Internet Firms Want FCC to Take The Reins

Last week's staggering defeat to Comcast in a landmark D.C. Circuit Court decision left the U.S. Federal Communications Commission stripped of any "ancillary authority" it thought it had to regulate the practices of Internet service providers. As of now, it isn't exactly clear just which government agency does have that authority.

Rather than wait for Congress to make a decision on the matter -- an event that may, arguably, never happen at all -- a coalition of major Internet stakeholders, including Skype, Google, eBay, Amazon, Netflix, TiVo and Facebook, is calling on the FCC to take action. Quite literally, the group wants the Commission to convene a hearing declaring its intention to fill the gap left by the court's removal of FCC authority...with FCC authority.

In other words, the FCC may not be the best-suited to regulate the Internet under current U.S. law -- but no other candidates exist.

"We think that time is of the essence here," stated Markham Erickson, executive director of the Open Internet Coalition, in a press conference Tuesday morning. "While we're not opposed to Congress getting involved in trying to address what happened with the Comcast decision, at the same time, the FCC needs to move quickly to open a proceeding to classify high-speed Internet access services as telecommunications services.

"In fact, that's been the norm at the FCC for most of the history of essential communications platforms -- that they're treated as telecommunications services. If the FCC were to do that, it would be a fairly straightforward process of reversing the 2002 [Brand X] cable modem order, and it would re-establish the FCC's legal authority, allowing it to move forward on the Broadband Plan, and the network neutrality rulemaking," Erickson said.

What Erickson is asking for is a complete U-turn -- for the FCC to effectively declare Internet communications the same, from a legal standpoint, as telephone communications. The FCC steered clear of that interpretation in 2002 when, under the leadership of then-Chairman Michael Powell, it declared the type of service delivered to customers via cable modem as an information service, distinct and different from a telecommunications service.

The Pizza Connection

As the 2002 declaration reads (PDF available here), "In this proceeding, as well as in a related proceeding concerning broadband access to the Internet over domestic wireline facilities, we seek to create a rational framework for the regulation of competing services that are provided via different technologies and network architectures. We recognize that residential high-speed access to the Internet is evolving over multiple electronic platforms, including wireline, cable, terrestrial wireless and satellite.

"By promoting development and deployment of multiple platforms, we promote competition in the provision of broadband capabilities, ensuring that public demands and needs can be met. We strive to develop an analytical approach that is, to the extent possible, consistent across multiple platforms. For the reasons discussed...we conclude that cable modem service, as it is currently offered, is properly classified as an interstate information service, not as a cable service, and that there is no separate offering of telecommunications service."

That declaration effectively freed the FCC from having to resolve the issue of how, or whether, broadband carriers must be forced to open their services up to multiple Internet access providers. The same laws that forced the Bell System to open up its long distance lines to MCI may have applied in compelling AT&T (NYSE: T) to offer Internet service from a menu of competitors. One of those competitors would have been a small firm called "Brand X," whose name will forever grace the history books as the subject of the Supreme Court's 2005 "Brand X Decision." Overturning the appeals court, the nation's highest court sided in favor of the FCC, in a decision authored by Justice Clarence Thomas with the sole dissent of Justice Antonin Scalia.

Scalia's dissent was classic Scalia, complete with frequent alliteration, fluent vocabulary, and a pizza analogy. The point the justice made was that from a consumer's perspective, whether he receives service from a service provider or from a carrier, he receives service. The difference would be about as trivial as whether a pizza restaurant delivers food to customers' doors, or hires a cab driver to do it instead.

Since the delivery service provided by cable (the broadband connection between the customer's computer and the cable company's computer-processing facilities) is downstream from the computer-processing facilities, there is no question that it merely serves as a conduit for the information services that have already been "assembled" by the cable company in its capacity as ISP. This is relevant because of the statutory distinction between an "information service" and "telecommunications."

The former involves the capability of getting, processing, and manipulating information. The latter, by contrast, involves no "change in the form or content of the information as sent and received." When cable company-assembled information enters the cable for delivery to the subscriber, the information service is already complete. The information has been (as the statute requires) generated, acquired, stored, transformed, processed, retrieved, utilized or made available. All that remains is for the information in its final, unaltered form to be delivered (via telecommunications) to the subscriber.

This reveals the insubstantiality of the fear invoked by both the Commission and the Court: the fear of what will happen to ISPs that do not provide the physical pathway to Internet access, yet still use telecommunications to acquire the pieces necessary to assemble the information that they pass back to their customers. According to this reduction, if cable-modem-service providers are deemed to provide "telecommunications service," then so must all ISPs because they all "use" telecommunications in providing Internet functionality (by connecting to other parts of the Internet, including Internet backbone providers, for example).

In terms of the pizzeria analogy, this is equivalent to saying that, if the pizzeria "offers" delivery, all restaurants "offer" delivery, because the ingredients of the food they serve their customers have come from other places; no matter how their customers get the food (whether by eating it at the restaurant, or by coming to pick it up themselves), they still consume a product for which delivery was a necessary "input." This is nonsense.

Concluding that delivery of the finished pizza constitutes an "offer" of delivery does not require the conclusion that the serving of prepared food includes an "offer" of delivery. And that analogy does not even do the point justice, since "telecommunications service" is defined as "the offering of telecommunications for a fee directly to the public." The ISPs' use of telecommunications in their processing of information is not offered directly to the public.

What Erickson and his coalition are requesting is for the FCC under Chairman Julius Genachowski to declare Internet service a "Title II" service under the existing Telecommunications Act, and effectively concede Justice Scalia was correct after all -- a step which he says actually would not be unprecedented.

The FCC's 'Spare Tire'

The Open Internet Coalition's Markham Erickson believes that the FCC can salvage its ability to execute the Broadband Plan proposed earlier this year by Chairman Julius Genachowski, if it can declare itself the regulator of merit for Internet service under a different legal theory than the one struck down last week by the D.C. Circuit Court, in a ruling favoring Comcast.

"I would almost look at reclassification as sort of a spare tire that lets the Commission move forward on its agenda, and Congress can always make a comprehensive fix to the Telecom Act at the same time," said Erickson in response to a question from Betanews. Though he also suggested that Congress may not act at all, citing the fact that it took at least 10 years for it to debate the last set of changes to the Telecommunications Act under the Clinton administration.

Declaring the Internet a Title II service, Erickson suggested, would be "an elegant solution, in that it is a narrow approach that returns the FCC to narrowly regulating just the on-ramps to the Internet. At the same [time], I think, it protects the edge-based providers and the Internet as a whole from being put under regulation under a broader theory, and a more uncertain theory of ancillary authority under Title I [of the Telecommunications Act].

"I actually think that the Comcast decision, in many ways, was a blessing," Erickson continued, "in that it's really saying that the Commission needs to jettison the amorphous concept of ancillary authority, because it's not clear exactly how far that extends into the Internet. If it refocuses on just the last-mile facilities of the Internet access provider, they would be on solid legal foundation. It's also something that the Supreme Court mentioned in the Brand X Decision, that the FCC could of course revisit its decision and reverse its decision, and if they did so, they would be on solid legal foundation. It was Justice Scalia who dissented from affirming the FCC's ruling in the cable modem order, saying quite clearly, the facilities [of] the Internet access provider are separate offerings that are telecommunications services, not information services."

Betanews asked Erickson, wouldn't such a move by the FCC simply delay, or at least overlook, the inevitable necessity of Congress to make new law with regard to who should regulate the Internet, or parts of the Internet?

"The Comcast court [D.C. Circuit] was clear that they were very skeptical of the use of Title I ancillary authority to regulate Internet access providers. I would make a distinction between regulating the Internet and regulating the last-mile facilities of the Internet access providers," he responded. "But if the FCC were to classify these services as telecommunications services -- which many of them were until they were reclassified as information services under Title I -- under Title II, the Commission would have a solid legal foundation."

The D.C. Circuit order, Erickson noted, not only leaves the door open for the FCC to make that declaration, but suggests that it could still do so -- not only leading the horse to water, but shoving its nose into the lake. "If the Commission revisits that (2002 Brand X) order, they would be on solid legal foundation. It's not to say that Congress may not want to update the [Telecommunications] Act in and of itself. I don't think it's entirely necessary. I think that these are essential communications platforms, and telecommunications services under Title II have historically applied to essential communications platforms -- that is, two-way communications where the facility provider that [is] allowing for those two-way communications to happen, isn't interfering in the communications."

Representing Skype's interest in the affair (certainly a telecommunications service in the technical sense, and in some countries, the legal sense as well), its senior director of government and regulatory affairs, Christopher Libertelli, told the press conference earlier this week that the bigger, traditional carriers such as Verizon and AT&T aren't going to start regulating themselves -- despite their public promises -- in the absence of leadership from the FCC, or from somebody.

"Carriers have long engaged in dialog around this idea of a voluntary code of conduct that would, I guess, substitute for a government policy," Libertelli remarked. "And I think it's interesting, because after the Comcast case, government has no policy in this space. It lacks subject matter jurisdiction, as the FCC lacks subject matter jurisdiction to enforce its Internet policy statement. So we should think about these efforts to do voluntary, industry-led enforcement mechanisms against this vacuum. The carriers know that it's not sustainable for the chairman of the FCC to not have subject matter jurisdiction in this important area, and have no policy.

"The key is enforceability," he continued. "My job is to protect the Skype community. If you're a Skype user, my job is to bring your concerns to the regulator should the carriers' worst behavior block or degrade your conversation. So at some level, this whole Title I/Title II debate is about, where do consumers go? Title II is a mechanism that would provide consumers with a place to go to the FCC, to bring to regulators' attention conduct that harms consumers. If this notion of a voluntary process lacks that essential enforceability feature, I think it's going to fall short of establishing a real government policy in this area."

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