The Deeply Baked First Amendment Rights and Limited Responsibilities of Information Service Providers

The network neutrality tennis match has been called in favor of the Republican Information Service team over Network Neutrality Democrats. Ventures providing broadband Internet access have no obligation to operate neutrally. And they have robust, unimpeachable First Amendment rights.

Information Service Providers, have every legal right to act as unneutral and biased as they want to be. That means no one—in a personal capacity, or on behalf of the federal government—can sanction participants in the Internet ecosystem on grounds they aren’t being fair and balanced, to repeat a past slogan.  They hold themselves out as family friendly, truth agents, and block (censor!) any content they deem harmful to children, snowflakes, wokeheads, anti-wokeheads, et al.

This may come as a newsflash to some, but it should not for anyone with a baseline sense of what the First Amendment protects. Someone surely in the know, is upcoming FCC Chairman Brendan Carr. Yet he appears to have promised President Trump and Elon Musk that the FCC, under his leadership, will push the envelope on official disregard for the First Amendment.

Surely Chairman Carr knows the FCC has no statutory authority to punish broadcasters, social networks, or broadband operators from being woke, too liberal, anti-Trump, anti-Musk and whatnot.

Back in the day, First Amendment advocates did not cleave on a Democrat/Republican fulcrum. Now it appears that people who should know and embrace the First Amendment seem clueless.

Unintended Consequences When the FCC Cannot Use Its Expertise and Respond to Changed Circumstances

          The conservative majority in the Supreme Court has worked tirelessly to prevent regulatory agencies from using their expertise to assess how changed circumstances affect statutory authority.  See, e.g., Loper Bright Enters. v. Raimondo, 144 S. Ct. 2244, 2266 (2024); available at: https://www.supremecourt.gov/opinions/23pdf/22-451_7m58.pdf; (overruling Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984); available at: https://supreme.justia.com/cases/federal/us/467/837/.       

          While I appreciate that the FCC can overreach, I worry that the Court has blithely ignored two serious problems it has created:

1)       It looks like the impact of non-deference forecloses even independent regulatory agencies, like the FCC, from interpreting laws that Congress did not, or could not future proof.  For example, the last major amendment to baseline telecommunications law occurred in 1996, with no assessment of how broadband and the Internet fundamentally change information, communications, and entertainment markets.

          Rather than defer to the FCC’s interpretation of ambiguous statutory authorization, the Court requires explicit and properly tailored legislation.  Congress has developed a loathsome reputation for not assessing what legislative amendments and additions are necessary and overdue.  If Congress predictably fails to act, then obsolete and quite probably harmful statutory language persists.

2)       Court appears more inclined to use non-deference as a basis for preventing regulatory agencies from expanding jurisdiction to address new and potentially severe quandaries.  It is easy to reverse an expansive or re-regulatory initiative as the 6th Circuit Court of Appeals did in its rejection of the Democratic majority FCC’s effort to interpret broadband access as a telecommunications service. See https://www.opn.ca6.uscourts.gov/opinions.pdf/25a0002p-06.pdf.

          Going forward, will courts apply non-deference to regulatory expansion clearly responding to a problem, which not addressed would trigger severe, quantifiable harm?  

          For example, the FCC has limited and ambiguous authority to assess the environmental impacts of telecommunications service providers.  See https://www.fcc.gov/general/nepa-faq. Reviewing courts and sponsored advocates already consider the scope of FCC space environment oversight quite limited, See, e.g., https://law.justia.com/cases/federal/appellate-courts/cadc/22-1337/22-1337-2024-07-12.html; https://techfreedom.org/fcc-lacks-statutory-authority-and-expertise-for-outer-space-activities/, despite the irrefutable fact that spacecraft reentry has significant, adverse impact on the earth’s atmosphere and the pace of global warming. See, e.g., https://indico.esa.int/event/493/timetable/?view=standard_inline_minutes.

          The vast increase in space launches and injection of toxic gases and particles, including aluminum oxide, from space objects reentering earth’s atmosphere raise questions about future sustainability of space and the impact of on earth’s atmosphere. Even the complete vaporization of space objects appears to have potentially hazardous impacts on the environment below. “In a series of high-altitude research flights over Alaska and the U.S. Midwest in March and April, researchers sampled stratospheric air using specialized mass spectrometers. They discovered surprising amounts of many metals commonly used in rockets and satellites, often in ratios mirroring those found in specific high-performance aerospace alloys. The investigation revealed that the metals are accumulating within sulfuric acid particles, which constitute most of the stratosphere’s particulates and influence our world’s ozone layer and climate.” Leonard David & Lee Billings, Space Junk Is Polluting Earth’s Stratosphere with Vaporized Metal, Scientific American (Oct. 26, 2023); https://www.scientificamerican.com/article/space-junk-is-polluting-earths-stratosphere-with-vaporized-metal/.

          Would any reviewing court affirm a decision of the FCC to expand its regulatory oversight and require space ventures to assess the environmental impact of its vastly expanded launch and spacecraft vaporization activities?  I do not think so, particularly for any venture led by Elon Musk. See https://ehtrust.org/federal-court-rules-in-favor-of-fcc-space-x-can-launch-thousands-of-satellites-without-environmental-review/

          What court would risk being overturned by the Supreme Court for considering it rational and consistent with statutory authority for the FCC to make some assessment of the impact on earth from toxic emissions above? 

An Epidemic of Overreach at the Supreme Court, FCC and Beyond

           Recent precedent overturning decisions by the Supreme Court prompted thoughts about the human proclivity to overreach when assuming—correctly or not—the opportunity and divine duty to act. I am certain the conversative majority at the Court thinks they should exploit their numbers to the max, having toiled in the vineyards for so many years as a minority voice of reason.

           It seems almost a foregone conclusion that an unfortunate and harmful sequence of increasingly unwise and ill-conceived actions start when an individual or group perceives an opportunity to overplay an advantage that might be a long time coming.

           In quick succession, the Supreme Court conservative wing has checked off a longstanding wish list. Surely there is strength in numbers and reinforcing validation. Having achieved longstanding goals, the Court conservatives now expand their list of attainable ambitions in an ever more aggressive and risky selection of outcomes previously considered both unattainable and unlawful.

           The possibility exists that overreach may reach an endpoint and pushback. Overconfidence morphs into hubris, inflexibility, results-driven decision making, sanctimoniousness, and arrogance.  Having reversed Roe v. Wade, why not press onward and outlaw the decades-long use of medications that terminate early pregnancies. Why stop there? How about outlawing contraception? Might there be a way to execute the religious view that in vitro pregnancies, supported by federally approved fertility enhancing medications, can be judicially deemed unlawful? While they are at it, might the end point be a complete prohibition on any sort of pregnancy termination?

           I hope pushback eventually reaches a critical mass, when overreach, of any sort and political basis, has become unpopular, unlawful, and based on assumptions and personal views rather than facts. 

           Let’s consider overreach at the FCC by Democratic and Republican majorities.  A Democratic majority FCC can engage in mission creep, sometimes the product of Chevon Doctrine deference to agency expertise.  A Republican majority might interpret a statute as authorizing its result-driven determination that current market conditions justify deregulation and industry self-regulation.

           A humble judiciary, not motivated by doctrine, politics, and personal bias, might not second guess the FCC’s interpretation of an ambiguous law. Often this makes sense, because a hands-on, close understanding of technology and market change trumps insistence on narrow, historical extrapolation.  For example, a reviewing court should uphold an FCC expansion of its regulatory wingspan to include fiber optic cable, even though the Communications Act of 1934 specifies jurisdiction only for “wire and radio.”  See https://telefrieden.blogspot.com/2024/06/who-needs-humility-when-you-have-6-3.html.

           Democratic overreach might delay or reject deregulation based on a determination that self-regulation will harm consumers, promote market concentration, and stifle market entry by small ventures with a promising new business plan. Republicans might search for regulations they consider job killing, innovation stifling, and a threat to national security.

           I cannot understand how FCC Commissioners, of either party, can come up with a rationale for more or less regulation based on mere conjecture, not science, statistics, and facts.

           Republicans and their sponsored researchers spoke with absolute certainty that network neutrality regulation reduces infrastructure spending by wireless carriers.  These Commissioners ignored whether the carriers had to invest in next generation plant, or having previously done so, they could reduce capital expenditures for a while. If network neutrality had such a stifling effect on plant investment, what evidence shows a significant increase in capex now that network neutrality rules have evaporated?

           Democrats and their sponsored researchers also speak with absolute certainty about the benefits of network neutrality rules. I think they overreached with some unnecessary safeguards that could harm broadband subscribers rather than protect them from unlawful carrier behavior.  I consider some types of so-called paid prioritization potentially desirable and beneficial to some consumers without constituting unlawful discrimination. 

           Might some video streaming subscribers want “better than best efforts” routing of mission critical bits?  How about access to video content at the highest bit rate a carrier can deliver instead of an industrywide (collusive?) decision to throttle wireless video streams to “CD quality”? If carriers can lawfully package service tiers on bitrate and data volume, why would any FCC administration permit deliberate service degradation?

          Bottom line: overreach occurs everywhere often with readily identifiable harms.

Does the FCC Have a Safe Harbor to Deregulate Despite the 1994 MCI Case Precedent?

             The prior blog entry suggested that the Supreme Court would have to use a semantic sleight of hand to approve FCC deregulatory initiatives while vacating new or resurrected regulatory rules and requirements.  See https://telefrieden.blogspot.com/2024/04/does-supreme-court-conservative.html. On further review, I think there just might be a way to pull this blocked on one side, open on the other gambit.

             Despite all the speculation about pending foreclosure of regulatory agency discretion, there is a provision in the Telecommunications Act of 1996 that the Court might deem sufficiently clear to withstand the major question and ambiguity roadblocks: 47 U.S. Code § 160 - Competition in provision of telecommunications service.  See https://www.law.cornell.edu/uscode/text/47/160.

             This Section establishes three evaluative criteria for the FCC to use when considering a deregulatory proposal for Title II, telecommunications service providers:

 (1)       enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory;

(2)       enforcement of such regulation or provision is not necessary for the protection of consumers; and

(3)       forbearance from applying such provision or regulation is consistent with the public interest. 47 U.S.C. §160(a)(1)-(3).

             There’s a lot of wiggle room in the criteria for a pro marketplace-oriented FCC to abandon common carrier rules and regulations.  Despite all the conservative majority’s antipathy toward regulatory agency activism, Section 160 just might provide enough clarity to green light major deregulatory initiative.  

             No questions asked.

Does the Supreme Court Conservative Majority Want to Prevent Regulatory Agencies from Responding to Technological Innovation and Changed Circumstances?

             Despite ample and longstanding case precedent, the Supreme Court appears ready to prevent regulatory agencies from acting when a statutory mandate is ambiguous and outdated. 

The Court appears ready to prevent regulatory agencies from “changing its mind” about the proper scope of regulation, either to increase, or decrease oversight.

            The Court’s conservative super majority wants to reverse its Chevron Doctrine that conditionally supports judicial deference to the expertise resident in agencies such as the Federal Communications Commission.  See https://www.law.cornell.edu/wex/chevron_deference.  Additionally, the Court wants to deem off limits any issue that constitutes something so important that Congress must legislate. See West Virginia v. EPA, 142 S. Ct. 2587 (2022); https://law.stanford.edu/publications/testing-the-major-questions-doctrine/.

             This means that if Congress does not enact timely clarifications and updates to a law, regulatory agencies cannot “fill in the blanks.” If the FCC and other agencies cannot act, doesn’t this mean that they cannot establish new rules and regulations, but also they cannot deregulate, despite changed circumstances?

             Does it also foreclose actions by both Democratic and Republican majorities to alter a regulatory regime by changing what Communications Act Title applies? Having done so previously, the FCC recently restored the application of Title II telecommunications service, common carrier to Internet access. https://www.fcc.gov/document/promoting-fast-open-and-fair-internet, ¶153-186.

             I hope this Court will not attempt a textual analysis of original statutory intent to establish the basis only for regulatory agency abandonment (but not new, or renewed application) of a statutory mandate, absent congressional authorization.

             If the Court wants to endorse unilateral, unauthorized deregulation, then it will have to reverse another longstanding case precedent that prevented the FCC from removing telecommunications common carrier tariffing requirements in light of marketplace dynamics favoring more facilities-based competition and less regulation.  See MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 512 U.S. 218 (1994); https://supreme.justia.com/cases/federal/us/512/218/.

             In a decision written by Justice Scalia, a far more principled Supreme Court in 1994 did not allow a Democratic majority FCC to “jump the gun” with a deregulatory initiative that contradicted a clear statutory mandate: “It is effectively the introduction of a whole new regime of regulation (or of free-market competition), which may well be a better regime but is not the one that Congress established.” 512 U.S. at 234.

             The Court properly decided that Congress had to act and it did so in a timely manner. Sadly, the current gridlocked congress has little likelihood of enacting essential statutory revisions. 

             Unless the Court comes up with a clever and undisciplined roadmap for unilateral deregulatory initiatives, while prohibiting new rules and regulations, agencies like the FCC will become powerless to make deregulatory, regulatory, or re-regulatory actions.

             Now that would be job killing, investment thwarting, and innovation stifling.

The Wall Street Journal Editorial Board's Faulty Memory

             You would think the Editorial Board of the Wall Street Journal would remember what it wrote about network neutrality. In its April 24th diatribe against network neutrality regulation,

https://www.wsj.com/articles/fcc-net-neutrality-jessica-rosenworcel-biden-administration-internet-b427c825?mod=opinion_feat1_editorials_pos1; the Board appears has forgotten how it spread the gospel that classifying Internet access as telecommunications service, subject to streamlined regulation, would stifle investment, innovation, and employment in the wireless industry. No 5G, no billion-dollar acquisitions, and nothing but stagnation in an industry otherwise considered quite dynamic and robust.

             The Editorial Board joined a large cast of characters, including former FCC Chairman Ajit Pai, and gobs of “coin-operated” sponsored researchers, in ignoring a basic tenant in high tech finance: Research and development, as well as capital expenditures in next generation service, trump any regulatory initiative, no matter how misguided.

             The Editorial Board also lost track of where U.S. wireless carriers operate along a technology curve in any given year.  High investment occurs when competitive necessity requires carriers to install next generation equipment, followed by far less investment once the new plant becomes operational.

             Wireless carriers cannot afford to punish overzealous regulators with skimpy investment at the onset of next generation service, nor do they overinvest simply because a more lenient and favorable regulatory environment exists, soon after a high point in new technology deployment.

             The Editorial Board also seems to have forgotten the initiatives by much loved fellow conservatives to require content neutrality by liberal and biased Internet Service Providers.  Some of the Journal’s best buddies urged Congress to mandate common carriage regulation of the Internet.

Network Neutrality Redux and the Return of Falsehoods and Disinformation

            Despite vowing to eschew involvement in the latest Network Neutrality drama, I cannot sit back and let stand the resumption of the distorted gospel preached by the anti-network neutrality crowd.  This group has legitimate criticisms, many of which I have tried, via hundreds of law review pages—to analyze, and even endorse, in specific instances.  

            For example, see Freedom to Discriminate: Assessing the Lawfulness and Utility of Biased Broadband Networks, 20 VANDERBILT JOURNAL OF ENTERTAINMENT AND TECHNOLOGY LAW, 655-708 (2018); https://scholarship.law.vanderbilt.edu/jetlaw/vol20/iss3/2/; Grey nuances in the black and white debate over subsidized Internet access, 41 TELECOMMUNICATIONS POLICY 1017-1026 (2017); http://dx.doi.org/10.1016/j.telpol.2016.10.002; Network Neutrality and Consumer Demand for “Better Than Best Efforts” Traffic Management, 26 FORDHAM INTELLECTUAL PROPERTY, MEDIA & ENTERTAINMENT LAW JOURNAL, 71-102 (Fall, 2015); http://www.fordhamiplj.org/publications/network-neutrality-and-consumer-demand-for-better-than-best-efforts-traffic-management/; Internet Protocol Television and the Challenge of “Mission Critical” Bits, 33 CARDOZO ARTS & ENTERTAINMENT LAW JOURNAL, No. 1, 47-87 (2015);http://www.cardozoaelj.com/wp-content/uploads/2014/01/Frieden-FINAL.pdf.

Even current FCC Commissioners, who ought to know better, will trot out the same clearly untrue parade of horribles.

            Network neutrality regulation will not create a suffocating Internet rate regulation regime.  The Democratic majority has clearly exempted broadband internet access from Title II common rate regulation. By the way, Title II still explicitly applies to wireless telecommunications, like cellphone service, and no one can credibly claim that carriers are severely constrained by  overpowering FCC oversight.  Network neutrality orders have always applied light-handed regulatory oversight.

            Title II of the Communications Act does not impose some atavistic, old school “public utility” regulation.  Despite the growing efforts of the Supreme Court to prevent regulatory agencies from responding to changed circumstances, the FCC has frequently recalibrated its Title II regulatory toolkit over time.  My prior blog post https://telefrieden.blogspot.com/2023/10/upcoming-limits-on-fcc-statutory.html noted that an expansive reading of West Virginia. v. EPA,  https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf might prevent the Commission from streamlining and reducing regulation, unless the Court can craft language that creates an exemption for deregulatory initiatives that require a new and improved statutory interpretation.

A doctrinal and wrong-headed insistence on legislative clarity, ironically could prevent the FCC from improving regulations and make them better in light of fast changing technological and marketplace conditions.  Bear in mind that the last major revision to the Communications Act of 1934, took place in 1996, a time preceding the emergence of a mission critical Internet for most people.  It appears that some of the six conservative Supreme Court Justices now expect Congress to act early and often in revising the Communications Act.  If Congress fails to act—and we surely can expect that--then apparently the FCC is powerless to respond to changed circumstances.

Over several decades, I have tried to explain that much of the problems in applying statutory definitions to Internet access, stems from the FCC’s insistence that a single classification must apply.  The FCC created mutually exclusivity between telecommunications services and information services in 1998 in response to a letter of inquiry from a Senator Ted Stevens. See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report to Congress, 13 FCC Rcd 11501(1998).

Nothing in the Communications Act prevents the FCC from recognizing that technological and marketplace convergence creates service offerings that combine basic and enhanced, telecommunications and information services. Our wireless handsets offer basic plain old telephone service, texting, which used to be a legacy telecommunications service, and other services that combine data processing/information services with telecommunications carriage.

            The FCC does not have to insist on an either/or dichotomy,  Nothing in the Communications Act mandates this.  We have had to tolerate decades long regulatory toggling between telecommunications service and information service, because the FCC cannot wrap its head around the reality that convergence requires a nuanced and admittedly more complicated blend of definitions.  Sometimes the statute does not even provide a definition, such as “advanced telecommunications capability.” The FCC interprets these words to include broadband, but the Republican Commissioners want to ignore the word telecommunications and instead insert information service.  This sure looks like overreaching, legislating by unelected bureaucrats so reviled by the right.  Then again, some of them want to convert social networks into involuntary common carriers to deny them any sort of First Amendment editorial freedom.

            Lastly (I hope!), we really ought to laugh at the false notion that a single regulatory initiative will exclusively impact the aggregate level of infrastructure investment carriers will make in a given year.  Former FCC Chairman Ajit Pai preached this gospel relentlessly and it became a truth for anti-network neutrality advocates. One has to ignore the carriers’ business plans and the ebb and flow of technology investment as a function of innovation and product life cycles. 

To believe the network neutrality investment disincentive canard, one would have to discount the billions invested in new 5G spectrum and network upgrades.  I expect sponsored, voodoo economists to “prove” a decline in carrier network investment going forward.  Should aggregate investment actually decline, this outcome more likely results from the winding down of 5G investments, not the onset of innovation and investment stifling regulation.

Upcoming Limits on FCC Statutory Interpretations Unless It Deregulates

             The activist, results-driven Supreme Court appears ready to limit severely the ability of the Federal Communications Commission and other independent regulatory agencies to interpret ambiguous statutory language and answer essential questions about statutory meaning, even when vastly changing markets and technologies makes such work essential.  Lacking humility and common sense, the Court appears hellbent to outlaw statutory interpretation like what kinds of services fit within the following ambiguous words Congress crafted, circa 1996: “advanced telecommunications capability.” 47 U.S.C. § 1302(a), codified by the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56, (1996)

            If one applies basic jurisprudence, telecommunications means what Congress defined it to be in the applicable statute, i.e., 47 U.S. Code § 153 – Definitions. It just so happens that Congress did provide a definition of advanced communications services, information service, telecommunications, and telecommunications service.  Applying the yet to be reversed Chevron Doctrine, the FCC has no need to interpret unambiguous statutory language, because it can apply the plain meaning.

            However, Congress failed to provide a definition for something that is both advanced and telecommunications.  The legislature did not define “advanced telecommunications capability.” Heretofore, no one has questioned the lawfulness of the FCC’s determination that this undefined category includes broadband, Internet access.  Additionally, no one has challenged the lawfulness of the FCC’s determination that its universal service mission, spelled out in Section 254 of the Telecommunications Act, includes promoting affordable access to broadband, interpreted by the Commission to fit somewhere within the definition of advanced telecommunications and/or information services.

            Just now, the Court finds it mission critical to ignore regulatory agency expertise, because deference might legitimize more, different, or possibly even improved regulation.  Apparently, any recalibration expands the dreaded regulatory state, managed by unelected officials intent on micromanaging our lives and depriving us of life, liberty, and the pursuit of happiness. 

            How ironic, that no one raised a peep when the FCC unilaterally decided to reclassify as an information service a legacy technology for decades fitting snugly in the telecommunications category.  With an eye toward expanding further the array of convergent services that combine both basic and advanced telecommunications capabilities, in 2018 then FCC Chairman Ajit Pai championed a new determination that paging, texting, and short messaging was much more sophisticated and “advanced” than simply keying in letters and numbers on a telephone handset.  See Petitions for Declaratory Ruling on Regulatory Status of Wireless Messaging Service, Declaratory Ruling, 33 FCC Rcd. 12075 (2018); available at: https://docs.fcc.gov/public/attachments/FCC-18-178A1.pdf.

            In a Declaratory Ruling, the FCC asked and answered whether it should shift its classification of texting from “old school” basic, common carrier telecommunications to something advanced and largely unregulatable information processing.  Most short messaging still involves keying in letters and numbers on a wireless handset, but clever statutory reinterpretation made it possible for a deregulatory-driven FCC to take matters into its own hand without awaiting new legislation.

            With the Supreme Court’s newfound antipathy to regulatory agency overreach, would the FCC’s reclassification of texting as data processing pass muster now?  If so, why would deregulatory freelancing not constitute unlawful overreach by a regulatory agency unwilling to await new statutory instruction?

 

The Highly Questionable Assertion that Regulation Stifles Innovation

             Big Pharma and Big Telecom endless repeat as gospel truth the highly questionable assertion that government oversight stifles innovation.  Facing the prospect for Medicare administrators, newly authorized to negotiate or even set caps on the prices of a very few drugs, Big Pharma has launched an outreach offensive stating as a given that such action will "stifle innovation" and "harm consumers." See, e.g., Tomas J. Philipson, The Deadly Side Effects of Drug Price Controls, The latest Medicare guidance will stifle pharmaceutical innovation—and it’s worse than we thought, WALL STREET JOURNAL (April 5, 2023); available at: https://www.wsj.com/articles/medicare-drug-price-controls-will-make-america-sicker-research-innovation-negotiations-private-insurers-b503b4ba.

             Big Pharma's big fib reminds me that Big Telecom uses the same gambit.  In the case of telecommunications, incumbent carriers swore that mandatory network access neutrality would stifle innovation and reduce capital expenditures in new technology.  Some of their favorite legislators, now obsessed with mandating "fair treatment" by social media, conveniently forget about their virulent opposition to nondiscriminatory broadband network access.

             Does innovation disincentivization pass a reasonable person's "smell test."  Successful incumbent ventures will scrimp on developing and bringing to market new products and services, because the Big Bad Government acts in ways that might constrain upside profitability?  Incumbents simply will conserve capital and scrimp on research and development, apparently content to squeeze out profits from prior investment in now aging innovations?

             Does this strategy make any sort of business sense, particularly for industries that reward innovation with government-conferred monopolies in the form of patent protection and limits to competition?

             I concede that a tougher environment for price gauging does create new incentives, such as redoubled efforts to extend the patent monopoly of a soon expiring drug by reformulating it to provide extended release, or to coat it with something to reduce the risk of stomach distress.  Similarly, I can see how the potential, for harm to innovation, exploits anxiety about any adverse impact on global market share in industries with national security risks, such as telecom, broadband, and computer chips.

             On the other hand, does can anyone seriously claim that commercial ventures will deliberately handicap their future marketplace competitiveness and ability to introduce faster, better, smarter, and possibly more expensive new drugs and telecommunications services? If you believe that, then explain to me why wireless carriers plan the deployment of next generation networks, year end and year out, without regard to which political party has more FCC Commissioners and whether network neutrality obligations apply.

             Is 5G wireless the last innovation we can expect from Verizon, AT&T, TMobile, and Dish?

Tracking Inconsistent Zigs and Zags in Telecom Policy Research

Sponsored researchers surely embrace Oscar Wilde’s view that “consistency is the last refuge of the unimaginative.”  Why bother building a multi-year record of empirical evidence when there are ample publishers and even appellate court judges (and their law clerks) waiting for intellectual support no matter how suspect.

Just now, I am seeing how both wireless and wireline carriers have unleashed a torrent of inconsistent advocacy research.  On one hand, the conventional wisdom dished from this group and their sponsored researchers was the “fact” that network neutrality and other regulations directly and negatively impact investments made in infrastructure.  Former FCC Chairman Amit Pai made a point to repeat this assertion early and often and it became gospel truth, so much so that cherry-picked and quite questionable “research” became the foundation for the appellate court affirmance of the Restoring Internet Freedom Order.

Now, circumstances and motivations have changed with the Covid pandemic offering a true test whether carriers have made sufficient plant investment, both under the disincentivizing network neutrality regime and free of it.  No one has convinced me that a single regulatory or degregulatory initiative substantially impacts carrier investment decisions one way or the other, particularly because of far more impactful factors such as interest rates and the normal ebb and flow of technological development cycles.  

Carriers did not close their wallets when network neutrality rules were in force.  That is corroborated by ample current evidence—now touted by the carriers-- that during the pandemic, U.S. carriers were able to meet rising demand for bandwidth.  If the carriers had scrimped on investment, because of the horrendous burdens imposed by network neutrality, how could their networks show such resiliency and ability to accommodate significant increases in subscribership and bandwidth requirements? It shows me that the need to stay competitive and to install new technology, such as 5G, trumped any incentive to forestall investment to make a regulatory and public policy statement.

Additionally, carriers cannot credibly oppose municipal broadband networks and expanded universal service subsidies if they persist in spreading the gospel that network neutrality forced underinvestment.

We no longer hear that consumers do not want, and will not pay for something better than 25 megabits per second download speeds and 3 megabits per second upload speeds.  We no longer hear that carrier networks are woefully underfunded and unable to satisfy consumer requirements. Such assertions now would support the case for market failure and the need for taxpayer funded networks, because the carriers have no interest in building.  Of course, now that Covid has unleashed a torrent of new universal service money, who can dispute the premise that incumbent carriers want to tap the gravy train.

By the way, the new FCC has yet to reinstitute network neutrality, but I am not seeing any new evidence of substantial increases in network investment by carriers still freed from the unconscionable burdens previously imposed.

Who needs consistency?

Network Neutrality: Cause and Effect

Perhaps you might join me in wondering how sponsored researchers managed to convince FCC Chairman Pai and others that network neutrality regulation singularly caused a near immediate drop in infrastructure investment by U.S. carriers.  How do you isolate the variable of “regulation” from, for example, the investment cycle in migrating from 4G to next generation 5G wireless plan.

Set out below, are two FCC charts that track capex incurred by the major U.S. wireless carriers from 2010 to 2019:

            S

 

Source: https://www.fcc.gov/20th-mobile-wireless-competition-report-quick-facts

Source: https://docs.fcc.gov/public/attachments/FCC-20-188A1.pdf

 From 2010 to 2019, the FCC toggled between imposing network neutrality requirements and eliminating them. For purposes of our direct comparison of a regulatory or deregulatory action and subsequent impact on investment, keep these years in mind:

 2010, the FCC approved the first FCC Open Internet Order creating network neutrality rules and regulations; 2014, the D.C. Circuit partially reverses the FCC on grounds that some of the network neutrality requirements imposed common carrier duties on private, non-common carriers; 2015, the FCC respond to the appellate court reversal with the 2015 Open Internet Order reclassifying broadband Internet as Title II regulated common carrier telecommunications service; 2016, the D.C. Circuit defers to the FCC and largely upholds the Commission; 2017-2018, the Ajit Pai led FCC signals its priority in reversing the 2015 Open Internet Order and does so in 2018 with the Restoring Internet Freedom Order.

Does wireless carrier investment correlate up or down with the changing regulatory regime? It sure does not look like it to me.  Even stakeholders, when communicating with buy side Wall Street analysts, emphasize competitive necessity and the business cycle for next generation network investment. 

Regulation does not matter significantly, until it becomes the sole predictor of investment in a different forum.          

 

Freedom of Speech Hypocrites

Conservatives’ whining about a liberal bias in social media strikes me as hypocritical.  When Fox et al receive criticism about a conservative bias, defenders rally around the First Amendment and libertarianism.  Fox can be as biased and censorious as it wants to be.  Fox can serve as a conduit for Russian disinformation so long as the company does not act maliciously, or grossly negligent.  Fox can target, vilify and disparage.  The New York Post can come up with a questionable “October Surprise,” clearly intending to help re-elect President Trump.

These very same First Amendment advocates expect social networks like Facebook and Twitter to serve as neutral conduits, without any “right” to censor, curate or manage uploaded content from subscribers.  Really?  Conservatives loath efforts by a Democrat-led Federal Communications Commission to impose “network neutrality” obligations on Internet Service Providers.  The Republican majority at the FCC championed deregulation as “Restoring Internet Freedom.”

Now, conservatives want to impose a fairness mandate on social networks who apparently have no First Amendment rights in curating, filtering and algorithmic monitoring.  Settled “SUPER PRECEDENT” recognizes a First Amendment right to curate, filter and monitor content.  Librarians do that,  so do web-based news aggregators and surely Fox, the New York Post and yes, the New York Times as well, do that when they deviate from a commitment to  best practices in journalism.  Additionally, a nonpartisan majority provided web carriers and content distributors significant immunity from liability when providing a conduit for harmful content.  This “safe harbor” helped incubate the Internet, particularly when it was technologically infeasible to monitor the torrent of traffic.

In prior blog entries, I have noted that algorithms make mistakes, including the refusal to issue me a credit card in light of my “insufficient credit experience.”  I will readily acknowledge that the algorithms and staff assessments of social networks may overshoot, or undershoot the mark in curation.

I will never accept the view—conservative or liberal—that ISPs, social networks and telecommunications networks have to assess the political consequences of allowing, or blocking specific content.  Do we really want a regulator or judge to second guess decisions made to allow or block content without allowing the conduit operator to assess the veracity and compliance with the terms of service?  

Have conservatives lost respect for the “sanctity of contract”?  Do they really think the Constitution supports revocation of social networks’ management of the content they disseminate?

Chilling.

Lies, Damn Lies and Wall Street Journal Editorials

            By way of full disclosure, I should report that I subscribe to the Wall Street Journal and benefit from its news reporting.  However, my mental and emotional wellbeing also benefits if I ignore obvious mistruths in countless editorials and columns, particularly ones about telecommunications and the Internet.   I have wasted countless hours trying to set the record straight when some ideolog misrepresents the truth to make some intellectually dishonest point.

            Imagine that: fake news and untruths from the Wall Street Journal.

            Today’s mistruth, on pA16 (Faster Internet Is on the Way): “American’s working at home would be in a much worse position in this pandemic is the Obama [Network Neutrality] rules were still in place.”

            Editorial writers at business publications know—or should know—that variation in regulatory scope and even so-called regulatory uncertainty has limited, if any, impact on the need for capital expenditures and a venture’s decision to make the inevstment.  Put another way, whether the FCC does or does not impose Network Neutrality rules has no major impact on a carrier’s incentive and need to invest in infrastructure.

            Does anyone truly and honestly believe that wireless carriers in the U.S. would take a “pass” on 5G investment if the FCC still had open access requirements?  Let me restate something obvious: carriers invest out of competitive necessity and when technological innovations provide opportunities for more revenues and consumer satisfaction.  Network Neutrality rules might motivate carriers might try to grab spectrum at auction for less money, but doing so only provides evidence that the rules possibly might dampen profitability, not investment incentives. 

By the way, any profit dampening would have little impact on the incentive and ability of U.S. wireless carriers to make necessary investment.  For years, Sprint’s major investor, Japan’s  Softbank, and TMobile’s Deutsche Telekom made necessary investments.  Failing to do so would risk ruin, including the billions of dollars in “sunk investments.”

            I’m skeptical whether Network Neutrality would reduce carrier revenues and profitability.  Even FCC Chairman Ajit Pai never got around to explaining how Network Neutrality rules would deprive carriers of robust, revenue streams.  It was all about less incentives for investment, innovation and employment.

            Ironically, the fact that U.S. wireless carriers have managed to accommodate increased demand supports my premise.  The coronavirus would have stimulated demand regardless of whether “Obama rules” or “Trump Rules” were in effect.  The Journal editorial writers surely can make no credible argument that wireless carriers somehow would be unable or unwilling to satisfy wireless network demand.  A carrier either makes a network investment, or not, based on anticipated demand and expectations of growth in that demand.  No one believes that Network Neutrality rules would have stifled consumer demand for more bandwidth and greater transmission speeds.  The opposite seems more likely.

I have never been a Network Neutrality “true believer,” but some positive outcome seem crystal clear.  Wireless carriers have maneuvered through a rising tide of demand to the benefit of everyone, not just an exclusive group whose rate plan qualifies them for preferred access to scarce network resources.

Perhaps someday the Journal editorial writers will understand the difference between public access to a service akin to a basic necessity and a surcharge to jump the queue at a Disney theme park ride.

             

What You Need to Know About the Restoring Internet Freedom Court Decision

            The D.C. Circuit Court of Appeals affirmed most of the FCC’s Restoring Internet Freedom Order [1] largely on Chevron Doctrine deference grounds.  This two-pronged judicial review model first considers whether applicable statutory language is ambiguous.  If applicable law is clear and unambiguous, the court must assess whether the FCC complied with the legislative mandate.  If the applicable law has ambiguities, the court must consider whether the FCC’s chosen course of action was reasonable under the circumstances.  Because judges lack expertise in statistics, economics, electronic engineering, accounting, corporate management, finance etc. they must rely on the expertise resident at the regulatory agency and which advocacy and sponsored research it embraces.  In this case, the court opted not to second guess the FCC’s legal and economic rational, despite the agency’s clear preference for the filings that support its deregulatory agenda. [2]

            Put another way, experts at the FCC and ones financed by stakeholders will have ulterior motives precluding an unbiased assessment, but appellate courts will not reject selective and even one-sided evaluation unless the process exceeds generous deference and a basic assessment of reasonableness.  In this case, the court opted not to question the FCC’s reclassification of broadband Internet access as an information service, wireless broadband access as a private, non-common carrier mobile service and the limited scope of new transparency requirements in lieu of prior open-ended general conduct standard and the specific rules prohibiting blocking, throttling, and paid prioritization of traffic.

            The court did reverse the FCC on four specific areas where the court determined that the agency failed to set out its legal authority or address the implications and impact of its deregulatory initiative.  The court vacated the FCC’s blanket preemption of state laws and that would impose regulatory requirements, despite the FCC’s near complete abdication of jurisdiction.  The court also remanded to the FCC the duty to address three discrete issues that the agency largely ignored:

(1) The Order failed to examine the implications of its decisions for public safety; (2) the Order does not sufficiently explain what reclassification will mean for regulation of pole attachments; and (3) the agency did not adequately address Petitioners’ concerns about the effects of broadband reclassification on the Lifeline Program. [3]

            The court fully embraced the FCC’s legal, technical and economic rationales for reclassifying broadband Internet access as a largely unregulated information service.  The decision validates the FCC’s emphasis that Internet Protocol domain name identity queries (“DNS”) and temporary storage of traffic—caching—justify an overall information service classification.  Because these two information service functions are inextricably linked with other functions, which do include a telecommunications transport function, the overall composite service cannot be functionally subdivided into separate information services and telecommunications service elements. [4]

            In making this finding, the court heavily relied on the Brand X case precedent [5] for guidance and validation.  In this prior case, the Supreme Court also relied heavily on the Chevron Doctrine to support a prior reclassification of broadband Internet access from telecommunications, common carriage to the largely unregulated information services designation.  Brand X also determined that DNS and caching were “inextricably intertwined” with high speed bit transmission that the FCC could reasonably conclude that Internet Service Providers did not offer a telecommunications service on a standalone basis, a conclusion reached by Justice Scalia in dissent. [6]

            The court also rejected the view that these two functions fit within an exception to the normal application of the information service classification for a subset of information processing functions that satisfy necessary telecommunication management requirements, rather than constitute part of an information service.  The court refers to its prior affirmance of the FCC’s common carrier reclassification decision, United States Telecommunications Ass’n. v. FCC, 825 F.3d 674 (D.C. Cir. 2016) to emphasize that the case only permitted Title II common carrier attribution to functions like domain name look ups and caching, but did not mandate it. [7]

            The court also validated the FCC’s reclassification of mobile broadband Internet access as a private, non-common carrier service, despite an amendment to the Communications Act creating a definition for Commercial Mobile Service provided by cellular companies in their provision of voice and text services accessible to and from the wireline public switched telephone network (“PSTN”). [8] The court was predisposed to side with the FCC so that the Commission would not have to confront a “statutory

contradiction” [9] of having reclassified wired broadband access an information service, but not its wireless counterpart that the FCC increasingly believes constitutes a functional and competitive alternative.  Such regulatory asymmetry could adversely impact the commercial attractiveness of wireless services, particularly if one believes any sort of government oversight imposes costs, such as reduced innovation, infrastructure investment and flexibility.

            The court addresses three areas that support the FCC’s information services reclassification.  First, the court notes that the applicable statutory language uses public switched network and not public switched telephone network.  The absence of telephone, in conjunction with the Chevron Doctrine and the Brand X case precedent, supports “leaving the door open to a different, adequately supported, reading, which the Commission has provided here.” [10] The FCC now considers the use of IP addresses, in conjunction with telephone numbers, as sufficiently uncoupling wireless broadband networks from the telecommunications service classification even though cellular telephone networks surely provide voice telephony, including access to the wired PSTN, in addition to broadband Internet access.  The court also accepts the FCC’s argument that even though Voice over the Internet Protocol services make it possible to originate and receive telephone calls, that functionality by itself does not make wireless networks fully interconnected with the PSTN, nor does it deemphasize the core, non-telecommunications nature of broadband Internet access.  In a nutshell, “blurring [of information and telecommunications services] is not erasing.” [11] Lastly, the court supports the FCC’s determination that mobile broadband does not qualify as a functional equivalent to mobile voice even though consumers use a single handset and wireless network to access both services.

            Arguably the most questionable aspect of the court’s decision lies in its endorsement of sponsored research claiming to show that network neutrality regulation had a direct and significant impact on infrastructure investment and innovation. As part of its analysis to determine whether the FCC acted reasonably and not in violation of the Administrative Procedure Act prohibition on arbitrary and capricious decision making, the court reviews the evidentiary record.  The court did not question the validity, significance, methodology, or rigor of research supporting the Commission’s view that network neutrality rules and regulations created significant disincentives for innovations and investment.  Instead it appears to downplay the scope, nature and reliance of the Commission’s reference to sponsored research supporting its views established well before the issuance of a decision.  While deeming the FCC’s references and reliance on these studies as reasonable, the court also appears to characterize the Commission’s use of the research as minor and fully apprised of the “modest probative value to studies attempting to draw links between the Title II Order and broadband investment . . ..”[12]  This characterization does not jibe with the many instances where FCC rulings [13] and statements by Chairman Pai [14] and others emphasized the disastrous impact on network neutrality regulation. The FCC and D.C. Circuit refer to Title II regulation as “utility-style regulation,” [15] even though the FCC had established rules that substantially exempted broadband Internet access providers from conventional oversight including the elimination of any regulation of rates for service, or profit margins. [16]

            The court did not entirely endorse the FCC’s world view and deregulatory agenda.

The court rejected as unlawful the FCC’s attempt to foreclose any state regulation inconsistent with the Commission’s policy including efforts to impose network neutrality regulations for over which he Commission now lacks jurisdiction. [17] In effect, the FCC cannot abandon jurisdiction over broadband Internet access and then foreclose states from asserting jurisdiction over intrastate service: “[I]n any area where the Commission

lacks the authority to regulate, it equally lacks the power to preempt state law.” [18]

We can expect some states, such as California, New York and Vermont to enact network neutrality regulations that the FCC probably will reject as unlawful despite the clear direction provided by the D.C. Circuit.

            Additionally, the court considered it arbitrary and capricious for the FCC not to have considered the implication for public safety in light of the Commission’s statutory duty to promote “safety of life and property through the use of wire and radio communications.” [19]  The court noted that Verizon had deliberately slowed the data speeded available to first responders in California as they tried to contain forest fires.  Such “throttling” is now permissible under the FCC rules, but the court required the Commission to address its impact on public safety.

            The court also recognized that the FCC left unresolved issues pertaining to pole attachments, because the FCC shares jurisdiction with states and municipalities on this matter and providers of cable, telecommunications and information services seek access to utility poles even though the directly applicable statutory mandate, 47. U.S.C. § 224(a)(4) refers only to Title II regulated telecommunications services. [20]

            The court also required the FCC to address the impact of the largely deregulated information services classification on the Lifeline Program that subsidizes low-income consumers’ access primarily to Title II regulated telephone service and handsets. [21]  The court determined that the FCC left unanswered important questions whether stand alone broadband service providers can qualify for universal service funding despite eligibility criteria limiting eligibility to Title II regulated common carriers. [22]

           

           

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[1]           Mozilla Corp. v. FCC, No. 18-1051 (D.C. Cir. Oct. 1, 2019); Retrieved from: https://www.cadc.uscourts.gov/internet/opinions.nsf/FA43C305E2B9A35485258486004F6D0F/$file/18-1051-1808766.pdf [hereinafter cited as Mozilla Corp. v. FCC].

[2]           “Regulation of broadband Internet has been the subject of protracted litigation, with broadband providers subjected to and then released from common carrier regulation over the previous decade. We decline to yet again flick the on-off switch of common-carrier regulation under these circumstances.” Id. at 145-46.

[3]           Id. at 13.

[4]           “[J] just as the USTA petitioners ‘fail[ed] to provide an unambiguous answer to’ whether ‘broadband providers make a standalone offering of telecommunications,’ USTA, 825 F.3d at 702, Petitioners have not done so here. Nor have they shown the Commission’s stance to be unreasonable. We conclude, under the guidance of Brand X, that the Commission permissibly classified broadband Internet access as an ‘information service’ by virtue of the functionalities afforded by DNS and caching.” Id. at 45.

[5]              National Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967 (2005).

[6]              See Rob Frieden, What Do Pizza Delivery and Information Services Have in Common? Lessons from Recent Judicial and Regulatory Struggles with Convergence, 32 RUTGERS COMPUTER & TECH L.J., No. 2, 247-296 (2006).

[7]              “To begin with, Petitioners misconstrue USTA. As they do persistently, they gloss passages that find parts of the Title II Order to be permissible readings of the statute as mandating those readings—when the passages plainly do not do so. A case in point is the treatment of the TME. Petitioners say that ‘[t]his Court has already agreed that DNS and caching fall within the terms of the telecommunications management exception.’ Mozilla Br. 43 (emphasis added) (citing USTA, 825 F.3d at 705). Yet all we said in USTA was that we were ‘unpersuaded’ that the FCC’s ‘use of the telecommunications management exception was * * * unreasonable.’ USTA, 825 F.3d at 705. The Title II Order, in other words, adopted a permissible reading, though not a required one.”  Mozilla Corp. v. FCC at 23.

[8]           47 U.S.C. § 332, Mobile Services (2018).

[9]           See Mozilla v. FCC at 49.

[10]          Id. at 50. “Similarly in USTA we rejected a claim that 47 U.S.C. § 1422(b)(1)(ii)’s use of the term “public switched network”— in a context pretty clearly meaning only the telephone network—meant that the Commission was required to so limit its definition for purposes of Section 332.  Id. at 52.

[11]          Id. at 58.

[12]          Id. at 76.  Empirical studies are available that measure actual investment outcomes.  See, e.g., Christopher Alex Hooton, Testing the economics of the net neutrality debate, TELECOM POL’Y (Sep., 2019); retrieved from: https://doi.org/10.1016/j.telpol.2019.101869.

[13]          “[T]he record shows that the existing regulations constrain technological advances and deter broadband infrastructure investment by creating disincentives to the deployment of facilities capable of providing innovative broadband Internet access services.” Appropriate Framework for Broadband Access to the Internet Over Wireline Facilities, Report and Order and Notice of Proposed Rulemaking, 20 F.C.C. Rcd. 14853, 14865 (2005).

[14]         “These Internet regulations will work another serious harm on consumers. Their broadband speeds will be slower than they would have been without these regulations.

The record is replete with evidence that Title II regulations will slow investment and innovation in broadband networks.” Protecting and Promoting the Open Internet, Report and Order on Remand, Declaratory Ruling, and Order, Dissenting Statement of Commissioner Ajit Pai, 30 F.C..C Rcd. 5601, 5927  (2015).

[15]          See Mozilla v. FCC at 10.

[16]          The court did find troubling “the Commission’s failure to grapple with the fact that, for much of the past two decades, broadband providers were subject to some degree of open

Internet restrictions,” arguably ample time to adjust to any regulatory restrictions.  See, Id. at 86.

[17]          “The Commission ignored binding precedent by failing to ground its sweeping

Preemption Directive—which goes far beyond conflict preemption—in a lawful source of statutory authority. That failure is fatal.” Id. at 121.

[18]          Id. at 123.

[19]          Id. at 93 citing 47 U.S.C. §151.

[20]          Id. at 104. “The Commission offered, at best, scattered and unreasoned observations in response to comments on this issue. Because the Commission did not adequately address

how the reclassification of broadband would affect the regulation of pole attachments, we remand for the Commission to do so.” Id. at 104-05.

[21]          In the Telecommunications Act of 1996, Congress codified and expanded the FCC’s universal service mission to cover “an evolving level of telecommunications services that the Commission shall establish periodically * * *, taking into account advances in telecommunications and information technologies and services.” 47 U.S.C. § 254(c)(1).

[22]          “[B]roadband’s eligibility for Lifeline subsidies turns on its common-carrier status. See In re FCC 11-161, 753 F.3d 1015, 1048–1049 (10th Cir. 2014) . . . As a matter of plain statutory text, the 2018 Order’s reclassification of broadband—the decision to strip it of Title II common-carrier status—facially disqualifies broadband from inclusion in the Lifeline Program.” Mozilla v. FCC at 111.