The FCC makes a breakthrough on net neutrality--but the battle isn't over

The FCC's big breakthrough on net neutrality is only the start of a bruising battle

There's no question that the new proposal on network neutrality from Tom Wheeler, chairman of the Federal Communications Commission, is a breakthrough of immense proportions.

Wheeler, in an essay published Wednesday on Wired magazine's website, said he will move to reclassify all broadband Internet services as "telecommunications" services subject to FCC regulation as common carriers. (In technical terms, he's planning to reclassify Internet service as "telecommunications" under Title II of the Communications Act of 1934.) 

This step has been urged on the FCC by net neutrality advocates for more than a decade, most recently by President Obama, who appointed Wheeler to his post. Wheeler outlined what reclassification would enable the FCC to do: "ban paid prioritization, and the blocking and throttling of lawful content and services." It will enable the agency to extend to mobile Internet providers these rules, which forbid Internet service providers to favor some Web content companies and services (for example, content and services those ISPs own) over others on their way to your home or business.

"My proposal," Wheeler wrote, "assures the rights of internet users to go where they want, when they want, and the rights of innovators to introduce new products without asking anyone’s permission."

Wheeler's proposal is almost certain to win approval from the majority Democrats on the five-member FCC when he presents it on Feb. 26. Wheeler is a recent convert to Title II reclassification; just last year, he proposed a regulatory regime that avoided reclassification and would have allowed ISPs to favor some traffic under "commercially reasonable" arrangements, to be reviewed by the FCC on a case-by-case basis. 

But he seems to have come around to the idea that reclassification may be the only way for the FCC to claim adequate legal authority over ISPs. In doing so, he's rectifying a historic mistake committed by his own agency in 2002. That's when the FCC, under then-Chairman Michael Powell, first classified ISPs as providers of "information" rather than telecommunications.

That act instantly tied the agency's regulatory hands behind its back. Twice since then (in lawsuits brought by Comcast and Verizon, two big ISPs), federal courts have overturned FCC initiatives to foster an open Internet on grounds that it had given up its authority. In a dissent in a 2005 Supreme Court case, Justice Antonin Scalia argued that  the FCC never had the right to reclassify Internet service as informational in the first place, calling it "perfectly clear that someone who sells cable-modem service is 'offering' telecommunications."

So in the sense of securing the FCC's jurisdiction over ISPs, Wheeler's proposal is a major step forward. But the real battle will involve what the FCC will do with its regulatory powers -- and that battle is just beginning. Wheeler's essay asserted that his plan would entail "the strongest open internet protections ever proposed by the FCC," and that these would be "bright-line rules," as though they would be immune from legalistic torturing.

But he also wrote that he intends to "modernize Title II, tailoring it for the 21st century," in order to preserve incentives for ISPs to keep investing on network improvements. That means, he wrote, that the FCC won't regulate ISP rates or many other competitive activities. It's worth asking whether he's expanding the FCC's regulatory authority with one hand and giving it away with the other.

ISPs, especially Comcast and Verizon, are big players in Washington, known for throwing their money and influence around. If their businesses are reclassified under Title II, they can be expected to squeeze the resulting rules and regulations until they scream for mercy. It's fine to praise Wheeler's plan, as do some net neutrality fans, for aiming to "regulate the internet like a utility." But it's worth noting that utilities have long learned how to run rings around their regulators. 

One important clue to how firm a hand the Wheeler FCC will take with ISPs may come from its treatment of the proposed Comcast-Time Warner Cable merger, which would unite the nation's No. 1 and No. 2 ISPs into an Internet service behemoth. Internet service in the U.S. is almost devoid of effective competition, and the merger would make things much worse. Moreover, Comcast historically has been a major violator of net neutrality practices. If the FCC wants to show that it will be serious about using Title II authority to uphold the public interest, it could start by killing the merger deal. 

The reclassification proposal must survive what is sure to be a legal obstacle course. The chief executive of the cable industry's lobbying arm, the National Cable & Telecommunications Assn., said in 2013 that any attempt to reclassify ISP service under Title II would set off "World War III."

That CEO is Michael Powell, who as FCC chair masterminded the declassification of 2002. As the chief lobbyist for the industry that profited so handsomely from his effort, Powell was paid $3.3 million in 2012, the latest year disclosed. 

The battle lines are already plain. Broadband for America, which masquerades as a public-interest organization but in reality is heavily funded by the NCTA, was quick off the mark Wednesday, calling Wheeler's plan "an unprecedented expansion of FCC power with heavy regulation of the Internet for the first time," and claiming that it would "stifle investment, innovation and consumer choice." 

Even before Wheeler's essay was published, it was subjected to a preemptive strike by AT&T, another big ISP, which made clear that it would take reclassification to court. "Those who oppose efforts at compromise because they assume Title II rests on bullet proof legal theories are only deceiving themselves," wrote Hank Hultquist, the company's vice president for federal regulation, on its blog. 

Wheeler is taking an important step forward, but his generalship skills are about to be battle-tested.

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