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By Fred Campbell
The U.S. Court of Appeals for the District of Columbia Circuit's decision striking down the Federal Communication Commission's net neutrality rules is an invitation to regulatory mischief.
Although the court ruled against the FCC in the case, it invited the FCC and state regulatory agencies to exercise expansive authority over all Internet companies--an invitation that FCC Chairman Tom Wheeler says he is “going to accept.”
The FCC should decline the invitation.
This was the second time in four years that the FCC's efforts to regulate the Internet have been overturned. The public would be better served if the FCC deferred to Congress before attempting to write its own Internet rules for a third time.
The Communications Act was last updated when the Internet relied on the plain old telephone network and dial-up modems. In that dial-up era, different networks provided different services. Cable networks couldn't provide telephone or Internet services, telephone networks couldn't provide television services, and mobile wireless networks could only support phone calls. As a result, the Act has different rules for “common carrier” or “telecommunications” service (plain old telephone and telegraph) in Title II, “radio” (wireless and broadcast television) in Title III, and “cable” service (video, including satellite TV) in Title VI.
Internet convergence has blurred these distinctions. The broadband networks operated by today's “telephone,” “cable” and “wireless” companies can deliver telephone, television and broadband data services over the same connection. From the consumer's perspective, Verizon Communications Inc.'s “telephone” network and Comcast Corp.'s “cable” network offer comparable services. But not according to the law.
The Communications Act unreasonably discriminates among similar networks and services based on outdated categories. The FCC has found that imposing different regulatory obligations on similar service--which is what the law currently requires--is “a deterrent to deployment of all IP networks” and “unfair for consumers.” In short, the Act desperately needs an update for the Internet era.
Congress has recognized this need and initiated a process to update the Communications Act. This legislative process is the appropriate forum to determine whether and how the Internet should be regulated.
The FCC should reject calls by net neutrality advocates who want the agency to regulate the Internet in the same way as plain old telephone service under Title II. This approach assumes that the issues presented by the Internet are no different than those Congress addressed in the 1930s when it decided to regulate the monopoly telephone network.
That assumption misses important distinctions between the Internet and the historical telephone network--the most important being the availability of video services. There were no video service providers on the telephone network, which was designed for one-to-one consumer communications. In contrast, the Internet is a mass-media communications platform, capable of providing the same video content that was traditionally delivered by television stations and cable operators. This means that the First Amendment and video programming issues addressed in Titles III (television broadcasting) and VI (cable) of the Communications Act are also applicable to the Internet.
So why aren't net neutrality advocates calling for the application of Titles III and VI to the Internet along with Title II? The answer is that these portions of the Act are inconsistent with the telephone regulations in Title II. Title III prohibits the FCC from treating television stations as “common carriers” based on First Amendment concerns, and Title VI allows cable operators to charge content providers for carriage on cable networks.
Congress permits payments between cable and television stations on one side and content providers on the other because two-sided market deals can be beneficial to consumers. For example, broadcast television relies on the sale of advertising to finance the distribution of TV shows to consumers for free over the air; that is, advertising revenues subsidize infrastructure costs, relieving consumers of that burden. On the Internet, however, only “edge” content providers (e.g., Google Inc.) rely on advertising revenue to provide free services to consumers; consumers themselves have to pay for the maintenance and expansion of the ISP's broadband network. The Internet developed this way, in part, because in its dial-up infancy it used telephone lines already paid for by telephone customers at rates controlled by Title II common carrier regulations. In the broadband era, all this has changed, to the detriment of the customer.
Most recognize that, if ISPs were allowed to negotiate with content providers, consumers might pay less for better Internet access service. But net neutrality advocates are more concerned about protecting Internet content businesses than consumers. The purpose of net neutrality is to “set a norm of zero prices” for the use of ISPs' networks by content companies, which means that consumers are solely responsible for paying the costs of network upgrades through their Internet service bills.
Congress might decide that the Internet should be regulated under Title II only and abandon Titles III and VI -- or it might not -- but it is Congress's decision to make. The FCC should not try to reconcile the different priorities in Titles II, III, and VI of the Communications Act on its own. It should look to Congress for updated authority.
Fred Campbell is executive director of the Center for Boundless Innovation in Technology and former chief of the FCC's Wireless Bureau.
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