Title II Approach

Many left-leaning groups, congressmen and, surprisingly, Supreme Court Justice Antonin Scalia support using Title II of the Telecommunications Act in ensure net netrality. While this type of reclassification does not in fact explicitly provide protections against blocking and paid prioritization, it would give the FCC the authority to implement said net neutrality protections that were previously struck down in January’s Supreme Court ruling against the FCC’s 2010 Open Internet Order. Free Press and others see Title II as the only way to give the FCC the authority it needs to implement those protections.

However, this approach is considered by some to be heavy-handed, since it would reclassify broadband (wired, wireless or both) as a public utility just like power, water and transportation. Title II regulation would allow the FCC the ability to directly dictate the terms and prices of Internet usage, which Republicans and economists think would harm the Internet innovation.

John W. Mayo, a Professor of Economics, Business and Public Policy in Georgetown University’s McDonough School of Business, is an expert on antitrust and how microeconomics apply to public policy. He participated in the George Washington University Democracy Journal’s symposium entitled “Regulating the Digital Economy,” back in October. When asked about Title II reclassification, he had this to say:

“What have been the results of public utility regulation? Public utility regulation does pretty well in a world where demand is pretty stable, costs are pretty stable, and technology is not changing. That is the best case scenario for public utility regulation. That happens to be exactly the opposite of the world we’re looking at applying public utility regulation to, where demand is exploding, where technology is changing as we speak. In that sort of world, you have to ask yourself a question: How has public utility regulation done in terms of its results at promoting and stimulating innovation? The result: it doesn’t do very well.”

Section 706 Approach

Moderate democrats, telecoms like Verizon and Comcast, Federal Trade Commission, policy groups like the Center for Boundless Innovation in Technology and others who see Title II as too overbearing and have called for a light-touch regulatory approach using the powers enumerated in Section 706 of the Communications Act to implement these protections.

“The Telecommunications Act of 1996…addressed the issue of whether the federal government should intervene to prevent a ‘digital divide’ in broadband access. Section 706 requires the FCC to determine whether ‘advanced telecommunications capability [i.e., broadband or high-speed access] is being deployed to all Americans in a reasonable and timely fashion.’ If this is not the case, the act directs the FCC to ‘take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.'” Some of the actions the FCC can take include “price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.” (CRS report, page 10-11)

Hybrid Approach

Chairman Wheeler has suggested a hybrid approach that would take parts of both Title II and Section 706.

As the New York Times pointed out, the hybrid approach “would establish a divide between ‘wholesale’ and ‘retail’ transactions. It would apply utilitylike regulation to the wholesale portion, the exchange of data from the content provider to the Internet service provider for passage through to the end consumer. The retail portion, the transaction that sends data through the Internet service provider to the consumer and which allows the consumer to access any legal content on the Internet, would receive a lighter regulatory touch.”

The Minority Media and Telecommunications Council even suggested using a combination of Section 706 and Title VII of the Civil Rights Act, which would provide “a neat framework within which the FCC can enforce its open Internet rules well within its Section 706 authority.”

Updating the Communications Act

Conservative groups and republicans of the House Energy and Commerce see the current legislative frame as outdated. They want to update the Communications Act of 1996 and have been working towards it since December of last year. President of American Commitment Phil Kerpen told Broadband Breakfast, “if we rewrote the whole act, we could get rid of a lot of outdated regulation that don’t fit, but we could build in some consumer protections.” Conservatives see this as an opportunity to reduce the size of the government a bit, since there currently are multiple bureaucratic agencies with overlapping regulatory powers. A new act would not only help to streamline regulatory authority, but it would also update how broadband companies are defined and what laws of the law pertain to them. Currently, the Communications Act applies different treats telecommunications services, which transmit data, differently than information services, which process data. Telecommunications services are regulated under Title II, while information services are regulated under Title I.

Bloomberg explained the absurdity of this difference back in January. “Early in the 2000s, the cable industry argued that it not only transmitted Internet data to customers, it also provided e-mail addresses and Web pages—it processed data as well. Since cable companies were therefore both telecommunication and information services, the industry argued, it could only possibly be an information service. The FCC bought this argument. In 2002, it decided that since cable was both, it could only be one.” Everything from placing phone calls to watching videos & TV will eventually all happen over the Internet, so an updated paradigm would help the regulatory framework.

 

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