Broadband Reclassification Still on the Table, But Seen as Unlikely Under Wheeler

Wheeler, who spoke to the Cable Show Wednesday (see separate report in this issue), released a blog post Tuesday defending the draft NPRM and warning that Title II remains on the table. “If the proposal before us now turns out to be insufficient or if we observe anyone taking advantage of the rule, I won’t hesitate to use Title II,” Wheeler wrote (http://fcc.us/PRB8ZQ). “However, unlike with Title II, we can use the court’s roadmap to implement Open Internet regulation now rather than endure additional years of litigation and delay."

Wheeler “still doesn’t get it,” Free Press CEO Craig Aaron said in a news release Wednesday. “People aren’t flooding his phone lines and filling his in-box because they're confused about his proposal. They understand all too well that his plan would create a pay-to-prioritize Internet with fast lanes for the few.” The next step is a no-brainer, said Aaron. “If the chairman truly wants to do right by the Internet and avoid losing another costly court battle, he should follow the letter of the Communications Act, exercise the FCC’s clear authority and reclassify Internet service providers as common carriers."

But Public Knowledge offered a more charitable view of Wheeler’s actions. “Wheeler’s blog post is right that the FCC needs to get this discussion going right away,” said PK Senior Vice President Harold Feld. “The commission cannot stand by and leave the Internet unprotected. I am also encouraged to see consideration of Title II move over the last few months from ‘off the table’ to ‘only as a last resort’ to ‘we will use it if necessary.’ Our job going forward is to make the case for why paid prioritization is inherently anti-consumer, anti-competitive, and anti-innovation. We must make the case not only to the FCC, but also to Congress, that only by classifying broadband access as Title II will the FCC have the authority it needs to adequately protect the public.” The FCC proposed rulemaking “properly frames the debate and gives us the opportunity to make our case,” Feld said. “I am glad to see the debate begin and hope the public continues to voice its solid opposition to paid prioritization.”

"It takes a lot of backbone to be a Daniel in the lion’s den,” said former Chairman Reed Hundt. “But Tom Wheeler has plenty of backbone and that’s what he was doing at NCTA.” What he’s saying to the cable industry is that “you are the broadband titans and you really need to behave in a certain way,” Hundt said. “The beneficiaries of that are twofold: Number one, the web-based content companies and number two, the consumers who want a wide range of choices among web-based content companies."

Former Commissioner Robert McDowell said a reclassification fight would overwhelm everything else the FCC is trying to do if Wheeler were to propose taking that step. “An attempt to impose Title II on broadband for the first time in American history would spark one of the largest policy fights ever seen in Washington, D.C.,” McDowell said. “It would consume the vast majority of the chairman’s time, political capital and commission resources.” The order would also be vulnerable to being overturned in court, he said. While the Supreme Court’s 2005 Brand X “said the commission could have gone either way in the cable modem order, the changed market conditions since then might make it challenging for the commission to defend the title reclassification in the courts,” said McDowell.

Not ‘Idle Threat'?

Wheeler “doesn’t strike me as a person who makes idle threats,” said Lawrence Spiwak, Phoenix Center president. If Wheeler does go for such a “nuclear option,” it’s “more a political question for the administration than it is a legal one,” Spiwak said. Despite “certain constituencies’ dislike of paid prioritization,” the Verizon court that struck down net neutrality rules this year focused specifically on the fact that the FCC’s “undue discrimination” rule was, in practice, “zero price regulation” and therefore per se common carriage, Spiwak said. “Given this ruling, I'm not sure how the Commission can lawfully prevent paid prioritization going forward. Instead, it will apparently focus on whether or not such arrangements raise legitimate anticompetitive concerns, which is probably the better way of going about it."

Wheeler has said he won’t hesitate to use Title II, but it’s unclear in what context that might happen, said Sarah Morris, senior policy counsel at the New America Foundation’s Open Technology Institute. “It’s not clear to me that the Chairman is keeping Title II on the table within the context of this proceeding or as an option if 706 fails once again,” she said about that Telecom Act section. “The time for Title II and strong network neutrality rules is now, in this proceeding.”

In light of the Verizon decision, Section 706 offers no path for “meaningful, bright-line nondiscrimination protections,” said Morris. “By definition, the rules must permit negotiations and discrimination or they will amount to the type of common carriage rules that the court deemed impermissible. Title II is the only way to get around the common carriage prohibition."

A former FCC spectrum official who represents carriers among other clients expressed surprise at the extent of the complaints followed the unveiling of proposed rules (WID April 25 p1): “Really? People are freaking out over an NPRM? Since when does that happen? It’s just an NPRM.” But the former official thinks the threat is real: “From the time he came in [Wheeler] has not hesitated to show muscle.”

Delay Tactic?

But some say that unless Wheeler acts now, reclassification is likely not an option for many years to come. “Title II is definitely on the table,” said public interest lawyer Andrew Schwartzman. “The problem with Wheeler’s approach is that he wants to delay the inevitable. It will take years for the commission to decide that Wheeler’s approach is insufficient and then start the process of reclassifying. He needs to reclassify now."

"If he’s not going to act on it now, Title II will not be actually on the table until after [Wheeler] is done being chairman,” said a former FCC legal adviser who represents media clients. “He’s going to try to get this order passed then it will be challenged, perhaps, something might go wrong. But by the time all those happen he'll no longer be chairman. [Title II] is still an open docket, but that’s about it.”

"I think he really prefers not to use Title II, which would be political headwind and a multiyear slog in court,” Guggenheim Partners’ analyst Paul Gallant said of Wheeler. “But if his preferred approach proves unworkable, I absolutely believe he would pull the trigger on Title II."

"I personally have always favored the ‘light touch’ Title II option rather than the increasingly contorted dance the FCC has been doing to justify Title II-like regulation under different sections of the [Communications] Act,” said Donald Evans, a lawyer at Fletcher Heald. “It is a viable option, but obviously a less desirable one in the FCC’s eyes. The change to Title II would certainly entail years of litigation, while they have at least a thin, court-approved ledge to stand on under Section 706.”,