Anatomy of Defective Legislation: The No Rate Regulation of Broadband Internet Access Act, H.R. 2666

             The U.S. House of Representatives has passed a bill that would prohibit the FCC from regulating Internet Service Provider rates.  While one surely can appreciate the merits of such legislation, House Republicans have created a remarkably flawed document.

            The drafters do not seem to understand that the Communications Act, which the bill would amend, vests the FCC with jurisdiction in Section 208 to oversee “charges, classifications, regulations or practices.”  H.R. 2666 creates the kind of ambiguity that allows the FCC to remedy through its preferred statutory interpretation, because one person’s rate regulation is another’s lawful regulation of charges, classifications and practices.

            The Supreme Court has created something called the Chevron Doctrine that creates a model for assessing whether courts should defer to regulatory agency legislative interpretation.  While agencies like the FCC must apply the clear meaning of an unambiguous law, court must defer to reasonable agency interpretations when the applicable law is ambiguous.

            On its face, H.R. 2666 is ambiguous, because one could readily argue that this bill does not repeal Sections in the Communications Act that authorize the FCC to investigate complaints about carrier billing and treatment of information about customer network usage (Sec. 222) as well as issues that affect out of pocket cost, but can be deemed something other than a rate.

            In the Internet ecosystem, ISPs often negotiate agreements that do not involve rates and even the exchange of money.  Instead they use customer information as a marketable currency of great value to advertisers.  Data mining configures and analyses ISP subscriber behavior that can be monetized, but not converted into applicable rates and tariffs.

Does Sec. 706 Authority Ride Solely on the FCC Continuing to Find Indequate Broadband Competition?

            In the Verizon v. FCC, the D.C. Circuit Court of Appeals briefly addressed the issue of the Commission's assessment of broadband competition.  With some incredulity, the court nevertheless expressed its unwillingness to second guess the FCC on its decision to back off from previously finding adequate market access.  With a new and reversed finding of inadequate access—especially in rural areas—the FCC has a stronger argument for using Sec. 706 of the Communications Act to achieve promotional goals through non common carrier rules and regulations.

            The D.C. Circuit Court of Appeals frequently is not so deferential.  For example, even when the FCC had explicit authority under the Telecommunications Act of 1996 to require local loop unbundling, the D.C. Circuit (in the U.S. Telecom Assn. cases) chided the Commission for lack of granularity and market specific requirements.  Bear in mind the court second-guessed--if not micromanaged--a process involving telecommunications service providers and Title II requirements.  The court appeared quite uncomfortable with the FCC forcing competitors to cooperate on matters where interconnection terms and conditions would not match what arm's length, market driven negotiations would generate.

            The possibility exists that a change in administration, or judicial impatience with regulatory meddling will prompt an appellate court to second guess a finding of insufficient competition.  If that were to occur I suspect the FCC would claim that its Sec. 706 authority does not ride solely on the basis of its annual assessment of the broadband marketplace.  However the Commission would have yet another hard case to make that accessibility in the context of Sec. 706 is measured by factors other than marketplace competitiveness.

Does the ITU Want to Regulate the Internet?

             Remarkably the International Telecommunication Union (“ITU”) has flown under the radar scope of critics.  This specialized United Nations agency does have a substantial impact on telecommunications, spectrum management and the Internet.  Wireless carriers in the United States can blame the FCC all they want for spectrum scarcity, but the true originator of spectrum allocation decisions typically is the ITU.  Nations usually follow the ITU consensus in their domestic allocations. While nations can take a “reservation” to the ITU consensus and make a unilateral, national decision, few do.  Pursuing an exception usually ends up costing the outlier, because equipment adhering to that specification may not have the same scale and efficiency as one adhering to a global standard.  Think first generation cellular AMPS versus GSM.

            It should come as no surprise that the ITU has turned its attention to the Internet: as we migrate more information, communications and entertainment to an IP-centric network, the ITU surely will offer its “good offices” to anticipate and resolve conflicts.

            The U.S. has disproportionately low influence in the ITU, largely because few U.S. citizens serve in senior management positions.  Such underrepresentation results from limited second and third language skills and the perception that working at the anything related to the United Nations won’t enhance one’s career.  Of course it does not help that the organization of structure and unstated philosophy of the ITU tends to favor non-Western nations, even when the matter does not involve development and bridging the digital (or analog) divide.

            The ITU has not engaged in a power grab as much as pursue its real or perceived mission.