Tales of the Sausage Factory

Net Neutrality Litigation: Round 1 Goes To the FCC.

Good news! The D.C. Circuit denied the request by the carriers suing the Federal Communications Commission (FCC) to prevent the FCC’s net neutrality rules and reclassification of broadband as a Title II telecom service. As of today, the Net Neutrality rules are in effect, and broadband access is once again a Title II telecommunications service — pending the final outcome of the lawsuit challenging the the FCC’s actions.

 

Reactions from net neutrality opponents have ranged from defiance to “no biggie” with a side of trying to claim a partial win for getting expedited briefing (I’ll explain below why this is a tad disingenuous). On Twitter, I did see a few of my opposite numbers wailing and gnashing their teeth, at the prospect that their beloved Broadband Equestria ruled by the wise Queen Comcast Celestia and Princess Verizon Twilight Sparkle is now going to be converted into a Hellscape overrun with Tyrannosaurus Tariffs that will devour helpless ISPs like tourists dumb enough to go to Jurassic World. Needless to say, supporters of net neutrality and Title II, like my employer Public Knowledge, have been somewhat more upbeat.

 

So what does all this mean for the litigation and the ongoing machinations in Congress around net neutrality? Short version — the court was not impressed with the arguments of the carriers that the FCC was so whacky crazy power-usurping unlawful that this case is the slam-dunk reversal the carriers and their cheerleaders keep saying it is. Mind you, that doesn’t mean the FCC will win. But it does mean that opponents of net neutrality and Title II might want to ratchet back the TOTAL CONFIDENCE OF VICTORY they have exuded until now just a wee bit. It also provides a psychological lift to the pro-net neutrality side that the FCC can win this even in the D.C. Circuit.

 

On the political side, Republicans had hoped that a stay would push Democrats to the bargaining table to avoid the litigation risk. Because the FCC’s odds improve with the denial of the stay, this may have the opposite effect, with Democrats more likely to wait for a court decision rather than try to strike a deal. This could either prompt Republicans to sweeten their offer, or double down on efforts for total repeal.

 

I provide the longer version below . . .

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Tales of the Sausage Factory

First Round of Lawsuits Filed In Net Neutrality Case. Now What?

Yesterday, the U.S. Telecom Association (USTA), the trade association for incumbent telecoms like Verizon and AT&T, and a Texas WISP called Alamo Broadband, filed separate appeals from the FCC’s Order reclassifying broadband as Title II and applying net neutrality rules. (This Ars piece links to both Petitions). USTA filed in the D.C. Circuit, while Alamo filed in the 5th Circuit (which is generally considered one of the more hostile to the FCC).

 

I dig into this a bit, and try to explain what happens next, below . . .

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Tales of the Sausage Factory

Title II, Robert McDowell, And The Boy Who Cried ‘Black Helicopter.’

I noted with some considerable interest the February 17 Wall St. Journal Op Ed by Former FCC Commissioner Robert McDowell and Gordon M. Goldstein describing how reclassifying broadband as a Title II telecommunications service will invariably lead to “the International Telecommunications Union (ITU), a regulatory arm of the United Nations” asserting jurisdiction over the Internet. As a consequence, McDowell warns us, the ITU will allow freedom-hating dictatorships such as Russia and China to take control of “Internet governance,” extend censorship to the Internet, and generally crush freedom-as-we-know-it.

What I noted, however, was the remarkable similarity between this column and McDowell’s 2010 Wall St. Journal Op Ed on the same theme. “The U.N. Black Helicopters will swoop down and carry off our Internet if we try to reign in carriers from abusing consumers and adopt real net neutrality” has become a perennial favorite for McDowell and some others. We heard the same cries in 2012 as we geared up for the ITU’s World Conference on International Telecommunications (WCIT). In the lead up to the WCIT, the refusal of then-FCC Chairman Julius Genachowski to close the inquiry into whether to reclassify broadband as Title II prompted more than a few anti-net neutrality advocates to claim that supporting Title II, or even just plain ‘ol net neutrality, gave aid and comfort to Russia, China, Iran, etc. in their efforts to use the ITU to take over the Internet.

So no surprise, as we move closer to actually reclassifying broadband and getting strong network neutrality rules in place, it is time once again for the annual reunion tour of Robert McDowell and the Black Helicopter Band. Despite making the same wrong prediction about the ITU for the last 5 years, we will once again see Robert McDowell and the usual suspects singing backup that reclassifying broadband will serve the nefarious agenda of Russia, China and anyone else we don’t like by allowing the U.N. to swoop in with their black helicopters and carry off our Internet and crush our freedoms.

For those new to this performance, I debunk it (once again) below . . .

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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

Welcome To The 2015 Spectrum Season!

Happy New Year faithful readers! Following in the footsteps of Congress, The Daily Show, and just about everyone else here in D.C., I’ve been on hiatus for the last month or so getting rested and rejuvenated for the exciting new year of 2015. In particular, I am extremely excited about this year’s roll out of the “Spectrum Wars” series.  To make life easier for everyone (and more entertaining for myself), I will provide some summaries of the major regulatory issues currently on the table — including what TV series they resemble. As this is primarily intended for people trying to catch up on existing proceedings, I’m not going to speculate on new things that might happen.

Enjoy below . . . .

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Tales of the Sausage Factory

Title II And The Return of the “Gore Tax.” Or, The Debate We Should Be Having.

Hal Singer and Robert Litan over at Progressive Policy Institute caused some stir recently with this paper claiming that if the Federal Communications Commission (FCC) reclassifies broadband as a Title II telecommunications service, it will tack on over $15 billion in new state taxes, fees and federal universal service charges. As Free Press already pointed out, (a) Congress extending the Internet Tax Freedom Act (ITFA) in the recent “CRomnibus” funding bill” takes the state tax issue off the table; and (b) even without ITFA, the PPI Report made a lot of questionable assumptions to reach their high number.

 

Update: Senator Ron Wyden (D-OR), one of the drafters of the IFTA extension, has this short but forceful statement about the claims that reclassifying broadband as Title II will allow states to tax broadband access despite IFTA. “Baloney.”

 

Happily, the ITFA extension lets us blow past the debate about whether states even use the FCC definition of “telecommunications” for revenue services (many don’t, see, e.g., this tax letter from Tennessee as an example). We can cut right to the chase on the big thing ITFA doesn’t cover — Universal Service Fund (USF). Here again, I want to blow past the question of the numbers used by PPI (which rely on a set of assumptions that amount to what we call in the trade a SWAG (“scientific wild ass guess”)) and focus on the debate we should be having — do we still believe in Universal Service or not?

 

If we no longer believe in Universal Service as a fundamental principle, fine. Lets own that and end the program. If we do believe in the principle of universal service, and we agree that broadband is the critical communications medium of the 21st Century, it makes no sense to play tax arbitrage games with definitions. The FCC continues to play silly, complicated games with the Connect America Fund (CAF) because everyone wants to redirect USF support to broadband but nobody wants to include broadband in the contribution base. As a result, an increasingly smaller base of voice services is supporting an increasingly larger set of overall services. This makes no sense and is inherently unsustainable.

 

As I explain below, this isn’t the first time we’ve debated the importance of universal service and whether we care enough about it to pay for it. Nor will reclassification trigger some sort of “sticker shock,” as the PPI paper suggests. Instead, as I explain below, reclassification is the prelude to the real debate we need to have on whether we still believe in the fundamental principle of service to all Americans, or not.

 

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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

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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Tales of the Sausage Factory

The Zombie Anti-Net Neutrality Arguments The D.C. Circuit Already Rejected.

I do not expect folks to be models of consistency, or to give up on arguments and talking points they have memorized. I also readily agree that a lot of times the same set of facts or a particular statute or set of cases can lend itself to multiple interpretations. but at some point — unless you are either a religious fanatic or deliberately disingenuous — you have a responsibility to admit that the courts disagree with you (at least when talking about law stuff).

 

For example, as I wrote after the oral argument in the Net Neutrality case (aka Verizon v. FCC) I think Judge Tatel and his fellow jurist are completely and utterly wrong on their interpretation of the supposed “common carrier prohibition” that prevents the FCC from banning paid prioritization entirely (as long as it is a Title I information service). I wish the FCC had appealed this to the Surpreme Court. But they didn’t. I wish the recent 10th Circuit case affirming the FCC on Intercarrier Compensation Reform had addressed this question and created a circuit split to take up to the Supreme Court. But they didn’t. So I’m stuck saying “I think this is stupid and totally contrary to the statute and Judge Tatel just made it up, but it’s the law until the Supreme Court says otherwise.”

 

I bring this up because, as John Oliver recently told everyone, the FCC has (to use Chairman Wheeler’s words) decided to “accept” the “invitation” of the D.C. Circuit to write new network neutrality rules based on the Court’s opinion in Verizon v. FCC.  That means we will play this case as the ground rules. So any arguments the D.C. Circuit already resolved are now decided as a matter of law. But whereas I — dumb lawyer that I am — accept that I am stuck with whatever ignorant, idiotic or just plain wrong thing the two-judge majority voted for, a lot of other people don’t. They go on spouting the same arguments that the D.C. Circuit already rejected AS IF NOTHING HAD HAPPENED while simultaneously arguing that since the D.C. Circuit struck down the network neutrality rules (which is not, in fact, what the court did), the FCC has no authority to make network neutrality rules (which is the complete opposite of what the court actually said.

I go through my list of “Zombie Anti-Net Neutrality Arguments The D.C. Circuit Already Killed Deaded Than A Dead Man On Dead Day In Deadville” below . . .

 

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Tales of the Sausage Factory

Net Neutrality Videos Much More Interesting Than I Could Ever Make.

It’s impossible to keep up all the videos about net neutrality. Heck, I have been delinquent in flogging my own. For example, I have two new “5 Minutes With Harold Feld” videos out: one on what I call “virtual redlining” (about how permitting prioritized content invariably leads to targeting and segmenting audiences in ways that recreate all the usual stereotypes and re-marginalizing traditionally marginalized communities) and this on “rural virtual redlining” (how allowing prioritization further isolates rural and exacerbates the digital divide).

As you can see from the pathetic hit counts if you click through, my personal contributions are a total flop. Why? Because, in my own words, 5 Minutes with Harold Feld takes “insanely complicated and incredibly boring stuff and make it slightly less boring because THIS STUFF IS IMPORTANT.” So even at my most wildly successful, I am only slightly less boring. This apparently does not help much.

However, lots of much more interesting and entertaining people have used the power of online video — and even traditional media — to provide a much less boring perspective. I’m listing my top 5 Internet videos below the break. Please feel free to add links to your favorites in the comment section, assuming you did not fall asleep trying to watch my videos.

Actually interesting Net Neutrality videos below . . .

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