TRANSLATION? Net neutrality is dead…
The Federal Communications Commission’s plan to gut net neutrality rules and deregulate the Internet service market may hinge on the definition of the word “broadband.”
In February 2015, the FCC’s then-Democratic leadership led by Chairman Tom Wheeler classified broadband as “telecommunications,” superseding the previous treatment of broadband as a less heavily regulated “information service.” This was crucial in the rulemaking process because telecommunications providers are regulated as common carriers under Title II of the Communications Act, the authority used by the FCC to impose bans on blocking, throttling, and paid prioritization.
Thus, when the FCC’s new Republican majority voted on May 18 to start the process of eliminating the current net neutrality rules, the commission’s Notice of Proposed Rulemaking (NPRM) also proposed redefining broadband as an information service once again.
To make sure the net neutrality rollback survives court challenges, newly appointed FCC Chairman Ajit Pai must justify his decision to redefine broadband less than three years after the previous change. He argues that broadband isn’t telecommunications because it isn’t just a simple pipe to the Internet. Broadband is an information service because ISPs give customers the ability to visit social media websites, post blogs, read newspaper websites, and use search engines to find information, the FCC’s new proposal states. Even if the ISPs don’t host any of those websites themselves, broadband is still an information service under Pai’s definition because Internet access allows consumers to reach those websites.
FCC gets benefit of the doubt
Telecommunications, as defined by Congress in the Communications Act, transmits information of the user’s choosing to and from endpoints specified by the user without making any changes to the user’s information.
Pai’s claim that broadband isn’t telecommunications might not make sense to consumers, who generally use their Internet connections to access websites and online services offered by companies other than their ISPs, as a TechCrunch article recently argued. But courts have granted the FCC wide latitude on how it defines broadband over the years, essentially ruling that the FCC can classify Internet service however it wants.
Yes, there are plenty of instances in which courts have overturned FCC decisions, including a 2014 case that vacated an earlier attempt to impose neutrality rules. But when it comes to defining broadband as either an information service or telecommunications, judges have allowed FCC decisions to stand as long as the commission does a reasonably good job of justifying itself. That 2014 decision didn’t dispute the FCC’s authority to impose net neutrality rules or reclassify ISPs—rather, judges said the FCC could impose strict versions of net neutrality rules as long as it changed its classification of broadband.
Wheeler relied on the court system’s deference to FCC decisions on this matter when he successfully fought off a lawsuit filed by ISPs, and Pai is hoping that judges will grant the same courtesy after the FCC changes its mind.
Why Pai says broadband isn’t telecommunications
“The Communications Act specifically defines telecommunications as “the transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sent and received.” A telecommunications service is “the offering of telecommunications for a fee directly to the public.”
The 2015 FCC order that turned ISPs into common carriers and imposed net neutrality rules said that the statutory definition of telecommunications applies to broadband, as evidenced by how ISPs market their services to consumers, consumers’ expectations from broadband providers, and the way the networks operate.
SPs might also offer information services such as e-mail and online storage, just like any other company that offers services over the Internet. But the FCC in 2015 said that ISPs’ information services are separate offerings from broadband. As a result, the Internet plan you buy from an ISP is a regulated common carrier service even though those same providers offer some services that aren’t strictly telecommunications.
Pai’s argument that broadband isn’t telecommunications doesn’t hinge on ISPs offering their own e-mail and online storage services. Instead, he says the core broadband offering itself isn’t telecommunications.
Landline and mobile voice service are both considered telecommunications by the FCC. But broadband isn’t telecommunications because “broadband Internet users do not typically specify the ‘points’ between and among which information is sent online,” Pai’s NPRM argues. It continues:
Instead, routing decisions are based on the architecture of the network, not on consumers’ instructions, and consumers are often unaware of where online content is stored. Domain names must be translated into IP addresses (and there is no one-to-one correspondence between the two). Even IP addresses may not specify where information is transmitted to or from because caching servers store and serve popular information to reduce network loads. In short, broadband Internet users are paying for the access to information “with no knowledge of the physical location of the server where that information resides.” We believe that consumers want and pay for these functionalities that go beyond mere transmission—and that they have come to expect them as part and parcel of broadband Internet access service.
Under this interpretation, the fact that consumers specify which websites they want to visit isn’t the same thing as specifying the “points” they want to reach. Broadband users would have to specify the IP addresses and caching servers they want to connect to in order for broadband providers to become the dumb pipe described in the definition of telecommunications.
Using search engines makes broadband an “information service”
“An information service, by contrast, is defined in the Communications Act as “the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications.” The information service definition “includes electronic publishing, but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service.”
The “capability” part of the definition is key, according to the FCC’s new argument, because broadband offers the capability to provide the functions described in the definition of information service. Pai’s NPRM thus argues that today’s broadband services meet the statute’s definition of an information service:
We believe that Internet service providers offer the “capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications.” Whether posting on social media or drafting a blog, a broadband Internet user is able to generate and make available information online. Whether reading a newspaper’s website or browsing the results from a search engine, a broadband Internet user is able to acquire and retrieve information online. Whether it’s an address book or a grocery list, a broadband Internet user is able to store and utilize information online. Whether uploading filtered photographs or translating text into a foreign language, a broadband Internet user is able to transform and process information online. In short, broadband Internet access service appears to offer its users the “capability” to perform each and every one of the functions listed in the definition—and accordingly appears to be an information service by definition.
Wheeler’s FCC came to markedly different conclusions.
“[A]s a practical matter, broadband Internet access service is useful to consumers today primarily as a conduit for reaching modular content, applications, and services that are provided by unaffiliated third parties,” the FCC said in its 2015 net neutrality order. “As the Center for Democracy & Technology puts it, ‘the service that broadband providers offer to the public is widely understood today, by both the providers and their customers, as the ability to connect to anywhere on the Internet—to any of the millions of Internet endpoints—for whatever purposes the user may choose.’ Indeed, the ability to transmit data to and from Internet endpoints has become the ‘one indispensable function’ that broadband Internet access service uniquely provides.”
The fact that consumers don’t generally specify IP addresses is irrelevant because they choose which websites they want to visit, this argument says. Broadband providers themselves implicitly recognize their status as a neutral conduit in how they market their services, differentiating themselves based on the speed of accessing third-party services, Wheeler’s FCC said:
“That broadband Internet access services today are primarily offerings of Internet connectivity and transmission capability is further evident by how these services are marketed and priced. [People who submitted comments to the FCC] cite numerous examples of advertisements that emphasize transmission speed as the predominant feature that characterizes broadband Internet access service offerings. For example, Comcast advertises that its Xfinity Internet service offers “the consistently fast speeds you need, even during peak hours,” and RCN markets its high-speed Internet service as providing the ability “to upload and download in a flash.” Verizon claims that “whatever your life demands, there’s a Verizon FiOS plan with the perfect upload/download speed for you.”
Freedom of interpretation
From a legal perspective, the most important argument Wheeler’s FCC made may have been that the FCC can interpret the statute however it chooses. The commission pointed to a 2005 Supreme Court ruling in the Brand X case that upheld the FCC’s earlier declaration that cable Internet is an information service.
“The Court held that the word ‘offering’ in the Communications Act’s definitions of ‘telecommunications service’ and ‘information service’ is ambiguous, and that the Commission’s finding that cable modem service is a functionally integrated information service was a permissible, though perhaps not the best, interpretation of the Act,” Wheeler’s FCC said.
The Chevron Supreme Court precedent gives federal agencies leeway in interpreting ambiguous instructions from Congress.
“If a statute is ambiguous, and the implementing agency’s construction is reasonable, Chevron requires a federal court to accept the agency’s construction of the statute, even if the agency’s reading differs from what the court believes is the best statutory interpretation,” the Supreme Court said in its Brand X decision.
Broadband industry trade groups and ISPs sued Wheeler’s FCC in 2015, claiming that the commission did not adequately justify its reclassification of broadband. But the US Court of Appeals for the District of Columbia Circuit sided with Wheeler in its June 2016 ruling. Judges noted that the FCC has defined different broadband services both as telecommunications and information services at different times. In 1998, the FCC classified the transmission component of DSL as a telecommunications service, only to reverse itself several years later. Pai glossed over the late-’90s treatment of DSL and temporary imposition of strict utility rules in his pronouncement that the FCC should return to Clinton-era “light-touch” regulatory policy.
Classifying a service as one thing and then reclassifying it later on is allowable as long as the agency “show[s] that there are good reasons for the new policy… it need not demonstrate to a court’s satisfaction that the reasons for the new policy are better than the reasons for the old one,” according to a precedent cited in last year’s court decision.
The 2015 definition of broadband as telecommunications met this low bar, judges ruled. “In the Order, the Commission concluded that consumers perceive broadband service both as a standalone offering and as providing telecommunications,” the judges wrote. “These conclusions about consumer perception find extensive support in the record and together justify the Commission’s decision to reclassify broadband as a telecommunications service.”
Pai seeks judicial deference
The FCC’s 2015 classification of broadband as telecommunications was upheld by appeals court judges again last month, although it hasn’t been tested in front of the Supreme Court. If today’s FCC follows through on its plan to make broadband an information service once again, net neutrality supporters will almost certainly sue and may argue that Pai didn’t do a good enough job in justifying the change.
But the FCC’s authority to classify broadband however it wishes, within reason, hasn’t changed. Pai is counting on it, and his proposal favorably cites the same court ruling that upheld Wheeler’s decision.
Pai argues that the FCC’s 2015 decision has harmed investment in broadband and that this change justifies a return to the pre-Wheeler approach. This argument is disputed, with each side presenting different numbers.
But the court decision upholding Wheeler’s broadband classification deferred to the commission’s evaluation of complex market conditions, Pai’s proposal notes. The order upholding Wheeler’s broadband classification “applied a ‘highly deferential standard’ to the agency’s predictive judgments regarding the investment effects of reclassification.” Presumably, the court would apply the same deferential standard to an FCC conclusion in 2017 that the 2015 order was a mistake that harmed investment.
The FCC, Pai’s proposal says, “is free to change its approach to interpreting and implementing a statute so long as it acknowledges that it is doing so and justifies the new approach.”