Happy New Year! There is no question that in 2024 the telecommunications industry will be dominated by the FCC’s proposal to reinstate the Net Neutrality rules, which would prohibit the blocking, throttling and prioritization of Internet traffic. The proposal also includes FCC control over the entire Internet with its “General Conduct” rule which would allow the Commission to give thumbs down to every new service or product introduced by a broadband Internet service provider.
Undergirding the agency’s proposal is its plan to reclassify broadband Internet access service (BIAS) as a Title II common carrier telecommunications service, for that is the only way it can directly control every aspect of the Internet. If BIAS remains a Title I information service, by law, the FCC can only indirectly regulate the Internet and could not control prices of Internet services or establish a General Conduct rule.
The industry got its first bite at the apple when it filed comments on the Commission’s proposals on December 14, 2023, in Docket 23-320. As expected, consumer advocate groups were gung-ho to reinstate the Net Neutrality rules and reclassify BIAS as a Title II telecommunications service. Internet service providers (ISPs) were adamantly opposed to Net Neutrality and Title II classification. Here are some of the arguments made on each side.
Supporting Net Neutrality, Public Knowledge claims that broadband as a Title I information service is completely incompatible with the Commission’s public safety obligations. Moreover, the effect on pole attachments and Lifeline impedes the goal of ensuring timely deployment and adoption of broadband by all Americans.
The consumer advocate organization asserts that Covid clearly demonstrated the dangers of Title I regulation for broadband services
For example, the Commission could not prevent ISPs from terminating subscriptions when newly unemployed subscribers could not pay their monthly bills and was therefore forced to rely on a voluntary pledge. But just as the Commission could not compel ISPs to keep customers subscribed during the crisis, the Commission could not monitor whether those ISPs that signed the voluntary pledge followed through on their promises. Despite the self-congratulatory insistence of the Commission at the time about the effectiveness of these voluntary measures, the Commission received thousands of complaints that ISPs were violating their commitments. Other ISPs took advantage of the circumstances to raise fees and impose new caps at a time when customer use of broadband dramatically increased to compensate for the lockdown – effectively price gouging during the crisis. (Docket 23-320, Public Knowledge Comments, filed December 14, 2023, at p. 12).
Conversely, ISPs argue that the Internet is already open and fair, and claim there is no need for Net Neutrality rules or the reclassification of BIAS.
[T]he [FCC’s]Notice cites no evidence in the years since the 2018 Order’s issuance suggesting that the openness of the internet depends on Title II reclassification or is in any way at risk. It cites none because there is none, and there is none because that claim is not true: The internet already is and will remain open, because that is what consumers demand of their broadband providers.
Verizon is a prime example of this, as it has publicly and expressly committed to open internet principles that apply to our consumer mass-market broadband internet access services. On our website, we explain that “[t]o enable our consumer broadband customers to take advantage of all the internet has to offer”: we “will not block any legal internet content, applications, or services based on their source or content”; “will not throttle or slow down any internet traffic based on its source or content”; “will not accept payments from any company to deliver its traffic faster or sooner than other traffic on our consumer broadband service”; will not “deliver our affiliates’ internet traffic faster or sooner than third parties’ ”; and “will not prioritize traffic in a way that harms competition or consumers. (Docket 23-320, Verizon Comments filed December 14, 2023, at pp. 5-6.).
A key area of disagreement concerned the Commission’s legal justification for reclassifying BIAS as a common carrier service. All parties understand that Net Neutrality will likely be decided at the U.S. Supreme Court. That Court has made clear in cases in which it finds that Congressional intent is unclear (such as BIAS appears to be), it is likely to decide intent the issue itself, under the Major Questions Doctrine (MQD) and not give deference to agency expertise under the historically used Chevron Doctrine (in this case to the FCC).
For example, Verizon notes, “[t]he major questions doctrine forecloses the Commission’s proposal to rely on purported ambiguities in the Communications Act to impose common-carrier regulation on broadband because the agency purports to assert authority of “vast ‘economic and political significance’” without express authorization from Congress.” There are several factors that indicate the major questions doctrine applies to BIAS.
First, the scope of the authority asserted in the NPRM is tremendous. By subjecting broadband to common-carrier regulation, the proposed rule would “fundamentally transform[] the Internet” by “wrest[ing] control of the Internet from the people and private Internet service providers and giv[ing] control to the Government.
Second, the proposed rules threaten to upset vested interests throughout the communications industry. Today, as in 2015, “[t]he financial impact of the rule — in terms of the portion of the economy affected, as well as the impact on investment in infrastructure, content, and business — is staggering.” Indeed, the threat (and brief imposition) of Title II on broadband has reduced industry investment by about $90 billion and cost about 215,000 jobs — harms that will be further exacerbated if the Commission adopts the heavy-handed regulatory scheme proposed in the NPRM.
Third, “Congress has been studying and debating net neutrality regulation for years,” and “has considered (but never passed) a variety of bills relating to net neutrality and the imposition of common-carrier regulations on Internet service providers
Fourth, and finally, “[t]he public has also focused intensely on the net neutrality debate,” as exemplified by the fact that the NPRM leading to the 2015 Order generated “some 4 million comments . . . , apparently the largest number (by far) of comments that the FCC ha[d] ever received about a proposed rule.” All of the above facts bring the major questions doctrine to bear because “[a] decision of such magnitude and consequence” on a matter of “earnest and profound debate across the country” must “res[t] with Congress itself, or an agency acting pursuant to a clear delegation from that representative body. (Docket 23-320, Verizon Comments at pp. 30-33, quoting then judge Bert Kavanaugh in 2015).
Public Knowledge vehemently disagrees. It claims the Commission must be permitted to classify BIAS, and the reliance on the Major Questions Doctrine by ISPs, is simply because they don’t like the classification chosen.
The argument that MQD prohibits the FCC from once again reclassifying broadband rests on the assertion that classification of broadband as Title II is a question of significant economic or political importance. But this is a red herring. Any classification of broadband – whether as Title I, Title II or Title IV – is a “question of significant economic and political importance.” But no one argues that the FCC is powerless to classify broadband at all. After all, classification of broadband as a Title I service forfeits billions of dollars in USF funds for broadband-only providers, forfeits the availability of access to pole attachments, and potentially imposes billions of dollars in costs to edge providers and consumers. Rather, proponents simply say the quiet part out loud – they dislike the idea of being regulated as Title II because they regard it as more “onerous” and “burdensome” than Title I (and chose to disregard the initial FCC classification of cable modem broadband as Title VI service, a classification reached by two district courts under the relevant statutory definitions). But Major Question Doctrine does not claim that when confronted by a choice the agency must take the “least burdensome” as defined by industry – especially where doing so would require reversing two previous Supreme Court decisions expressly granting deference to the FCC. (Docket 230-320, Public Knowledge Comments, filed December 14, 2023, at p. 33).
Reply comments in this proceeding are due on January 17, 2024. We will keep you informed of further developments as they happen.