TechCrunch TV on “Net Neutrality”

by on May 6, 2010 · 11 comments

I appeared this afternoon on the inaugural edition of TechCrunch TV to talk about–what else?–Net Neutrality.

Multiple media sources are now reporting that the FCC, contrary to reports from earlier this week, has decided to go ahead with an effort to change the classification of broadband Internet service from a Title I “information service” to a Title II “telecommunications service,” if only to salvage the proposed rulemaking on the open and transparent Internet.  (See stories on The Wall Street Journal and The Washington Post as well as Ars Technica.)

Those of us who aren’t on the FCC’s official leak list will have to wait with the rest of the rabble to get a look at just how the FCC proposes to effect this radical change in communications law.  Will it apply to all broadband Internet–including cable, fiber, DSL, satellite, wireless and broadband over power lines?  Will the FCC propose to regulate only as much as needed to get the jurisdiction the D.C. Circuit says it doesn’t have under Title I to implement the NPRM, or will they throw in some additional provisions to achieve other goals–such as the reform of the Universal Service Fund?  Will state and local regulators get to share in the fun of telling ISPs how best to run their business?

And, what about Naomi?  (A cultural reference only Jim Harper will get.)

The TechCrunch discussion included Richard Bennett of the Information Technology and Innovation Foundation, Gigi Sohn of Public Knowledge and Mike Masnick, CEO of TechDirt.  Andrew Keen, author of “The Cult of the Amateur,” moderated.

It’s not Just a Good Idea, it’s the Law

Let’s leave the merits of the NPRM and of regulating ISPs as telephone companies aside for the moment.  (But if you need a reminder on the merits, see “Net Neutrality Tail Wags Broadband Dog.”)   Let’s instead talk about the law.

With only thirty minutes to cover years worth of history, it wasn’t possible to get a decent airing of the most important issues.  Gigi Sohn and I nearly derailed the conversation with a preview of the oral arguments in the inevitable D.C. Circuit case that will challenge whatever the FCC actually does here.  I argued, as I have explained in more detail elsewhere including a recent CNET piece, that aside from the nutty policy implications of treating ISPs as if they were AT&T in the 1930’s running a single phone system including consumer-leased black rotary dial phones, that the agency simply doesn’t have the legal authority to decide what is and what is not an “information service.”

Gigi disagreed, saying that an agency can “change its mind–can change its interpretation–of its organic statute so long as it gives a reasoned explanation.”  She was emphatic about this point.  (Public Knowledge was equally emphatic in its belief that the agency could enforce neutrality principles under Title I–an argument thoroughly rejected by the D.C. Circuit in Comcast v. FCC.)

Lord help us if we lived in a country where that was true. Unelected regulators across the federal alphabet soup of agencies would simply decide when it was time for the law to be rewritten and, rather than seeking changes from Congress, would expediently do it themselves.  Prosecutor, judge, and jury all in one, subject to the lightest possible form of judicial review.

Fortunately, we do not live in such a country.

Even if agencies do have discretion to reconsider whether or how they apply the authority given to them by Congress years later, that discretion would have no bearing  on an FCC effort to change the definition of telecommunications services to include broadband Internet access.

Delegated Powers vs. Statutory Interpretation

Why not?  Congress did not delegate to the FCC the power to decide what was and was not an information service.  It defined that term–as well as defining telecommunications service–in the 1996 Communications Act.  Slightly different terminology had applied for decades, but the basic distinction was always between phone service (the highly regulated monopoly of the former AT&T, broken up in 1984) and data service (unregulated other than to keep AT&T out of the business, again until the breakup).

Which is to say that Congress gave no discretion to the FCC to make up its mind–or to change its mind.  Congress decided where broadband Internet belonged in the regulatory landscape.  Congress decided it belonged under Title I–information services.

But don’t take my word for it.  The FCC read its “organic statute” the same way.  It argued that interpretation to the U.S. Supreme Court in the 2005 Brand X case, and won.  The Supreme Court agreed that the definitions were ambiguous, and agreed that the FCC’s interpretation of them was reasonable.

So by 2005, all three branches of the government–executive, legislative, and judicial–were unanimous in their agreement that “information service” included broadband Internet, at least as it applied to cable offerings.  DSL was later added to the list.  Internet over wireless, satellite, fiber optic cable and broadband over power lines has always been assumed to be an information service.  If we ever figure out how to send packets through water pipes, that will be an information service too.

This was not a determination or a decision or a discretionary act of the FCC.  It was plain and simple statutory interpretation.

Changed circumstances–assuming they have changed in a way that would support a decision to regulate ISPs more and not less–are irrelevant to an agency’s power to change definitions in the law governing their jurisdiction.  Agencies have no such power.  Only Congress can change the definitions, or eliminate them, or give the agency new authority to regulate new activities.

In other words, the statute defining what an agency can and cannot do cannot be rewritten by the agency, even with the best of intentions and the most reasonable of explanations.  Supreme Court decisions cannot be overturned by agencies when those decisions have outlived their usefulness.  The Chevron Doctrine, which the Court applied in Brand X to give deference to the FCC’s interpretation of ambiguities in the definitions, is not a blank check to go back and forth at will, substituting different–albeit reasonable–interpretations whenever taking the opposite view suits the agency’s changing agenda.

(For more of the legal details on administrative law than even I want to know, see Seth Waxman’s clear-headed filing on behalf of the U.S. Telecom Association.)

Public Knowledge argued for Chevron deference in Comcast v. FCC.  The D.C. Circuit rejected that argument.  And for good reason.  This well-meaning but ultimately fantasyland view would run afoul of the most basic doctrines of regulatory law, and would, if seriously contended by the regulators, return us to the early New Deal era, when the courts ruled unconstitutional the heart of FDR’s plans as illegal delegations of lawmaking powers from the legislative to the executive branch.

If Only There Were Some Way to, You Know, Change the Law

If Congress believes that the FCC should regulate ISPs with a heavier hand than Title I allows, Congress is free to rewrite the Communications Act once again.  (But of course there are limits even to what Congress can do.  Remember that legislators have three times attempted to give the FCC a mandate to regulate Internet content and police it for indecency much as the agency still–with Victorian relish–polices broadcast TV and radio.  Twice the U.S. Supreme Court voided the law on First Amendment grounds, and the third time scaled it back to nearly nothing.)

All the panelists agreed that in a perfect world Congress would decide when it was time for the FCC to take control of ISPs.  But we don’t live in a perfect world.  Congress is busy.  We need to save the Internet right now, Public Knowledge and Free Press earnestly believe, and if the courts and Congress won’t give the FCC the authority to do it, well, the agency will heroically rise to the challenge and do it themselves.

There’s just one problem.  While we don’t live in a perfect world, we in the U.S. do live in one governed by the Constitution.  Even when that document seems inconveniently rigid, the framers get the last word.

It might take a lot of expensive litigation (half of which will be paid for by taxpayers), but in the end that’s how this conversation will end.

  • jhn

    Wow, you must not read actual administrative law decisions much. Of course agencies can change what definitions mean. For example, what it means to “offer”
    a telecommunications service.

    For more on the actual law, not the law the Seth Waxman wishes it was, read Fox v. FCC. There need to be no changes of circumstances for an agency to change its mind. This has been settled definitively.

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  • sjschultze

    Larry, it's always frustrating to read your net neutrality commentary because of the high rate of straw men, FUD, and just plain counterfactuals. This was true three years ago (…) and it is true now. There are reasonable arguments against net neutrality and reclassification (with which I ultimately disagree) but what you wrote here doesn't come close.

    To begin with, nobody is seriously suggesting that anything on the “enhanced” layer of the network would be regulated or regulable. However, the Commission's existing practices suggest a meaningful differentiation between the transport services provided by “ISP”s and the content and services on top of that transport. I assume you have read the law professors' letter on the docket which discusses this:

    Second, if you think that the Communications Act clearly spells out that all aspects of operating an ISP are an “information service” then you are living a pipe dream. Please cite the portion of the Act. If you think that the Courts defined it as such, then you need to re-read Brand X. It is about Chevron, full stop. The Court noted multiple reasons to support “the conclusion that the Communications Act is ambiguous about whether cable companies 'offer' telecommunications with cable modem service.” With respect to its Chevron interpretation, it noted, “The Chevron framework governs our review of the Commission's construction. […] Agency inconsistency is not a basis for declining to analyze the agency's interpretation under the Chevron framework. […] For if the agency adequately explains the reasons for a reversal of policy, change is not invalidating, since the whole point of Chevron is to leave the discretion provided by the ambiguities of a statute with the implementing agency.” I'm not sure what Executive decision you're referring to with respect to classification, other than perhaps the FCC itself (although characterizing that as an Executive decision isn't really accurate in the context of an independent administrative agency.)

    You also seem to think that because the Chevron argument failed in the context of Comcast v. FCC at the circuit court, it will likewise fail in the context of an entirely different fact pattern and countervailing Supreme Court precedent. It should be self-evident why this argument fails.

    There are decent arguments to be made against reclassification. For instance, you could discuss the notion of mutual exclusivity of information services and telecommunications services, which played a key role in Brand X. I happen to think that's a losing argument, but at least it operates within the domain of plausibility and permits actual debates on the merits.

  • larrydownes

    Please. The Fox case dealt with how the FCC effects the “statutory ban” against indecency in over-the-air broadcasts that “Congress has instructed the Commission to enforce.” The FCC has the delegated power to define and enforce the standards. The question in Fox was whether isolated expletives uttered during the Billboard Music Awards in 2002 and 2003 could be sanctioned under the FCC's rules, and the Court held that they could. (A First Amendment challenge is still pending.)

    Agencies can change their own definitions, so long as they follow the statute and the Constitutions.

    They can't change definitions in the statute. Congress is not an advisory body established to support a hard-working regulatory government.

    The Fox case does, however, remind us that the FCC has taken a “gradually expanding” approach to “enforcing the statutory ban against indecent broadcasts.” Just as, no doubt, it would be taking a “gradually expanding” approach to enforcing the statutory ban against indecent Internet content–had the Supreme Court not held the laws giving them that authority to be patently unconstitutional.

    Not really the best citation to support the premise that the FCC would make a good enforcer of content neutrality rules, but thanks.

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  • CAG

    Larry, nice job. It amazes me that the Gigi Sohns of the world think that this type of regulation will help. I think Mike makes the best case that this does nothing to actually help competition in the ISP market, which is where there is a lot of angst. Tighter regulations, through Title II, and years of litigation is certainly not an incentive for attracting new ISP competitors, nor will it incent smaller ISPs to grow.

  • CAG

    Larry, nice job. It amazes me that the Gigi Sohns of the world think that this type of regulation will help. I think Mike makes the best case that this does nothing to actually help competition in the ISP market, which is where there is a lot of angst. Tighter regulations, through Title II, and years of litigation is certainly not an incentive for attracting new ISP competitors, nor will it incent smaller ISPs to grow.

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