Tales of the Sausage Factory

Ninth Circuit Knee-Caps Federal Trade Commission. Or: “You Know Nothing, Josh Wright.”

Back in October 2014, before the Federal Communications Commission (FCC) reclassified as Title II, both the FCC and the Federal Trade Commission (FTC) brought complaints against AT&T Mobility for failure to disclose the extent they throttled “unlimited” customers once they passed a fairly low monthly limit. You can see the FCC Notice of Apparent Liability (NAL) here. You can see the FTC complaint, filed in the district court for Northern California, here (press release here). As some of you may remember, the FCC was still debating whether or not to reclassify broadband as a Title II telecom service.  Opponents of FCC reclassification (or, indeed, of any FCC jurisdiction over broadband) pointed to the FTC enforcement action as proof that the FTC could handle consumer protection for broadband and the FCC should avoid exercising jurisdiction over broadband altogether.

 

In particular, as noted in this Washington Post piece, FTC Commissioner Maureen Olhausen (R) and then-FTC Commissioner Joshua Wright (R), both vocal opponents of FCC oversight of broadband generally and reclassification specifically, tweeted that the FTC complaint showed the FTC could require broadband providers to keep their promises to consumers without FCC net neutrality rules. Wright would subsequently reiterate this position in Congressional testimony, pointing to the FTC’s enforcement complaint under Section 5 of the Federal Trade Commission Act (FTCA) (15 U.S.C. 45) as an “unfair and deceptive” practice to prove that the FTC could adequately protect consumers from potential harms from broadband providers.

 

Turns out, according to the Ninth Circuit, not so much. As with so much the anti-FCC crowd asserted during the net neutrality debate, this turns out (pending appeal) to be dead wrong. Why? Contrary to what some people seem to think, most notably the usual suspects at Cable’s Team Rocket (who are quoted here as saying “reclassifying broadband means the FTC can’t police any practices of common carriers, at least in the Ninth Circuit” which is either an utterly wrong reading of the case or an incredibly disingenuous remark for implying that reclassification had something to do with this decision. You can see their full press release, which borders on the Trump-esque for its incoherence, here.)

 

As I explain below, the Ninth Circuit’s decision did not rest on reclassification of broadband. To the contrary, the court made it explicitly clear that it refused to consider the impact of reclassification because, even assuming mobile broadband was not a Title II service, AT&T Mobility is a “common carrier” by virtue of offering plain, ordinary mobile voice service (aka “commercial mobile radio service,” aka CMRS). The Ninth Circuit agreed with AT&T that because AT&T offers some services as common carrier services, AT&T Mobility is a “common carrier” for purposes of Section 5(a)(2) of the FTCA and thus exempt from FTC enforcement even for its non-common carrier services.

 

Given that Tech Freedom and the rest of the anti-FCC gang wanted this case to show how the Federal Trade Commission could handle all things broadband, I can forgive — and even pity — Tech Freedom’s desperate effort in their press release to somehow make this the fault of the FCC for reclassifying and conjuring an imaginary “gap” in broadband privacy protection rather than admit Congress gave that job to the FCC. After all, denial is one of the stages of grief, and it must come as quite a shock to Cable’s Team Rocket to once again see that Team PK-chu was right after all (even if it doesn’t make me particularly happy that we were, for reasons I will explain below). But this is policy, not therapy.  As of today, instead of two cops on the beat for broadband consumer protection access, we have one — the Federal Communications Commission. Fortunately for consumers, the FCC has been taking this job quite seriously with both enforcement actions and rulemakings. So while I consider it unfortunate that Ninth Circuit has cut out the FTC on non-common carrier related actions by companies offering a mix of common carrier and non-common carrier services, the only people who need to panic are Tech Freedom and the rest of the anti-FCC crowd.

 

OTOH, longer term, this does create a more general concern for consumer protection in more deregulated industries (such as airlines) covered by the exemptions in Section 5 of the FTCA. Yes, I know most folks reading this blog think the universe revolves around broadband, but this decision impacts airlines, bus services, private mail services like UPS, and any other company offering a common carrier service “subject to the Acts to regulate Commerce.” (15 U.S.C. 45(a)(2))  (Also meat packers and a few other named exceptions). So while I am hopeful the FTC appeals this to the full Ninth Circuit for en banc review (and even the Supreme Court, if necessary) from a general consumer protection perspective, the only direct result of this case for broadband policy is to underscore how important it is for the FCC to do its job despite the industry nay-sayers and their Libertarian cheerleaders.

 

More below . . .

 

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Tales of the Sausage Factory

H.R. 2666: House Prepares to Give ISPs License To Price Gouge (Even More).

The House Rules Committee has scheduled a floor vote for Friday April 15 (today!) for an amended version of H.R. 2666 aka the “No Rate Regulation of Broadband Internet Access Act,” aka the “Twice The Evil of the Beast” Act. Ostensibly, the bill is supposed to codify the commitment made by President Obama, FCC Chair Tom Wheeler, and just about everyone else that the FCC would never use the classification of broadband as a Title II service to engage in “utility style rate regulation.”

 

Surprise! As I explain in a much shorter version over here, H.R. 2666 basically removes the authority of the FCC to take action on any complaints relating to overcharges, fees or other nasty practices that broadband providers may do to overcharge you — provided they disclose them honestly (and, since there is not exactly a lot of competition, disclosure doesn’t help much). It also effectively strips the FCC of its authority to address zero-rating — even in the worst anticompetitive cases where a provider zero-rates its own content while applying its broadband cap (however discriminatory) to rival services. Along the way, it renders various merger commitments involving offering low cost service to the poor unenforceable and has lots of other nasty impacts.

 

Needless to say, the collective trade associations of the broadband industry are thrilled.

 

That’s not just me talking. That’s from the President’s veto threat message. Additionally, this group of 50 public interest groups think H.R. 2666 is a very, very bad bill, and 30 groups signed on to this letter explaining how H.R. 2666 will screw up privacy protection by letting ISPs charge you for it (aka “pay for privacy” like this from AT&T).

 

I’m going to repeat a pitch here I will repeat often: If you think letting broadband providers price gouge and undermine net neutrality is a bad thing, please call your Representative in the House directly, or use this link to go to BattleForTheNet.com and call your Representative (they have a tool to help find your Rep and have a script — but use your own words, that is always more convincing.

 

Made your call? Good. See below for lots more details so you can explain to your friends why they should call. . . .

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Tales of the Sausage Factory

The Last Time The FCC Classified A Service As Title II Was 2007. Here’s How It Worked.

Predictably, as we get closer to actually adopting Title II for broadband, we see much scrambling about by folks who never seriously considered the question of how Title II would actually work because no one in the press or the opposition ever really thought it could get that far. Opponents of Title II, needless to say, describe a blasted bureaucratic Hellscape smothering broadband service with (to quote the latest missive from a bunch of House and Senate Republicans) “1000 active rules that are based on Title II, and 700 pages of the C.F.R.”

 

After 6 solid years of Republicans opting for the partisan politics of obstruction rather than engaging on substance, such ridiculous claims hardly come as a surprise. It’s also a rather silly argument given that the bulk of those rules address things that would not apply to broadband and that everyone — even Republicans — actually like: making sure  9-1-1 works reliably, fixing rural call completion problems, keeping track of phone reliability and phone outages during natural disasters, protecting the privacy of our phone calls and requiring providers to report data breaches, etc.

 

Still, even without deliberate efforts to muck things up and exaggerate things, I recognize that this whole “Title II” thing doesn’t happen every day and lots of folks have questions about what the heck does this all mean. As I (and others) have noted in the past, classification doesn’t have to be a big deal. To illustrate this, I will go back to the last time the FCC classified a service — automatic voice roaming in the wireless world — as a Title II service. As we will see, this took remarkably little effort. The FCC explicitly rejected the requirement to do rate regulation or a requirement to file tariffs with the prices and did not need to engage in any extensive forbearance. They just said “nah, we’re not gonna do that.” The final adopted rules are less than a page and a half.

 

I will also note that despite classifying automatic voice roaming as a Title II service in 2007 (and classifying mobile wireless phone service as a Title II service in 1993), the wireless industry seems to be doing OK, with more than 300 million subscribers and (as CTIA never tires of telling us) several gagillion dollars worth of capital investment.

 

The automatic voice roaming decision also provides a nice comparison with a similar service classified under NOT TITLE II some years later. In 2011, the FCC issued an Order adopting data roaming rules, but couldn’t bring itself to go the Title II route. The result was an insanely complicated “commercial reasonableness” standard which requires wireless carriers to negotiate under a bunch of vague guidelines that still allow carriers to avoid coming to an actual deal. As the D.C. Circuit pointed out in affirming this approach, the FCC needed to leave enough room for carriers to discriminate against each other to avoid triggering the “common carrier prohibition.” Recently, T-Mobile (which opposes using Title II) filed a Petition on data roaming with the FCC alleging that the existing “commercially reasonable” standard is utterly useless unless the FCC adopts a bunch of “benchmarks” and presumptions to put some teeth into the standard. Without getting into the merits of the data roaming petition (which my employer Public Knowledge supports), it is interesting to compare how the Title II automatic voice roaming worked out v. the Title III/Title I data roaming rules.

 

I do not claim that reclassifying broadband as a Title II service (which, as I have noted before, was tariffed back in the day it was Title II) is exactly comparable. Rather, I offer this as an example of the principle of the Black Swan. Just as the appearance of a single black swan falsifies the statement “all swans are white,” the hysterical ravings of the anti-net neutrality crowd that classifying something as Title II would require the FCC to impose price controls, tariffs, and the occasional human sacrifice to avert structural separation is falsified by demonstrating that the FCC has, in the past, classified services as Title II and did not impose any of these things. In fact, the Title II solution worked out much better than the NOT TITLE II alternative.

 

More detail below . . . .

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Tales of the Sausage Factory

What To Expect From The National Broadband Map.

Hey everyone, remember the National Broadband Map? As part of the Broadband Stimulus in the American Recover and Reinvestment Act (ARRA), Congress let the National Telecommunications Information Administration (NTIA) use a chunk of money to fund a national broadband map that they had ordered NTIA to create in 2008 as part of the Broadband Data Improvement Act (BDIA). Congress ordered NTIA to finish the project by February 17, 2011. NTIA handed out a chunk of change to make it happen back in 2009, and no one has heard much about it since.

NTIA has now leaked that they plan to release the first iteration of the map on February 17 – the day Congress ordered them to release it. This gives NTIA serious bragging rights at the next social get together with the Federal Communications Commission (FCC). “Yes, we got it done on time.” Asst. Secretary Larry Strickling, head of NTIA will say to FCC Chairman Julius Genachowski over a plate of nachos. “It would have been so awkward to have to ask for a month extension. We spent all our grant money on time as well, despite having to totally invent a multibillion dollar program and a tracking system from scratch. Really, staying on time isn’t that hard. You just need to have a plan. Speaking of which, how goes the National Broadband Plan implementation? Still on track?” At which point Genachowski will smile politely and head off for another mojito.

My predictions for the National Broadband Map below:

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Tales of the Sausage Factory

First Step Reforming FCC’s Universal Service Fund? An Honest Evaluation of the Goals and Trade offs.

The problem of reforming the Universal Service Fund (USF) without Congressional direction means working without clear guidance on what the FCC should, institutionally, hope to achieve. “Broadband!” Is the usual answer from reform proponents. “Basic broadband for everyone! And eliminate waste. And spur investment. And promote innovation. And create jobs. And education. And –“ Well, you get the idea.

Listening to the FCC Commissioners at the open meeting, and reading through the released materials, my sense is the FCC has decided that we ought to maximize the number of people who have access to a threshold level of broadband. That’s not necessarily a bad goal. At the same time, the general impact of the proposed reforms favor larger carriers providing minimal service over smaller, local providers that may provide significantly better service.  That may still end up being the best way to maximize “bang for the buck” and may ultimately benefit the largest number of Americans. But if we are going to make that choice, we ought to do it explicitly, and in a way that minimizes the harm to those who did a good job under the old rules. Even better, we ought to consider whether we will really get the broadband bang for the USF buck the FCC appears to expect by reverting to what is, in essence, a return to the universal service model we had under the AT&T monopoly and the Communications Act of 1934 rather than the more locally-oriented model adopted by Congress in the Telecommunications Act of 1996.

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Tales of the Sausage Factory

Why We Care About Broadband Policy, Not Competititon.

I’m back from my week of travels, where lousy broadband connectivity prevented me from blogging my trip to the NARUC Summer Conference and trip to Netroots Nation. Hopefully, I will get to fill in some of the blanks. NARUC (the National Association of Regulatory Utility Commissioners) passed some good Telecom resolutions supporting the FCC’s reclassification of broadband back into the Title II telecom box (although reminding the FCC that states have an important role to play and therefore to use preemption sparingly), and urging the FCC to address early termination fees for cell phone services.

So to get the ball rolling, here is a reprint of my opening remarks in the “framing debate” between myself and Ray Gifford from our Wed. morning NARUC Telecom session. As regular readers know, I’ve argued that things like Network Neutrality are right as a matter of economics (that is, they promote a better economic outcome for everyone: see economists make this argument here and here), that it is critical as a matter of First Amendment freedom and to prevent “virtual redlining.” Below I add an additional argument, what Ray characterized (and I agree) is a “progressive era” argument for why we care about broadband policy.

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Tales of the Sausage Factory

Genachowski Hits The Legal Reset Button — “Title II Lite”

Genachowski has announced his proposed response to the Comcast case. This is precisely the result Comcast and the other carriers feared since the DC Circuit panel signaled at oral argument they would slam the FCC.  In my latest “5 Minutes With Harold Feld,” I give a short (at least, as short as I can) explanation of what this “Third Way” (also referred to as “Title II Lite”) means and what happens next from a process perspective. Some additional analysis, laughing at Wall St. analysts, and reference to a Dilbert from 1992 below . . .

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Tales of the Sausage Factory

A Bad Bit of Timing For RCN — Public Comment Opens On Merger Day After Blocking Goes Public.

Welcome back everyone to the new and improved Wetmachine.com! I beg everyone’s indulgence while I figure out our new interface.

Every now and then, the universe hands you some lousy timing. Case in point for RCN. Back in March, when RCN announced its pending acquisition by Yankee Group, no one gave it a second thought. It all looked very uncontroversial and part of the natural consolidation for the few survivors of the debacle we call “intermodal competition.” But in what RCN can only view as the worst possible timing, the FCC put the deal out for public comment right after several stories that RCN had settled a class action for blocking p2p applications in a manner reminiscent of Comcast. (RCN “vigorously denies all wrongdoing,” but it is unclear whether they deny blocking or whether they deny they did anything wrong by blocking.)

Why does this matter? Because RCN has just become the prime opportunity for the FCC to answer the question “What’s our authority after the Comcast/BitTorrent case?

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Tales of the Sausage Factory

Why Don’t Broadcasters Become “Spectrum Innovators?” Because They Like Being Broadcasters.

Can’t help but take a brief break from the Net Neutrality craziness to be mildly amused at Adam Thierer over at Tech Liberation Front. We have an increasing number of reports that Blair Levin wants to bribe broadcasters to get off their spectrum as part of the national broadband plan. Adam is very excited by this and, of course, brings up the usual Libertarian argument that because property solves all problems, we should just make the broadcast licenses property of the broadcasters and let the endless innovation begin.

The problem with argument is that broadcasters could already do this. Under 47 USC 336(b), broadcasters can use their digital spectrum to provide “ancillary and supplementary services.” In a series of orders, the FCC has said that as long as full-power broadcasters provide one free over the air digital channel, they can do whatever they want with the remaining spectrum — including lease it out in the secondary markets to someone else. Under the statute, broadcasters need to pay a fee for any such ancillary services that would be the functional equivalent of what the broadcasters would have paid for the spectrum at auction (47 USC 336(e)), which the FCC has fixed at 5% of any annual revenue from the ancillary services.

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Tales of the Sausage Factory

My Weekly Five Minutes of Fame — I Explain the National Broadband Plan In Five Minutes.

We are starting a new feature at Public Knowledge called “Five Minutes With Harold Feld,” wherein I will take insanely boring complicated wonkery and make it mildly less boring. This week, I explain the National Broadband Plan and the comments PK filed last night.

Stay tuned . . . .

Posted in Tales of the Sausage Factory, The Stimulus Package (ARRA) | Also tagged , , | 3 Comments (Comments closed)
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