Wheeler Under Pressure to Seek Additional Comment Before Reclassifying Broadband Under Title II

Wheeler had little more to say at the news conference after Thursday’s FCC meeting, which was repeatedly interrupted by net neutrality protesters. His hope is to get the net neutrality order done “fast” but also “right” and “permanently,” Wheeler told reporters. “We’re on course to do that.” Industry officials said the agency might be well advised to build more of a record on very specific issues tied to reclassification, as urged by President Barack Obama Nov. 10 (see 1411100035). Most industry observers discounted any rumors that a January vote remains possible.

“If you’re going to forbear from the 995 out of a thousand requirements of Title II without a thorough fact-based discussion of that, appellate courts are going to be quick to strike it down,” said former FCC Commissioner Robert McDowell, now at Wiley Rein. “The record right now does not contain enough data to justify such a commission decision and they would be wise to issue at a minimum a public notice to gather more data.”

A former senior FCC official who represents wireline clients said the May 15 net neutrality NPRM likely provides the public notice necessary to reclassify broadband, since the FCC asked for comment on any hybrid approach as well as any forbearance approach. The question is whether the FCC has an adequate record, as required by the Administrative Procedure Act, on all of the complex issues that would be raised, the lawyer said. “For example, forbearance requires a geographic market/product market approach which is more akin to the competitive analysis done in mergers. The commission doesn’t have that record, so they would need to rely on generalities.”

Berin Szoka, president of TechFreedom, predicted the commission would vote on an order no earlier than March. Szoka said that by waiting, the commission gives Congress time to develop a legislative compromise if the new Congress chooses to act first on net neutrality. "I’m optimistic that Congress can get a deal done as long as they have time,” he said.

Moving too quickly on the order carries risks, Szoka said. “This is precisely the same issue the FCC is facing on the prison payphone order” where the agency hurried an order under acting Chairwoman Mignon Clyburn, he said. The FCC “ended up doing something that was different from what was proposed.” The “last thing” Wheeler wants “is to go down as the FCC chairman who caused the agency to lose again in court, especially if that loss happens on his watch,” he said.

Obama put Wheeler and the FCC in a tough spot, said Doug Brake, telecom policy analyst at the Information Technology and Innovation Foundation. “If we are heading towards reclassification, another round of comments seems necessary if the commission has any hope of the rules sticking,” Brake said. “That, plus all the forbearance fights start to look like a poor use of time when the ultimate solution will eventually come from Congress.”

From the beginning, the FCC had to worry about legal issues, said economist Coleman Bazelon of The Brattle Group. “With Obama’s pronouncement, they have another layer of political issues, too,” he said. “On both fronts, the underlying economic issues will take a back seat. I don’t envy Wheeler on this one.”

"I think the realization is now sinking in at the FCC that the Title II route poses a lot more legal complications than the pro-Title II advocates acknowledge,” said Randolph May, president of the Free State Foundation. “President Obama's direct involvement in the proceeding, with his explicit 'ask' for Title II regulation, ironically has exacerbated the legal risks for the supposedly independent agency. So, I think Chairman Wheeler is trying to figure out what to do next, and I suspect he probably already has concluded he can't adopt a forbearance order simultaneously with a reclassification without issuing a further notice.” Wheeler deserves credit for taking a pause in the proceeding, May said. “My own position is that there is certainly no reason to rush to adopt any new regulations, given the absence of a market failure,” he said. “But, if a commission majority disagrees, they should steer clear of Title II and proceed under Section 706."

Wheeler could avoid some controversy by not reclassifying broadband, said Michael Santorelli, director of the Advanced Communications Law and Policy Institute at New York Law School. “In light of recent developments, including the president's statement and yesterday's rancorous FCC meeting, the safest prediction about the path forward is that it will probably be paved with partisan acrimony,” he said Friday. “That's a shame given the largely bipartisan legacy of the modern broadband regulatory framework. Rules that are based on Section 706 appear to be a viable middle ground. The commission should pursue that option and choose compromise over contention.”