How Internet Companies Are Driving a Public Utility Regulation Approach to Net NeutralityFCC, Net Neutrality September 12th, 2014
Austin Allen, Reporter, Broadband Breakfast
WASHINGTON, September 12, 2014 – In what would have seemed highly unlikely just a few months ago, growing support for public utility regulation is emerging. Tech companies, politicians, internet service providers, and component makers have started to outline their views regarding their policy approach to the issue of net neutrality. In order to understand the views of the major players and their respective camps, it is helpful to look back in time a bit.
In January 2014, the D.C. Circuit Court of Appeals ruled, in Verizon Communications v. Federal Communications Commission, that the FCC lacked the authority to enforce both the anti-blocking and anti-discrimination clauses of the agency’s 2010 Open Internet Order unless broadband providers were reclassified as common carriers, and subject to the regulation as “telecommunications services” under Title II of the Communications Act.
Although the FCC arguably has the authority to reclassify internet access service as a “telecommunications,” such a move would be a significant reversal of agency decisions. About 10 years ago, the FCC chose to make fiber-optics exempt from common carrier regulation; then it took the same path for cable-modem services, and for digital subscriber line (DSL) service over copper wires.
Is ‘Light Regulation’ Still Regulation?
While FCC Chairman Tom Wheeler has said that he is keeping the option of Title II regulation on the table, the thrust of his efforts have been aimed at regulating broadband providers without having to treat them as regulated entities.
The agency has argued that the D.C. Circuit has already authorized, using Section 706 of the Telecommunications Act of 1996, (1) the transparency requirement in his proposed network neutrality rules; (2) a “no blocking” requirement; and (3) the enforcement of a “commercially unreasonable” standard against potentially discriminatory practices by internet service providers.
Wheeler believes that his agency can enforce the no blocking goal and the non-discrimination rule under Section 706 of the Telecommunications Act of 1996. In a February 19 statement he said that the court agreed that the section “gives the FCC authority to encourage broadband deployment by, among other things, removing barriers to infrastructure deployment, encouraging innovation, and promoting competition.”
“The D.C. Circuit ruled that the FCC has the legal authority to issue enforceable rules of the road to preserve Internet freedom and openness.”
-FCC Chairman Tom Wheeler
While major ISPs like Comcast and Time Warner Cable have said that they will continue to adhere to the principles of the 2010 Open Internet Order, critics of these companies want concrete safeguards. On January 30, a coalition of 86 groups, including the American Civil Liberties Union, Free Press, Demand Progress and Reddit, called for reclassification under Title II. In late February, Netflix signed a multiyear agreement with Comcast in which the video streaming company paid Comcast for a direct connection to Comcast’s network. It made a similar agreement with Verizon. Netflix has called for stronger net neutrality rules to protect an open internet.
Early Support for Wheeler’s Section 706 Approach
Some saw Wheeler’s proposition of enforcing net neutrality rules through Section 706 as a plausible way forward. In May, a huge coalition of tech companies, led by Google, Microsoft, Yahoo, Amazon, Facebook and Twitter, asked the FCC to protect users and companies “on both fixed and mobile platforms against blocking, discrimination, and paid prioritization.” Other companies that signed the letter include eBay, KickStarter, Reddit, WordPress, Mozilla, Dropbox, LinkedIn, Foursquare, Digg, Meetup and Lyft. However, these companies didn’t explicitly state which route – Section 706 or Title II reclassification — they supported.
A renewed push for reclassification started in July. In its FCC filing, Netflix made clear its staunch support for reclassification. In addition to advocacy groups like Free Press, Public Knowledge and EFF, both The New York Times editorial board and former FCC Commissioner Michael Copps, who now heads the advocacy group Common Cause, have argued for the common carrier solution. Tech companies Etsy and Dwolla have also joined this camp along with tech incubator Y Combinator, whose founder Alexis Ohanian argued that only reclassification would give the FCC the necessary authority to halt paid prioritization.
“The FCC cannot impose a nondiscrimination rule–unless it classifies broadband providers under Title II,” wrote Ohanian in a letter to the FCC. “The Court also held that, without classifying broadband providers under Title II, the FCC could not ban charging fees for priority access, even though the FCC recognized such fees would be a ‘significant departure from historical and current practice.’ ”
On Wednesday, September 10, the Battle for the Net’s “Slow Lane Protest” saw more than 10,000 websites participate, including Netflix, WordPress, Vimeo, Tumblr, FourSquare, KickStarter and Dropbox, display a symbolic loading icon on their respective sites that encouraged visitors to contact members of Congress, the White House and the FCC about net neutrality. This symbolic internet slowdown generated “nearly 300,000 calls and more than 2 million emails to Congress,” while “722,364 people filed comments at the FCC,” a press release from Fight for the Future stated.
Absent from the “slowdown” participants were tech giants Apple, Facebook, Google, Microsoft and Yahoo. These companies have signed on to coalitions that support open internet principles, and Google took to its “Take Action” page to voice its opposition for paid prioritization. Google did not respond to a request for comment as to why the company did not participate in Wednesday’s protest.
ISPs, Carriers & Equipment Companies Oppose Reclassification
Although ISPs like Comcast and Time Warner have been vague. Many of them are proponents of light regulation that they state has allowed them to grow and thrive. Comcast’s most recent post on their blog cements their stance against reclassification, together with a seemingly strong statement of support for open internet rules under Section 706. However, Comcast does not actually say that it supports this route; rather, it states that “The Courts have laid out a clear path and clear authority (under Section 706 of the Telecommunications Act) for the FCC to adopt robust and legally enforceable Open Internet rules.”
Other major carriers have taken a similar approach. Verizon has been an opponent of reclassification, a viewpoint reiterated in their filing with the FCC on July 17. Ars Technica reported that Verizon said Title II reclassification would require web services like Netflix to pay Verizon. In May, AT&T stated that they believed reclassification would “cause risks and harms that dwarf any putative benefits.” The telecommunications giant said in a filing with the FCC on July 17th that it supported a Section 706 approach to enforcing net neutrality and ending paid prioritization.
In a filing submitted on July 15, the Telecommunications Industry Association said that reclassification would “thwart cycle of investment, competition and innovation” in the broadband space. Many members of the TIA, such as Cisco, IBM, Intel, Panasonic, Broadcom, D-Link and Nokia, penned a letter to the FCC on September 9 in which they made similar comments.
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