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

LAS VEGAS--FCC Chairman Tom Wheeler said his model for the way forward on net neutrality regulations is the way that the wireless industry has been regulated as common carriers under Title II of the Telecommunications Act, while abstaining from all but three key sections of that part of the law. Wheeler said that the FCC will seek to hold broadband providers to a legal standard of what is "just and reasonable" in evaluating whether their practices violate rules on transparency, discrimination and paid periodization.  

Wheeler said the FCC is going to circulate a rulemaking to all its commissioners on Feb. 5 and vote on it Feb. 26.

During an on-stage interview here at the 2015 Consumer Electronics Show with Consumer Electronics Association President Gary Shapiro, Wheeler said that the net neutrality debate has forced the FCC to confront two challenges. One is how to make sure that innovators and consumers in the broadband economy have open access to networks. The other is to make sure the FCC is creating an environment that provides incentive for ISPs to invest in broadband networks.  

Initially, the FCC, following a federal appeals court decision in January 2013 that largely struck down the FCC's 2010 net neutrality rules, pursued a path using Section 706 of the Telecommunications Act. The goal was determine which practices of broadband providers were "commercially reasonable" in connection to complying with net neutrality rules. However, Wheeler said "it became obvious that commercially reasonable could be interpreted as what is reasonable for the ISPs, not what is reasonable for the consumers or innovators. And that's the wrong question and the wrong answer."

As a result, starting last summer the FCC began investigating an approach using Title II, which would classify broadband providers as common carriers, as well as a hybrid approach. Then, when President Barack Obama in November came out in favor of the "strongest possible" net neutrality rules using Title II, the discussion heated up significantly, with net neutrality proponents urging a Title II approach and carriers and network infrastructure companies arguing against it. Broadband providers are currently treated as lightly regulated "information services" and not "telecommunications services" under Title II.

Wheeler said "we were headed down a path that was aiming for same kind of goals" as Obama, which was how does the FCC make sure that carriers' practices are just and reasonable while incentivizing ISPs to invest.

Wheeler noted that ISPs have said a Title II approach will chill investment, but the prospect of such rules has not stopped wireless carriers and other entities from bidding nearly $45 billion in the AWS-3 spectrum auction.

Wheeler said he thought of how, as head of CTIA in the 1990s, he helped negotiate the rules for how wireless carriers would be regulated. He noted that under Section 332 of the Telecommunications Act, wireless carriers are regulated as Title II common carriers, but crucially the FCC is instructed to forbear, or abstain, from "what are onerous provisions and inappropriate provisions," except for Sections 201, 202 and 208 of the law.  

"Under that, in the last 20 years, the wireless industry has been monumentally successful" he said, as Title II-regulated companies.  

  • Section 201 requires carriers to "furnish such communication service upon reasonable request therefor" and that "[a]ll charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful."
  • Section 202 makes it unlawful for common carriers to "make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage."
  • And Section 208 lets people make complaints to the FCC against things common carriers have done and provides ways for carriers to address complaints and provide redress for those complaining.

"There is a way to do Title II right that says there are many parts of Title II that are inappropriate and would thwart investment," Wheeler said. However, he noted that the U.S. has the most robust mobile ecosystem in the world, and the trend toward the Internet of Things demands open networks.

At the same time, he said, there should be no need for ISPs to file tariffs, informational activities and other onerous requirements of Title II. He said the FCC's goal is to create "a yardstick against which behavior should be measured. And that yardstick is just and reasonable."

CTIA strongly disagreed with Wheeler' interpretation of how to use wireless regulation as a model for the way forward on net neutrality. "CTIA and its member companies want, and continue to support, an open Internet. Comparisons to the regulatory framework for mobile voice are misplaced and irrelevant," CTIA President Meredith Attwell Baker said in a statement. "Congress created a regulatory regime for mobile voice under Section 332 and Title II. Congress also created a separate regulatory regime--explicitly outside Title II--for other services like mobile broadband. The FCC cannot now re-write Congress's intent to re-write the Act or re-write history. Section 332 was a tool to deregulate mobile voice that led to competition and innovation benefiting consumers. The Chairman is correct that that deregulation worked. The Chairman cannot now use that same deregulatory tool to extend regulation and government intrusion where it has never been before. As the courts have made clear, a properly-crafted Section 706 approach could withstand judicial scrutiny and not run afoul of Congress' explicit directive under Section 332."

The new rules, regardless of their content, are likely going to spark a fresh round of litigation. Indeed, Verizon Communications (NYSE: VZ) CFO Fran Shammo said at an investor conference in November if new net neutrality regulations should pass, he is concerned that it will create a very litigious environment.

Republicans, newly empowered with control of both the House and Senate in Congress, and are expected to introduce industry-backed legislation this month to potentially block the FCC from reclassifying broadband under Title II while seeking to enshrine net neutrality principles in law.

Wheeler said the fight over net neutrality has been a remarkable and lengthy process that is nearing a conclusion. "It's been an interesting process--there's an understatement, an interesting process--over the last year" since a federal appeals court decision forced the FCC to rework its net neutrality rules.

Related Articles:
FCC plans to vote on new neutrality regulations in February
CTIA argues that legally, wireless broadband is exempt from Title II net neutrality rules
Entner: Out of the net neutrality Title II news blizzard with AWS-3 auction
Netflix to FCC's Pai: Open Connect is not a 'fast lane'
Cisco, Intel, Qualcomm and others voice opposition to using Title II for net neutrality
U.S. Cellular partner, Cellcom and other small carriers oppose using Title II for net neutrality rules

Article updated Jan. 7, 2015 at 3:30 p.m. PT with comment from CTIA.