The latest twist in the net neutrality drama comes from Congressman Henry Waxman, who last week proposed a “hybrid approach” for adopting open Internet rules that calls for reclassifying broadband Internet access as a Title II ‘telecommunications service’ (with forbearance from virtually all of the provisions in that title) plus reliance on Section 706 of the Telecommunications Act of 1996. While perhaps deserving of marks for creativity and effort, sadly this trial balloon is made of lead. In many respects, this “hybrid” would be the worst of all worlds, presenting all the risks of any other Title II reclassification proposal while creating a regulatory framework that is even more rigid than the standards designed for telephone monopolies under the 1934 Act.
For starters, the Waxman proposal fails at the threshold because it wrongly assumes that reclassifying broadband as a Title II “telecommunications service” would survive court scrutiny. As our FCC comments explain, any effort to justify reclassification under Title II must contend with the repeated factual findings by the FCC (and endorsed by the Supreme Court) demonstrating that broadband Internet access is an information service. Especially in light of the consistent factual findings the FCC would have to repudiate and the broadband industry’s substantial reliance on those findings over the last decade, the FCC cannot simply choose a new classification to address any perceived shortcomings of its authority under Section 706. The legal impediments to reclassification would be even more pronounced under this and other hybrid proposals.
Even while acknowledging the serious concerns that attend imposing “traditional utility-style regulation that is unsuited to the modern Internet,” Congressman Waxman proposes to embrace Title II for the sake of correcting a “problem” he perceives with the Verizon case. Such an ‘ends-justifies-the-means’ approach would seem certain to provoke profound skepticism by courts questioning the rationality of action that adopts a Title II common carrier classification but immediately forbears from obligations that make it common carrier (including Sections 201 and 202). To be sure, as a policy matter, we strongly agree that the FCC should refrain from imposing those traditional utility requirements on broadband providers, but as a legal matter, doing so by adopting a Title II classification and simultaneously undoing its effects likely would be considered arbitrary and capricious.
Another fatal flaw in the Waxman proposal beyond reclassification itself is its dependence on sweeping forbearance to eliminate the unwanted provisions of Title II. As we have explained previously, the highly uncertain prospect of forbearance cannot cure the ills of Title II reclassification. Among other serious challenges, forbearing from virtually all of Title II would encounter strong opposition, as most groups supporting reclassification favor the broad imposition of common carrier duties on broadband providers. Such opposition guarantees the process would be incredibly complex and time-consuming, even if the FCC ultimately were to agree to grant the requested relief. As the FCC and the Department of Justice recognized a decade ago in urging the Supreme Court to uphold the information-service classification, the forbearance process not only is unlikely to mitigate the harms associated with a Title II classification but itself could be a source of investment-chilling and job-killing uncertainty.
But the problems don’t stop there. While both Title II and Section 706 generally leave room for companies to offer different classes of services at different prices, the combination of the two statutes under Congressman Waxman’s proposal would completely prohibit such offerings, creating a form of ‘super-common carriage’ that would prove more restrictive than the standards that apply to monopoly telephone providers. That would turn the Act on its head. Whereas Congress directed the FCC in Section 230 to preserve the unregulated status of Internet services, Congress Waxman’s proposal would rule out even the sort of pro-competitive and pro-consumer business arrangements that monopoly telephone providers would be free to implement under Title II. In the end, legal infirmities and practical realities doom the “hybrid” approach. Any proposal that depends on Title II will have significant negative consequences for ISPs, their customers, and the rest of the Internet and no amount of forbearance can fully eliminate those harms. Nor is it necessary for the Commission to pursue such an approach, given the availability of less radical options that can the Commission can effectively use – such as reliance on its court-recognized authority under section 706 -- to bar commercial arrangements that are antithetical to consumers or competition.
As we move forward, we should recognize that our success over the past decade in growing the Internet economy has been predicated on a ‘light touch’ approach to regulation. For that progress to continue, broadband providers will need to attract private capital on reasonable terms to fund the upgrades required to provide Internet service at super-fast speeds, to expand coverage, and to boost opportunities for low-income consumers and other underserved segments of society. Those investments, in turn, are vital to our economic well-being and global competitiveness as well as to the strength of our educational and health care systems and our democracy. The problems of Title II underscore the need for a balanced and flexible regulatory approach under Section 706, not a gimmicky mash-up of regulation that threatens all of the core investment and innovation objectives at issue.