A Guide to the Network Neutrality Discussions at the FCC

A lot of people are discussing the FCC’s meetings on net neutrality. Many are discussing the process–”secret,” “backdoor,” “corporate behemoths,” or merely “stakeholder” discussions, depending on your point of view (from outside the room, or from inside). Others, noting the bizarreness of the whole process, are providing interesting psychoanalysis of the Chairman and his Chief of Staff. Though some have discussed substance, I thought it might be helpful to lay out the likely points of contention in these discussions and provide a guide for understanding, in advance, winners and losers in the negotiation.

The details probably mean more to me than most people, as I’m a telecom law professor who has spent several years litigating network neutrality issues.  (I am probably best known for being the lead lawyer on the net neutrality case against Comcast when Comcast blocked peer-to-peer technologies, and for arguing the appeal on behalf of groups supporting the FCC, working with many in the DC and academic community.) Assuming (for your sake) that you have not spent years steeping your mind in the details of net neutrality, this guide may help.

Why the details of a net neutrality deal will be confusing to the average person.

The details of the deal–like many laws and agency rules–will seem almost deliberately hard to understand. These details will be technical legal jargon penned by lobbyists–and a Chairman–who may not want the deal to be easily understood by the public. Insiders are speculating that the Chairman will endorse a hollow deal (if he doesn’t run out the clock), and then try to sell the deal as a grand victory for consumers. But that’s like speculating the sun will rise in the East. That is a standard political move; a politician names something the “Healthy Forest Initiative” or the “Clear Skies Initiative” or the “Open Internet Rule” whether or not the real legal details further your promised goal.

Whether or not the Chairman has a Hollywood mentality, he will claim any deal on his watch is a huge victory for the public interest. The Chairman is even rumored to be courting any nonprofit public interest group to to provide political cover for his deal, even if that nonprofit is significantly funded by interested corporations and never even joined the main pro-net-neutrality coalitions, SavetheInternet.com and the Open Internet Coalition, which have existed since 2006. In addition, of course, he has placed in the room favoring net neutrality not the leading nonprofit group long fighting for net neutrality (Free Press, who leads the SavetheInternet.com coalition and led the Comcast case, where I once worked), but Google, which has a commercial relationship with Verizon Wireless and is therefore likely willing to (literally) “sell out” the public on some issues of wireless net neutrality.

For those of you left who believe that a politician would never lie to you, keep in mind than many believe this FCC Chairman, Julius Genachowski, has followed the well-worn politician strategy–use legalistic details to cave to industry but fool the public–when he buckled to AT&T pressure and issued his “compromise,” loophole-riddled net neutrality proposal last October and then more recently, when he was leaning towards building net neutrality on hollow jurisdiction on jurisdiction before the Democratic base revolted and Genachowski announced the Third Way on Title II. Meanwhile, the same Chairman has repeatedly proclaimed his support for meaningful net neutrality, including this week through his press secretary, and serves under a President who promised to take a back seat to no one on the issue .

It is only well-positioned lobbyists that will know, from the details, if the Chairman is telling the truth when proclaiming a consumer victory.

But you should also know, even if you cannot afford a white shoe lobbyist.

The carriers’ bottom line in any negotiation: loopholes.

Having spent many years dealing with carriers, and reading about the negotiations, it’s clear to me that the carriers’ bottom line has not changed in five years and is very simple: they want a loophole. Of course.

Better yet, they want several loopholes, and they want to add a way to make enforcement of the deal impossible–essentially to build the loopholes on a trapdoor.

They only need one loophole, or one trapdoor, to gut the rule. So let’s say Chairman Genachowski says, in other words, “The carriers wanted 6 loopholes, but they only got one! What a great compromise.” That is not a “compromise” but a loss. It is not net neutrality but would instead authorize net neutrality violations through a loophole. The carriers need only one.

The pro-net-neutrality position is to stamp out the loopholes and ensure an open Internet. I noticed that another professor, Barbara van Schewick of Stanford, has provided a detailed analysis of some pro-net neutrality details in her recent ex parte letter. (And her recent book.) Derek Turner has done the same, to a lesser extent so far.

Eliminating the Open Internet With a Legal Dictionary

Net neutrality proponents want to prohibit ISPs like Verizon, Comcast, and AT&T from (1) blocking or discriminating for or against traffic (2) on the Internet, (3) whether consumers access the Internet through cable and DSL or wireless connections, (4) unless it is reasonable network management to ensure the operation of a nondiscriminatory network. And these advocates want (T1) a legal process that even start-ups could use, with clear rules and expedited procedures built on (T2) solid jurisdictional footing.

The carriers only need one loophole (1-4: discrimination, specialized non-Internet services, wireless, reasonable network management) or one trapdoor (T1-T2: ineffective process or lack of jurisdiction) to win. You can bet they are angling for all of them, and may “concede” one of them, to reach the goal they have spent millions trying to reach: no net neutrality. They have not suddenly found religion.

Loopholes.

  1. Blocking or discriminating. The carriers may concede “no blocking,” a minor limitation when you can degrade or discriminate, and would want to define unlawful discrimination very narrowly, enabling them to engage in all the discrimination they seek. First, they want to define discriminatory to include only antitrust violations or “harm to the consumer” likely amounting to antitrust harm.  But, because antitrust law does not take into account democratic speech concerns and has extremely weak standards imposed by conservative courts, antitrust enforcement will not ensure an open Internet. Net neutrality advocates have therefore always argued against mere antitrust rules.  Second, they want the right to engage in what they call “reasonable” discrimination, and claim that charging websites for priority (aka “paid priority“) is not discrimination. For the past 5 years, net neutrality opponents opposed paid priority (using analogies to a fast lane and a toll booth) and the President has twice affirmed his opposition to paid priority. Net neutrality proponents have argued that discrimination should be prohibited, and that paid priority is an easy case that can be prohibited in advance.
  2. Managed Services. As net neutrality is meant to keep “the Internet” open and free, the carriers have proposed the idea of new “non-Internet” services called specialized or managed services that enable them to end-run around net neutrality rules without oversight. It is unclear to me what the carriers believe these services to be, as different carriers say different things at different times. The whole point of this “specialized services” bucket is for carriers to take capacity on the same exact pipe that provides Internet access and allocate that capacity to pay-services where they can cut paid priority deals. This is an obvious, potential, end-run around the net neutrality rule, where wealthy content-providers (and those content-providers owned by the carriers themselves) can get special access to consumers that Internet start-ups and the rest of us would lack. Also, carriers will likely have incentives to allocate more and more capacity to these services at the expense of investing in Internet capacity–even though American networks have capacity and speeds trailing far far behind global leaders. Expect carriers to argue that the FCC currently lacks all authority over these new specialized services and that few or no rules should apply to the services. At best, expect carriers to argue that general antitrust law should apply, enforceable through the Department of Justice and Federal Trade Commission. Carriers have long argued this point. As discussed above, antitrust enforcement simply cannot ensure an open Internet, and net neutrality advocates have long opposed the notion.
  3. Wireless. The carriers want to exempt wireless.  Even though the National Broadband Plan claims wireless is the future of broadband (side-stepping an inconvenient policy issue), and though the Chairman is seeking 500 MHz of spectrum for broadband and previously proposed applying the same net neutrality policy to wireless connections, and though AT&T is reportedly asking to discriminate against Youtube, you can expect the carriers to argue no rules should apply to wireless. They always make this argument, and–in light of the Chairman’s support of more spectrum for wireless broadband–you would think the argument should fall on deaf ears. The carriers claim that disclosure is enough; the public should have the right to know which applications and sites a carrier is blocking. Net neutrality advocates have always argued mere disclosure is not enough because the wireless market is not competitive enough, because of switching costs, and because the market and disclosure will not be effective to ensure wireless access to an open Internet.
  4. Reasonable network management. In the Free Press-Comcast case before the FCC, Comcast argued that it could discriminate against BitTorrent so long as it could declare an activity to be “reasonable network management.” So if “discrimination” is narrowly defined, the carriers find a loophole in expansively defining the idea of “reasonable network management.” In that case, Free Press and others argued that reasonable network management includes techniques to ensure nondiscriminatory access to legal content, such as targeted security measures and acute, very temporary congestion management. In issuing the Comcast Order, the Republican Chairman proposed a strict test, requiring carefully tailored responses to critically important problems, but Genachowski’s net neutrality proposal in October did AT&T a favor and eliminated that strict test (issued by a Republican Chairman and two Democratic Commissioners), replacing it with nothing. If the FCC’s current grand deal leaves reasonable network management undefined, then it would provide no guidance to start-ups who’d be forced to litigate against AT&T’s super lawyers, before an FCC well-known to AT&T, over whether a particular practice fits within a nebulous concept of “reasonable.” Not good odds. An undefined exemption like this, built on the word “reasonable,” gives the carriers considerable leverage to engage in discrimination with impunity. Net neutrality proponents seek a very narrow standard for reasonable network management, as well as specific guidance in the law on what is clearly and what is clearly not reasonable.

Trapdoors.

  1. Legal process. Start-ups need quick, clear legal procedures, as do their venture investors. So do underfinanced consumer groups. Meanwhile, carriers benefit from expensive, drawn out affairs, where they can bleed start-ups to death through legal fees and lobbyists. If a process does not have specific prohibitions but rather has completely vague standards and  rebuttable “presumptions,” start-ups are disadvantaged.  We discussed vague standards like “reasonable” above, which provide start-ups little guidance and complex legal cases. As for “presumptions,” imagine a “presumption” against paid priority. A carrier will simply try to rebut the presumption, hiring any economist-for-sale to argue that a particular paid priority deal would be good for consumers. The start-up will then have to sink huge amounts of money in economists and lawyers to respond to the carriers’ rebuttal. That financial barrier disadvantages the small innovators that provide disruptive innovations benefiting all of us. (See also van Schewick’s analysis.)
  2. Jurisdiction. We need clear jurisdiction at the FCC to enforce any deal reached. But I have heard some pretty bizarre ways to enforce this deal, likely proposed by the carriers and entertained by the Chairman. Some include basing the deal in Title I of the Act (which means, after the Comcast decision, deliberately  building a house on sand, knowing it will collapse). Some suggest coupling this Title I idea with requesting an amicus brief from industry groups. (The thought of a regulator trading away the President’s core technology initiative for an industry amicus brief is something not even Hollywood could think of; I can’t believe this is seriously being considered.) Others suggest some consent decree that the FCC could, or could not, enforce, as though self-regulation could work, or the FCC could bind non-parties to the consent decree.  Another proposal includes packaging the deal for Congress. Yes, that same Congress that can’t pass anything controversial, and the one where carriers could easily stall a deal with their political might and campaign contributions. Those favoring net neutrality, which supposedly includes the Chairman, would not support any of these too-clever-by-half Rube Goldberg ideas, which appear designed to fail. Rather, a net neutrality supporter would favor a prompt Title II reclassification before the midterms, and adopt a net neutrality rule on the firmest footing of Title II. At the same time, for Congress’s benefit, the Chairman can pursue a parallel strategy encouraging Congress to codify a deal. Why place all your eggs in the Congress basket, when the Chairman has three votes at the FCC?

Which brings us back to the question of process: why is the Chairman even asking the companies he is supposed to regulate in the public interest … for their permission to regulate them?

On substance, this is the cheat sheet on technical details.  Hope it helps.

4 thoughts on “A Guide to the Network Neutrality Discussions at the FCC

  1. Mauricio says:

    Very good, thanks for sharing.

  2. [...] week I wrote up a guide of the FCC negotiations on net neutrality, setting out all the loopholes, and noting that the [...]

  3. [...] are many models (and factors) for implementing a network neutrality rule, but we will discuss two. For completeness, some of [...]

  4. [...] I will give upfront. On substance, they reveal why the FCC needs to ensure any of its rules are not riddled with loopholes permitting threats to an open Internet. On procedure, they reveal why the FCC needs to ensure it [...]

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