The Truth Behind the Doublespeak on Internet Rate Regulation

Keep up with the latest developments and legal issues in the telecommunications and emerging technology sectors, with exclusive access to a comprehensive collection of telecommunications law news,...

By Matt Wood

This may shock some of you, especially during an election season. But sometimes when people in Washington say one thing, they actually mean another.

Case in point: Republicans on the House Subcommittee on Communications and Technology are marking up a handful of bills this morning. One of these bills, led by Rep. Adam Kinzinger, says little more than this: The Federal Communications Commission may not regulate the rates companies like Comcast charge for broadband Internet access.

FCC Chairman Tom Wheeler has testified before that same subcommittee that he doesn’t plan to regulate broadband rates. A few Democrats in Congress have echoed that statement.

So what gives with the Kinzinger bill? Why is there any need for further action?

The difference is not in what elected officials and agency heads say in hearing testimony, or in what they convey in off-the-cuff remarks. There’s practically no difference in the top-level talking points that both sides use when it comes to letting market forces determine the rates most Internet users pay for access.

But there are meaningful differences between the rate-setting power Congress granted the FCC in the laws on the books today—which are the same ones that Chairman Wheeler and the FCC have already chosen not to use—and the consumer-protection authority the newly proposed bill endangers.

The FCC’s 2015 Open Internet Order treats broadband like a communications service as Congress always intended—instead of treating it like a website for regulatory purposes. Contrary to the fibs and fabrications some lobbyists and lawmakers favor, this is exactly the right dividing line. The FCC has no business (and no authority for) regulating Internet content, but it does have a congressional mandate to ensure we have world-class broadband communications networks.

In its open Internet ruling, the FCC rightly returned to the strong legal foundation of the communications laws and said that broadband networks are common carriers under Title II of the Communications Act. Yet it didn’t adopt what broadband providers often try to denigrate as “utility-style” rules for Internet access networks.

The FCC used its congressionally granted discretion to “forbear” from large swaths of that statute, including what are labeled Sections 203 and 205. Those are the provisions that otherwise give the FCC power to demand prior notification of broadband providers’ prices and practices in tariffs, along with the power to dictate and determine the prices broadband providers charge.

This approach fits perfectly with the FCC’s longstanding reliance on Title II in other competitive (or semi-competitive) markets like wireless voice or business-grade broadband.

Title II provides a deregulatory, flexible and technology-neutral framework for such markets. However, it preserves absolutely essential principles, like the guarantees of universal, affordable, reasonable and nondiscriminatory telecommunications services. Those principles are just as important today as ever, even as the FCC leaves behind the difficult business of trying to set the right price for retail telecom offerings.

The Kinzinger bill endangers those very same principles. It doesn’t just take rate setting off the table, or cement in a new statute what the FCC has already decided to do by forbearing from Sections 203 and 205.

It would prevent the FCC from assessing entire categories of unfair broadband-provider practices. We can argue about whether data caps, overage penalties, interconnection fees and sponsored-data charges are reasonable, or whether they’re instead monopoly abuses, double-charging schemes or threats to Net Neutrality. But Congress shouldn’t take the FCC out of that vital conversation.

Under the Kinzinger bill, broadband providers could try to characterize any and every determination the FCC makes as a rate regulation. If the FCC decides that ISPs blocking lawful websites always harms Internet users, the cable and phone companies could argue that this effectively sets at zero the toll they can extract from those websites. (This isn’t hypothetical. That argument did in fact rear its head in the last Net Neutrality court case, decided in 2014.)

Finding such a harmful practice to be unreasonable, and banning it straight out, is a very different proposition from the FCC attempting to determine and set the prices that broadband providers’ retail customers pay for service every month.

Lots of agencies and laws protect consumers against unreasonable business practices. Refusing to permit the sale of an unsafe good or service isn’t rate regulation. It’s just an agency doing its job to protect consumers and promote competition. This is the job that millions of Internet users demand of the FCC. Congress needs to get out of the way.

Matt Wood is the policy director for the Free Press Action Fund.

Request Tech & Telecom on Bloomberg Law