The latest wrinkle in the ongoing debate over network neutrality comes from Rep. Henry Waxman, D-Calif., ranking member of the House Committee on Energy and Commerce, who suggests the Federal Communications Commission adopt a “third way” in regulating the way last mile Internet service providers like Comcast, AT&T and Verizon handle traffic from major video content providers like Netflix, Amazon and Google’s YouTube.
Waxman’s proposal was detailed in a filing in the FCC’s latest inquiry into ways it can effectively enforce network neutrality. While current FCC net neutrality guidelines allow ISPs the freedom to take “reasonable” steps to prioritize or manage traffic to improve quality or protect other applications, Waxman is among those who want the government to take a larger, more active role in managing the Internet ecosystem. Waxman states he wants a “bright-line” rule against any ISP blocking, throttling or paid prioritization.
Waxman agrees with many activists who want the FCC to change the regulatory classification of ISPs as written in the Telecommunications Act of 1996.
Regulations for ISPs are spelled out under Title I of the Act. Here, with the intention of fostering a growing industry, Congress intentionally sought to keep regulation minimal and the compliance burden low. Title II of the Act spells out regulations for older telephone companies, and derives heavily from the 1930s-era monopoly regulations that ended 30 years ago. Dated as it is today, the Telecom Act was a bipartisan effort, spurred by the arrival of both the Internet and wireless phone service, to transition the telecom industry from monopoly to competitive business.
Waxman is among those who want to reverse this 30-year course, and reclassify competitive wireline and wireless ISPs as Title II common carriers subject to a host of rules and regulations on rates and services.
Trouble is, even those who favor network neutrality are divided as to whether reclassification is the correct remedy. Even as he asks for public comment, FCC Chairman Thomas Wheeler has expressed some reservations about reclassification. Wheeler has stated “we don’t want to put in rules in place that would dis-incentivize companies from making…continued investment.”
So did his predecessor, Julius Genachowski, whose own “third way” stopped short of this step. Both might worry that reclassification would impose egregious pricing and service conditions on ISPs that would be counterproductive in the long run. Others have pointed out that despite all the new rules reclassification would add, it would not prohibit paid prioritization. The U.S. Post Office, after all, is a regulated common carrier, yet it can offer Express Mail.
Waxman’s solution — boiled down — is to trust the government to restrain itself. Waxman points to another part of the Telecom Act, Section 706, and suggests that it be woven into the reclassification.
Section 706 is something of an elastic clause in Telecom Act. It allows the FCC to investigate whether advanced communications technologies — the definition of which includes Internet — are being deployed in a reasonable and timely manner and to “take immediate action” to remedy any perceived problem.
What Waxman hopes is that the FCC can reclassify ISPs as Title II carriers then use Section 706 to ban ISP prioritization but disregard, or forbear, all of the other Title II requirements. Not only does this open all sorts of legal questions, beginning with whether the FCC can alter definitions set by Congressional legislation, it also counts on the FCC to deliberately restrain itself from using the additional regulatory power Waxman’s proposal would give it.
Given the attempts the FCC has already made to expand its purview, Waxman is asking Americans to take a big leap of faith. Through the past two administrations, the FCC has continually sought to increase its regulatory scope beyond broadcasting and into cable TV and Internet. Just in the past week Wheeler has suggested the FCC regulate subscription-based Internet video services and use its indecency rules to stop sports reporters from saying the Washington Redskins team name on the air.
Waxman’s solution is weak because it tries to jam new realities — on-demand Web video, wireless Internet and changing consumer viewing habits — into regulatory silos that are three decades old. Rather than trying to redefine FCC scope through a sloppy cut-and-paste of outmoded law, Congress should revisit the Telecom Act in its entirety— modernizing it to fit the Internet ecosystem of our time.
It’s doubtful the digital economy will be served by tempting the FCC to take a power trip through this evolving landscape. There still too much of a chance for unintended consequences if the FCC is allowed unchecked discretion in overhauling the underlying economics of the Internet industry.