Net neutrality regulations perfectly fit the FCC's statutory intent

Net neutrality regulations perfectly fit the FCC's statutory intent
© Greg Nash

This week, the Federal Communications Commission (FCC) is set to vote on the Restoring Internet Freedom Order (RIFO), a proposal that would repeal “net neutrality” regulations the agency passed two years ago.

The order seems to ignore the will of Congress by, in essence, pronouncing the agency’s intent to no longer use its expertise to serve the public interest. That is the fundamental reason that I believe the draft order, if adopted in its current form, be highly vulnerable to reversal.

Congress has created expert sectoral agencies, such as the FCC, with deep experience in a particular industry and with the power to create forward-looking, industry-wide rules. Congress has also created general-purpose antitrust enforcement agencies, such as the Federal Trade Commission and the Department of Justice’s Antitrust Division, with broad authority to protect competition across the economy on a case-by-case basis.

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The history is important. For decades, the FCC has taken action to ensure that gatekeeper power held by telecommunications networks cannot distort competition in adjacent markets. And, for the last decade, a bipartisan consensus has prevailed.

 

Indeed, since at least 2005 the FCC has always made clear that it would take effective action to keep the internet open. The legal basis for that has changed in reaction to court rulings, but not the prohibition of conduct that would, for example, block websites or throttle traffic. For the FCC to step away from that longstanding principle — affirmed by Democratic and Republican FCC chairs alike — is to turn its back on all that went before. In the eyes of the courts, this reversal will weaken the FCC’s view of the law and the facts.

Consider the no-blocking rule, which prohibits a broadband provider from deciding that a consumer should not be able to access a lawful website, thus protecting new creators of content (including unpopular content) from discrimination. The draft order suggests that the FCC doesn’t approve of blocking, but insists that the FCC will do nothing about it if it takes place.

Is it conceivable that Congress created the FCC so that it could identify a risk and then decide (wholly apart from its legal authority) that it should take no action to constrain it?

In place of conduct rules, the draft order offers a collection of alternatives that it says will get the job done: A transparency rule, competition in the marketplace, antitrust, and consumer protection. All are useful, but none individually, or as a whole, will guarantee the critical aspects of net neutrality that the FCC said it would protect in 2005 when it emphasized that it “has jurisdiction necessary to ensure that providers of telecommunications for Internet access ... are operated in a neutral manner,” including that “consumers are entitled to run applications and use services of their choice.”

Take the draft order’s alternatives one at a time: Transparency is important, but the draft order weakens the effect of the 2015 transparency rule in two critical ways. First, it eliminates the requirement that individual consumers have the right to be notified whether their use of the network will be impaired. And it ends the ability of consumers to file a formal complaint with the FCC. How will individuals be able to tell whether a broadly worded statement on a broadband provider’s website has anything to do the fact that their online video service is buffering or grainy? And without a formal complaint process, how will they directly challenge a broadband provider? 

And as for competition, broadband markets are very, very concentrated. Earlier this year the FCC reported that 58 percent of households have either zero or one choice for high-speed broadband delivered by wire.

Antitrust is important, but insufficient. In a similar context, the Supreme Court, in an opinion by Justice Anthony Kennedy, explained just why regulation can be preferred to antitrust, noting the “considerable expense and delay in antitrust litigation, and the great disparities in wealth and sophistication” between the parties. But the draft order expects that individual consumers will be able to bring big broadband companies to heel by filing antitrust actions. 

Finally, and as FTC Commissioner Terrell McSweeny explained in a net neutrality comment filed with the FCC, consumer protection is not enough either. Whether the FTC has jurisdiction over the big broadband providers is an open question. But, in any event, backward-looking consumer protection can never provide the same guarantee to consumers and start-ups as forward-looking rules. The FTC’s consumer-protection authority can only enforce the promises that a company makes. If a company says it’s going to do bad things, then consumer protection won’t stop it.

There’s also the relative expertise of the agencies. The FTC is a great antitrust and consumer-protection agency and its work is vitally important. But it was not designed to be an expert in the way that communications networks operate. For example, suppose a consumer says that a website has been blocked, but the broadband provider says there were just technical problems. Under the draft order, the technologists and engineers and experienced lawyers and the policy advisors who deal with the broad jurisdiction of the FCC, much less the commissioners themselves, would no longer be decision makers. The FTC, which has been prohibited from working on common-carrier issues in telecommunications, would have to solve the puzzle. Why bench the experts?

The simple fact is that Congress created the FCC as an expert agency, but now the FCC seems poised to say that it won’t exercise its expertise. It is unlikely the FCC will be able to convince a court of appeals that it is free to stop doing its job where there is, as the draft order admits and as the facts clearly demonstrate, an acknowledged risk of harm to consumers and competition.

Jonathan Sallet is a senior fellow at the nonprofit Benton Foundation. He served previously as general counsel at the FCC, where he helped to write the 2015 net neutrality rules and subsequently defended the rules in court.