FCC's Pai Blasts Wheeler Claims Of ‘Light Touch' Net Neutrality Rules

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By Lydia Beyoud

Feb. 10 — Republican FCC Commissioner Ajit Pai raised a host of concerns Feb. 10 in opposition to the draft Open Internet order being circulated among the agency's commissioners ahead of a Feb. 26 vote.

Pai told reporters Federal Communications Commission Chairman Tom Wheeler's proposal would go far beyond what agency officials said Feb. 4 when they announced the broad strokes of what they called the strictest set of net neutrality regulations ever proposed by the commission.

Pai has opposed reclassification of broadband Internet services under Title II of the Communications Act of 1934, as well as the extension of those rules to mobile broadband providers, both of which things Wheeler's proposal would do. Though the rules are meant to strongly safeguard consumers and edge providers, officials said, they are structured in a “light touch” manner that shouldn't give broadband providers disincentives to invest in their networks and services, officials said.

Despite FCC officials' claims to the contrary, the draft order would subject Internet service providers—and ultimately consumers—to additional taxes and fees, raise the prospect of rate regulations of Internet services, and possibly prohibit “zero rating” plans that allow consumers to stream certain types of mobile data for free, Pai said.

“It is clear in this document that the FCC is going to subject both broadband Internet access services provided to end users and broadband subscriber access services provided to edge providers to Sections 201, 202 and 208,” said Pai, referring to sections of the Communications Act.

FCC officials said their plan would forbear, or exempt, ISPs from most parts of Title II except for certain sections, including those three. The core of Sections 201 and 202 is “just and reasonable” charges, said Pai. Paired with Section 208's promise of enforcement remedies, “it's unmistakable that the FCC, based essentially on its own ad hoc determination of what is just and reasonable, is going to be deciding ex post what reasonable rates are,” he said. “It's an inescapable conclusion.”

Pai also voiced concern over what he said was an effort to extend the FCC's jurisdiction into managing the structure of Internet networks at interconnection points and adjudicating disagreements between edge providers and broadband providers.

The rules would allow “anyone online” to file a complaint with the commission or in federal court against an ISP, “bringing the FCC into the business of managing that relationship,” Pai said. “I think that's something that ultimately is going to mire us in the muck of litigation for years.”

Fellow Republican Commissioner Michael O'Rielly voiced similar concerns in a statement issued Feb. 10. “The promised forbearance amounts to fauxbearance,” he said, adding that the draft order “leaves in place more than a dozen provisions that are central to common carrier regulation.”

O'Rielly also expressed concern over what he said are the implications of Section 201(a) to require broadband providers to provide service through interconnection. “Nowhere in the fact sheet does the FCC disavow its intent to do so, so I must consider that it is a real possibility,” he said.

Presidential Influence

Pai and O'Rielly have called for the FCC to publicly release the rules in recent weeks, a view echoed by Republican lawmakers who say they're concerned Wheeler's decision was unduly influenced by President Barack Obama, who publicly called for strict Title II rules in November.

Wheeler has declined to do so, and such a move would break with agency administrative policy, FCC officials have said.

Investigations are under way in both the House and Senate on the role the White House may have played in the independent agency's net neutrality proceeding.

Speaking to reporters after Pai's remarks, Public Knowledge Senior Vice President Harold Feld said each of the past four presidents have weighed in on a number of major issues before the FCC.

“It is extraordinarily disingenuous for Pai and others” to ask FCC to violate standard procedure by publishing the draft order before a vote, Feld said. “There are a lot of reasons why this has been debated in the past, and the general consensus is it’s a bad idea to pre-publish these things,” he said.

Feld called into question Pai's statement that the Open Internet order would apply rate regulation to broadband services, stating that Sections 203 and 205—both of which are forborne from in the order, according to officials—are what the FCC typically uses to enact explicit rate regulations.

“When it forbears from them, then the FCC is no longer capable of doing rate regulation in the way that Pai and others have suggested is possible to do,” said Feld.

Sections 201 and 202 wouldn't permit the FCC to enact price regulation in the form the rules' detractors imply, but would allow the commission to determine that certain practices or rates, such as doubling prices or charging $200 early termination fees for wireless service, wouldn't pass “the laugh test” of just and reasonable practices, Feld said.

FCC Process Reform Reintroduction

Though lawmakers can't compel Wheeler to publicly issue his draft net neutrality order before a vote, legislation reintroduced Feb. 10 by Sen. Dean Heller (R-Nev.) reintroduced Feb. 10 to reform how the FCC conducts its operations could require it for future orders.

The FCC Process Reform Act of 2015 adds to Republican lawmakers' calls for the agency to release the draft of its Open Internet order to the public ahead of the scheduled Feb. 26 vote.

As the commission “continues to work on complex policies affecting our entire nation, I believe consumers deserve more transparency in the FCC rulemaking process,” said Heller, a member of the Senate Commerce, Science and Transportation Committee, in a Feb. 10 statement.

The bill would also require the FCC to put in place procedures for minimum public review periods for statistical reports and ex parte communications, and would require any order, decision, report or action to be published within 30 days of adoption by the commission.

Heller's legislation would also address what Pai called “a solution in search of a problem” by requiring the FCC to first identify a market failure, consumer harm or regulatory barrier to investment before adopting what Heller called “economically significant rules.”

The commission would then be required to “demonstrate that the benefits of regulation outweigh the costs while taking into account the need for regulation to impose the least burden on society.”

Bicameral Effort

Rep. Greg Walden (R-Ore.), chairman of the House Energy and Commerce Communications and Technology Subcommittee said the legislation would bring “much-needed transparency, accountability, and predictability to the FCC,” according to an e-mailed statement.

Heller introduced similar legislation in February 2014, and the House Energy and Commerce Committee approved similar bipartisan legislation in March 2014. The Senate bill never proceeded out of committee, however.

The issues that triggered the House committee's own review into FCC process reform “have become more apparent in recent months,” Walden said, adding that he hoped the bill would be enacted now that Republicans control both chambers.

A number of telecommunications groups welcomed the bill's reintroduction, with USTelecom stating “the legislation introduced today will enhance transparency, increase regulatory certainty, and streamline rulemakings and other commission proceedings.”

The National Association of Broadcasters said the bill would help ensure FCC procedures don't impede broadcasters' ability to serve the public interest. “The agency has a critically important mission, and it is imperative that it execute that mission expeditiously, fairly and in a data-driven manner,” NAB spokesman Dennis Wharton said.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

Text of Pai's statement and fact sheet are at http://www.fcc.gov/events/press-conference-fcc-commissioner-ajit-pai.

Text of O'Rielly's statement is at http://op.bna.com/der.nsf/r?Open=tbay-9tltuf.

Text of Heller's bill is at http://op.bna.com/der.nsf/r?Open=tbay-9tlnzd.

Text of Heller's statement is at http://www.heller.senate.gov/public/index.cfm/pressreleases?ID=6024e394-77ce-4cd8-9430-60110e651cda.