by Arnold Ahlert
In a completely unsurprising development, one of the two Republican Commissioners on the Federal Communications Commission (FCC) has made it clear the Obama administration’s effort to regulate the Internet is nothing more than another government power grab. “President Obama’s plan marks a monumental shift toward government control of the Internet,” said a statement released by commissioner Ajit Pai. “It gives the FCC the power to micromanage virtually every aspect of how the Internet works. The plan explicitly opens the door to billions of dollars in new taxes on broadband… These new taxes will mean higher prices for consumers and more hidden fees that they have to pay.”
The plan saddles small, independent businesses and entrepreneurs with heavy-handed regulations that will push them out of the market. As a result, Americans will have fewer broadband choices. This is no accident. Title II was designed to regulate a monopoly. If we impose that model on a vibrant broadband marketplace, a highly regulated monopoly is what we’ll get.
Pai’s statement was a response to an op-ed column in Wired magazine by FCC Chairman Tom Wheeler. He believes “a modernized version” of Title II of the Telecommunications Act of 1996, used to break up AT&T into four distinct Bell companies, should be applied to Internet Service Providers (ISPs). Title II originally came into being under the Communications Act of 1934. Part of it prevented phone companies from engaging in “unjust or unreasonable discrimination” when it came to providing service for their customers. “Using this authority, I am submitting to my colleagues the strongest open internet protections ever proposed by the FCC,” Wheeler wrote last Wednesday. “These enforceable, bright-line rules will ban paid prioritization, and the blocking and throttling of lawful content and services.”
Wheeler, Obama and the rest of their Democratic Party allies want to reclassify broadband as a telecommunications service and regulate ISPs like utility companies, or “common carriers,” rather than “information services” that fall outside FCC regulatory power. The ostensible purpose of the change is to implement “net neutrality” rules. Net neutrality is about preventing ISPs from blocking, slowing down, or diminishing the quality of applications and websites, from charging them higher prices for providing prioritized access, aka “fast lanes,” or giving preferential treatment to their affiliates.
Wheeler has drafted a 332-page plan to address the issue. He denies that it imposes new fees or price regulations. It will go to a vote on Feb. 26, and it expected to pass by a margin of 3-2 when the agency’s two Democrats side with the Chairman. Yet there is a telling indication that Wheeler is being less than forthcoming: just as the Democrats did with ObamaCare, the FCC won’t release the actual text of the plan until after they vote on it.
That doesn’t sit well with Pai. “I believe the public has a right to know what its government is doing, particularly when it comes to something as important as Internet regulation,” he said. “I have studied the 332-page plan in detail, and it is worse than I had imagined.”
He further explained that the part of Title II whereby the FCC is granting itself the authority to determine whether a variety of practices are “just and reasonable,” does give the agency the power to raise prices. “The claim that President Obama’s plan to regulate the Internet does not include rate regulation is flat-out false,” Pai declared. “Indeed, the only limit on the FCC’s discretion to regulate rates is its own determination of whether rates are ‘just and reasonable,’ which isn’t much of a restriction at all.”
Republicans are also incensed. Committees in the House and Senate initiated investigations to determine if the White House improperly influenced the FCC proposal. On Monday, Sen. Ron Johnson (R-WI), Chairman of the Senate Homeland Security and Governmental Affairs Committee, sent a letter to Wheeler asking him to explain his decision and produce documentation regarding communications and meetings between the White House and FCC officials. Johnson informed Wheeler he was concerned about “apparent pressure exerted on you and your agency by the White House.”
Johnson further noted the plan is “not only a monumental shift from Chairman Wheeler’s original net-neutrality proposal but also a large deviation from the light regulatory touch applied to broadband services since the Clinton administration,” Johnson said in releasing the letter. “The decision is wrong, and the process raises serious questions about the president’s inappropriate influence over what is supposed to be an independent agency that derives its authority from Congress and not the White House,” he added.
Last Friday, Rep. Jason Chaffetz (R-UT), Chairman of the House Oversight and Government Reform Committee, expressed similar reservations, and also requested “all documents and communications” between the FCC and the White House.
And although the president appoints the FCC Chairman as Obama did with Wheeler in 2013, the agency is in fact supposed to remain independent. Wheeler, however was a major fundraiser for the president. Furthermore, Johnson and Chaffetz cited a Feb. 4 Wall Street Journal article reporting that, back in November, the White House’s top economic advisor gave a “heads up” to Wheeler about Obama’s intention to regulate the Internet like a public utility, an idea the president himself announced four days later. “The prod from Mr. Obama came after an unusual, secretive effort inside the White House, led by two aides who built a case for the principle known as net neutrality through dozens of meetings with online activists, Web startups and traditional telecommunications companies,” the Journal stated. Johnson asked Wheeler if the FCC was aware of that secretive effort.
Gigi Sohn, the FCC’s special counsel for external affairs, tried to downplay the connection. “I think what the president’s statement did was, rather than force the chairman’s hand, was give him cover to do something he already was thinking about doing,” Sohn said in an appearance on C-Span’s “The Communicators” series.
Forcing anyone’s hand at this point is highly problematic. If the FCC passes its proposal, there is little doubt ISPs and broadband carriers would initiate litigation to prevent it from going into effect. The FCC’s track record in court is not promising. In 2007 the agency responded to a complaint that Comcast was restricting customers’ ability to access certain peer-to-peer networks by issuing an order claiming the cable giant violated federal policy. Three years later, the D.C. Circuit Court vacated the order, finding that while the FCC is permitted to take action reasonably ancillary to its statutory mandate, the FCC could point to no such authority in this particular case.
Later in 2010 the FCC adopted the “Open Internet Order,” broadly imposing net neutrality rules, but stopping short of imposing the Title II reclassification of ISPs they are currently seeking. They cited section 706 of the Telecommunication Act of 1996 whereby the FCC “shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans” as the basis for their statutory authority.
In 2011 Verizon sued the FCC and once again, in January 2014 the DC Circuit Court struck down parts of the Open Internet Order. They vacated the FCC’s anti-discrimination and anti-blocking policies, but maintained the requirement that carriers notify their customers regarding what traffic can be blocked and/or run faster.
Hence the FCC’s current effort to impose Title II common carrier regulations, one Pai doesn’t believe will go anywhere. “Courts have twice thrown out the FCC’s attempts at Internet regulation,” he explained. “There’s no reason to think that the third time will be the charm. Even a cursory look at the plan reveals glaring legal flaws that are sure to mire the agency in the muck of litigation for a long, long time.”
Given the Obama administration’s appetite for unassailable power, that is a good thing. Moreover, the Internet has done quite fine without the heavy hand of a federal government that, far more often than not, seeks to “solve” a problem where none really exists. Moreover, lost in this argument is the reality that private enterprise has invested billions of dollars in bringing an invention to people so all-encompassing, they now consider Internet access a “right,” even though it is nothing of the sort–and even though Internet providers have adhered to a number of regulations already providing virtually unlimited access to this technology. Yet in their effort to impose greater controls, the Obama administration has embraced one of the American left’s most vexing beliefs: The pernicious notion incentive and coercion are interchangeable terms.