Key Questions Up in Air as Net Neutrality Order Approaches Approval

Cable and commission officials didn't expect the agency to forbear from Communications Act Section 201(b), which requires “reasonable rates” -- a key part in the industry’s complaints that the order would create rate regulation for broadband. A former FCC official familiar with the agency’s deliberations told us that Clyburn has been pushing for the change, which Google, as well as Free Press, had lobbied for. Despite a report in The Hill, officials inside and outside the agency said Clyburn wasn't trying to weaken the order at the last minute by proposing the deletion, but to strengthen its legal authority. A commission official said the move weakens the order's legal authority because what Clyburn wants to remove would reduce two legal justifications in the draft order to one.

According to the agency’s fact sheet on the draft order (see 1502040055), and comments by a senior agency official at the time, the FCC based the draft’s authority on both Communications Act Title II and Telecom Act Section 706. As a backstop, the agency noted that the U.S. Court of Appeals for the D.C. Circuit (see 1401150046) raised the question of the legal relationship between ISPs and edge providers in last year’s ruling striking down much of the 2010 open Internet rules. Google and Free Press told agency officials in recent days that creating the new relationship unnecessarily creates a legal uncertainty that could harm the agency’s ability to withstand the expected legal challenges (see 1502230054). Google also feared the new legal relationship could open the door to ISPs demanding payment from edge providers for delivering their content, said an ex parte filing by Austin Schlick, director-communications law at Google, who was general counsel to the FCC when it approved the original net neutrality rules in 2010.

While saying he didn't know about Clyburn’s proposal firsthand, Free Press Policy Director Matt Wood said she's apparently seeking to remove the provision "that's strengthening the legal authority and the rules tremendously." The sentiment was the consensus of several lobbyists who’ve been working on net neutrality.

CTIA, NCTA, USTelecom and others have suggested they may appeal the order (see 1502130049). “I don’t think you’ll see any" petitions for FCC reconsideration from broadband providers "as they’ll be heading straight to court,” said a cable attorney. There may be multiple challenges because wired and wireless providers have different interests over whether wireless should be subject to the rules, the attorney said.

Public Knowledge Senior Vice President Harold Feld doesn't expect "challenges on rates or conditions any time soon," he said. "Or really at all unless something outrageous happens. This isn't about rate regulation.” Other consumer advocates agreed. "ISPs have been behaving themselves as the policy process played out over the past year," said Michael Calabrese, director of the Wireless Future Project at the New America Foundation's Open Technology Institute. The order will "nip in the bud" the possibility of paid prioritization "even if [the benefits] never becomes obvious since the harms will have been preempted," he said.

Small cable and wireless ISPs were also uncertain about a push to be forborne from Title II regulations (see 1502200048). Commissioner Mike O’Rielly, expected to be in the minority in Thursday’s vote, told the WISPAmerica 2015 conference in St. Louis Tuesday that he’s “particularly concerned” about the impact of regulating small, wireless ISPs under Title II. “We’ve all seen the ads and the rhetoric: a big bad cable company intends to nip the next garage-start up in the bud. What gets lost in the debate is that there are numerous small ISPs that will be caught in a Title II trap,” O’Rielly said, according to prepared remarks. Comptel and others that have been pushing for a strong rule against paid prioritization, blocking and throttling for interconnection were uncertain if it would be included in the final order.

“Any so called ‘tech’ company that has fiber connectivity should be careful what they wish for,” said former Commissioner Robert McDowell, now at Wiley Rein. “The Supreme Court said in its 2005 Brand X decision that an information service provider that uses telecom input to deliver its content or application will become a telecom service provider after reclassification because it's too difficult to parse the delivery service from the information service.” The sweeping nature of Title II has been a “pitfall” of reclassification from the start, McDowell said. “If tech companies are just now waking up to this fact, it may be too late. Title II is very sticky and it will only grow like a virus. … Silicon Valley may rue the day that they pushed for Title II.”

The commission has disputed charges the order would regulate rates because it would not call for broadband providers to get agency permission before setting rates. However, the draft order “belies the claim that [the agency] will not regulate rates for broadband service,” wrote Daniel Lyons of Free State Foundation, an associate Boston College law professor, in a paper Wednesday. Noting Section 208 allows complaints against carriers, he said this part of the order “not only invites but demands that the Commission intervene in the market, at least upon request, to pass judgment regarding whether individual carrier rates are just and reasonable.”