Section one, Why Net Neutrality was a Good Idea
Section II of The DISSENTING STATEMENT OF COMMISSIONER MIGNON L. CLYBURN
Re: Restoring Internet Freedom, WC Docket No. 17-108..
Misreading Regulatory History
This item’s justification for rolling back our light-touch Title II approach is grounded primarily in assertions that this is simply returning to the regulatory status quo ante. The item even cites precedent going as far back as 1998 for the proposition that the FCC has always considered internet service an information service. Well, take a walk back with me down the halls of FCC Past.
It is the 1960’s and 70’s when packet-switched precursors to internet access were uniformly considered Title II services. The FCC was thoughtfully considering packet-switched networks as early as 1966 when it launched the first Notice of Inquiry into the interdependence of computers and common carrier telecommunications services. Now, all telecom geeks know that the ARPANET was the precursor to the commercial internet, but what you may not know is how close we came to having it owned by AT&T. In the early 1970s, AT&T was approached with a proposition: buy ARPANET and operate it as a public, common carrier service. AT&T declined, because it did not fit with their business objectives. It was over a decade later before AT&T developed its own packet-switching solution.
So, the logical thing to do was commercialize the offering itself. Some key ARPANET players thus founded Telenet Corporation and, in 1973, applied for a FCC license to operate the nascent service on a common carrier basis, offering functionality like database access and electronic mail. In 1974, the FCC approved Telenet’s application and began offering the service, filing its first tariff on August 15, 1975.
What does this show? That the FCC majority is being disingenuous in its retelling of regulatory history, particularly as it relates to internet and packet-switched services. This majority is not “returning” to a time where packet-switched networking, and the internet access variant, in particular, were regulated as Title I services. Indeed, the item is internally inconsistent since it admits that Digital Subscriber Line (DSL) services were regulated as Title II services until 2005. Even after 2005, and to this day, hundreds of wireline carriers continue to offer broadband as a Title II service.
It was not until the early 2000s that the FCC began deregulating internet transmission. Up until that point, broadband providers were required to line share and unbundle their networks, which allowed vibrant retail competition for internet access over the incumbent networks. It was only when as a policy matter the FCC decided to collapse the protocol stack and rely wholly on intermodal competition for fixed services, that it had to decide what to do with the transmission component that was clearly a telecommunications service.
These are issues with which the FCC has struggled mightily, and I am sure will continue to struggle with in the future. But painting the FCC’s past approach to internet access as a deregulatory nirvana fails to grapple with the truth of our regulatory past.
As I have said before, it makes no sense to take regulatory protections away from a transmission medium that consumers use to connect to the world and go about their business. It makes even less sense when you realize that voice service, which contains many of the same transmission properties, is treated as a Title II service.
While much of the item is focused on whether broadband has this “capability” or not, whether that capability is “offered” to consumers or not, I believe it is instructive just to bring it up a level and compare the FCC’s historic classification of voice service with broadband service. Again, it makes absolutely no sense that broadband is about to be a Title I service, while voice service is a Title II service. And, as I noted in my dissent to the NPRM, there is not a single modern service that the majority would characterize as a telecommunications service, effectively reading that definition out of the statute. Hundreds of computer scientists who filed in the record agree that this reclassification is nonsensical and does not match up with the underlying internet technology. This can easily be lost in the regulatory- gobbledygook that I will let the lawyers deal with, but I think it is illuminating to make a few points about this.
From a consumer perspective, both voice and broadband serve to connect people and information. For a voice service, you type in the person’s name on your smartphone, hit the dial button, and in a matter of milliseconds, the phone network does a series of database dips and passing of signaling information to figure out the best network routing for your phone call. The network connects the two phones, and now you can speak back and forth. Now, let’s compare what happens in the broadband context. To visit a website, you type in the name of the website on your smartphone, hit the enter key, and in a matter of milliseconds, the broadband network does a series of database dips and passing of signaling information to figure out what is the best network routing for your web session. The network connects your computer with the server, and now you can send data back and forth.
Consumers use both of these services to connect to people and information. It is akin to counting angels dancing on a head of a pin to single out a database that transforms identifiers into addresses (DNS or Domain Name System) and an efficient routing mechanism (caching) in the broadband context to say that this somehow transforms the transmission of information into something else. Why not single out the Local Exchange Routing Guide, a database for voice service that transforms identifiers into addresses, as a reason to reclassify voice as an information service? Or why not use virtual connection caching, a mechanism for more efficient routing on Time Division-Multiplexing (TDM) networks, as a reason to reclassify voice as an information service? On the consumer side, does a call to a voice-menu that allows you to pay your credit-card bill somehow turn your telephone service into an information service? Does a call to dial-a-forecast number? No. I believe this exposes this as an outcome-oriented decision, devoid of any reasonable mooring in technology or consumer expectations.
And this becomes even more clear as the FCC majority clears the decks of all the authority it could use to address these problems. It neuters section 706 of the Act, a provision which the D.C. Circuit has said can reasonably be interpreted as a substantive grant of authority. It refuses to exercise ancillary authority, or the Commission’s Title III authority. All of this has far-reaching consequences for the future of the internet, and particularly for mobile broadband.
Since the prior Administration’s first open internet proceeding in 2010, I have called upon my colleagues to protect consumers’ access to mobile broadband services with the same rules that we imposed on fixed broadband services. A substantial percentage of consumers, especially those in vulnerable communities, rely solely on mobile services for their communications needs and the lack of competition in the commercial mobile wireless industry too often leaves them vulnerable.
Seven years later, those circumstances have not changed even though every year, the percentage of mobile only households increases. In 2010, it was 30%; at the end of 2016 it was 50.5%.3 According to the Pew Research Center, the share of Americans that own smartphones is now 77%, up from just 35% in the first survey of smartphone ownership conducted in 2011.4 And the commercial wireless market has become even more consolidated, leaving consumers with fewer competitive options than they had in 2010. The U.S. Department of Justice, or DOJ, uses the well-known Herfindahl-Hirschman index (HHI) to measure market concentration, and classifies markets with an HHI of less than 1500 as unconcentrated and markets with an HHI of over 2500 as highly concentrated. In 2010, the HHI index for the commercial wireless market was 2868.5 Now it is over 3100.6 Since the percentage of consumers who rely solely on mobile for their communications needs is increasing every year, and the commercial wireless industry is becoming increasingly consolidated, the need to protect mobile broadband consumers is even greater now than it was in 2010. Health Resources and Services Administration (HRSA), Rural Health Information Hub, Health Care Workforce Distribution and Shortage Issues in Rural America, https://www.ruralhealthinfo.org (last visited Dec. 15, 2016).
The majority’s decision to now reclassify mobile broadband is based upon a misguided analysis of the law and the relevant record evidence. Congress did not lock in the meaning of the phrase “public switched network,” as referring to the public switched telephone network more than 22 years ago. If it had, it would not have included the words immediately following that phrase “as such terms are defined by regulation by the Commission.” That language is an express delegation of authority from Congress to the Commission and it allows the agency to adopt a different definition for the public switched network when the facts warrant such a change. In 2015, the Commission determined that mobile broadband is interconnected to the “public switched network” because, through the use of VoIP, messaging, and similar applications, it effectively gives subscribers the capability to communicate with all North
American Numbering Plan (NANP) endpoints as well as with all users of the Internet.”7 The D.C. Circuit upheld this determination as reasonable and went on to explain that the record had additional evidence of applications “that would allow a mobile broadband (or other computer) user to employ a service enabling her to receive telephone calls to her IP address.”8 The majority’s order does not point to any changed circumstance that could reasonably refute the FCC’s decision that mobile broadband is interconnected to the public switched network or the D.C. Circuit’s rationale for upholding the Open Internet Order on this issue. The majority simply refuses to address them.9 The majority’s finding that mobile broadband service does not interconnect with the public switched telephone network also ignores record evidence to the contrary. A number of engineers and other parties filed comments explaining why the PSTN and IP networks should not be viewed as two completely separate networks.10 In fact, the Electronic Frontier Foundation (EFF) explained that technical developments, such as the E.164 Uniform Resource Identified and the 5G Evolved Packet Core enable mobile broadband services to directly connect with the PSTN.11 Although the majority discusses this EFF filing, 12 it refuses to acknowledge this evidence means mobile broadband internet access services “provide interconnection to the public switched network using the NANP” and that invalidates its determination that mobile broadband does not interconnect with the PSTN.
The majority also errs by expressly deciding not to exercise its Title III authority. Although the majority concedes that the Commission has authority to impose open internet conduct rules on mobile broadband service licensees, it declines to do so because of its view that this would lead to imposing regulatory burdens on mobile licensees that are not placed on fixed broadband services. I do not see how the majority can properly reach that conclusion until it has reviewed the more than 47,000 complaints that the National Hispanic Media Coalition’s (NHMC) FOIA request revealed. This is another reason why the Commission should have delayed its vote on this item. Before expressly declining to exert Title III authority, the Commission should have reviewed those complaints to determine if commercial wireless licensees are blocking, throttling or engaging in other unreasonable conduct regarding mobile broadband services.
A Destructive Future
And when the current rules are laid to waste, we may be left with no one to protect consumers. This Order loudly crows about handing over authority of broadband to the FTC, an agency with no technical expertise in telecommunications and one that may not have authority over broadband providers in the first instance. But don’t just take my word for it: even one of the FTC’s own Commissioners has articulated these very concerns.
On the latter point we are still playing a waiting game, which is why I asked my colleagues to delay the vote until we knew for sure whether the FTC could even exercise its limited role in the net neutrality space. Unfortunately, my request was denied, and we have plowed ahead with a wildly unpopular decision that will ensure that regulatory authority is entrusted to an agency that is unable to enact the strong prophylactic protections that are necessary to protect consumers and competition in an online world.
Even if the court were to come back and say that the FTC actually has authority to address the non-common carrier activities of these providers, the FTC could still be vulnerable. Courts may deny the FTC’s efforts to impose antitrust remedies on broadband providers because the industry is ostensibly regulated by the FCC. Indeed, Verizon v. Trinko contains language that suggests that where there is an ostensible remedy for harm under the Communications Act, the courts will not go out of their way to find an antitrust violation. So, the very fact that the FCC disclaims authority might also undermine the FTC’s authority as well.
And if the FTC were to apply its substantive authority, the result may not that friendly to consumers or competition. Recall that the FTC must act after harm has already occurred, and must do so through litigation. This means no clear rules of the road for broadband, and that a startup or sole proprietor will likely be long gone before its complaint is adjudicated. This also means that most consumer harms are unlikely to reach the attention of the FTC, since their standard is that consumer injury must be “substantial” in order to state a claim under the FTC Act.
In short, we are trading in clear protections for uncertain ones, rock-solid legal authority for a shaky one, and robust enforcement authority for a weaker one. And I will note that some of the people who have criticized the FCC’s authority in this context have also criticized the FTC for their “overreach.” My fear is that this is yet another ploy to roll out the red carpet for broadband providers, while putting consumers in the long queue for the side door. Welcome to a regulatory-free zone.