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'Poison'

Title II Reclassification of Broadband in Some Form Seen as Nearly Inevitable Move by FCC

What FCC Chairman Tom Wheeler and his team will propose on net neutrality remains unclear, industry and agency officials said in interviews this week. The officials agree the most likely proposal remains some iteration of Title II reclassification of broadband, possibly based on proposals by Mozilla and Columbia Law School professor Tim Wu, an early proponent of net neutrality.

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Industry lawyers tell us industry’s biggest fear is that Wheeler will propose Title II regulations for mobile and fixed broadband. Wheeler spoke to the USTelecom board recently and made clear that Title II reclassification is a real option, industry officials said. If the chairman is willing to compromise, that’s not completely clear, said a lawyer whose firm represents telecom clients worried about Title II. “Industry is increasingly nervous,” the lawyer said. “Nobody really knows.”

Mozilla floated its version of a Title II regulatory scheme in May (http://bit.ly/RsjahV), saying the last-mile terminating access network between a remote endpoint and an ISP’s local subscribers is a “delivery service,” which should be subject to common carrier regulation (see 1405080067).

Wu and Tejas Narechania, also of Columbia Law School, made a similar argument in a June paper (http://bit.ly/1ruHhqp). They said one alternative for the FCC would be to adopt a two-stage framework, in which broadband transactions would be broken down into two parts with a call and a response. The response, or sender-side transmission, could then be subject to Title II regulation. The FCC invited Wu and Narechania to speak at an Oct. 7 roundtable on net neutrality and the law (http://fcc.us/1wMEMnK). Also getting some comment is a third, similar proposal filed by the Center for Democracy & Technology (http://bit.ly/ZGzP5r), industry officials say.

Geoffrey Manne, executive director of the International Center for Law and Economics, said both papers appear to be in the FCC’s sights as it rewrites the net neutrality rules. “As soon as I saw Wu’s and Mozilla’s proposals I predicted that the FCC would likely go in that direction -- I see them as exactly the sort of needle threading that the politically embattled FCC might like,” Manne said. “But it’s more complicated than that -- there are serious problems with the proposals and while they may be appealing on the surface, closer reflection makes them look far less appealing, even for the FCC’s political purposes.”

Marvin Ammori, fellow at the New America Foundation, said President Barrack Obama has made clear repeatedly he's concerned about paid prioritization, or Internet fast lanes. “I think it’s sort of sinking in there’s no way you can ban paid prioritization without Title II in some fashion,” said Ammori, who also spoke at the law roundtable. “It seems to me that things are in play.”

Ammori said he sees several options. The FCC could stick with Section 706 of the Communications Act as the underpinning for the rules, he said. Or the FCC could adopt Title II with forbearance. Ammori told us that option has lots of political support, but he’s not sure Wheeler is moving in that direction. “I get the feeling that that might be seen as a defeat,” he said. A recent proposal by Rep. Henry Waxman, D-Calif., that the FCC consider a hybrid net neutrality proposal reclassifying retail services while forbearing from parts of Title II and using Section 706 for the substance of the rules has growing support (see 1410060031 ). “I think that is going to get a lot of attention,” Ammori said. There is also lots of discussion of various variations of the Wu and the Mozilla proposals, he said. “The Tim Wu proposal is actually very different from the Mozilla proposal and the Mozilla proposal is very different from the way a lot of people talk about the Mozilla proposal,” he said. The big problem with both is people don’t understand them, he said.

Right now all of the focus is on Title II and Internet service providers view that as poison,” said former FCC Commissioner Robert McDowell, now at Wiley Rein. McDowell voted against the initial net neutrality rules in 2010.

Things are “fluid” but the assumption is there will be “some sort of Title II-based option,” said Public Knowledge Vice President Michael Weinberg. “The question is what is the right flavor of Title II is, because you can’t do what you want to do without it,” he said. The Mozilla and Wu proposals are “in the same family,” but they are also “complicated,” Weinberg said. “To understand them you need to be thinking about the Internet at a fairly low level of abstraction.” It’s very complicated to figure out how they would apply in various situations, he said.

What everyone is missing is that Title II already offers a “light-touch, flexible framework,” said Free Press Policy Director Matt Wood. “We need to keep core nondiscrimination and common carrier principles in place for broadband, just as the FCC has done by using Title II for wireless voice for two decades now.” Wireless carriers praise light touch regulation but then argue that Sections 201, 202 and 208 of the Communications Act “would somehow burden broadband,” he said. “If wireless carriers want to keep arguing for their right to discriminate unreasonably, it just makes them look unreasonable.” The FCC can “and almost certainly would” forbear from lots of Title II regulation “on its own motion, and on a nationwide basis,” Wood said.

The once “unthinkable” might actually happen and the FCC will regulate broadband as a common carrier service under some hybrid model of regulation, said Free State Foundation President Randolph May. “I think the dynamic is moving that way,” he said. “For anyone hoping to see an end to the decade-long net neutrality saga, this is bad news, because I think the ISPs will actually challenge a Title II or hybrid-Title II approach in court and win, at least I hope they will challenge it.”

May said he opposes banning paid prioritization and “freezing in place existing business models.” But at the same time, he said, Title II would not foreclose the practice. “It could be allowed, or not, under both Title II or the 'commercial reasonableness' test, depending on how the FCC viewed the circumstances,” he said.

During a Digital Policy Institute webinar Thursday, Richard Bennett, visiting fellow at the American Enterprise Institute Center for Internet, Communications and Technology Policy, predicted the FCC will “cave in” to political pressure and approve tough new rules for net neutrality. “The question we have to ask ourselves is do we want to have a static Internet or do we want to have a dynamic Internet,” he said. “What you get when you apply utility regulation is an unchanging or very slowly changing system.”

In the medical field they say ‘first, do no harm,’ and I wish more regulators would repeat that to themselves,” said James Prieger, associate professor of public policy at Pepperdine University. Regulators like a “static, unchanging industry” and are uncomfortable with and suspicious of new services, he said. “I would always lean in the direction of letting the companies experiment,” he said. Reclassification would be a “radical” approach to net neutrality, Prieger said.