Federalism Versus Balkanization and Muni Wi-Fi

         While most attention today focused on the FCC’s Open Internet, I was intrigued with the discussion—make that righteous indignation—presented by Commission’s Pai on the FCC’s partial preemption of state laws restricting territorial build outs by municipal Wi-Fi networks.  Commissioner Pai gave an extensive review of Constitutional law with emphasis on state sovereignty.

          Commissioner Pai never addressed the considerable body of case precedent favoring FCC preemption of state regulation, including the attempt by state public utility commissions to regulate—if not prohibit-Voice over the Internet Protocol (“VoIP”).  See Minn. PSC v. FCC, 394 F.3d 568 (8th Cir. 2004).  States’ rights notwithstanding, many courts share the FCC’s view that much in telecommunications and now the Internet involve interstate commerce. 99.9999999+ percent of the time, Internet traffic crosses a state border.  Over the years, such a crossing “contaminated” any pure intrastate link which arguably includes the wireless few feet linking a tablet and the Internet cloud.

          Not so long ago Commissioners of both parties would express concern about “balkanization” of telecommunications policy, i.e., fragmentation and proliferation of many inconsistent state policies.  That environment would generate “regulatory uncertainty” and “disincentives for investment in next generation networks.”  Now Commissioners and others earn brownie points for how well they can express fealty to the Constitution.

          An ignored but obvious issue in the debate lies in the vast increase in scrutiny and involvement in telecommunications policy by groups such as the American Legislative Exchange Council.  The real possibility exists that ALEC offered state legislators in places like North Carolina and Tennessee a template for a law few framed as pro-market/pro-state.  Might state legislators have voted for something without much analysis?

          In any event I saw a huge irony in the universal view that America needs more competition in broadband, but Commission Pai’s insistence that municipalities do not count, even when no one else seems “incentivized” to make the effort.

A Very Preliminary and Tentative Summary of the FCC’s Open Internet Order

            I have prepared a tentative summary of the FCC’s Open Internet Order based on pre-release documents as well as what transpired at the Commission meeting today (Feb. 26, 2015). I expect to read the entire 300+ page document as soon as it is released.  Until then, here are the main points:

            The FCC opted not to construct an order solely applying Section 706 of the Communications Act as the foundation for creating narrowly calibrated non-common carrier rules applicable to ISPs in their capacity as information service providers.  Despite a finding by the D.C. Circuit Court of Appeals that Section 706 grants the FCC an independent right of authority to examine broadband availability with an eye toward removing barriers—financial and regulatory--, the Commission decided to reclassify Internet access so that Title II applies.  The Order goes to extraordinary lengths to emphasize that it will forbear from applying most common carrier regulations, [1] but opponents have objected to the regulatory options the Commission now make available. [2] The FCC voted on party lines to adopt the order that staff emphasized would provide necessary safeguards without imposing unnecessary public utility requirements, but which the Republican Commissioners consider micromanagement, including rate regulation. [3]

            The Order expresses the view that reclassifying Internet access as a telecommunications service provides the strongest legal foundation for the Open Internet regulations, coupled with a secondary reference to Section 706 of the Telecommunications Act of 1996.  By using the more muscular Title II foundation, the FCC asserts that it can establish clear and unconditional statutory authority, but also use the flexibility contained in Title II to forbear from applying most common carrier requirements not relevant to modern broadband service just as occurs for wireless telephone service.  However with a Title II regulatory foundation, the Order makes it possible for the FCC to create an Open Internet conduct standard asserting that ISPs cannot harm consumers or edge providers with enforcement tools available to sanction violations.

           The Order defines “broadband Internet access service” as a telecommunications service under Title II, with emphasis on the “retail” link between an ISP and broadband subscribers. However the FCC does apply the Title II classification to upstream ISPs and content providers, commonly referred to as “edge providers.”  This means that the FCC will have jurisdiction to examine ISP carriage both downstream to broadband subscribers and upstream to edge providers, but the nature and type of such oversight and the applicable regulations may differ.  Additionally the Commission will have direct statutory authority to consider complaints and to resolve disputes, including ones claiming that interconnection and compensation terms are unjust and unreasonable.

           The Order deviates from previous open Internet initiatives by opting to apply the same requirements on wireline and wireless broadband.  Previously the Commission had imposed less burdensome requirements on wireless broadband based on its comparatively recent availability, as well as the potential for spectrum scarcity and other technological factors that might necessitate deviation from absolute access neutrality. The FCC also rebuts claims that Title III does not allow classification of mobile broadband as a telecommunications service, noting that the Commission has asserted Title II oversight of wireless telephone service, termed Commercial Mobile Radio Service by Congress in amendments to Title III.

           While the debate over network neutrality has become quite contentious and hyperbolic, the three core requirements imposed by the Order have generated much popular support.  With the common carrier reclassification, the FCC considers it lawful to impose explicit requirements that ISPs not: block, legal content, applications, services, or non-harmful devices; throttle, impair or degrade lawful Internet traffic on the basis of content, applications, services, or non-harmful devices; and offer paid prioritization that would favor some lawful Internet traffic over other lawful traffic in exchange for additional compensation, or based on corporate affiliation.

           The Order addresses the need for ISPs to have the ability to manage their networks and to offer specialized services not available to all users.  The FCC seeks to promote flexibility without allowing these options to provide a loophole for practices that violate network neutrality policy. Coupled with requirements that ISPs operate with transparency in terms of how they provide service, the FCC will permit deviations from absolute neutrality on a case-by-case basis taking into consideration the particular engineering attributes of the technology used as well as the rationale supporting the legitimacy of the practice.  

 

 

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[1]              The major provisions subject to forbearance include no rate regulation: the Order makes clear that broadband providers shall not be subject to tariffs or other form of rate approval, unbundling, or other forms of utility regulation, no last-mile unbundling, no burdensome administrative filing requirements or accounting standards, no requirement to contribute to

universal service funding under Section 254, and no new taxes or fees.

 

[2]           The major provisions of Title II that  the Order will apply are: nondiscrimination and no unjust and unreasonable practices under Sections 201 and 202; authority to investigate complaints and resolve disputes under section 208 and related enforcement provisions, specifically sections 206, 207, 209, 216 and 217; protection of consumer privacy under Section 222; fair access to poles and conduits under Section 224, protection of people with disabilities under Sections 225 and 255; and providing universal funding for broadband service through tpartial application of Section 254.

 

[3]              The presentation of the order before the Commissioners noted that 27 customary common carrier requirements would not apply to ISPs, nor would they have to tariff their services, unbundle offerings into separate elements and make financial contributions to universal service funding.

A Foolproof Toolkit for Hiding Sponsored Research

      Today’s New York Times has a front page story reporting on how a reliably anti-climate change researcher failed to disclose substantial financial support from electric utilities and their advocacy groups. 

     The Times identified a direct link between funder and researcher coupled with an explicit quid pro quo: the delivery of peer-reviewable, academic papers absolving humans of any role in climate change in exchange for money.  How could the Times find a “smoking gun” when hundreds of millions get funneled into sponsored research in telecommunications and Internet policy and other areas?

     The answer lies in the combination of two factors easily addressed and remedied by just about every other sponsored researcher.  His contract for service specified work for hire instead of general financial support for the “mission” of an institute, center, or foundation.  Additionally he worked for a federal government organization—not a University—having a duty to comply with generally avoidable Freedom of Information disclosure requirements.

     Rather than consider the Times piece a marvelous piece of journalistic sleuthing, I marvel at the failure of the researcher to use readily available tools to avoid detection.  So in the spirit that “sunlight is the best disinfectant,” I offer the following toolkit that identifies how easy a sponsored researcher can cover her tracks.

      1)         Create, or affiliate with an institute, center, or foundation having a vague “mission” that can provide cover for both researchers and sponsors.  Who could have a problem with promoting a better functioning marketplace, more innovation and extra competition?  You don’t have to disclose the intent to help the Koch brothers emasculate the EPA and in turn earn more billions.

     2)         Exploit plausible deniability, i.e., the sheer “coincidence” that financial underwriter and researcher happen upon identical interests without direct—and forensically identifiable—consultation.  Never create a specific contract deliverable specifying the content of a publication.  Financial benefactors understand the need for ambiguity and willingly will pay vast sums to support what can appear as benign academic support.

     3)         Disclose financial support in a single ambiguous sentence.  Sponsored researchers only need to add a footnote “gratefully acknowledging financial support from the Institute for the Study of Solar Flux Density.” Nothing in this sentence implies that the researcher has abandoned academic freedom and independence in exchange for money.

     4)         Build “your brand,” reputation and expertise with available funding.  Sponsored researchers can flood the “marketplace of ideas” without voluminous work made possible by having funds to hire staff.  There are plenty of groups having dozens of researchers available to generate work product, while people like me are lucky to have a single graduate student assistant.  The volume of sponsored research available for placement in academic journals can easily crowd out the work of unsponsored researchers.

     High productivity coupled with cheerleading by sponsors makes it possible that certain professors and institute “Fellows” can enhance their visibility and in turn their available to provide background and provocative media quotes.  The network neutrality debate has created a cottage industry of experts known for where they lie on a pro/con continuum.  The New York Times may support an “open Internet,” but articles surely will contain a quote from some expert in the anti-network neutrality camp who has achieved visibility through sponsored research, disclosed or not.

     Sponsored research has a profound and pernicious effect on public policy debates.  In a nutshell blatant advocacy becomes wrapped in the legitimacy of research.  Few seem to know or care that the research has a champion, and that the work product would not pass muster under blind peer review even with financial disclosure.