Reports: FCC to include wireless in push to reclassify broadband under Title II for net neutrality

As has been widely expected, multiple media reports indicate that FCC Chairman Tom Wheeler will introduce a draft order to codify net neutrality rules that would reclassify broadband as a telecommunications service under Title II of the Telecommunications Act. Additionally, according to one report, the draft order will place mobile data services under that regulatory regime--something that is sure to provoke fierce backlash from the CTIA and wireless carriers.

The reports, from the Wall Street Journal and the New York Times, cited unnamed sources familiar with the plan. The NYT cited unnamed industry analysts, lobbyists and former FCC staff members. FCC spokeswoman Kim Hart declined to comment.

According to the NYT, the change will give the FCC stronger legal footing to implement rules to ensure transparency around network management practices, ban discrimination against or blocking of lawful content, and to forbid paid periodization of content. Until now, broadband has been treated as a lightly-regulated information service.

Wireless broadband had been mostly exempt from the FCC's 2010 net neutrality rules, which were largely scrapped by a federal appeals court in January 2014. However, according to the NYT, Wheeler will include mobile data services in his proposal. Wheeler is also looking to have rules apply to the interconnection market involving deals with Internet backbone companies. The rules would reportedly seek to deter content blocking or discrimination in deals between content companies like Netflix (NASDAQ: NFLX) and ISPs.

Wheeler 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. Details of the draft are expected to leak out after it is circulated, and the proposal could change before it is voted on.

The FCC proposal is expected to reclassify mobile and wired broadband under Title II, but use "forbearance" to abstain from the most onerous regulations, like price regulation. Wheeler has argued that under Section 332 of the Communications Act, this is what was done in the 1990s for mobile voice and that the wireless market has flourished under that regime.

However, the CTIA counters that Wheeler is misconstruing Section 332, noting that the Title II approach applies only to mobile voice services and that Congress explicitly exempted mobile broadband from being regulated under Title II.

The FCC could formally decide that mobile broadband actually is a "Commercial Mobile Radio Service," as mobile voice is, and not a "Private Mobile Radio Service." The FCC declared mobile broadband was a PMRS in a 2007 ruling, and the FCC could potentially reverse itself as long as it explains its rationale. CTIA argues the 2007 ruling has since been upheld in court several times, meaning it would be tough for the FCC to legally reverse its position.

CTIA President Meredith Attwell Baker, a former FCC commissioner, again reiterated the lobbying group's opposition to a Title II approach to ensuring net neutrality. "We have significant reservations with any approach that applies intrusive public utility regulation on mobile broadband for the first time, which is why Congress's consideration of net neutrality legislation is the best path forward to provide certainty to all stakeholders," she told the Journal.

Net neutrality proponents have long argued that reclassification under Title II is the only way to get net neutrality rules that will stick. "This straightforward protection of two-way communications is central to real net neutrality and critical to the future of the Internet," Craig Aaron, CEO of public interest group Free Press, told the WSJ.

Wireless carriers and ISPs have made clear their opposition to a Title II approach, saying it will harm investment. Hank Hultquist, AT&T's (NYSE: T) vice president of federal regulatory, wrote in a company blog post 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.

"The elimination of mutual exclusivity could empower the FCC to regulate virtually every tech company that combines transmission with information to deliver digital goods and services to customers," he wrote. "Social networks, digital music, video chat, and even Internet search are all examples of information services that are provided via telecommunications, and thus have a transmission component that could be segregated and regulated under Title II if the mutual exclusivity of information and telecommunications services were breached."

He added: "And since the FCC has long treated resellers of common carrier services as common carriers themselves, providers of connected devices, like e-readers and vehicles, are virtually indistinguishable from ISPs in their use of transmission as a way to deliver information. It's no longer a question of how providers design their services and consumers perceive them, instead it becomes simply a question of whether the Commission wants to pry it apart or not. In this structure, the boundaries around the Commission's jurisdiction become as broad as it wants them to be, at best loosely tethered to what Congress granted it."

AT&T CEO Randall Stephenson predicted last month that a fight over the net neutrality rules would spark litigation that would eventually reach the U.S. Supreme Court.

Verizon (NYSE: VZ), for its part, argues that the FCC does not need to use Title II to ensure net neutrality rules, and can codify the rules "by reaffirming that broadband Internet access service is an integrated information service, relying upon its authority under Section 706 and the roadmap set out by the D.C. Circuit for issuing sustainable rules."

Verizon, in a filing with the FCC, argues that abstaining from lots of regulations under Title II "would do nothing to solve the intractable legal problem that neither the Communications Act nor the Constitution permits the Commission to compel broadband Internet access providers to provide their services as common carrier telecommunications services, or to convert their private networks to a public use." The company also argues that "Title II proponents inevitably would challenge the scope of the Commission's forbearance, prolonging legal uncertainty and chilling investment."

For more:
- see this WSJ article (sub. req.)
- see this NYT article
- see this AT&T blog post
- see this Verizon filing
- see these two separate CNET articles

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Wheeler: Wireless industry regulation is model for using Title II in net neutrality debate