James Speta on “The Shaky Foundations of the Regulated Internet”

by on February 5, 2010 · 5 comments

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).

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