FCC Set to Pass Open-Internet Rules That Clash With Prior StanceTodd Shields
The Federal Communications Commission is poised this week to approve strong net neutrality rules, setting up an awkward hurdle for court battles ahead: its own prior decisions.
FCC Chairman Tom Wheeler, determined to preserve an open online information highway, wants to use the extensive powers crafted to govern utilities like phone companies. That’s a change from a lighter approach adopted a decade ago when the agency had a Republican majority.
Wheeler’s proposal is opposed by AT&T Inc., Comcast Corp. and other providers, which want as little government involvement as possible. It’s supported by the likes of video streamer Netflix Inc., which fear that without federal intervention, Internet service providers could pick winners and losers by manipulating how traffic flows over their networks.
Wheeler, a Democrat, is expected to prevail on Feb. 26 at the agency, where his party is in the majority. The vote would move the issue from the political stage, with 4 million people writing to the FCC and President Barack Obama calling for strong rules, to the judicial arena.
“Both sides will tell you it’s a legal slam dunk,” said Kevin Werbach, an associate professor at the University of Pennsylvania’s Wharton School and a former FCC official. “I don’t think it’s a slam dunk for either side.”
In 2002, during the administration of President George W. Bush, the FCC concluded that Internet service delivered by cable companies was an information service -- a legal description allowing only light regulation.
Wheeler wants to reverse that decision by deeming broadband a telecommunications service under Title II of the 1934 Communications Act, which establishes a set of rules for utility telecommunications services.
Wheeler says the FCC isn’t seeking to regulate the prices broadband providers charge, as it does with phone companies. He does want to keep the providers from charging some Web companies extra for so-called fast lanes and to forbid blocking or interfering with subscribers’ Internet traffic.
His strategy of reclassifying the service providers stems from a decision by the U.S. Court of Appeals in Washington last year that voided FCC open-Internet rules. Judges said the agency improperly treated Verizon Communications Inc. as if it were a utility -- something the FCC couldn’t do because of its 2002 ruling.
By formally classifying Internet service as a utility now, Wheeler hopes to shore up the legal foundation that the court found to be lacking.
Harold Feld, vice president of the policy group Public Knowledge, which supports Wheeler’s proposal, said he’s optimistic the agency will prevail in court even though it is reversing itself.
“I don’t think the court’s going to say you chose once in 2002 and now you’re stuck with that forever,” Feld said.
Others challenge that reasoning. “The agency can change its mind, but does it have a reason?” asked James Gattusso, senior research fellow at the Heritage Foundation, a policy group. “I don’t know if the reason can be, ’The politics have changed, we have a new chairman.’”
“Nothing material has changed” since 2002, and it would be unlawful for the FCC to decide Internet providers are telecommunications services, said AT&T General Attorney Gary Phillips in a Feb. 18 filing at the FCC. AT&T Chief Executive Officer Randall Stephenson said last week in an interview on CNBC that he expects “all of us in the industry will be asking for a stay of any order.”
The argument revolves around which of two legal terms best describes the Internet.
Telecommunications service refers to transmitting data without changing its form or content. An information service has the ability to generate, store and change information. Apps and websites are examples of information services, according to the group Free Press, an advocate of strong net neutrality rules.
Broadband services fall squarely within the definition of information services, just as they did in 2002, the National Cable & Telecommunications Association, a trade group, told the FCC in a filing. Broadband providers retrieve and process information, performing functions such as caching content and detecting malware, the group said.
According to Feld, broadband subscribers simply use the providers as conduits to reach independent information providers of their choice.
Cable companies, which have sought higher fees from high-volume users such as Netflix, are expected to join a lawsuit seeking to overturn the rules.
“It’s just too dramatic” a change from earlier rules, said Michael Powell, who as Republican FCC chairman led the agency to its 2002 decision. Powell, president of the National Cable & Telecommunications Association, spoke in an interview on C-SPAN television.
Werbach, the law professor, said the FCC’s expected action guarantees a strong legal challenge.
“The industry is fairly united in trying to do everything they can to overturn” an order relying on utility powers, Werbach said. The FCC will need to show it was reasonable to have changed its basis of authority, he said.
An added hurdle for the agency, according to Werbach: industry can claim it has relied on the FCC’s 2002 ruling as it spent billions of dollars to build high-speed Internet access networks. That would increase the burden on agency lawyers to offer sound reasons for the change.
Another possible challenge to the FCC action: mobile carriers have said they would sue to overturn rules that subject wireless networks to the utility-style powers. They’ve argued Congress specifically exempted mobile from utility-style regulation. Wireless networks needs to be regulated in part because they carry 55 percent of Internet usage, Wheeler said in a Feb. 9 speech.
The FCC takes comfort from a victory before the U.S. Supreme Court, which in 2005 upheld the agency’s decision on cable Internet service.
The justices said the FCC has discretion to interpret the law, Gigi Sohn, the FCC’s special counsel for external affairs, said in an interview on the C-SPAN television network.
“Even though it’s not the best interpretation, as long as it’s not wacky, you have to uphold it,” Sohn said. “And I think that’s what is going to happen here.”