FCC's Wheeler lays out net neutrality plans while AT&T, Verizon reportedly prep lawsuits

FCC Chairman Tom Wheeler made official what he has been hinting at for around a month: He will introduce a proposal to reclassify broadband as a telecommunications service under Title II of the Telecommunications Act as part of an effort to craft net neutrality rules. Wheeler also clearly stated that the rules will apply to wireless networks.

Wheeler made the statement in an op-ed article in Wired. In the op-ed, he discusses in more detail what he said during the Consumer Electronics Show in January. He noted that he originally believed the FCC could codify net neutrality regulations using a standard of "commercial reasonableness" under Section 706 of the Telecommunications Act. Wheeler wrote that while a federal appeals court decision in January 2014 seemed to point the FCC toward that approach, he "became concerned that this relatively new concept might, down the road, be interpreted to mean what is reasonable for commercial interests, not consumers."

"That is why I am proposing that the FCC use its Title II authority to implement and enforce open internet protections," Wheeler wrote. Earlier this year, President Obama urged the FCC to use Title II to implement net neutrality. 

CTIA, wireless carriers and ISPs have vowed to fight such an approach, saying it will harm investment.

Wheeler said he will submit to his colleagues "the strongest open Internet protections ever proposed by the FCC. These enforceable, bright-line rules will ban paid prioritization, and the blocking and throttling of lawful content and services. I propose to fully apply--for the first time ever--those bright-line rules to mobile broadband. My proposal assures the rights of internet users to go where they want, when they want, and the rights of innovators to introduce new products without asking anyone's permission."

Wheeler wrote that the FCC can use Title II to create net neutrality rules "while encouraging investment in broadband networks."

"To preserve incentives for broadband operators to invest in their networks, my proposal will modernize Title II, tailoring it for the 21st century, in order to provide returns necessary to construct competitive networks," he wrote. "For example, there will be no rate regulation, no tariffs, no last-mile unbundling. Over the last 21 years, the wireless industry has invested almost $300 billion under similar rules, proving that modernized Title II regulation can encourage investment and competition."

Carriers and ISPs have argued that even if the FCC uses "forbearance" and abstains from many Title II regulations, there will be tremendous uncertainty in the market, which will hamper investment. Until now, broadband has been treated as a lightly-regulated information service. Net neutrality proponents have long argued that the FCC needs to reclassify broadband to put net neutrality rules on firmer legal footing.  

Republican lawmakers have proposed legislation that would enshrine into law many net neutrality rules but that would also stop the FCC from reclassifying broadband as a telecommunications service under Title II. Wheeler seemed to shrug off that approach.

"Congress wisely gave the FCC the power to update its rules to keep pace with innovation. Under that authority my proposal includes a general conduct rule that can be used to stop new and novel threats to the internet," he wrote. "This means the action we take will be strong enough and flexible enough not only to deal with the realities of today, but also to establish ground rules for the as yet unimagined."

"The Internet must be fast, fair and open," Wheeler concluded. 

heeler is expected to circulate the draft order to his fellow FCC commissioners on Thursday, and the agency is expected to vote on the proposal at its Feb. 26 open meeting.

But opponents to the action are already planning their next move. According to a VentureBeat article, which cited an unnamed source, AT&T (NYSE: T) and Verizon Communications (NYSE: VZ) will file lawsuits "almost immediately" after the Title II reclassification becomes official. Verizon led the legal challenge to FCC's 2010 rules and largely won.

A Verizon spokesman did not immediately respond to a request for comment. An AT&T spokesman referred questions about the report to a recent blog post by Hank Hultquist, AT&T's vice president of federal regulatory.

In that post, he wrote that the FCC has long adhered to an interpretation of the law in which information services and telecommunications services are treated as mutually exclusive and cannot be co-mingled. He also argued that the FCC has not taken the proper steps needed to legally reclassify broadband as a common carrier telecommunications service.

"Under longstanding precedent, the FCC must make particularized findings with respect to the offerings of individual carriers in order for it to find that either they are operating as common carriers, or should be required to operate as common carriers," he wrote. "The FCC has not engaged in the kind of detailed analysis that would be needed to assess the offerings of every ISP that would be subject to its rules."

Hultquist  also hinted at coming litigation: "As I said, I have no illusions that any of this will change what happens on February 26th," he wrote. "But when the FCC has to defend reclassification before an appellate court, it will have to grapple with these and other arguments. Those who oppose efforts at compromise because they assume Title II rests on bullet proof legal theories are only deceiving themselves."

For more:
- see this Wired article
- see this VentureBeat article
- see this ArsTechnica article
- see this AT&T blog post

Related Articles:
Reports: FCC to include wireless in push to reclassify broadband under Title II for net neutrality
CTIA's Baker praises Republican net neutrality bills, but AT&T's Stephenson sees lawsuits ahead
Republican lawmakers embrace net neutrality, but would block FCC from using Title II
Sprint splits from industry, is OK with Title II for net neutrality as long as wireless has flexibility
CTIA comes out swinging against Title II net neutrality approach for wireless

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