Thursday, May 13, 2010

Critiquing the So-Called Consensus on FCC Internet Regulation

Last week, FCC Chairman Julius Genachowski announced his plans to change broadband Internet service from a lightly-regulated "information service" into a more heavily regulated "telecommunications service." Oddly, the Chairman portrayed his plan to reclassify broadband as an attempt to save a so-called "consensus" concerning the FCC's role in regulating the Internet. But serious observers shouldn't let this curious "consensus" narrative take their eyes off the ball.

The real question to be decided is whether broadband reclassification under Title II is legally justifiable. In the end, a storyline about a vague and ephemeral claimed "consensus" won't authoritatively decide that question. Instead, the propriety of broadband reclassification and regulation depends on laws actually passed by Congress, and by policies actually adopted by the FCC and upheld by the courts.

Network neutrality regulation of the Internet is a policy still in search of a legal basis. Nowhere in the Telecommunications Act of 1996 is there any express authorization for the FCC to impose net neutrality regulation. And the ruling in Comcast v. FCC rejected the Commission's previous claimed "ancillary" jurisdictional basis for imposing net neutrality regulation. So now the Chairman hopes to overcome these obstacles by undoing key FCC deregulatory policies treating broadband Internet as an "information service" and by instead subjecting broadband Internet to outdated regulation designed for monopoly-era phone service.

So what exactly is this "consensus" that net neutrality regulation is supposed to be preserving? It's not so clear. In describing his plans to subject broadband Internet to Title II regulation, the Chairman stated that "[t]he goal is to restore the status quo consensus that existed prior to the court decision on the FCC's role with respect to broadband Internet service." The Chairman describes a "broad consensus in the public and private sectors" developed over the past fifteen years that calls for light-touch regulation of broadband by the FCC. It's also called "bipartisan."

So there was a consensus prior to the court’s ruling that was not itself challenged by the ruling but nevertheless is coming apart after the ruling? And the way to save this consensus is by adopting a reclassification and regulation plan for which there is obviously not a consensus?

This "consensus" is an odd sort of thesis-antithesis-synthesis narrative for smoothing over a sudden repudiation of deregulatory policies that have kept the Internet free from regulation. And in terms of messaging, the consensus mantra was hard to miss. The Chairman's speech announcing his reclassification and regulation plans used "consensus" nine times. (This excludes his references to a "widely understood," "widely accepted," and "long and widely thought" view of how the FCC should treat the Internet.) Moreover, FCC General Counsel Austin Schlick repeated the word "consensus" another ten times in his "legal framework" for broadband reclassification and regulation.

Perhaps the advantage of conjuring up a fuzzy consensus is that it's then supposedly easy to suggest what's in the conjured "collective" mind. And perhaps an imagined consensus of private companies, policy analysts, regulators, and elected officials existing over a span of a decade-and-a-half gives some rhetorical cover to a bold and controversial course of action by a federal regulatory agency. When a regulatory policy is in desperate search of a jurisdictional basis, it is certainly easier to ground it in a story instead of a statute. But regardless of how vaporous or verifiable the claimed "consensus" truly is, that isn't the one that ultimately counts.

If there is a real consensus that matters, it is the consensus expressed in the Telecom Act actually passed by Congress. It is also the consensus embodied in actual FCC rulings that classified broadband Internet as a lightly regulated Title I "information service." And it is likewise contained in actual court rulings that upheld Title I classification of broadband and rejected Title I "ancillary jurisdiction" as a basis for net neutrality regulation.

Congressional statutory limits on the FCC's delegated authority, the precedential weight of prior Title I classification rulings by the Commission, and authoritative court rulings concerning the limits of agency processes and powers are the concrete realities against which audacious broadband reclassification and regulation will ultimately be measured. And don't expect courts to give much deference based on agency technical expertise grounds to storytelling by a Fuzzy Consensus Commission.

But let's not forget the serious policy problems with the Chairman's so-called "third way" for broadband reclassification and regulation. Free State Foundation President Randolph May recently called this approach the "wrong way":

It is wrong because the proposal to unbundle 'transmission' from 'content' and 'applications' is impractical in a broadband world of integrated services. Even if it were practical, which it is not, it would be too costly. And the new unbundling regime would be too unstable as the line between 'transmission' and other services is constantly litigated. The 'third way' is the 1980s way of regulating telephone companies -- but the Internet is a 21st century phenomenon.

Seen in this light, Title II-based net neutrality regulation of the Internet faces serious legal and policy shortcomings.