President Barack Obama called on the FCC to create the "strongest possible" regulations to ensure net neutrality. Importantly, the president said the rules should apply to wireless networks as well as wireline ones, but he acknowledged that wireless networks are different than wired ones.
"The rules also have to reflect the way people use the Internet today, which increasingly means on a mobile device," Obama said in a statement released by the White House. "I believe the FCC should make these rules fully applicable to mobile broadband as well, while recognizing the special challenges that come with managing wireless networks."
The president's statement is likely going to increase the pressure on FCC Chairman Tom Wheeler to push for strong rules. Obama's stance drew immediate opposition from Verizon Communications (NYSE: VZ), AT&T (NYSE: T) and groups allied with them.
The FCC is an independent regulator, so Obama cannot order it to do anything, something the president acknowledged in his statement. However, Obama's stance, which has never been so explicit or detailed, adds an influential voice to the debate.
Most crucially, Obama said that the FCC should classify consumer broadband service under Title II of the Telecommunications Act, as a common carrier service, while at the same time abstaining from imposing rate regulation "and other provisions less relevant to broadband services." Wheeler has said he remains open to classifying broadband that way, but has indicated the FCC is considering a "hybrid" approach that would only reclassify parts of the broadband ecosystem as common carriers.
"This is a basic acknowledgment of the services ISPs provide to American homes and businesses, and the straightforward obligations necessary to ensure the network works for everyone--not just one or two companies," Obama said.
Carriers and ISPs have said that if the FCC classifies broadband as Title II service, investment would shrivel up. Obama noted that Internet investment in wired and wireless networks "has supported jobs and made America the center of a vibrant ecosystem of digital devices, apps, and platforms that fuel growth and expand opportunity."
However, he said "network investment remained strong under the previous net neutrality regime, before it was struck down by the court; in fact, the court agreed that protecting net neutrality helps foster more investment and innovation. If the FCC appropriately forbears from the Title II regulations that are not needed to implement the principles--principles that most ISPs have followed for years--it will help ensure new rules are consistent with incentives for further investment in the infrastructure of the Internet."
Obama is calling for the FCC to enact four rules:
- A "no blocking" rule that says ISPs should not be permitted to block lawful Internet traffic.
- A "no throttling" rule that says ISPs should not be able to intentionally slow down some content or speed up others based on the type of service or an ISP's preferences.
- Increased transparency around how ISPs connect to consumers, and potentially the ability of the FCC "to apply net neutrality rules to points of interconnection between the ISP and the rest of the Internet." That would potentially address interconnection deals like the ones between Netflix (NASDAQ: NFLX) and Verizon, AT&T and Comcast (NASDAQ: CMCSA).
- A "no paid prioritization" rule, which cuts to the heart of what net neutrality advocates have been concerned about. "Simply put: No service should be stuck in a 'slow lane' because it does not pay a fee," Obama said. "That kind of gatekeeping would undermine the level playing field essential to the Internet's growth. So, as I have before, I am asking for an explicit ban on paid prioritization and any other restriction that has a similar effect."
Obama's call for the FCC to use legal authority under Title II is likely the most controversial element of his statement. One option the FCC has been considering is whether to rely on Section 706 of the Telecommunications Act, which gives the FCC authority to encourage broadband deployment by, among other things, removing barriers to infrastructure deployment, encouraging innovation and promoting competition. Net neutrality proponents have argued the FCC should use Title II authority to put new rules of firmer legal footing.
In a statement, Wheeler said the FCC "will incorporate the President's submission into the record of the Open Internet proceeding. We welcome comment on it and how it proposes to use Title II of the Communications Act." Wheeler noted that starting in May the FCC began soliciting comment on how to chart a way forward on net neutrality rules after a federal appeals court in January had struck down much of the previous set of rules. Wheeler confirmed recent reports that FCC's staff has started exploring "hybrid" approaches, which have been proposed by some members of Congress and leading advocates of net neutrality, which would combine the use of both Title II and Section 706.
"The more deeply we examined the issues around the various legal options, the more it has become plain that there is more work to do," Wheeler said. "The reclassification and hybrid approaches before us raise substantive legal questions. We found we would need more time to examine these to ensure that whatever approach is taken, it can withstand any legal challenges it may face. For instance, whether in the context of a hybrid or reclassification approach, Title II brings with it policy issues that run the gamut from privacy to universal service to the ability of federal agencies to protect consumers, as well as legal issues ranging from the ability of Title II to cover mobile services to the concept of applying forbearance on services under Title II."
Wheeler said he welcomed continued input from Obama, his fellow commissioners, members of Congress and other stakeholders. "We must take the time to get the job done correctly, once and for all, in order to successfully protect consumers and innovators online," he said.
CTIA President Meredith Attwell Baker, herself a former FCC commissioner, said in a statement that "imposing antiquated common carrier regulation, or Title II, on the vibrant mobile wireless ecosystem would be a gross overreaction that would ignore the bipartisan views of members of Congress and the FCC, would impose inappropriate regulation on a dynamic industry and would threaten mobile provider's ability to invest and innovate, all to the detriment of consumers. CTIA strongly opposes such an approach."
Verizon said in a statement that the Title II reclassification approach "would be a radical reversal of course that would in and of itself threaten great harm to an open Internet, competition and innovation. That course will likely also face strong legal challenges and would likely not stand up in court. Moreover, this approach would be gratuitous. As all major broadband providers and their trade groups have conceded, the FCC already has sufficient authority under Section 706 to adopt rules that address any practices that threaten harm to consumers or competition, including authority to prohibit 'paid prioritization.' For effective, enforceable, legally sustainable net neutrality rules, the Commission should look to Section 706."
AT&T came out in opposition as well. "We feel the actions called for by the White House are inconsistent with decades of legal precedent as well as Congressional intent," Jim Cicconi, AT&T's senior executive vice president of external and legislative affairs, said in a statement. "Moreover, if the government were going to make such a momentous decision as regulating the entire Internet like a public utility, that decision is more properly made by the Congress and not by unelected regulators without any public record to support the change in regulation. If the FCC puts such rules in place, we would expect to participate in a legal challenge to such action."
For more:
- see this White House statement
- see this GigaOM article
- see this Reuters article
- see this WSJ article (sub. req.)
- see this NYT article
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