Common Carrier Classification for Broadband is no Panacea for an Open Internet
May 9, 2014 | by Andrew Regitsky
The FCC’s new net neutrality proposal is already in trouble. Even before the Commission votes to open a notice of proposed rulemaking NPRM at its upcoming May 15 meeting, the proposal is already facing criticism from Democratic commissioners. Commissioner Jessica Rosenworcel suggested that in the face of massive public outcry regarding the proposed new rules, the Commission should postpone the NPRM for at least a month, while Commissioner Mignon Clyburn reiterated her opposition to permitting companies to have any opportunity to pay for Internet priority treatment. Without support from these two Democrats, the proposal is likely to be rejected, since the two Republicans oppose any Internet regulation. This would be unfortunate, since as discussed below, there is no perfect solution to regulating the Internet.
The FCC’s latest proposal is its response to the January 14, 2014 DC Circuit Court of Appeals decision that rejected the “no discrimination” and “no blocking” provisions of the Commission’s original 2010 net neutrality order.
While, the new NPRM will not be made public until at least May 15, we do know some of the basics:
- The Commission will assert that its authority over the Internet falls under section 706, the “advanced services” portion of the 1996 Telecommunications Act.
- Companies would be permitted to negotiate agreements in which they would pay more to providers to have faster delivery of their content to consumers.
- The Commission would scrutinize such agreements on a case- by-case basis to ensure that the prices, terms and conditions are “commercially reasonable.”
- Broadband Internet service providers would be forbidden from blocking Internet content. To ensure transparency, they would be required to disclose how they treat all Internet traffic.
- All negotiated commercial agreements would have to be made public.
Opponents of the proposed rules are furious with the FCC’s proposal because they argue that “commercially reasonable” agreements would guarantee that certain large companies willing to pay more would receive priority Internet treatment. This would be a betrayal of the goal of an Internet in which all traffic is treated equally. They claim that the only way to ensure that the Internet stays open is by reclassifying broadband Internet access as a common carrier service regulated under Title II of the Telecommunications Act. Such regulation would permit the FCC to control all aspects of Internet services and products, including prices, terms and conditions. If the Commission were to continue regulated broadband as a Title I information service, it could only regulate the Internet “indirectly” (such as under section 706), since the FCC has only “ancillary” authority over Title I services. With ancillary authority, it is much more difficult to control prices, as the Commission found out when the DC Circuit rejected its 2010 Net Neutrality Order.
However, there are several major problems with attempting such a reclassification:
- Any classification attempt would be bitterly opposed by Republicans in a divided Congress;
- Reclassification would be opposed by Internet providers and lead to years of costly litigation;
Typically forgotten but most important, is the fact that even common carrier regulation would not guarantee an “open” Internet. Need evidence? Just look at the current circuit-switched network. Plain Old Telephone Service (POTS) has been regulated as a common carrier service for decades and yet there are constant complains about unequal treatment or unlawful discrimination when it comes to such basics as special access or unbundled network elements. Moreover, too many carriers spend their time seeking arbitrage opportunities rather than serving the public.
Certainly some of these issues have been addressed and resolved by the FCC. However, many persist today. If you have worked in this industry for a while, it is obvious that simply regulating a service as a common utility such as POTS does not automatically solve all its problems.
The drive companies have to serve their shareholders and seek profitability will continue no matter how broadband Internet service is classified. If broadband is reclassified as a common carrier service in which prices are tightly controlled, then Internet providers would use techniques POTS providers use today, such as using volume, term and growth discounts or the penalty of large termination liabilities to provide themselves a competitive advantage. And, such disparate treatment would be easily defended as “lawful discrimination.” Thus, all companies will never be treated exactly the same regardless of the regulatory system they operate in.
Open Internet advocates would better serve their interests by working with the Commission to specifically define the parameters of a “commercially reasonable” agreement. Moreover, they should work to ensure that carriers that illegally discriminate under such agreements face severe penalties. This is the best way to assure a lawful Internet going forward without facing years of needless litigation.
