With all the attention recently on the transition to the Internet Protocol (IP) network, it is easy to forget that the battle over the future of the Internet is still raging! Proponents of a “free and open” Internet are actively campaigning for the FCC to reclassify broadband Internet service as a “telecommunications” service so it can be broadly regulated as a “common carrier” service. It is not difficult to see the irony of this argument where a “free” Internet can only be achieved through increased regulation!

On the other hand, irony exists on both sides of the Internet divide, as many large Internet Service Providers (ISPs) continue to argue for minimal or no Internet regulation even while they seek advantageous deals that favor their own Internet traffic!    

These contrasting Internet arguments were on display in the thousands of industry comments were filed on March 21, 2014 in FCC Docket 14-28, the “Open Internet Remand” proceeding. The comments are part of a new proceeding began by the Commission in response to the rejection and remand of its 2010 Net Neutrality Order by the DC Circuit Court of Appeals on January 14, 2014.

As noted, most large ISPs are in favor of an Internet free of any federal regulation. For example, Verizon states;

The Internet is flourishing and continues to provide a robust and dynamic platform for competition and innovation. No problems threatening competition or consumers’ enjoyment of the Open Internet have emerged. To the contrary, the market and industry have moved on with the continued development of new services and capabilities, and there is little call for regulators to intervene in this working marketplace. At the same time, Verizon and other major players have made clear that they support an Open Internet and have publicly committed to ensuring that customers can access any lawful content, services, and applications, regardless of their source.  

Under these circumstances, rather than once again attempting to adopt prescriptive rules aimed at preventing theoretical problems, the Commission should instead rely primarily on consumer choice, competition, transparency, and effective multi-stakeholder processes to guide the development of the Internet. Prescriptive rules are particularly ill-suited for a dynamic marketplace like the Internet and would likely be outdated and counter-productive as soon as they are adopted (Comments of Verizon and Verizon Wireless at p. 1).

A few parties take the middle ground and argue that the Commission should utilize the Circuit Court’s apparent support for some type of Internet regulation under section 706 of the 1996 Act to craft new rules.  Section 706 grants the Commission the authority to regulate the deployment of advanced services. For example, AT&T suggests that the Commission should simply ban commercially unreasonable discrimination in the transmission of lawful network traffic over a consumer’s broadband Internet access service, and use section 706 authority to decide what is unreasonable:

In deciding whether an action is commercially unreasonable, the Commission should adopt a safe harbor for practices that, as a category, do not threaten the open Internet. Specifically, the Commission should clarify that any new prohibition on discrimination does not apply to non-exclusive arrangements entered into with unaffiliated providers of Internet content, services, or applications. This safe harbor would not only be consistent with cases delineating the breadth of common carrier regulation, but with section 706 itself insofar as it would offer greater predictability in the application of the Commission’s rules (Comments of AT&T at p11.).

However, parties favoring minimal or no future Internet regulation were dwarfed by the tens of thousands of comments from consumers and their advocates that argue that the Commission made a horrible mistake when it classified broadband Internet service as an “information” service rather than a “telecommunications” service. They argue that the Commission must now admit it is wrong and reclassify broadband Internet service as a telecommunications service that is regulated under Title II of the 1934 Communications Act.  For example, Free Press argues,

The Commission has a duty under the Act to prevent unreasonable discrimination online and on our public telecommunications network. It cannot reliably fulfill that duty by looking to Section 706.  That fact alone should end the agency’s authority inquiry in response to the Open Internet Order remand.  Title II is the only path for protecting Internet users against such discriminatory practices. But Title II is also the best and only viable answer for several other questions the Commission faces as well.  

For example, without using the common carrier regulations and authority available to it, the Commission cannot hope to preserve interconnection obligations as the network transitions to IP. It cannot preserve universal service obligations in a broadband world. It cannot maintain consumer safeguards in the event of natural disasters. And it cannot protect against broadband providers’ abuse of their market power to gouge consumers and competitors. The Commission can and must rely on its Title II authority to ensure universal access, preserve the Open Internet, and protect broadband competition (Comments of Free Press at pp. 6-7.).

The National Association of State Utility Consumer Advocates (NASUCA) agrees, noting that, “[n]ow is the time to perform the reclassification. The DC Circuit decision provides a roadmap which the Commission should follow. The decision clearly identifies the 2002 mis-classification as the main problem with enforcement of the Open Internet Rules.”  (NASUCA Comment at Executive Summary)

It is the opinion here that it would ill serve the Commission to try to reclassify broadband. It would unleash years of litigation and would almost surely cause Congress to become involved. It makes more sense for the Commission to use the section 706 authority already granted by the Court to craft a definition of “unreasonable discrimination,” and then evaluate Internet traffic arrangements on a case-by-case basis. However, the Commission currently consists of three Democrats and is under great pressure to take substantive action, so it will be interesting to see what it does.

By Andrew Regitsky, President, Regitsky & Associates

CCMI will conduct a special FREE 60-minute webinar on Wednesday, April 23 at 3 PM ET to detail all of the legal, regulatory, technical and financial issues that surround IP interconnection…an issue with industry wide implications.