‘Hybrid' Regulations for Open Internet Gaining Traction

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By Lydia Beyoud

Oct. 7 — Talk of hybrid regulatory regimes and the likelihood of litigation for the Federal Communications Commission's Open Internet proceeding held sway at an Oct. 7 FCC roundtable discussion at the agency.

The FCC concluded a series of public panels on the Open Internet notice of proposed rulemaking (NPRM) (GN Docket No. 14-28) with a focus on the FCC's legal authority and possible scope of the regulations.

At the heart of the issue is whether to reclassify broadband Internet services under Title II of the Communications Act, to regulate under Section 706 of the Telecommunications Act of 1996, or construct some combination of both.

This last approach, in various permutations, has increasingly been put forward as a possible compromise between public policy groups, Internet service providers like AT&T Inc. and Comcast Corp., and edge providers such as Netflix, Inc.

Classification of broadband services as Title II telecommunications services would give the FCC the express and expansive authority to regulate so-called common carrier services—something that is roundly opposed by broadband providers because such a decision would impose a strict regulatory regime.

“Both of the possible bases for the Commission's jurisdiction here each have their own weaknesses,” said Pantelis Michalopoulos, a partner in Steptoe & Johnson LLP's Washington office and head of its Telecom, Internet & Media Group.

Michalopoulos represented the Open Internet Coalition as intervenors in the law suit filed by Verizon Communications Inc. against the FCC over its 2010 Open Internet rules (Verizon Commc'ns Inc. v. FCC, 2014 BL 9154, 740 F.3d 623 (D.C. Cir. 2014). The U.S. Court of Appeals for the District of Columbia Circuit ruled Jan. 14 that the FCC's no-blocking and non-discrimination rules too closely resembled Title II common carrier regulations.

By combining facets of both the Section 706 and Title II regimes, the FCC could construct bright line rules under the broadband provision that would prohibit pay-to-play on the part of ISPs, said Michalopoulos.

Forbearance Authority

“At the same time, the FCC should conclude that the transport component of Internet access service can be separated from the information service and therefore is a telecommunications service,” he said. The FCC could choose to forbear from common carrier Title II regulation of such service, “so long as it is not necessary,” said Michalopoulos.

“We believe, that instead of being mutually exclusive, the choices are complementary and mutually reinforcing,” he said.

Nuala O'Connor, president for the Center for Democracy and Technology, said the FCC could choose to classify business-to-business broadband Internet service, such as between ISPs and edge providers, as a Title II service, while retaining rules under Section 706 for ISP-to-consumer transactions.

People think of the Internet “as an essential service, as a utility.”

Tim Wu, Columbia Law School

Columbia Law School professor Tim Wu said the FCC would be in “a tough spot” in relying solely on Section 706. People think of the Internet “as an essential service, as a utility,” said Wu, who coined the term “net neutrality.”

The FCC would be best served to reclassify broadband under Title II and then to forbear from the majority of its sections, though retaining Sections 201, 202, 208, and 222 “at a minimum,” Wu said. He added that forbearance and light touch Title II regulations have been very successful in regulating mobile technology, “and if it works for mobile, it ought to work for broadband.”

Likely Litigation

Several panelists commented on the likelihood of the FCC's open Internet rules facing litigation, no matter which direction the agency takes.

Thomas J. Navin, a partner at Wiley Rein LLP and former chief of the FCC's Wireline Competition Bureau, said he disagreed with the principle that the FCC could “simply reclassify broadband Internet access platforms as telecommunications services.”

“I think that would face an extraordinarily high hurdle to get over not only the legal obstacles but the economic obstacles,” Navin said.

Implementing Title II regulation “would be a bonanza for attorneys, but not necessarily good for Internet innovators or Internet investment,” he said.

“If the Commission defines bright line rules, we're going to end up in litigation and these rules are going to be litigated for another three to five years at least,” said Gus Hurwitz, assistant professor at Nebraska College of Law. Hurwitz said Section 706 authority was sufficient for the FCC to provide consumer protections.

“Nobody should make a decision based on whether or not there will be litigation,” Mark Cooper of the Consumer Federation of America said. “In America, the prime directive is: thou shalt litigate,” Cooper said. The FCC instead should consider what its policies should be and construct a legal framework around that, he 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