People + Policy
= Positive Change for the Public Good
Broadband networks represent the most critical communications infrastructure of our time: if these underlying transmission systems don't function effectively, the Internet cannot serve as a vibrant forum for speech, commerce, and culture.
Yesterday's ruling from the D.C. Circuit in Comcast v. FCC called into question the Federal Communications Commission's ability to protect consumers from harmful activity by the owners of these networks. Without oversight, dominant broadband providers - principally large cable and telephone companies - will be free to do as they wish even if their actions hinder the free flow of information, treat consumers unfairly, or discriminate against speech that they find undesirable. The decision also suggests that the Commission has limited authority to implement its recently devised National Broadband Plan - a plan that will be critical in closing the digital divide at home and abroad.
To understand these issues more fully, we need to step back in time a bit. Historically, communications law and FCC policy have recognized several unique characteristics of communications networks (like the telephone, telegraph, and now IP-based networks): (1) The networks require significant investment to build them, and as a result, the market to provide access to such networks will likely be heavily concentrated, (2) customers can likely use the services of only one network provider at a time; and (3) the costs associated with switching providers are significant. Thus, the owners of the networks have sufficient gatekeeping power. Because the network providers possess this gatekeeping power, the law required them to comply with certain basic rules, including the duty to open their networks to everyone without discrimination, and the duty to interconnect with other network providers that offered the same services.
On the other hand, the law historically imposed very few requirements on companies whose services made use of these networks, including such services as e-mail, Web browsing, and other content and applications made available over the Internet. The market for those types of services is more competitive, the barriers to entry are lower, and the chance that those service providers can extract monopoly rents or hamstring their competitors is significantly reduced as a result.
In 1996, Congress passed the Telecommunications Act, which essentially adopted these distinctions. Access to a communications network was deemed a "telecommunications service," and content and applications that used that IP-based networks to transmit data were termed "information services." And for the first few years after the 1996 Act was passed, the FCC treated broadband providers as "telecommunications service" providers.
In 2002, that changed. Reversing course, the Bush-era FCC decided to classify broadband Internet access service as an "information service" under the Act. In 2005, that decision was upheld by the Supreme Court as a reasonable interpretation of the 1996 Act. The Court did not reach the question of whether the FCC's interpretation was the best interpretation; it just said that the agency retained the discretion to make that determination, and that under Chevron v. Natural Resources Defense Council, the Court would defer to the agency's determination.
This deregulatory decision had far-reaching consequences. As set forth above, the law imposes very few obligations on information service providers. What the D.C. Circuit said yesterday is that since the Commission made the decision to classify broadband Internet access as an information service, it doesn't have authority under the current regulatory framework to enact basic consumer protections.
While the court drastically limited the scope of the FCC's authority to regulate broadband if broadband access continues to be classified as an information service, the Court left the door open for a straightforward fix: the FCC retains the authority to reclassify broadband providers as telecommunications service providers. The Commission would then be able to adopt policies to preserve the value of the open Internet, bring broadband to rural and low-income Americans, provide consumers with basic privacy protections, and require network operators to advertise and bill accurately for their services.
The Commission can and should pursue this option. It would put the FCC's broadband policies on more solid legal footing. And it would not be a radical change: it would merely close the loophole created by previous Commissions. Moreover, the Commission has the authority, under a procedure called forbearance, to tailor its policies narrowly. It can decide that broadband network owners should be required to comply with only some, and not all, of the rules governing "telecommunications services."
In the long term, Congress may pass legislation that provides the FCC with further guidance on how to regulate network providers. But in the meantime, the FCC must use the tools at its disposal - including reclassifying broadband transmission as a telecommunications service - to protect consumers from anti-competitive behavior, encourage broadband deployment and adoption, and preserve the Internet as an open platform for democratic engagement, information-sharing, cultural expression, and commercial activity. As both consumers and citizens, Americans deserve no less.
This post was originally published on the American Constitution Society blog.
People + Policy
= Positive Change for the Public Good
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