Press
accounts and the FCC’s own summary, provide a general sense of how the
Commission rationalizes its abandonment of network neutrality. See
https://www.fcc.gov/restoring-internet-freedom. However, a deeper dive can provide further
insights and perhaps identify areas of vulnerability in terms of judicial
review and future conflict.
Set out below, I offer such an analysis.
Thinly Disguised Disgust
Coupled with Supreme Confidence
On balance, I am surprised at
the lack of humility and decency in such an important document. As perhaps never before, the Pai-led FCC
makes it clear that it must correct grievous shortcomings in the legal
interpretation, evidence interpretation, economic philosophy and overall
perspective of the Wheeler-led, but Obama-controlled Commission and its Open
Internet Order.
The new
Commission comes ever so close to asserting that its predecessor distorted the
truth. The document states that the
prior Commission engaged in “results-driven” decision making (¶50) and “manipulated”
service definitions to “engineer[] a conclusion” (¶70). That comes across as disingenuous in light of
the paucity of unimpeachable empirical evidence in the Pai document and the
heavy reliance on cherry picked conjectures of preferred commenters who
repurpose sponsored research.
Despite a
commitment to empirical data collection, fair-minded cost/benefit analysis and
transparency, the nearly 200 page document comes up remarkably short on facts
and stands at parity with the Democrats on result-driven decision making.
Doubling Down the
Telecommunications/Information Service Dichotomy
The Restoring Internet Freedom
document relies heavily on the questionable conclusion that the FCC can and
should create mutually exclusive regulatory classifications, despite
technological and marketplace convergence.
Throughout the document, the FCC relies on a number of dichotomies whose
air tightness supports divergent regulatory treatment, despite the reality that
the telecommunications and Internet ecosystems do not support such neatness.
The document
supports extension of a view that the FCC must separate its treatment of
telecommunications and telecommunications services, on one hand, and information
services, on the other hand. The
Commission expressed such a need in 1998 in response to a Senate query (the
Stephens Report) and implemented this air tight strategy in the Computer Inquiries.
While such
a dichotomy might work in a world where dial up common carriers provided a stand-alone
link to information services, conduit and content now converge. For example, smartphones offer voice
telephone service, regulated as common carrier, Commercial Mobile Radio Service. These carriers also offer data services,
including access to the Internet cloud.
Consumers expect to have access to both types of services regardless of
their different regulatory classifications.
A Republican majority FCC agreed when it mandated data roaming, at a
time when such a service qualified for light-handed, information service
oversight.
Put another
way, on functional equivalency grounds, consumers understand voice as different
from data only insofar as how much the carrier charges, not how the carrier provides
either service. Similarly, consumers don’t
quibble about whether a mobile broadband service is public or private,
interconnected or not and whether the Public Switched Telephone Network and
telephone numbers are used.
Misreading the
Venerable Justice Scalia
To legitimize its reclassification
of broadband Internet access as an information service and wireless broadband
as private, not commercial carriage, the FCC now must return to the rationale
that bit and packet transmission cannot be distinguished and carved out from
the information service it carries. The
Commission blithely ignores that Justice Scalia, dissenting in the Brand X case, rejected the view that the
telecommunications element could not be carved out and recognized for what it
is: publicly available conduit functionality.
Justice
Scalia recognized that deference to the FCC on its interpretation of conduit
and content severability would promote deregulation in one instance, but could
just as easily be used again by the FCC—having a different political party majority—to
justify more government oversight:
Finally, I must note that, notwithstanding
the Commission’s self-congratulatory paean to its deregulatory largesse . . . what
the Commission hath given, the Commission may well take away—unless it doesn’t.
This is a wonderful illustration of how an experienced agency can (with some
assistance from credulous courts) turn statutory constraints into bureaucratic
discretions {to regulate or deregulate based on the agency’s legal
interpretation and politics]. . . . Such Möbius-strip reasoning mocks the
principle that the statute constrains the agency in any meaningful way.
Self-Inflicted Wounds
on the VoIP Regulatory Question
Without a doubt, Chairman Pai
must be basking in the limelight and congratulating himself for delivering an
unimpeachable document that will survive judicial review. Perhaps, but I would like to raise the VoIP
question.
Until now,
the FCC has managed to avoid classifying VoIP so that it can mandate universal
service contributions from VoIP services that access the PSTN. The reemphasis on mutual exclusivity between
basic telephony and enhanced, information services may force the Commission’s
hand. How can the FCC emphasize access
to the PSTN, use of telephone numbers, the degree of accessibility by the
public and the nature of interconnection to justify the unregulation of
wireless broadband even as these factors pretty much line up in favor of
treating VoIP as the functional equivalent of common carrier, regulated voice
telephony?
Employment,
Innovation and Investment
The
document reiterates how network neutrality and the Title II classification decimated
the telecommunications ecosystem with all sorts of disincentives. However, the Commission never proves
causality, nor does it have evidence that it, or the sponsored research it
chose to embrace, can prove causality: that network neutrality and/or common
carrier status constituted the direct cause for any and all reduction in
employment, innovation and investment.
Ironically,
while the document obsessively invokes the gospel of disincentives, later the
Commission emphasizes that ongoing investment in plant constitutes one of the
major reasons the broadband marketplace is robustly competitive.
Compare
these two conclusions:
The Commission has long recognized that
regulatory burdens and uncertainty, such as those inherent in Title II, can
deter investment by regulated entities . . .. The balance of the evidence in
the record suggests that Title II classification has reduced ISP investment in
the network as well as hampered innovation because of regulatory uncertainty. ¶88
With the advent of 5G technologies
promising sharply increased mobile speeds in the near future, the pressure
mobile exerts in the broadband market place is likely to grow even more significant.¶130
Let me get
this straight. Without identifying
evidence of causality and generating or identifying anything close to peer
review worthy data, the FCC concludes that the Obama era Network Neutrality
regime singularly caused a woeful decline in broadband plant. Yet at the very same time, during the
Obama-managed FCC, carriers like AT&T and Verizon expedited 5G plant
investment, unimpeachable proof of how competitive the broadband marketplace
has become, particularly in light of the functional equivalency of wired and
wireless networks.
Can the FCC
have it both ways, or might a reviewing court question the science, economics
and lawfulness of the FCC’s rationales for reclassification? That’s the Trillion Dollar question.
