Rehab for FCC’s Net Neutrality Habit

by Mike Wendy on December 4, 2010

On December 21st, the FCC will vote on a set of Net Neutrality regulations to “preserve the openness of the Internet.”  We don’t know what exactly those regulations will look like other than they reportedly bear strong resemblance to past “openness” principles which were struck down by a US Appellate Court this spring because the FCC lacked proper Congressional authority.

For this reason, there is a strong likelihood that, yet again, the FCC will be barred by court order from regulating the Internet, even with its new-and-improved, re-proposed regulations.

Agencies need clear authority to act because they are mini-legislatures of a sort (minus, of course, any officials voted into office).  They make “laws” which affect the prospective rights of individuals and entities, something that Congress has sole jurisdiction over.   To ensure the process of creating rules isn’t abused, agencies such as the FCC must adhere to strict due process / administrative guidelines, which have been in effect since 1946.

For the Internet, one might assume that the FCC has the authority to regulate the medium in any manner it sees fit – like phone service.  But Congress hasn’t given it to them. In fact, it has specifically placed information services – i.e., Internet Access – out the agency’s direct regulatory clutch (it’s actually one of the main reasons the medium’s thrived so well!).

Present FCC regulations do in fact recognize this, making information services unregulated.  For now, that is. Yet for the last 5 years, this has not stopped public interest groups and competitors from trying to regulate Internet “openness” through Net Neutrality regulations.  They believe that network providers have too much incentive to block content, applications, devices and speech through their own facilities (even though this has essentially not borne out in fact).

With the ’08 election came a new FCC, run by 3-2 majority of Democrats to Republicans (as per statute).  After over a year of haggling at the agency, this Wednesday Commission Chairman Julius Genachowski said he was ready to finally issue his Net Neutrality regulations.  Basically he stated, “Hey, trust me on the authority stuff.  It’s in the bag.”   As of this writing, no one other than trusted staff and insiders has seen what the Commission is using to get around the Appellate Court’s ruling.

Many believe that Congress must now step in.

I, too, believe it should.  But I think so in a different sense.  The market works.  We have de facto Net Neutrality, keeping the Internet growing and innovative, largely free of stultifying government regulation.   Thus, we do not need prophylactic regulations from Congress.  Rather, we need mainly small clarifications for the FCC to ensure that the Internet doesn’t “harm” people, while at the same time providing greater clarity / certainty to the marketplace so that the ecosystem – its core and its edge – knows what to expect to build their goods and services.

So, I put out for discussion a very simple “bill” that, I think, accomplishes this goal.  It works to keep government interference to a minimum, but also provides a safety net in case actual harm occurs, which affects consumers.

Internet Access Freedom Act

Section 1.  Amend the Communications Act’s (Act) definition of Information Services to include Internet access, and then plainly state that such services shall not be considered common carrier / telecommunications / Title II services (i.e., phone-like services).

Section 2.  Clarify Section 230 of the Act to prohibit common carrier / Title II regulation of information services / Internet access.

Section 3. Change Section 254 of the Act to ensure that universal service shall be based on an evolving level of communications services instead of only telecommunications services.

Section 4. Give jurisdiction for information services / Internet access for “unfair and deceptive” trade practices to the Federal Trade Commission.

There may be other related technical corrections, but the aim of this update is simple.  First, ensure that the current debate about what information services are ends.  In this respect, they are Internet services that sit outside of onerous telephone regulation, and can be wired or wireless in nature.  Second, update the law so that it’s clear it can help subsidize Internet services for those who cannot get it and cannot afford it, thus increasing uptake.  And Third, further clarify the safety net for consumers from unfair Internet practices, as well as anti-competitive behavior that may occur / actually harms consumers from providers of all types.

Others will suggest that more needs to be done in Congress.  I’m not so certain.  The Internet ecosystem has done an amazing job of growing and serving Americans of all stripes and capabilities without being compelled by government rule or regulation.  Keeping to this path – that is, “open-sourcing” the ostensible regulatory power of the FCC through the advance of technology, consumer transparency tools, industry best practices, and marketplace guidance – plus the tweaks I have suggested, may help further unleash the power of the Internet, providing the needed clarity for investment and infrastructure growth, while also posing little harm in terms of overbreadth that could needlessly thwart ecosystem innovation.

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