Tales of the Sausage Factory

Title II Doesn’t Give FCC New Rate Regulation Powers — For One Thing, Section 706 Already Did That.

As we get closer to the Federal Communication Commission (FCC) historic vote on reclassifying broadband as Title II, we descend further into a phenomena I refer to as #broadbandghazi. Crazy conspiracy theories and wild allegations abound, with the faithful ever insisting that the latest revelation proves, PROVES I SAY, the nefariousness of the evil dictator and tyrant Obama. The very fact that there is no actual evidence only proves how NEFARIOUS and EVIL are his ObamaPlans ™, etc.

 

Case in point, the oft repeated meme by opponents of Title II that Section 201 — by its very nature — imposes “utility style rate regulation” on broadband. Commissioner Pai, who has come to exceed even his usual histrionics on this particular subject, dramatically and repeatedly pushed this meme at his recent press conference. “The American people are being misled by about President Obama’s plan to regulate the Internet,” dramatically declaimed Pai, not sounding in the least like a crazed-conspiracy theorist. (And no, I’m not exaggerating, that actually was his opening line. See his statement here.) “the claim that President Obama’s Plan to regulate the Internet does not include rate regulation is flat out false.” (emphasis in original, *sigh*) When pressed to explain whether he accused Chairman Wheeler of being a liar, Pai demurred slightly, explaining that while everything Wheeler said about forbearing from the explicit price regulation statutes, Section 201(b) (47 U.S.C. 201(b)), by prohibiting all rates and practices that are “unjust and unreasonable,” by its very nature imposes “utility style price regulation” on broadband since it would allow people to bring complaints that the price charged is unjust and unreasonable. Q.E.D. Accordingly, no matter what the FCC Order actually forbears from or says, PRICE REGULATION IS COMING!! BE AFRAID AMERICA!! UTILITY! UTILITY! Pai in particular points out that the proposed Order will — *gasp* — allow consumers to file complaints and even use the courts if broadband providers rip them off with unjust or unreasonable rates and practices. “The plan repeatedly invites complaints from end users and edge providers alike,” warns Pai, apparently unaware that most people like the idea of a consumer protection agency like the FCC being authorized to take complaints when companies screw them over with unjust and unreasonable rates (as demonstrated by this delightful “Ode to Comcast (while waiting for the cable guy)”).

 

A few problems with this argument. First and foremost, Section 706 (47 U.S.C. 1302(a)) explicitly directs the FCC to use “price caps” to promote broadband deployment. In fact, if you go read the statute, price caps are the first explicit authority the FCC is already directed to use under Section 706. Keep in mind that Section 706 applies to broadband already under Title I. So to the extent the argument is based on the idea that language in 201 adds new authority, this argument fails. The explicit directive in Section 706 for the FCC to use price caps as direct rate regulation far exceeds any secret plan to regulate prices by implication from the language in Section 201 despite lots of forbearance to the contrary.

 

Indeed, given the explicit price cap language in Section 706, the FCC forbearance from future price regulation tied to reclassification actually reduces the likelihood of “utility style rate regulation” from the existing Section 706 authority (because, as I discussed back in this blog post on forbearance, the FCC can actually forbear from future obligations that don’t exist yet).

 

There are lots of other problems with this argument as well, as Politifact found when Ted Cruz first raised it back in November. So I elaborate on all the reasons the “Section 201 means utility style price regulation” is bogus #broadbandghazi conspiracy mongering below. . . .

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Tales of the Sausage Factory

Title II Forbearance Is Actually So Easy It Makes Me Want To Puke.

For those following the debate around whether to classify broadband access service as a “Title II” telecommunications service under the Communications Act of 1934, you may have heard about a thing called “forbearance.” For those unfamiliar with telecom law lingo, “forbearance” refers to  a special magic power that Congress gave the FCC as part of the Telecommunications Act of 1996 — the major edit/update Congress did almost 20 years ago. The 1996 Act added Section 10 (now codified at 47 U.S.C. 160) which gives the FCC the power to say “you know that specific provision of law that Congress passed? We decide it really doesn’t make sense for us to enforce it in some particular case, so we will “forbear” (hence the term ‘forbearance’) from enforcing it.” Or, as the D.C. Circuit explained in a case called Orloff v. Federal Communications Commission, once the FCC invokes forbearance and decides to forbear from a particular statute, the statute for all practical purposes disappears.

 

For those familiar with the argument, you will also know that the anti-Net Neutrality camp argues that getting the FCC to forbear from any rule is such a horribly complicated and detailed market-by-market analysis that the FCC couldn’t possibly grant the kind of broad, nationwide forbearance we would need to make Title II workable. As someone who actually lived through the 8 years of the Bush Administration and saw almost every single pro-competition provision of the 1996 Act stripped away by forbearance proceedings, I can only say “hah, I wish.”

Anyone who actually troubles to look up cases like Earthlink v. FCC or Ad Hoc Telecommunications Users Committee v. FCCor a bunch of other FCC and DC Circuit cases that are not that hard to find, you will discover that Forbearance is so easy it makes a consumer protection and rule of law guy like me want to puke. Srsly, the standards on this are so low, and so deferential to the FCC, that if Chairman Wheeler stands up at an open meeting and chants “Broadband is great, competition is good, be deregulated like you should. All in favor say ‘aye!'” — and then at least two other Commissioners vote yes — the DC Circuit will affirm it. Heck, according to ATT, Inc. v. FCCyou can even forbear as against potential obligations that don’t even exist yet.

Not that I expect mere facts to alter firmly held opinions that have become factesque. What Paul Krugman has termed the Very Serious People of telecom have all decided that Title II is a terrible onerous thing and that forbearance is just not going to make it work — despite the fact that the stupid cell phone you’re using couldn’t even have existed if Congress hadn’t made it Title II in 1993 by adding Section 332(c) of the Communications Act and the only non-Title II service we have other than broadband access — cable service — is widely regarded a monopolistic nightmare with all the innovating power of a fossilized brick. But the lawyer and eternal optimist in me keeps trying. So I unpack all this below — with lots of quotes because I know most of y’all not gonna actually click through to the cases.

Besides, I do a My Little Pony (MLP) mashup below because “Broadband is magic!” And that always cracks me up. . . .

 

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