Surprises in the Open Internet NPRM

by on October 23, 2009 · 14 comments

Pre-release rumors and press reports were making it sound like the Obama administration let Rep. Ed Markey draft the FCC’s Notice of Proposed Rulemaking to “Preserve the Free and Open Internet.”

Maybe there was a last-minute change of plan.

There were rumors and/or reports that the NPRM would contain a “viewpoint diversity” mandate and only allow forms of network management which someone has managed to prove to the FCC satisfy a “strict scrutiny” test.

In the Markey-Eshoo bill, the strict scrutiny test is defined as follows:

[A] network management practice is a reasonable practice only if it furthers a critically important interest, is narrowly tailored to further that interest, and is the means of furthering that interest that is the least restrictive, least discriminatory, and least constricting of consumer choice available.

But in paragraph 137 of the NPRM, the commission declines to adopt a strict scrutiny standard.

We recognize that in a past adjudication, the Commission proposed that for a network management practice to be considered “reasonable,” it “should further a critically important interest and be narrowly or carefully tailored to serve that interest.” We believe that this standard is unnecessarily restrictive in the context of a rule that generally prohibits discrimination subject to a flexible category of reasonable network management. We seek comment on our proposal not to adopt the standard articulated in the Comcast Network Management Practices Order in this rulemaking.

There were also reports the NPRM would include a carve-out for application and service giants like Google. But the definitions in the draft regulations included in the NPRM are so broad that many applications and services arguably could be included:

Broadband Internet access. Internet Protocol data transmission between an end user and the Internet. For purposes of this definition, dial-up access requiring an end user to initiate a call across the public switched telephone network to establish a connection shall not constitute broadband Internet access.

Broadband Internet access service. Any communication service by wire or radio that provides broadband Internet access directly to the public, or to such classes of users as to be effectively available directly to the public.

The regulations, if adopted, would apply to wireless broadband services. Which is no surprise.

The NPRM must be a disappointment for regulatory proponents, and will be bitterly fought over in the coming months. The deadline for public comments is January 14, and March 5 for replies.

But the NPRM is by no means a victory for broadband providers or sound public policy. The following language from the proposed regs:

Subject to reasonable network management, a provider of broadband Internet access service must treat lawful content, applications, and services in a nondiscriminatory manner

allows the FCC virtually unlimited discretion to allow or reject network management practices in the future. Broadband providers will have to seek FCC pre-approval, formally or informally, for everything they do.

That was the paradigm in the old days of the telephone monopoly. It was a golden era for lawyers and lobbyists, but not for investment and innovation.

  • mwendy

    FCC pre-approval. Sort of like Section 214(a) – extension (or sale) of lines. Now, there's a great way to promote innovation.

    I feel like I have stepped back to 1934.

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  • http://jerrybrito.com Jerry Brito

    mwendy (and anyone else): Maybe I'm blind, but I don't see in the NPRM where it specifies pre-approval. In fact, para. 134 seems to state the opposite, that the Commission will not require declaratory rulings before an ISP can deploy a network management practice. In the enforcement section of the NPRM (starting at para. 175) it foresees post-hoc adjudications, not pre-approvals. Am I missing anything? Thanks! -JB

  • http://jerrybrito.com Jerry Brito

    mwendy (and anyone else): Maybe I'm blind, but I don't see in the NPRM where it specifies pre-approval. In fact, para. 134 seems to state the opposite, that the Commission will not require declaratory rulings before an ISP can deploy a network management practice. In the enforcement section of the NPRM (starting at para. 175) it foresees post-hoc adjudications, not pre-approvals. Am I missing anything? Thanks! -JB

  • mwendy

    I was riffing off of Hance's 2nd-to-last paragraph. I haven't had time to parse the NPRM yet. It's an NPRM, and notice has been given – it wouldn't be weird to see a 214-like process in this instance. I think you left a piece of that line off: “Providers would not be required to seek a declaratory…but they or others would be free to do so”. Comments might turn this around. In fact, competitors might want this because most any facility that gets placed on to a network could affect management practices (to their detriment). They'd want to know for a variety of reasons.

  • http://www.techliberation.com hhaney

    Good catch, Jerry. But I agree with Mike. Theory and practice are not in alignment. A broadband provider knows that if it wants to do something which might rankle a competitor, the competitor will go to the FCC and the FCC will demand a full explanation from the broadband provider. This always happens, by the way, because Washington representatives are cost centers who are desperate to show they can contribute to the bottom line. A broadband provider further knows that the FCC will take most complaints seriously, and that it will ask the broadband provider to make the problem go away unless the broadband provider wants to battle it out in a formal proceeding. So, in most cases, the broadband provider has to buy off its competitors. This raises the cost of innovation and discourages some investment. Whether the broadband provider requests a declaratory ruling or not is a tactical question for the lawyers. A decision not to request a declaratory ruling in no way forecloses FCC intervention. I say there will generally have to be pre-approval not because the FCC cares one way or another, but because prudent managers will be desperate for assurance they are not heading into an ultimately worthless investment. It is no exaggeration to say that in the old days of the telephone monopoly, lawyers and lobbyists were the most important people in the company who had a shot at becoming CEO. Fortunately we have been seeing less and less of that. There's nothing wrong with a good, ethical lawyer, of course, but “Washington skills” shouldn't be a ticket to the top floor. That's where I fear we will be heading if the FCC regulates the Internet like it used to regulate the old telephone monopolies.

  • http://www.lightspeedsystems.com/ Justin Davis

    I agree, but I'm not so sure about what you said at the beginning. Where are you getting your information? I'm not disagreeing, but I'm just wondering how you came to that conclusion.

    Justin Davis
    Author does not represent the position of LSI, which screens content as an internet filter to K-12 institutions.

  • http://www.lightspeedsystems.com/ Justin Davis

    I agree, but I'm not so sure about what you said at the beginning. Where are you getting your information? I'm not disagreeing, but I'm just wondering how you came to that conclusion.

    Justin Davis
    Author does not represent the position of LSI, which screens content as an internet filter to K-12 institutions.

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