Communications / Regulation / Rule of Law / Technology

Two More Ways the “Open Internet Order” is Illegal

As I have previously discussed, the Open Internet Order (OIO) recently passed by the Federal Communications Commission (FCC) is an unconstitutional breach of the Fifth Amendment’s Takings Clause. That is not the only legal pitfall of the order, however. It also violates the Telecommunications Act, the very law which it is using to apply Title II rules to Internet service providers (ISPs).

Mobile Broadband and Section 332

The FCC takes a new step in the order by applying its common carrier reclassification to mobile broadband providers. Section 332 of the Telecommunications Act, however, prohibits private mobile radio services (PMRS), such as mobile broadband, from being regulated as common carriers. Indeed the DC Circuit in Verizon v. FCC, the case which struck down the FCC’s earlier attempt at net neutrality regulations, said “the treatment of mobile broadband providers as common carriers would violate Section 332.”

Now the FCC is trying to get around that ruling (and its own previous rulings to the same effect) by arguing (page 15 of the order) that mobile broadband is the functional equivalent of a commercial mobile radio service (CMRS) which can be treated as a common carrier under section 332. The Commission’s argument makes a massive stretch by holding that because some Internet services, like VoIP, result in information being sent over the telephone network, they are therefore interconnected with that network which would allow them to be treated as a CMRS.

The illogical gymnastics of the FCC’s argument do nothing to change the clear fact that mobile broadband is PMRS; the provision of certain services that eventually link to the phone network does not mean that all mobile broadband is interconnected with that network. The stubbornness of reality means that the FCC’s classification of mobile broadband as a common carrier service is illegal.

Termination and Section 203

A stated goal of the OIO is to prevent paid prioritization of content from certain edge providers. The Commission wants to ban so-called “fast lanes” that would disadvantage smaller providers and entrepreneurs or allow ISPs to extort fees from edge providers in order to have their content delivered. The law, as Ford and Spiwak of the Phoenix Center demonstrate, makes the way the FCC goes about accomplishing this goal legally impossible.

Section 203 of the Telecommunications Act requires that telecommunications firms submit positive tariffs to the FCC. This “tariff” is essentially a list of how much the firm charges for each service it provides so that the FCC can judge whether the rates are too low (confiscatory) or too high (excessive). Since ISPs are now classified as telecommunications firms, they will be required to do this for their services.

The service provided by ISPs is obviously delivering to end users the content they request. But the Verizon decision indicated that ISPs also provide a service to edge providers known as termination. Termination is the service by which ISPs deliver the content of edge providers to that edge providers’ customers. For example, Comcast provides termination service to Amazon when it delivers Amazon content to Amazon’s customers who subscribe to Comcast Internet. Termination is basically the same thing as consumers’ Internet service but viewed from the edge providers’ perspective; delivery of YouTube videos to your house is as much a service to YouTube as it is to you.

Currently this system works fine because ISPs normally do not charge edge providers an extortionate fee, or even any fee, for termination; they happily collect their revenue from consumers and go about their business. But with Title II reclassification, termination is now a telecommunications service, and, under section 203, ISPs must charge for it.

Furthermore, the FCC cannot stop the creation of slow and fast lanes as “unreasonable discrimination” under section 202 because prioritized termination is a different service than regular termination. Discrimination cannot exist between unlike services. Ironically, the very scenario the FCC seeks to avoid is all but mandated by the reclassification.

The FCC seeks to escape this situation by forbearing from section 203 in the context of termination (page 241), but that is not legal. The Telecommunications Act allows for the Commission to forbear from certain provisions of the act or regulations if they are not necessary in order to serve the public interest. The FCC’s own argument, however, is that ISPs are “gatekeepers” for content going from edge providers to the ISPs’ customers, and they must be regulated to ensure the public interest.

The DC Circuit agreed, saying in Verizon that ISPs were “terminating monopolies.” As Ford and Spiwak observe, in all previous forbearance cases, competition was cited as justification for why forbearance was consistent with the public interest. Since the FCC and the courts have already said that ISPs have a monopoly on termination, they have no legal basis for forbearing from section 203 for termination service. The FCC is aware of this problem but ignores it, merely saying that they “reject the argument” (page 197).

Despite widespread enthusiasm about the FCC’s decision, the Open Internet Order sets aside both sound policymaking and the rule of law. The Order should not survive in court.


Image: macro pixels url cliche by Chris Dlugosz is licensed under CC BY 2.0