Thinking Things Through on Net Neutrality – "Maintain That Line"

The Federal Communications Commission’s Restoring Internet Freedom Order is set to become effective on April 23. The rush to the court house door has begun. And measures to repeal the order by means of the Congressional Review Act have been initiated in Congress.

Hard-core advocates of maintaining public utility regulation of Internet service providers have proclaimed February 27 a “Day of Action.” That, of course, is their right. But finalization of the Restoring Internet Freedom Order, along with the spurt of other related activity, causes me to want to consider once again – and to restate – certain fundamental principles at stake in what’s called the “net neutrality” fight.

To that end, I am planning to engage in such restatement in a series of a few short posts. I have written thousands of pages regarding net neutrality over the last dozen years, so I surely understand that there are important nuances and wrinkles, both relating to legal and policy, that deserve attention. But there are also fundamental overriding principles at stake, not subject to nuances and wrinkles, that should not be lost in the noisy din.

Foremost is this: Digital broadband services should not be regulated under the same public utility-like Title II regulatory regime established for analog narrowband telecommunications services and applied to them throughout the 20^th Century. In this larger fundamental sense, the Commission’s action in the Restoring Internet Freedom proceeding was necessary to restore not only Internet freedom, but also to restore the line that had been crossed by the Obama Administration FCC in 2015 when it classified Internet service providers as common carriers subject to Title II regulation.

Before that 2015 action, there was a largely bipartisan understanding that, while certain forms of regulatory actions might be necessary to police possibly abusive practices by Internet service providers, the ISPs should not be regulated as public utilities under the same common carrier regime that earlier applied to monopolistic Ma Bell. Thus, there was no significant partisan stir when Clinton Administration FCC Chairman William Kennard declared in 1999 that it “is not good for America” to “just pick up this whole morass of [telephone] regulation and dump it wholesale on the [Internet] pipe.”

Chairman Kennard’s declaration was embodied in FCC policy in 2002 when the Commission determined that cable broadband services should be classified as lightly regulated information services rather than Title II services subject to public utility-like common carrier regulation. In doing so, the Commission stated that we believe “broadband services should exist in a minimal regulatory environment that promotes investment and innovation in a competitive market.” Over the next several years, the Commission classified other broadband services as information services so as “to create a rational framework for the regulation of competing services that are provided via different technologies and network architectures.”

This treatment of broadband services as information services under Title I, upheld by the Supreme Court in 2005 in the Brand X case, prevailed until 2015, when the Commission reversed course, holding that Internet service providers were common carriers.

This is the signal line that was crossed – and this is the line that was restored by the Commission’s action in December 2017 in the Restoring Internet Freedom Order.

There are certainly forms of oversight to police alleged “net neutrality” violations that are short of a return to Title II public utility regulation. Some of these ought to be acceptable and susceptible to a bipartisan compromise. Otherwise, it is possible that the “bouncing ball” of which I wrote in “Chevron and Net Neutrality at the FCC” – that is, between public utility regulation or not – might well continue to bounce back-and-forth. To my mind, any such compromise should not incorporate “bright line” prohibitions governing ISP practices that are divorced from an analysis of evidence concerning whether a market failure exists and whether, if so, such market failure has caused consumer harm.

In any event, regardless of whether such compromise in Congress is reached now or later, or not at all, there is no justification, as a legal or policy matter, for regulating today’s digital broadband Internet service providers, operating in an increasingly dynamic and competitive environment, as if they were Ma Bell offering staid analog narrowband telephone service in the last century.

That is the foremost principle at stake. That is why the line that prevents Internet service providers from being classified and regulated as common carriers in a public utility-like fashion should not be crossed. That is why the line restored in the Restoring Internet Freedom Order must be maintained.