The odds that the Federal Communication Commission's repeal of Obama-era net neutrality rules will be reversed look increasingly likely. Yesterday, Sens. Ed Markey, D-Mass., and Ron Wyden, D-Ore., held a press conference announcing they'd gained enough support, including Maine Republican Sen. Susan Collins, to force a Congressional Repeal Act vote on the issue. And late last week, the association representing Silicon Valley's biggest tech companies announced it would join the legal action challenging FCC Commissioner Ajit Pai's controversial December move.
Much of the concern about Pai's approach to internet regulation centers around what kind of regulatory vacuum the repeal creates. If the FCC has decidedly said it's not going to regulate internet service providers as common carriers, and the Federal Trade Commission — assuming last year's decision in AT&T v. FTC is upheld in the end — doesn't have the authority to regulate ISPs, what does that mean for consumers?
In response to concerns about a regulatory vacuum, the FTC and FCC issued a December memorandum of understanding promising they would, under Pai's "Restoring Internet Freedom Order," coordinate enforcement efforts. The MOU outlines the agencies' plans to pool resources on investigations and review informal complaints against ISPs' disclosure obligations to consumers, mandated under the order.
"When you have an industry that's as critical to our economy, our culture, our communications systems as broadband, why is one regulator good?" — Gigi Sohn, former counsel to FCC Chairman Tom Wheeler
But that's not enough for Gigi Sohn, former counsel to FCC Chairman Tom Wheeler, who says "that MOU doesn't mean jack squat if that [9th Circuit] decision gets upheld." That is, if it remains U.S. law that common carriers are designated not on the basis of activity but by status. In that case, the FTC still has no ability to oversee ISPs because of the exemption in Section 5 of the FTC Act.
"The FCC has stronger tools [than the FTC] and has given those tools away," Sohn said of the net neutrality repeal. Unless an ISP — no longer classified as a common carrier under Pai's repeal — fails to disclose its practices to consumers or lies to them, in which case the FTC could invoke its unfairness or deception authority under Section 5, consumers have little power.
"The new FCC/FTC relationship lets consumers know they're getting screwed," Sohn said. "But much beyond that, they don't have any recourse." And besides, she continued, why should there be only one regulator in the first place? Look at the finance industry, it's got like 13 regulators.
"When you have an industry that's as critical to our economy, our culture, our communications systems as broadband, why is one regulator good?" Sohn said.
Just going back to the good old days
But Prof. James Cooper of George Mason University School of Law, and who served as advisor to former FTC Commissioner William Kovacic, said the noise about the new reality is hype that's been amplified by strong talking points. Who could be against neutrality? Cooper said net neutrality's repeal simply returns us to the status quo. Now that broadband providers aren't classified as common carriers anymore, "The FTC is back on ... has complete jurisdiction." And the tea leaves indicate, Cooper said, that the 9th Circuit's forthcoming en banc decision will go in favor of the FTC.
Doug Brake of the Information Technology and Innovation Foundation agrees with Cooper that the 9th Circuit's rehearing of the case indicates the court "may realize they got it wrong" at first blush, adding the fact it vacated its earlier decision is a "somewhat unusual step that further indicates they are particularly skeptical of the panel opinion."
So if the FTC is simply going to become the de facto regulator again and everything returns to the way it was in 2014, why is there so much hysteria over net neutrality's repeal?
Well, some say, things were never that great to begin with.
"This is the very first time ever, and I mean ever, the FCC has made it explicitly clear to broadband providers it has no authority to discipline them in their bad behaviors. So we ain't in 2014 anymore, Dorothy." — Harold Feld, senior vice president at Public Knowledge
What good old days?
"It's not like 2014 was some banner year of consumer protection and joy," said Harold Feld, senior vice president at Public Knowledge. "The glory that was 2014 starts with the Comcast shakedown of Netflix," in which broadband speeds were slowed due to a dispute among ISPs. It's not exactly the North Star we want to move toward, he argued.
"I certainly hope the FTC is a player, but the ability of the FTC to protect consumers from behaviors that, as a matter of public policy we have until now not found to be contrary to the public interest, is extremely limited," he said. There's no requirement a business tell consumers everything it's going to do, and none of the behaviors being discussed in the conversation about net neutrality — that providers might block certain websites at their own discretion or throttle speed, for example — are recognized today as consumer harms.
"You don't have a right to access content any more than you have a right for your cable provider to carry a particular channel," he said. "If you call your cable company and say, 'I want you to carry the fuzzy animal channel,' and they say, 'No, we don't want to carry a fuzzy animal channel,' that's not a consumer harm. The same principle now applies to broadband. So Comcast can say, 'You can get MSNBC streamed to you in 4K and not have it count against your bandwidth cap, but Fox News we're not going to make available to you in 4K because we think that consumes too much bandwidth. That's not a harm. It's just the merchant decided not to sell it to you."
That aside, Feld said the FCC's position here is unprecedented. He said the FCC has always been very clear that if it saw bad behavior, it would act.
"This is the very first time ever, and I mean ever, the FCC has made it explicitly clear to broadband providers it has no authority to discipline them in their bad behaviors," said Feld. "So we ain't in 2014 anymore, Dorothy."
But Geoffrey Manne, executive director at the International Center for Law and Economics, doesn't see the regulatory scheme, as it technically exists now, as problematic. He thinks the FTC has plenty to go on. Largely because, even if the 9th Circuit court's initial ruling were to stand, and common carriers were designated based on status and not activity, the ruling technically only applies to companies headquartered in the 9th Circuit. Plus, suing a company in court is only one of the FTC's enforcement options.
"The FTC has lots of mechanisms for getting around [the ruling], not the least of which being administrative adjudication," Manne said. "I think far more likely is that it would have very limited effect beyond the 9th Circuit."
Alternatively, Manne said, what if the FTC simply decided it didn't agree with the FCC's terms? Who gets to decide who a common carrier is? "In the world in which Title II still applied," he said, "we all act as if regulation by the FCC under Title II equals common carrier status under the FTC Act, but I don't know that's necessarily the case."
But probably a more likely solution, Prof. Cooper suggests, would be legislative action that has historically seen bipartisan support but has yet to see a vote.
"When I worked at the FTC, everyone asked to get rid of the common carrier exemption," he said. "If the full 9th Circuit were to say, 'Yeah, the panel got it right, and the FTC doesn't have jurisdiction,' one easy statutory fix, one thing Congress certainly would have support on from a lot of people, would be to get rid of the FTC's common carrier exemption, and that would solve all the problems there, too."
From Sohn's perspective, this issue is only going to grow.
"To the extent I thought there was a huge movement in 2015 for net neutrality, it's metastasized," she said. "I think in 2018, it's going to be an election issue for the first time."
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