The FCC’s Nuclear Option on Net Neutrality

Venture capitalist Tom Wheeler, US President Barack Obama's nominee to head the Federal Communications Commission (FCC), attends the announcement in the East Room of the White House in Washington, DC, on May 1, 2013.
National Journal
Brendan Sasso
Jan. 15, 2014, midnight

Tom Wheel­er, the chair­man of the Fed­er­al Com­mu­nic­a­tions Com­mis­sion, has a de­cision to make.

A fed­er­al ap­peals court on Tues­day struck down the FCC’s net neut­ral­ity rules, eras­ing the Obama ad­min­is­tra­tion’s ef­fort to pro­tect the free­dom and open­ness of the In­ter­net.

The court also, however, left Wheel­er a path to pos­sibly save the rules. The judges made it clear that the FCC’s leg­al prob­lems stem from its de­cision to clas­si­fy broad­band In­ter­net as an “in­form­a­tion ser­vice,” and if Wheel­er chooses to re­clas­si­fy broad­band as a “tele­com­mu­nic­a­tions ser­vice,” the rules would im­me­di­ately be on much firmer leg­al ground.

Re­clas­si­fy­ing broad­band could save the FCC’s net neut­ral­ity rules, but it would come at a cost: the move would prompt a knock-down, drag-out fight with con­gres­sion­al Re­pub­lic­ans, who fear the FCC would be grant­ing it­self broad power to over­see the In­ter­net.

Without the rules, In­ter­net pro­viders could force web­sites like Google, Face­book or Net­flix to pay spe­cial fees in or­der to reach users.

Such a fight would put the rest of Wheel­er’s FCC agenda at risk, but the chair­man may well de­cide that’s a risk he’s will­ing to take.

The FCC ad­op­ted its net neut­ral­ity rules in late 2010 un­der Wheel­er’s pre­de­cessor, Ju­li­us Gen­achow­ski. They bar In­ter­net ser­vice pro­viders from block­ing web­sites or from dis­crim­in­at­ing against any In­ter­net traffic, ex­cept for reas­on­able net­work man­age­ment.

Without the rules, In­ter­net pro­viders could force web­sites like Google, Face­book or Net­flix to pay spe­cial fees in or­der to reach users. Sup­port­ers of net neut­ral­ity ar­gue the In­ter­net should re­main an open plat­form where all web­sites and ser­vices are treated equally.

But crit­ics ar­gue the rules un­ne­ces­sar­ily re­strict the busi­ness choices of In­ter­net pro­viders. They say ex­ist­ing com­pet­i­tion laws already ban ab­uses of mar­ket power and that In­ter­net pro­viders shouldn’t be barred from ex­per­i­ment­ing with new pri­cing mod­els.

Re­pub­lic­ans warn that re­clas­si­fy­ing broad­band as a tele­com­mu­nic­a­tions ser­vice could lead to not only the re­in­state­ment of net neut­ral­ity, but a host of oth­er bur­den­some reg­u­la­tions that could strangle the growth of the In­ter­net. While the FCC has only lim­ited au­thor­ity to reg­u­late in­form­a­tion ser­vices, it has sweep­ing power to man­age the busi­ness de­cisions of tele­com­mu­nic­a­tions ser­vices.

“The court today de­livered a vic­tory for jobs and in­nov­a­tion. This rul­ing stands up for con­sumers and pro­viders alike by keep­ing the gov­ern­ment’s hands off the In­ter­net,” Rep. Fred Up­ton, R-Mich., the chair­man of the House En­ergy and Com­merce Com­mit­tee, and Rep. Greg Walden, R-Ore., the chair­man of the Com­mu­nic­a­tions and Tech­no­logy Sub­com­mit­tee, said in a joint state­ment.

Robert Mc­Dow­ell, a former Re­pub­lic­an FCC com­mis­sion­er who voted against the rules, warned in an in­ter­view that re­clas­si­fic­a­tion could “trig­ger an ava­lanche of eco­nom­ic reg­u­la­tion on the In­ter­net.”

He ar­gued that the move would stifle eco­nom­ic growth, point­ing to the fact that stock prices for In­ter­net pro­viders like Com­cast and Ve­r­i­zon slipped when the FCC first floated the pos­sib­il­ity of clas­si­fy­ing broad­band as a tele­com­mu­nic­a­tions ser­vice in 2010.

En­act­ing net neut­ral­ity in the first place sucked much of the en­ergy from Gen­achow­ski’s chair­man­ship. With oth­er press­ing is­sues be­fore the com­mis­sion like an auc­tion of air­wave li­censes, a net­work tech­no­logy trans­ition and the pres­id­ent’s pro­pos­al to im­prove In­ter­net ac­cess in schools, Wheel­er may be hes­it­ant to re-fight that battle.

“It would start a big war with­in Wash­ing­ton and would prob­ably not be a con­struct­ive use of the com­mis­sion’s time,” Mc­Dow­ell said.

But some Demo­crats and pub­lic in­terest ad­voc­ates ar­gue that the rules are so im­port­ant that they are worth en­dur­ing some tem­por­ary polit­ic­al head­aches to save. As long as Re­pub­lic­ans only con­trol one house of Con­gress, they can kick and scream, but they can’t block any FCC ac­tion.

“The FCC needs to re­spond im­me­di­ately in a way that keeps the In­ter­net open to all of us, not just big cor­por­ate in­terests,” Sen. Al Franken, D-Minn., said in a state­ment.

“At its core, the FCC’s fun­da­ment­al re­spons­ib­il­ity is the reg­u­la­tion of com­mu­nic­a­tions net­works for the pub­lic in­terest and con­sumers every­where,” Sen­ate Com­merce Com­mit­tee Chair­man Jay Rock­e­feller, D-W.Va., said. “I urge the FCC to con­sider all vi­able op­tions to ac­com­plish these ob­ject­ives, and to make sure that that both con­sumers and com­pet­i­tion are pro­tec­ted through a free and open In­ter­net.”

In­stead of re­clas­si­fic­a­tion, the FCC could also try ap­peal­ing the de­cision to the full D.C. Cir­cuit Court of Ap­peals or to the Su­preme Court. But with the three judge D.C. Cir­cuit pan­el rul­ing un­an­im­ously against the FCC, the odds of win­ning on ap­peal don’t look good.

Wheel­er could also try to re­work the rules un­der their cur­rent au­thor­ity and see if that is enough to sat­is­fy the court. But re­writ­ing the rules would al­most cer­tainly mean wa­ter­ing them down and would likely still face Re­pub­lic­an op­pos­i­tion.

“It’s go­ing to be a big fight no mat­ter what,” said Mi­chael Wein­berg, vice pres­id­ent of con­sumer ad­vocacy group Pub­lic Know­ledge, ar­guing that Wheel­er should con­sider re­clas­si­fic­a­tion. “There’s vir­tue to just hav­ing it and mov­ing on.”

For now, Wheel­er is leav­ing his op­tions open.

“I am com­mit­ted to main­tain­ing our net­works as en­gines for eco­nom­ic growth, test beds for in­nov­at­ive ser­vices and products, and chan­nels for all forms of speech pro­tec­ted by the First Amend­ment,” he said in a state­ment.

“We will con­sider all avail­able op­tions, in­clud­ing those for ap­peal, to en­sure that these net­works on which the In­ter­net de­pends con­tin­ue to provide a free and open plat­form for in­nov­a­tion and ex­pres­sion, and op­er­ate in the in­terest of all Amer­ic­ans.”

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