As the FCC moves ahead with its broadband agenda, it must first address one of the biggest unknowns -- What is next for net neutrality? The answer (whatever it may be) is critical to the future of U.S. wireless operators and the wireless industry in general.
The FCC's net neutrality agenda was thrown into disarray earlier this month. On April 6, in a 3-0 decision, the U.S. Court of Appeals for the District of Columbia said the FCC overstepped its statutory authority when it cited Comcast in 2008 for interfering with subscribers' access to peer-to-peer file sharing services. The court said the FCC could not rely on its "ancillary jurisdiction" under Title I of the Telecommunications Act to regulate how Comcast managed its network.
The ruling, Comcast v. FCC, essentially said that if the FCC wants to move ahead with the draft net neutrality rules it proposed in October for wired and wireless networks, it has to find a better legal justification for doing so.
Opponents of new, codified net neutrality regulations--which include AT&T and the CTIA--have staked out their positions.
"They have fat wallets," said Mitchell Lazarus, a telecom lawyer and partner at Fletcher, Heald & Hildreth, a law firm based in Arlington, Va. "They will lobby very hard against any sort of net neutrality regime."
CTIA, in particular, continues to see net neutrality rules as a solution looking for a problem. "There's never been any need shown in the wireless space to apply these rules to us," said CTIA President Steve Largent. "There's never been a violation of the net neutrality principles. So why do you want to legislate or regulate when you don't need to? We're adhering to the principles."
Three main options
- It can appeal the Comcast decision.
- It can ask Congress for legislation granting it explicit authority over broadband.
- It can reclassify broadband from an information service to a Title II common-carrier service, subject to open-access rules--much in the way that telephone systems are currently regulated. This option is considered the most likely to be selected.
Each of these efforts can be undertaken at the same time though. "You (can) run with all of them simultaneously," said Harold Feld, legal director of Public Knowledge, a digital rights advocacy think tank. "They're not mutually exclusive."
While pressure grows on the FCC to make a decision, lawmakers have already begun bickering on the topic.
"If there is a need to rewrite the law to provide consumers and the FCC and the industry with a new framework, I as chairman will take that task on," Sen. Jay Rockefeller (D-W.Va.), the chairman of the Senate Commerce Committee, said at an April 14 committee hearing. "I think that is probably where we're going to end."
However, Sen. Kay Bailey Hutchison (R-Tex.), the committee's ranking member, cautioned against moves toward greater regulation, and said the FCC should not "go back to the old kind of regulation that I think is going to stifle the evolution that we have seen on the Internet."
The buffeting has left the FCC licking its wounds and reviewing its options. "I haven't made a decision yet" on how to proceed on net neutrality, FCC Chairman Julius Genachowski said during the committe hearing. At the FCC's open monthly meeting on April 21 he said the commission is working to ensure solid legal footing, but did not provide a timetable for when a decision will be made.
Most experts agree that if the FCC does decide to reclassify broadband, it won't happen quickly--and could result in even more litigation.
James Speta, a law professor at Northwestern University who specializes in telecommunications law, said it could take the FCC up to a year to implement reclassification, from a policy standpoint. First the agency has to institute a fresh rule-making process, and eventually issue a declaratory rulemaking that would reclassify broadband. "The ball is in the FCC's court," he said.
And, if the commission does vote to approve reclassification, the decision likely will be immediately challenged in court. Indeed, the resulting case could end up back in front of the D.C. Circuit, and, depending upon the outcome there, perhaps the U.S. Supreme Court.
AT&T, among other companies and groups, has urged the FCC to stay away from reclassification, arguing such a move would hinder investment in broadband networks.
Whether the FCC survives a legal challenge will depend entirely upon how it decides to reclassify broadband--and what legal justifications it uses. The Open Internet Coalition, whose members include Google and Skype, has urged the FCC to pursue a "Title II lite" approach. Under this approach, the FCC could move forward with reclassification of broadband under Title II--but "forbear," or decide not to impose certain stipulations of Title II such as rate regulation and tariff filing, Speta said, and focus solely on nondiscrimination of traffic.
There are other legal maneuvers the FCC can pursue if it wants to justify a reclassification--but the FCC will not only have to explain why it is changing its mind about the classification, it will also have to explain why it has the authority to do so. "If the FCC wanted to call it a common-carrier service, they would have to write an opinion explaining why it's a common-carrier service," Speta said. And as Lazarus put it, the FCC "can't make it a telecommunications service by saying it is."
"They're still working with a blank piece of paper in terms of which approach they're going to take," Lazarus concluded.
In the meantime...
While all of this legal to and fro is debated, what happens to the net neutrality draft rules from October?
The public comment period on the draft rules ends April 26; it was extended after the Comcast decision. There are still many substantive issues to work out in the proceeding, said Chris Riley, the policy counsel at consumer advocacy group Free Press, a net neutrality advocate. The FCC still needs to sort out how any new rules should apply to wireless networks and how to address managed services, he said.
"If the goal is to talk about what net neutrality should look like," he said, then the FCC needs to "continue talking about it at a substantive level while we talk about jurisdiction." Ultimately, though, how the FCC moves forward largely will hinge on what Genachowski decides to do on the legal front, he said. "Whether Chairman Genachowski likes it or not, his legacy and his impact as a chairman is on the line here," Riley said.
"That's what it boils down to," Feld added. "Genachowski has got to make a decision. My feeling is they are unlikely to go ahead on wireless if they don't go ahead on wireline."
CTIA's Largent said the wireless industry's trade group has not received feedback from the FCC on its concerns regarding net neutrality. He said the group plans to continue lobbying commissioners and lawmakers on net neutrality and broadband reclassification.
Broadband reclassification is a "premise we don't even want to walk down," Largent said. "So we're not assuming that they're going to that, and we don't want to assume that. So we're going to be busy educating all of the members of the commission as well as members of Congress about why we don't want to go down that road, and of all of the tremendous benefits of following Clinton-era policy decision, actually under Chairman [William] Kennard, to do a light regulatory touch for this industry."
"We think the facts are on our side," Largent concluded.
"I don't know what they're going to do," Speta said. "But I'm sure that a lot of FCC resources are being devoted right now to try and plot the best path they can."
Article updated April 26 to reflect the timing of Genachowski's comments.