Northwestern Law Prof. James Speta has a new paper out that touches on many of the themes that Barbara Esbin, my colleague at The Progress & Freedom Foundation, has been covering in her excellent work explaining why the FCC doesn’t actually have have the vast, essentially unlimited authority over the Internet that it has asserted in its recent effort to enforce its non-binding 2005 net neutrality policy statement and its ongoing net neutrality rulemaking. (See her FCC comments on that issue here and Adam’s thoughts on this here.) Speta’s thesis also seems to parallel the approach taken under PFF’s 2005 Digital Age Communications Act (DACA), which emphasized focusing on on unfair practices and relying on a standard of consumer harm as in antitrust rather than trying to enshrine abstract principles like “neutrality” into law.

Anyway, here’s the abstract for Speta’s paper:

The Federal Communications Commission’s order directing Comcast to cease certain traffic management techniques in the name of network neutrality adopted a very strong theory of the FCC’s regulatory jurisdiction over the Internet. This article offers three responses: (1) Briefly reviewing the theory of the FCC’s “ancillary jurisdiction” and the theory offered in the Comcast order, the article concludes that the FCC’s ancillary jurisdiction cannot be as broad as the agency asserted – for the agency claimed the power to regulate any aspect of Internet service, including price and quality of service. Because “ancillary jurisdiction,” however broad, simply cannot be as broad as the FCC’s nearly plenary authority over common carriers (as the FCC itself had previously recognized), the Comcast order states an untenable theory of regulatory power. (2) Although a rigorous administrative law analysis would conclude that the FCC does not have any “ancillary jurisdiction,” that conclusion is foreclosed by Supreme Court precedent, both generally and by a specific dicta that the FCC has some ancillary authority over the Internet. The article concludes that the FCC’s ancillary authority can be reasonably interpreted and rationally cabined – giving the FCC jurisdiction over Internet carriage of Title II and Title III services, meaning, for example, that the FCC has jurisdiction to regulate Internet carriers’ treatment of “interconnected VOIP,” as in fact the FCC has done. (3) Finally, the article offers a structure for conferring on the FCC an appropriate degree of regulatory authority over the Internet, through appropriate legislation. Because current antitrust doctrine struggles with the sorts of issues that might arise in the Internet, the FCC should have authority to enjoin unfair competition practices, when committed by Internet carriers offering public services (and at the retail level). This authority would be broad enough to cover the practices alleged in the Comcast case, but only if the FCC were to follow the substantive requirements of an unfair competition analysis (as it did not).

My colleague Barbara Esbin, a Senior Fellow and Director of the Center for Communications and Competition Policy at The Progress & Freedom Foundation, was asked to pen a short history of the net neutrality wars in the U.S. for a French publication, La Lettre de l’Autorité.  Her essay provides an excellent, concise overview of where we’ve come from and where we might be heading on this front.  I’ve pasted the entire essay down below, or you can download the PDF here.

Net Neutrality Regulation in the United States by Barbara Esbin

PFF Progress Snapshot Release 4.21 October 2008

The United States moved closer to “Net Neutrality” regulation this year when the Federal Communications Commission found that Comcast, a cable broadband Internet service provider, violated a set of Internet policy principles the FCC adopted in 2005 by limiting peer-to-peer (P2P) traffic. The ruling was the culmination of a ten-year effort that began as a call for wholesale “open access” to the cable platform for third-party Internet service providers. Requests for open access first emerged in 1998 when the FCC considered AT&T’s acquisition of cable operator TCI. The FCC rejected open access, but the issue quickly re-emerged in a subsequent proceeding to determine the appropriate regulatory classification of cable Internet service. Depending on how the FCC categorized cable Internet service, it would either be subject to telecommunications “common carrier” requirements, “cable service” requirements, or treated as a then-unregulated “information service.”

In 2002, the FCC classified cable Internet service as an “information service.” This meant that the telecommunications common carrier requirements — that service be provided upon request, without unreasonable discrimination as to rates, terms and conditions of service — would not apply to cable Internet services. The FCC’s decision was upheld by the U.S. Supreme Court in NCTA v. Brand X. Afterwards, advocates of open access re-directed their efforts away from advocating wholesale access for third-party ISPs, and towards rules aimed at consumer rights to a “neutral network” or “net neutrality.”

 In 2005 the FCC extended its deregulatory “information service” approach to wireline broadband Internet services provided, thus freeing telephone companies of traditional common carrier mandates for these services. The FCC’s decisions not to impose cable open access and to relieve telcos of common carrier obligations reflected a policy of fostering infrastructure deployment through market operations. Concurrently, the FCC released a “Policy Statement,” declaring four “entitlements” that Internet service consumers should enjoy: (1) access to lawful content of their choice; (2) ability to run chosen applications and services; (3) ability to connect their choice of legal devices that do not harm the network; and (4) competition among network, application and content providers. The Policy Statement expressly stated that the FCC was not adopting rules and that the principles are subject to reasonable network management. The FCC subsequently stated that it would entertain complaints concerning violations of the principles, and in early 2007, the FCC opened an “Inquiry” into broadband industry practices, seeking information about network management and asking whether it should impose rules.

In late 2007, an advocacy group filed a Complaint alleging that Comcast had violated the FCC’s Policy Statement by “secretly degrading” BitTorrent traffic, thus interfering with the Internet rights of its subscribers, and that its practices did not constitute reasonable network management. Several months later, Comcast and BitTorrent agreed to work together to resolve network congestion issues through the use of protocol-agnostic network management. Yet on Aug. 20, 2008, the FCC released an Order purporting to rule on the Complaint, finding that Comcast had violated the Internet policy principles, and rejecting its defense that its practices were reasonable. The FCC ruled that Comcast’s network management practices: discriminated among Internet applications and protocols rather than treating all equally; effectively blocked Internet traffic; posed significant risks of anti-competitive abuse; were inconsistent with “an open and accessible Internet;” and that Comcast’s failure to disclose its practices compounded the harms. Alternative means of managing network congestion approved by the FCC include metered usage and throttling the connection speeds of excessive users.

This action was said to be an “adjudication,” although traditional agency complaint rules were not followed. Comcast was given 30 days to disclose to the FCC “the precise contours” of its network management practices and describe what it will do instead to address network congestion. The effect of the Order is to establish a fifth “non-discrimination” Internet policy principle, to be implemented by the FCC through case-by-case adjudication of individual complaints rather than ex ante rules. Thus, 10 years later, and without explicit acknowledgment, the FCC has effectively abandoned its “hands off” approach and imposed a form of common carrier regulation on ISPs.

I have written elsewhere on legal and procedural flaws that may doom the Network Management Order. In summary: (1) the FCC has not been granted explicit authority to regulate the provision of broadband “information services;” (2) the “ancillary jurisdiction” on which the FCC relied was not reasonably related to its other statutorily mandated responsibilities; (3) having failed to adopt enforceable rules concerning broadband network management, the FCC could not lawfully subject Comcast to an “adjudication” concerning its practices; and (4) the Complaint filed against Comcast was defective in several respects and should have been dismissed.

The Network Management Order has been appealed by Comcast and several advocacy groups. Comcast challenges the basis on which the FCC found that it had violated federal policy in the absence of pre-existing legally enforceable rules. The advocacy groups appealed the FCC’s failure to order Comcast to immediately cease and desist interfering with P2P traffic. The appeals have been consolidated and will be heard by the D.C. Circuit Court of Appeals, a court that has shown little patience for the FCC’s unusual procedures and the FCC’s use of the doctrine of “ancillary jurisdiction” to expand its reach. Meanwhile, several network operators have announced bandwidth caps or plans to implement them. In addition, there are renewed calls both for the FCC to establish ex ante rules and for legislative action to grant the FCC express regulatory authority over broadband Internet service providers. In short, the legal and policy debate over net neutrality continues.

• Barbara Esbin is a Senior Fellow and Director of the Center for Communications and Competition Policy at The Progress & Freedom Foundation.