The Communications bar was buzzing today because the FCC released the Executive Summary of its National Broadband Plan. Tomorrow at its monthly meeting, the agency will release the entire plan, all 360 pages of it.
But along with the Commissioners, staff and scores of onlookers, there will be an elephant in the meeting room that will not get nearly as much attention – that is, whether the FCC actually has the power under the Communications Act to enact major parts of the plan. Without a “cop on the beat,” the fate of broadband consumer protection regulations such as privacy, transparency and emergency communications will be at risk, as will other initiatives to ensure great access to broadband and greater adoption of broadband by the disadvantaged.
As has been well documented, the Commission’s authority to protect broadband Internet users was thrown into doubt after the DC Circuit Court of Appeals heard argument in the Comcast-Bit Torrent blocking case. All three judges were skeptical of the Commission’s argument that it had “ancillary” authority under Title I of the Communications Act to regulate broadband Internet Service Providers. This means that even if there is no explicit provision in the Communications Act granting the FCC power to regulate, it can do as long as its actions were “ancillary” to another explicit goal in the Communications Act.
The Current Debate over FCC Authority
Soon thereafter, PK asked the FCC to place broadband Internet access service under Title II of the Communications Act, where its authority would stand on far firmer legal ground. We argued that the FCC could and should find that circumstances had changed, that the bases for its 2002 decision to treat broadband Internet access services as “information services” under Title I were no longer supportable, and that such services were more appropriately considered Title II telecommunications services. The largest ISPs responded with a 14 page diatribe.
Myths and Facts about the FCC’s Authority
Let’s examine the main arguments against placing broadband Internet access under Title II and separate the myths from the facts.
Myth #1: This debate is all about net neutrality
Big ISPs like to make this debate about net neutrality because those are the most controversial rules that would be threatened if the FCC’s power is constrained. But much more than net neutrality is at stake. Here is a partial list of proposals in the National Broadband Plan that would be endangered:
• Any change to the Universal Service Fund to provide money for broadband service instead of plain old telephone service.
• Transparency rules that let consumers know what they are paying for and what they are getting in broadband service.
• The ability to prioritize emergency communications and take other emergency preparedness measures
• Consumer privacy protections
• Expanding Lifeline and Linkup programs to subsidize broadband for the poor.
Even the carriers recognize that the authority question goes beyond net neutrality. Over the past several weeks, both AT&T and the National Cable & Telecommunications Association have filed tortured memos explaining how the FCC can save universal service under Title I.
Myth #2: If the FCC returns to Title II, it must apply all Title II regulation to broadband Internet access services
This is the flawed “all or nothing” argument. The FCC can, and has, declined to apply many Title II obligations, including rate regulation and tariffs. The only provisions that it must apply are those that prohibit “unjust and unreasonable discrimination,” prohibit “unjust and unreasonable rates and practices,” and which provide for a complaint process. The telephone companies lived under these non-discrimination rules for 70 years, and the wireless phone companies do so now, which makes their fervent opposition all the more puzzling.
Myth #3: Title II regulation would apply to Google and Akamai
This is the “FCC will have to regulate the entire Internet ecosystem” argument, which also has no basis in fact or law. Prior to the 2005 Brand X decision, which upheld the FCC’s decision to regulate broadband Internet access services under Title I, the FCC regulated only those services under Title II. The FCC never regulated the content, applications and services that constitute the Internet, and there is no reason to believe that a return to Title II would change that fact. Indeed, if the FCC did try to do so, it would be vulnerable to a legal challenge to its power to regulate what are unquestionably information services.
Myth #4: Title II regulation would deter investment
If this argument sounds familiar, it is the same one the carriers use against net neutrality. But it is no more persuasive in this context. The telephone companies and their Internet access services were regulated under Title II until 2005, and it did not affect investment. Carrier investment depends on a whole host of factors unrelated to telecommunications regulation, including the state of the economy and the level of competition. Indeed, AT&T’s investment in its landline network increased by 13% when it was subject to the stricter “nondiscrimination” condition imposed on it when it merged with BellSouth. And what regulatory regime has the ever-growing wireless phone industry operated under for the past decade? Title II.
Myth #5: “Legal precedent” will make it difficult for the FCC to change its position
Congress Daily last week quoted a prominent Congressional staffer on whether the FCC could regulate broadband Internet access under Title II:
“I think [the FCC] would have some legal difficulties” if it pursues this change…. [The staffer] said there's considerable legal precedent supporting the view that broadband is not a telecom offering. The case law includes a 2005 U.S. Supreme Court decision upholding the agency's earlier conclusion that it is an information service.
This reflects a fundamental misunderstanding of the Brand X decision and the law governing agencies like the FCC. Courts give agencies great leeway to interpret their organic laws unless that interpretation is 1) contrary to the law’s plain language and legislative history or 2) “arbitrary and capricious” – in plain speak – totally wacky. The Brand X court found only that the FCC’s decision to call broadband Internet access an “information service” was not totally wacky. The court did not say the FCC’s interpretation was the best or even a good interpretation of the Communications Act – just that it passed the red-face test.
If the FCC were to find that circumstances have changed and that broadband Internet access is better classified under Title II, it need not meet any higher burden than the arbitrary and capricious test. The Supreme Court reaffirmed this standard in the recent FCC v. Fox indecency case.
The FCC will likely wait to for the Comcast decision before acting. But with the power to implement the giant National Broadband Plan at risk, it behooves the agency to act soon thereafter. Otherwise, there will be no “cop on the beat” to protect broadband Internet users.