacity the network can prioritize for its own profit purposes. Prioritization that deprives the consumer of what the consumer has paid for would be commercially unreasonable and therefore prohibited.

“Simply put, when a consumer buys a specified bandwidth, it is commercially unreasonable – and thus a violation of this proposal – to deny them the full connectivity and the full benefits that connection enables.”

The NPRM, Wheeler noted, proposes two new powers for those who use the Internet and for the FCC:

  1. A requirement that networks disclose any practices that could change a consumer’s or a content provider’s relationship with the network.
  2. An FCC Ombudsperson to receive consumer complaints and, where warranted, investigate and represent their case.

Over the last few weeks, Chairman Wheeler has heard many complaints from net neutrality advocates who question the legal authority on which he is proposing to base new rules. The NPRM proposes using Section 706 of the Telecommunications Act of 1996 in ways, Chairman Wheeler believes, the U.S. Circuit Court laid out when it threw out the FCC’s open Internet rules. However, the NPRM also asks for input on whether reclassifying Internet access as a telecommunications service under Title II of the Communications Act would be a better course of action.

Just a few days after Mother’s Day, FCC Commissioner Clyburn revealed that Emily Clyburn, her mother, had called her about this issue with three questions: 1) What is this net neutrality issue? 2) Can providers do what they want to do? and 3) Did it already pass? She noted these questions echoed the voices of many, many citizens who have called, e-mailed and written the FCC.

In her remarks, Commissioner Clyburn equated an open Internet with the free and open exchange of ideas that is critical to “our democratic values of free speech, competition, economic growth, and civic engagement.” “At its core, an open Internet means that consumers, not a company, not the government, determine winners and losers. It is the free market at its best. All of this, however, does not nor will it ever, occur organically. Without rules governing a free and open Internet it is possible that companies – fixed and wireless broadband providers – could independently determine whether they want to discriminate or block content, pick favorites, charge higher fees or distort the market.”

On question #2, Clyburn warned that as of January 2014, there are no rules to prevent discrimination or blocking: “Nothing prevents providers from acting in small ways that largely may go undetected. And, nothing prevents them from acting in larger ways to discriminate against or even block certain content.” She said, “[T]he issue comes down to whether broadband providers should have the ability to determine, on their own, whether the Internet is free and open OR whether we should have basic and clear rules of the road in place to ensure that this occurs as we have had for the last decade.”

Commissioner Clyburn expressed that she looks at the January court decision in a positive light because of her concerns that the rules, adopted in 2010, did not go far enough: she would have applied the same rules to both fixed and mobile broadband; prohibited paid priority agreements; limited any exceptions to the rule; and “I am on record as preferring a different legal structure.” She said, “The remand enables us to issue this clarion call to the public where they can once again help us answer that most important question of how to protect and maintain a free and open Internet. That ability officially begins for everyone today.”

Commissioner Clyburn wanted to make clear that on question #3, no, the FCC was not voting on new rules May 15. She noted that the NPRM has changed considerably over the past few weeks with her input. “Though I still may have preferred to make portions of the draft more neutral, what we are voting on today asks about a number of alternatives, which will allow for a well-rounded record to develop, on how best to protect the public interest.”

Like Commissioner Clyburn and Chairman Wheeler, FCC Commissioner Jessica Rosenworcel voted in favor of launching the open Internet proceeding. She, too, stated that she supports an open Internet, but then voiced some dissent: “I would have done this differently. Before proceeding, I would have taken time to understand the future. Because the future of the Internet is the future of everything. There is nothing in our commercial and civic lives that will be untouched by its influence or unmoved by its power. I would have taken time for more input. Because I think as public servants we have a duty to acknowledge and respond to the great tide of public commentary that followed in the wake of the Chairman’s proposal.”

Rosenworcel said preserving an open Internet is an obligation, not a choice: “we are … obligated to protect what has made the Internet the most dynamic platform for free speech ever invented. It is our modern town square. It is our printing press. It is our shared platform for opportunity. Online we are sovereign -- we can choose, create, and consume content unimpeded by the preferences of our broadband providers. Sustaining this freedom is essential.”

She said the FCC must keep fairness and protection from discrimination front of mind as it proceeds: “These are the essential values in our communications laws. They are the ones we have honored in the past; they must guide us in the future. So going forward we must honor transparency, ban blocking, and prevent unreasonable discrimination. We cannot have a two-tiered Internet, with fast lanes that speed the traffic of the privileged and leave the rest of us lagging behind.”

FCC Commissioners Ajit Pai and Michael O’Rielly voted against launching the proceeding. Commissioner Pai had more extensive remarks and made a point of noting his agreement with Commissioner Rosenworcel – that the FCC process to date was flawed. “Going forward, we need to give the American people a full and fair opportunity to participate in
this process. And we must ensure that our decisions are based on a robust record,” he said. He called for 10 peer reviewed, economic studies to examine the impact of the proposed regulations and alternative approaches on the Internet ecosystem. He called on a series of hearings where commissioners could question the authors of the studies and the authors of those studies could discuss their differences. And he asked for similar input from computer scientists, technologists, and other technical experts.

But Pai’s objections to the proceeding are based on much, much more than any perceived flaws in process. First, he believes Congress and not unelected FCC commissioners should decide how broadband networks are regulated: “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.”

Pai restated a commitment to an open Internet – but to the four Internet freedoms as articulated by then-FCC Chairman Michael Powell in 2004: The freedom to access lawful content, the freedom to use applications, the freedom to attach personal devices to the network, and the freedom to obtain service plan information. [Of course, these four freedoms, unanimously endorsed by the FCC as the Internet Policy Statement in 2005, where thrown out by the courts, too – but no sense bringing that up when you’re making a point.] It is respect for these freedoms, Pai says, that has aided the Internet’s growth.

Commissioner Pai also noted his agreement with another Democrat – President Bill Clinton – to let the Internet grow and thrive free from price regulation and other obligations applicable to telephone carriers. He noted the Telecommunications Act of 1996 declared the policy of the United States to be “preserv[ing] the vibrant and competitive free market that presently exists for the Internet . . . unfettered by Federal or State regulation.” [emphasis his] “After all, nobody thinks of plain old telephone service or utilities as cutting-edge. But everyone recognizes that the Internet has boundless potential. And that’s because government didn’t set the bounds early on.”

Here are some specific problems Pai has:

  • “I see no legal path for the FCC to prohibit paid prioritization or the development of a two-sided market—which appears to be the sine qua non objection by many to the Chairman’s proposal.” Neither Sec 706 or Title II authority, Pai says, allows for such a ban – and he gives the legal reasoning at length. “I have been unable to find even a single case in which the Commission found it unlawfully discriminatory to offer a different (faster) service to customers at a different (higher) price.”
  • No matter the legal path, the legal consequences will “wreak havoc on the Internet economy.” Specifically, because of the broad interpretation of Sec 706, Pai asks: “So if three members of the FCC think that more Americans would go online if they knew their information would be secure, could we impose cybersecurity and encryption standards on website operators? If three members of the FCC think that more Americans would purchase broadband if edge providers were prohibited from targeted advertising, could we impose Do Not Track regulations? Or if three members of the FCC think that more Americans would use the Internet if there were greater privacy protections, could we follow the European Union and impose right-to-be-forgotten mandates? And because Section 706 gives state commissions authority equal to the FCC, every broadband provider, every online innovator, every Internet-enabled entrepreneur may now have to comply with differing regulations in each of the 50 states.” Title II would be no better, if not worse: access charges—tariffed charges that Internet service providers could impose on edge providers, content delivery networks, and transit operators without their consent; new Internet tolls by giving broadband ISPs no option other than access charges to recover their regulated costs; a broadband price hike for every consumer in America; and provisions ranging from the disclosure of customer information to mandatory billing disclosures would apply to broadband providers, edge providers, or really anyone in the Internet economy.
  • Pursuing net neutrality rules jeopardizes “every other goal of this Commission in the communications marketplace”: chilling further broadband deployment and threatening private investment.

Commissioner Michael O’Rielly minced no words as he voiced his dissent: “the premise for imposing net neutrality rules is fundamentally flawed and rests on a faulty foundation of make-believe statutory authority. I have serious concerns that this ill-advised item will create damaging uncertainty and head the Commission down a slippery slope of regulation.” O’Rielly said that “Congress never intended Section 706 to be an affirmative grant of authority to the Commission to regulate the Internet. At most, it could be used to trigger deregulation.” Moreover, he’s concerned the FCC seeks comment on using Section 230(b) – which relates to protection for private blocking and screening of offensive material – “to cast an even wider net of authority.”

Relying on Title II authority, O’Rielly says, contemplates “applying monopoly era telephone rules to modern broadband services solely to impose unnecessary and defective net neutrality regulations. I cannot support such a backward-looking, ends-driven approach -- not in a Notice and certainly not in final rules.” O’Rielly is concerned about the “real world impact” [his emphasis] of reversal of years of precedent and investment. “I also worry about the credibility of an agency that consistently fails to meet statutory deadlines to review and eliminate old rules, but is supposedly open to reapplying obsolete provisions.”

"The Notice suggests that reclassification could be accompanied by substantial forbearance from the Title II requirements. But the need to forbear from a significant number of provisions in Title II proves the point that Title II is an inappropriate framework for today’s dynamic technologies. Indeed, Title II includes a host of arcane provisions on topics like interlocking directorates, valuation of carrier property, uniform system of accounts and depreciation charges, telephone operator services, telemessaging service, Bell Operating Company entry into interLATA services, manufacturing of telecommunications equipment and customer premises equipment, and electronic publishing. Even if the Commission granted forbearance from all of the provisions that it has eliminated for incumbent telephone companies — and then some — advocates are ignoring that broadband providers and services would still be subject to a host of unnecessary rules. The idea that the Commission can magically impose or sprinkle just the right amount of Title II on broadband providers is giving the Commission more credit than it ever deserves."

Commissioner O’Reilly also faults the FCC with not providing any evidence of market failure to correct. “A true and accurate review of the U.S. broadband market — which must include wireless broadband — would show how dynamic it is. The Notice does acknowledge that innovation and investment have flourished, although it implausibly ascribes those successes to the vacated net neutrality rules.” And “the Notice fails to make the case that there’s an actual problem resulting in real harm to consumers.” He criticizes the NPRM for grasping at hypothetical concerns and for highlighting traffic differentiation or “prioritization” – when it is a necessary component of reasonable network management. “[F]ears that paid prioritization will automatically degrade service for other users, relegating them to a so-called ‘slow lane,’ have been disproven by years of experience.”

The proposed rules, Commissioner O’Rielly says, are “hopelessly vague and unclear”: “We are left to puzzle over what it means to provide a “minimum level of access” or what constitutes a “commercially unreasonable” practice, especially in the absence of contractual relationships.” O’Reilly finds it troubling that businesses could be required to ask government permission every time they need to make a business decision in order to avoid costly enforcement or litigation.

O’Reilly’s final beef is with the FCC’s cost-benefit analysis. He points out there’s no attempt to quantify and compare the costs of the proposed new requirements – including disclosures, reporting requirements, and certifications -- against the supposed benefits. He said he intends to spend time improving the FCC’s approach to cost-benefit analysis.

“In sum, the proposed net neutrality rules and legal theories will stifle innovation and investment by the private sector, provide no help to consumers, and thrust the Commission into a place it shouldn’t be,” Commissioner O’Rielly concludes.

The FCC plans a four-month public comment period. From May 15 through July 15, the FCC will accept initial comments on the questions presented in the NPRM. The commenters will have until September 10 to reply to the initial round of comments. However you feel about the open Internet, this is your opportunity to let these commissioners know what you think. You can follow the debates around network neutrality and reclassification of broadband with us – and we’ll see you in the Headlines.

By Kevin Taglang.