The industry comment period for the FCC’s Net Neutrality proceeding (Docket 14-28) has ended. The Commission’s expert workshops and Congressional hearings regarding Internet regulation will be over soon too. Unfortunately, this will leave the FCC and its Chairman Tom Wheeler in precisely the position it and he do not want to be in – forced to make a decision regarding how the Internet should be regulated in the future.

I do have a certain amount of sympathy for the Chairman Wheeler. He is under tremendous pressure from Democrats, consumer advocates and certain companies that feel they will be significantly disadvantaged if they receive slower Internet speeds than their larger competitors. Nevertheless, Mr. Wheeler has brought much of the pressure on himself. He originally advocated a regulatory position he knew was the strongest and one that was clearly legally defensible - permitting commercially reasonable broadband Internet access agreements which would be scrutinized if necessary on a case-by-case basis, rather than trying to reclassify broadband Internet access service as a Title II telecommunications service. 

Chairman Wheeler is very much aware that an attempt at reclassification would result in years of litigation, and massive industry uncertainty with investment and employment suffering. However, instead of standing strong and defending his original position, he has constantly vacillated in an attempt to appease all sides.  Naturally, he is pleasing no one. Thus this week we have the Chairman’s latest attempt to mollify his critics. In a September 22nd FCC blog, Mr. Wheeler stated that “the Commission is [now] looking for a rainbow of policy and legal proposals, rather than being confined to…limited ‘monochromatic’ options.”   

According to the Commission;

Commenters have suggested how Section 706 could be used [to regulate the Internet]. For example, AOL supports reclassification under Title II with substantive rules promulgated under Section 706. And AT&T has suggested paid prioritization could be banned under Section 706.

At the same time, the Commission has been presented with a number of variants on the use of Title II. Tim Wu and Tejas Narechania have made an important proposal of this kind, as has the Mozilla Foundation, which suggested in its reply comments that Title II be used to create a presumption that all paid prioritization arrangements are unlawful.

Some parties also have spoken positively of the benefits of both Section 706 and Title II. For example, a coalition of library and higher-education institutions has made proposals that build on these sources of legal authority—suggesting, among other ideas, a finding that paid prioritization arrangements presumptively violate the law under a standard of “Internet reasonableness”.

Among the witnesses at the Senate hearing last Wednesday was Nuala O’Conner of the Center for Democracy and Technology (CDT), who said that reclassification was a significant option but who also suggested that the Commission consider a “hybrid” approach combining the strengths of both Section 706 and Title II, which would employ Section 706 to protect consumers and other Internet access subscribers and Title II to protect edge suppliers.

While these commenters deserve praise for their efforts to create novel solutions for the Commission to adopt, almost all the proposal suffer from the same infirmity. They generally involve reclassification of some piece part of broadband Internet access service. This is true for even what I believe is the best novel solution. That is the hybrid proposal made by Mozilla, which states;

[R]remote delivery services provided by last-mile network operators to arms-length edge hosts, allowing them to communicate with that operator’s subscribers, represent a distinct legal category of services from user-facing Internet access services and from interconnection and peering. The Commission must therefore determine the appropriate regulatory framework for these services. The functionality of these services is limited to the delivery of traffic, subject in theory to prioritization or throttling based on payment or lack thereof. At the same time, in a world where any Internet user can also be a host, the services are undoubtedly offered “directly to the public, or to such classes of users as to be effectively available directly to the public.”  Therefore, under statutory language and past decades of interpretation as upheld by numerous court cases, remote delivery services are telecommunications services subject to Title II of the Communications Act. (See, Mozilla Petition to Recognize Remote Delivery Services in Terminating Access Networks and Classify Such Services as Telecommunications Services under Title II of the Communications Act, FCC Docket 14-28, filed May 5, 2014, pp. 2-3.)

According to Mozilla, classifying remote delivery service to an end user under Title II would not require the Commission to reverse prior classification decisions, because the Commission has not previously recognized the existence of such a service and, therefore, has had no prior occasion to consider its regulatory treatment. 

However, if the Commission were to now attempt to break Internet access service into component parts and classify them differently it could lead to additional troubles for the Commission.  Any attempt to classify even a segment of broadband Internet access as a telecommunications service will be fought in Court.  Moreover, it could be argued that every information service has a telecommunications component.  It would not take long for advocates to argue that each telecommunications component is actually a service into itself which should be unbundled and made available to competitors.  Can you imagine how much litigation this would lead to?  It would be a lawyer’s paradise.

The best thing Chairman Wheeler and the other FCC Commissioners could do now would be to stop making speeches about the many regulatory alternatives they are considering and, instead, develop criteria for evaluating what a commercially acceptable agreement would require.  Hybrid solutions for the Internet will not be solutions at all, but simply invitations for further litigation.

By Andrew Regitsky, President, Regitsky & Associates