Marvin Ammori

President Obama’s FCC Chairman, Julius Genachowski, has a reputation in DC of being a “tepid” regulator. From reports of his net neutrality proposal, he’s living up to that reputation.

The proposal does not meet Obama’s campaign promises, or Obama’s other agencies’ actions, on net neutrality. It is “make-believe net neutrality.”

Here are why the proposal is a meaningless gesture.

• It exempts wireless. Like the Google-Verizon proposal, Julius’s makes an artificial distinction between accessing the Internet through a wire and through a wireless connection. No nondiscrimination rule applies to wireless. The Chairman’s fig leaf is to ban “blocking” on wireless, but not discrimination. And this ban on blocking applies only to voice and video technologies–not new and innovative technologies yet unimagined. That is, this proposal is weaker than the Republicans’ 2005 policy principles, which would forbid all blocking; the proposal is nowhere near including a “fifth principle” of nondiscrimination on wireless that Democrats long called for. This wireless exemption comes despite predictions that, within the decade, most users will access the Internet wirelessly. It also comes despite the FCC’s National Broadband Plan betting on wireless to expand Internet access–a bet that would require broadcasters and government agencies to abandon spectrum holdings.Under Julius’ proposal, Sprint Wireless could discriminate against, say, Skype, degrading it to make it less reliable–so long as they don’t block it. Outside voice or video, anything is fair game. AT&T Wireless could make its own social network load faster than Facebook, or could make Fox News or MSNBC load faster than CNN or BBC, based on payments. While Skype, Facebook, and Fox News could maybe fend for themselves, innovative start-ups will be unable to reach wireless users without permission from gatekeepers like AT&T.
• The proposal may not ban paid-priority. A ban on paid priority is central to any real net neutrality proposal, beginning with the Snowe-Dorgan bill of 2006. Indeed, the notion of “payment for priority” is what started the net neutrality fight; in late 2005, AT&T’s CEO said that Vonage and Google had to stop using his pipes for free. The only way a carrier could charge for priority is if basic Internet access was not sufficient for a company to compete; if Yahoo! does need priority to compete effectively, why pay? Without a ban on paid priority, we can expect basic access to deteriorate so companies have to pay for priority.  I am guessing the proposal does not ban paid priority clearly because of earlier reports, and because recent reports refer to “unreasonable discrimination.”  “Unreasonable discrimination” is a term from section 202 of the Communications Act, and has applied to phone companies’ pricing. AT&T has long argued that phone companies could differentially price for access under section 202, so “unreasonable discrimination” would permit charging Google a price for priority, so long as that price were available to all other search engines. This could lead to exclusive deals. AT&T can simply set a high, monopoly-level price for search-engine priority that only Google can pay, one that no upstart (like StumbleUpon?) could afford.
• There may no jurisdiction for any of this anyway. In April, the D.C. Circuit interpreted Title I of the Communications Act narrowly, severely curtailing the FCC’s ability to adopt rules for Internet access. This was the Free Press-Comcast decision, which the FCC General Counsel argued for the FCC and I argued for consumer groups and tech companies. It was a shellacking. After a month of studying the question, the FCC General Counsel concluded the obvious: relying on Title I authority after that case was irresponsible and doomed to failure. The Chairman made a video explaining how the FCC should rely on authority under Title II, which is something that several Justices of the Supreme Court (including Scalia) thought the FCC should have done from the beginning. The Chairman described reclassifying to Title II as the principled center, but without principle, the center keeps shifting.In the proposal, the FCC will not reclassify. It will either build its house on the sand of Title I, citing multiple provisions as it did in the Free Press-Comcast case, expecting an obvious repeat-shellacking. Reports suggest a “new” theory, with “additional analysis.”  Reading between the lines, this may be the theory that was discussed months ago, even before the FP-Comcast decision was issued. This theory, which I remember discussing as early as 2007, rests on section 706 of the 1996 Telecommunications Act (codified at 47 USC 1302). I am skeptical that provision can support net neutrality, even after the negative report described in that section, but I will wait to see the details. Certainly, this is an untested theory, and its scope and outer bounds are unclear.
• Enforcement is unclear. It’s not clear if there are sufficient announced penalties or inexpensive, rapid procedures that start-ups and consumers could actually use.

Despite all these compromises, the Republicans have still come out guns blazing:

Rep. Marsha Blackburn (R-Tenn.) a member of the House Energy and Commerce Committee, said Tuesday afternoon that she would work to topple any FCC-led net neutrality order.

“This is a hysterical reaction by the FCC to a hypothetical problem,” she said, adding that Genachowski “has little if any congressional support” for the action. To overturn any order, Blackburn vowed to reintroduce her bill to prevent the FCC’s policy making process.

It’s like the famous (Lessig) quote: “Sold my soul and nothing happened.”