Saturday, April 17, 2010

Suspend, Reflect, and Develop Legislation

The Washington Post has a very good editorial, "Policing the Internet," in today's paper. It ought to be required reading for anyone interested in the FCC's current effort to regulate Internet service providers like Time Warner Cable, Verizon, or T-Mobile. It especially ought to be required reading for those over at the Portals, the FCC's Washington headquarters.

As every reader of this space knows, on April 6 the federal appeals court, here in Washington, in Comcast v. FCC cast very serious doubt on the FCC's legal authority to regulate Internet service providers as the FCC is proposing to do. While the D.C. Circuit court specifically ruled only that the FCC lacked jurisdiction to sanction Comcast for its Internet network management practices, its reasoning calls into question the agency's authority to adopt the Internet regulation rules it has proposed under the rubric of enforcing net neutrality.

Here is the closing paragraph of the Post's editorial:

"Congress should step in to strike the appropriate balance. Enacting laws would take some time, but the process would allow for robust debate. In the meantime, any questionable steps by ISPs will be flagged by unhappy consumers or Internet watchdog groups. If ISPs change course and begin to threaten the openness of the online world, Congress could and probably would redouble its efforts."

This is the most sensible course for the FCC to follow. Indeed, the day after the court decision, I filed comments at the FCC urging essentially the same course. And I did so again on April 14 in a commentary published on In the comments and commentary, I urged the FCC to work with Congress to develop a new legislative framework – a market-oriented framework that would give the FCC circumscribed authority over Internet providers. The comments have more detail, but here is the essence of what I suggested.

"The core of the new legislative framework would be a provision granting the FCC authority, upon a complaint filed and after an on-the-record adjudication, to prohibit broadband Internet Service Providers from engaging in practices that are determined to constitute an abuse of substantial, non-transitory market power and that cause demonstrable harm to consumers. Such a carefully-circumscribed market-oriented rule would provide the FCC with a principled basis for adjudicating fact-based complaints alleging that ISPs are acting anti-competitively and, at the same time, causing consumer harm. Using antitrust-like jurisprudence that incorporates rigorous economic analysis, the Commission would focus, post hoc, on specific allegations of consumer harm in the context of a particular marketplace situation."

Of course, there may be other ideas worthy of consideration as well.

Everyone knows that the FCC is furiously trying to figure out what to do in light of the D.C. Circuit decision. It is commonly said ( and supposed) that, despite the judicial setback, that FCC Chairman Genachowski is determined to move forward to adopt net neutrality rules because President Obama made a campaign pledge along these lines. And it is true that President Obama did make such a campaign pledge favoring net neutrality rules.

But that was in the midst of a political campaign in 2008. It is now April 17, 2010. Here is what I say now.

First, Candidate Obama (and his putative FCC Chairman Genachowski) could not have known then what they know now: that the FCC's legal authority to adopt net neutrality regulations under the theory proposed by the Commission in its rulemaking notice is highly questionable.

Second, and more fundamentally, the FCC is supposed to be an independent bipartisan regulatory agency, not subject to presidential direction to the same extent and in the same ways as are executive branch agencies. This is not to say the president and his Administration cannot and should not have views on the subject, or that they shouldn't express those views to the FCC commissioners. But it is to say that campaign promises essentially relating to matters within the FCC's realm shouldn't be seen in the same way as, say, campaign promises relating to changes in policy at the EPA or Department of Interior. If they are, then the FCC's role as an independent regulatory agency will be altered.

Let me be clear: I have no idea concerning the extent to which -- if any – the FCC's post- Comcast effort to find new ways to adopt Internet regulations is really driven primarily by the desire to fulfill a campaign promise. But it shouldn't be, especially in the light of the altered situation resulting from the court decision. As all reasonable observers agree, and as the Post editorial points out, there have been "very few instances where ISPs have been accused of wrongdoing." And the Post is correct that "FCC interference could damage innovation in what has been a vibrant and rapidly evolving marketplace."

Here's what the FCC should do now:

• Suspend the current rulemaking proceeding, without terminating it. In this way, if there are allegations of abuses by Internet providers, there will be a forum for interested parties to bring those allegations to the attention of the Commission.

• Take time to reflect and work with interested parties and Congress to develop a new legislative framework appropriate for the digital age. The FCC is supposed to be an "expert" communications body. It knows, or ought to know, that the current Communications Act is especially ill-suited for today's dynamic communications environment. The Commission should use the court decision as an opportunity for envisioning a new Digital Age Communications Act.