Title II Net Neutrality Supporters Hopeful After DC Circuit Oral Argument

Witnesses at Thursday's House Communications Subcommittee net neutrality hearing divide between ISPs backing broadband Title I information service classification and 2015 FCC rule advocates backing Title II authority. Both sides sought legislation, in advance testimony.

"We won the argument," said Sen. Ed Markey, D-Mass., who attended court Friday and briefly dropped by the PK event. "The FCC was using tortured logic in trying to defend their repeal of the Obama-era rule, and I left convinced that we are in a very strong position to prevail." He said two judges showed appropriate "skepticism" about the FCC's case.

"There is a degree of confidence and optimism coming out of the oral arguments," though it's hard to predict the ruling, said Sarah Morris, New America's Open Technology Institute deputy director. The FCC and ISP trade groups didn't comment. They previously voiced confidence in the outcome.

The FCC doesn't deserve deference on its broadband reclassification under a 2005 Supreme Court Brand X affirmation of a previous information service classification of cable modem offerings, said Steptoe & Johnson's Markham Erickson, representing Mozilla, Incompas and other challengers. He said the commission for the first time disavowed all its authority to protect consumers from ISP "gatekeepers" that could block or throttle internet content. The agency ignored broadband's "telecommunications" component and failed to consider whether it's being offered to the public as a Title II service, he said: that attracted "some interest" from the court.

'Powerful' Question

Millett raised a "pretty powerful hypothetical" that the FCC's interpretation could turn phone service into an information service, because consumers can call in prescription drug orders by simply pressing buttons. He said the FCC had no answer other than that broadband and phone services have been regulated differently, which is "arbitrary and capricious." Millett's hypothetical appears to raise a totally new issue not considered in the record, said Incompas General Counsel Angie Kronenberg. Judge Stephen Williams, Millett and Wilkins also heavily questioned challenger arguments against FCC reclassification.

The FCC didn't justify repeal of net neutrality prohibitions against blocking, throttling and paid prioritization, said Kronenberg. She said commission reliance on competition to discipline ISPs was misplaced because consumers often lack fixed broadband choices, and mobile services are inadequate alternatives. The agency refused to consider evidence of market harms from recent ISP transaction reviews, she said.

FCC reliance on ISP disclosure under transparency rules enforced by FTC consumer protection authority is inadequate to address net neutrality concerns, said Harris Wiltshire's Stephanie Weiner, who had argued for the Internet Association and other intervenors Friday. She said ISPs could commit abuses and evade FTC enforcement by simply disclosing their practices. The FCC inadequately explained how its "backstop," including antitrust enforcement, is sufficient to address harms, and misread data on the 2015 Title II order's broadband network investment impact, she said.

FCC Section 257 authority for transparency rules is highly vulnerable, Harris said. The transparency/disclosure regime is a "linchpin" to the FCC's approach, so if it falls, it threatens the whole order, she told us afterward. Sidley & Austin's Jon Nuechterlein, arguing for ISP intervenors Friday, had said any problem could be resolved through a "narrow remand" and possible use of Section 706 authority.

There was court recognition, particularly from Millett, the FCC "abdicated" responsibility, and it's unclear if potential harms could be remedied under its backstop, Morris said. She said the FTC process is "fairly burdensome" for consumers and competitors, and the harms can be hard to detect and prosecute. There's no longer FCC oversight of related internet interconnection disputes, as under Title II, she said.

Potential congressional legislation must provide serious net neutrality protection, Kronenberg said. The FCC's 2015 regulations are the "absolute baseline," Morris said.

Hill Hearing

House Commerce Committee staff, unlike most witnesses, mentioned oral argument details in Mozilla v. FCC (see 1902010046).

Staff noted the FCC acknowledged in court Friday it doesn't "prohibit blocking and throttling practices that are disclosed under its transparency rule, and such practices would not be deceptive and may not be unfair under the FTC Act." The trade commission, the prehearing memo said, "lacks general Administrative Procedure Act rule making authority, including for broadband internet access services, lacks civil penalty authority for first offenses, and lacks specialized subject-matter expertise" here. The FTC declined to comment, and other witnesses besides Free Press and Mozilla declined to comment or didn't respond.

This FCC walked "away from responsibility" and gave it to the FTC, "a long-desired goal of the telecommunications carriers," says advance testimony from Tom Wheeler. He chaired the FCC at the time of the rules, since rescinded, that Title II backers still support. "Any further policy considerations should use the 2015 concepts as the starting point," he says. "Operators of America’s digital networks are not bad actors," he says. "They cannot simply be allowed to make rules to serve their own interests."

NCTA CEO Michael Powell wants "Congress to break this interminable circularity" of rules differing by FCC administration. "Since 2004, when I outlined the four internet freedoms" as FCC chief, "we have found common ground around the basic tenets" of no blocking; no throttling (of lawful content); no paid prioritization with fast lanes and slow lanes absent public benefit; and network practice transparency, he says. "The FCC has struggled to adopt sustainable rules because it lacks a clear basis of jurisdiction." Free Press wants to bring back "bright-line rules against ISP blocking, throttling, and paid prioritization," says Senior Counsel Jessica Gonzalez. It seeks additional safeguards and wants the FCC to investigate ISP "discrimination and abuse."

Free Press doesn't want the old ISP net neutrality rules to apply to web platforms, Gonzalez emailed us. "They are differently situated. They are not access providers. This isn’t to say they should be free from regulation and oversight, just that these rules aren’t the right fit." Mozilla Chief Operating Officer Denelle Dixon told us that "while there is an obvious need for accountability for the tech industry around privacy in particular, any legislation around net neutrality should focus on the pipes to the internet, and not the internet destinations they lead to.” Other witnesses didn't comment on this issue.

Mozilla thinks restoring, perhaps through court, the 2015 rules "is the clearest path" for "clear protections for users and clear guidance for businesses," says Dixon. Any resulting law "must offer strong net neutrality protections and adequate, flexible authority for the FCC to enforce it," she says. "Net neutrality can ultimately encourage greater long-term investment across the network stack." Yet Eastern Oregon Telecom CEO Joseph Franell says since the common-carrier broadband service repeal, "investors have been much more willing and perhaps eager to invest in rural" telecom: "Application of Title II as part of Net Neutrality had a dramatic chilling effect on rural telecom in the Pacific Northwest."

The litigation looms over a Maryland net neutrality and ISP privacy bill (see 1902060057). House Communications Subcommittee ranking member Bob Latta, R-Ohio, looks forward to hearing proposals from Democrats at Thursday’s hearing (see 1902060053).