The Perfect, the Good, and the FCC 4

It has been a busy week in U.S. communications policy, with an FCC meeting adopting important spectrum policy reforms, an FCC complaint about Comcast’s approval policies for cable modems, and a dispute between Comcast and Level 3 over fees for Internet backbone traffic.  And late last night, it got even more interesting.

FCC Chairman Julius Genachowski reportedly circulated a draft Open Internet order, to be considered at the FCC’s December 21 meeting.  According to a statement given to reporters, the order builds on the compromise terms from Congressional negotiations led by Representative Henry Waxman this fall.  What does that mean?  I’m confident of two things: Hardly anyone will like the proposal; and it’s the right thing to do.

Advocates of network neutrality will be disappointed the FCC isn’t going forward with “reclassification” of broadband access as a regulated telecommunications service, while many Republicans and network operators will complain about a “power grab” to “regulate the Internet” even after Democratic losses in the midterm elections.  Both should  put aside their ideologies and look realistically at the situation.  Don’t let the perfect be the enemy of the good.

If you believe in the need to protect the open Internet, this is the realistic way forward, and it could lay the groundwork for other steps if necessary in the future.  If you see network neutrality as a dangerous drag on Internet investment, this is the realistic way to remove that regulatory overhang. Kill this proposal, and it’s hard to envision anything but years of further uncertainty, most likely ending with a worse compromise down the road. I don’t love it either, but I’m a realist.  The fate of network neutrality will hinge not on the FCC’s rhetoric, but on its implementation.  There can’t be implementation without an order.  And I can’t see any other order making it through in the current environment.

It’s important to understand how we got here.

It seems like the network neutrality fight has been going on forever.  When I entered academia in 2004, I thought the issues were pretty well developed.  Concerns about closed, discriminatory broadband networks, which I and others started writing about five years earlier, were widely recognized. The outcome also seemed pretty clear.  Even FCC Chairman Michael Powell, a Republican who favored deregulation of broadband access networks, acknowledged the importance of an open Internet.  He gave a speech setting forth four “Internet freedoms” which should be protected to ensure innovation and consumer choice.  A year later, the FCC memorialized those principles in a policy statement, and the Supreme Court ratified the FCC’s deregulatory classification of broadband on the theory that it retained the power to act when it found the justification.  The only question was how the FCC would actually move forward when issues arose.

Fast forward through five years of loud, contentious fights.  We’re pretty much still in the same place.  The FCC’s one attempt to take more specific action, its 2008 order against Comcast’s network management practices, was overturned in court earlier this year.  This uncertainty benefits no one.  It hurts those in favor of network neutrality the most, because companies are moving forward with infrastructure investments and business strategies that become difficult to unwind after the fact.  We’ve already seen exclusive content deals like ESPN3 and TV Anywhere take hold.  There are reports of application blocking and other restrictions on wireless networks.  And now, Comcast and Level 3 opening up a can of worms in the backbone market.  The FCC might find these practices legitimate, but until it’s operating under a defined legal and procedural framework, it can’t even make that assessment.

The network neutrality battle is frequently posed as a binary choice: inaction or reclassification.  In fact, neither is realistic.  Concerns about the open Internet won’t go away if the FCC does nothing now.  Comcast’s clumsy 2008 response to peer-to-peer file-sharing traffic won’t be the last time a network operator provokes popular and Congressional ire.  And broadband will only become more important and economically significant.  In other words, network neutrality rules will be on the FCC docket indefinitely, until the agency takes a concrete step forward.  Again, I say this with the perspective of someone who has watched this issue now for a dozen years.

On the other side, whatever the merits of the reclassification path, it’s not going to happen.  There may have been a window of opportunity earlier this year, but it closed.  A majority of the members of the House of Representatives signed on to a letter opposing the idea, and one could scarcely create a better issue to draw the united fire of grassroots Tea Party activists, the most powerful bipartisan corporate lobbying interests, and Republicans eager to take down the Obama Administration.  I could imagine an FCC Chairman risking everything to push reclassification at any cost, but I can’t say I’d recommend that to Chairman Genachowski now.  Especially when there’s an alternative that achieves the same objectives.

Keep in mind that reclassification itself doesn’t make Net neutrality happen, even if the FCC order survives the court challenge. It gives the agency legal authority and a set of precedents, but applying those precedents to contemporary broadband practices will still be a painstaking process. Everyone knows the 1996 Telecommunications Act is outdated in this converged digital era.  Anything the FCC does is a necessary stopgap until Congress replaces it, a process likely to take several years.  The open Internet is the principle worth fighting for, not a particular legal theory.

While there is no guarantee of success under the approach Chairman Genachowski has chosen either, there is a good legal basis to support it.  The Supreme Court in the 2005 Brand X case expressly stated that Title I “ancillary authority” gave the FCC some authority to adopt broadband rules.  And the court that overturned the FCC’s Comcast order actually provided a roadmap for a successful do-over, by emphasizing what the Commission failed to argue then.  This new approach would parallel what I proposed in a law review article, Off the Hook, published at the beginning of this year. The FCC picked the wrong statutory provision in Comcast, and its sloppiness in the proceeding under prior Chairman Kevin Martin undermined its legal case.  The current Chairman won’t make those mistakes.

It’s not the most satisfying solution, but it’s the best option today.

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Disclosure: I co-led the FCC review for the Obama Administration’s Transition Team in 2008, and advised the FCC and National Telecommunications & Information Administration in 2009.  My FCC consulting engagement ended before Chairman Genachowski developed the current proposal, and these are entirely my personal views.

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