“Speak softly and carry a big stick,” is good advice, but it only works if you use the stick to smash someone in the mouth from time to time. If people think your stick is just decoration, you lose power.
This is the FCC’s dilemma as it tries to design rules to prevent broadband providers from playing favorites when they deliver web traffic. It has a big stick, called “Title II,” but most people think the agency lacks the political juice to wield it against some very powerful companies.
And while some have proposed “light touch” options to avoid a confrontation, that may be wishful thinking: FCC Chairman Tom Wheeler will have to go all-in and swing the Title II stick, or just it lay down altogether. To get a better idea of Wheeler’s predicament, here’s a fresh look at Title II: what it is, who is for and against it, and why insiders think Wheeler won’t use his only weapon to enforce net neutrality.
Title II: what it means in plain English
The telecom scene is jargon-heavy, and the Title II debate is no exception: the crux of the fight turns on whether the FCC should re-classify broadband companies as a “telecommunications service” instead of as an “information service.”
Why does the label matter? In theory, it should not: the FCC could call Comcast a cat food company, and it would still provide the same services. But under FCC rules, the “telecommunications service” label is important because it triggers a series of obligations under Title II of the Communications Act of 1934.
[pullquote person=”” attribution=””]The Title II debate is divisive, which has led some to call for a middle ground — one that is unlikely to work.[/pullquote]
Those obligations, which cover everything from price-caps to closed-captioning to emergency services, have traditionally applied to “common carriers” like wireline phone companies, and place restrictions on how they run their business. That’s why broadband providers like Comcast(s cmcsa) and Verizon don’t want to live under Title II — they want to continue on as “information services” under a different part of the law (Title I) which, on paper, involves a lighter regulatory load.
There’s one more important element to the Title II debate, however. It’s the idea of “forbearance,” which is industry-speak for the FCC’s power to impose some obligations but not others. For instance, the agency could say the rules of section 224 on “Pole Attachments” no longer apply, while leaving other sections in place — perhaps section 202 (non-discrimination) and section 208 (complaint procedures).
This would mean that Title II would not be as onerous as it appears, but it would still require a legal two-step on the part of the FCC: the agency would have to issue a re-classification order to make the broadband companies a “telecommunications service” under Title II, and then declare a series of forbearance measures to explain which parts of the law will not apply.
The FCC, by the way, has the legal authority to do all this. There’s no doubt about it, because the D.C. Court of Appeals said so in a thunderbolt court ruling in January. The ruling struck down the FCC’s last set of rules on net neutrality, but said they would have been legal if they had been issued under Title II.
Why some say we need Title II, and others say we can’t have it
The Electronic Frontier Foundation recently took the position that the FCC should use its Title II power to bring broadband providers to heel. This declaration, coming from a group that has long been suspicious of government regulating the internet, came as a surprise and reflects growing concerns over the power of Comcast and other big ISP’s.
According to the EFF, Title II is necessary to stop a future where big ISP’s can give special “fast lane” treatment to websites they like (or that pay them) and slow down small sites, or ones tied to their competitors. Comcast, for instance, might one day decide to give a speed boost to its tech site Re/Code, while slowing down readers’ access to Gigaom.
The EFF isn’t the only one calling for Title II. The CEO of Kickstarter recently warned that “fast lanes” could impede the next generation of web services from emerging because a future Facebook or Twitter might not be able to afford the toll to reach customers in the first place. The Title II chorus is also coming from the likes of Reddit and Netflix(s nflx), and from politicians like Sen. Charles Schumer (D-NY).
The goal of the Title II advocates is not, of course, to reclassify broadband providers for the heck of it. Rather, they believe the FCC has no other choice if it truly wants to prevents ISPs from favoring some websites over others. As Netflix told the agency last week, two previous attempts to use other laws to enforce net neutrality have failed — meaning it’s Title II or bust.
Meanwhile, big telecom companies have come down just as strongly against Title II. Their best argument is that reclassification would turn them into public utilities with no incentive to invest in pipes or new technologies. Comcast said so in a recent blog post, adding that Title II is not necessary given the FCC’s auxiliary power under Title I, and trying to use it will only cause a mess of legal headaches.
The anti-Title II companies, which also include Verizon and AT&T(s t), are supported by some conservatives who take the position that the FCC will stifle innovation, and by Republican politicians like Rep. Bob Latta (R-Oh) who is trying to pass a law to clip the FCC’s net neutrality wings.
As you can see, the Title II debate is divisive, which has led some to call for a middle ground — one that is unlikely to work.
“Title II lite” is an illusion
Net neutrality advocates who want to help the FCC escape its dilemma have come forward with ideas that, they suggest, will let the agency impose Title II but without too much screeching from Comcast and the gang.
One idea comes via the Mozilla Foundation, which has called for the FCC to apply Title II but only at a deeper layer of the internet where ISP’s meet “edge providers” like Level 3(s lvlt) or Netflix. Another comes from law professor Tim Wu, an authority in the field who first coined the term “net neutrality, and who proposes a belt-and-suspenders approach:
the Commission’s best course is to pass tough rules under 706 with Title II as the backup, to insure the rules survive a court challenge. This strategy may actually ward off court challenges, given that it presents the carriers with a kind of trip wire.
Under Wu’s proposal, the FCC would draw, but not fire, its Title II weapon, while also keeping the ISP’s in line on a day-to-day basis with the Title I powers it has used in the past.
These proposals hold out the promise of Title II lite — a way to show the ISPs that the FCC means business but without triggering a political brawl. And the FCC appears to be listening:
The problem, however, is that opponents will likely fight just as fiercely no matter how Title II is invoked, since it is not the details they oppose so much as any type of reclassification in the first place.
According to Paul Werner, a veteran telecom lawyer at Shepherd Mullin, Wu is correct that agencies like the FCC can and do create rules under multiple sources of law; however, in the case of Title II, Werner suggested by email that Wu’s “backup” plan wouldn’t fly with the courts:
But what the courts have said the FCC cannot do is use Title II as a “backstop” for imposing core Title II obligations – such as non-discrimination or common carriage requirements – on internet service providers. The DC Circuit invalidated just such an approach recently in holding that the FCC cannot backdoor Title II regulations under the guise of its Section 706 authority. Instead, the fundamental legal and policy choice facing the Commission is whether or not to re-classify internet service as a “telecommunications service” subject to the full complement of Title II regulations.
This is another way of saying that, when it comes to Title II, the FCC can’t be half-pregnant. While the agency could invoke Title II and immediately forebear on its more onerous obligations, it would still have to stand and fight for Title II in the first place — and that is something it’s reluctant to do.
Why the FCC won’t use its only weapon
The FCC has received more than a million public comments about net neutrality — a huge response, second only to Janet Jackson’s infamous nipple-slip — and many of them explicitly call for Title II. But, for now, those comments won’t matter too much. Title II may have popular support and it appears to be the correct policy choice, but that’s still no match for corporate realpolitik.
Simply put, Title II advocates just don’t have the money and lobbying firepower to challenge the telecom industry. New figures, for instance, showed that ISPs have spent $42.4 million so far this year, and that Comcast alone spent nearly $4.5 million in the second quarter.
The notion that ISPs are throwing money around is nothing new, of course, but the critical issue when it comes to Title II is that no one is spending on the other side.
According to Washington insiders, the Title II cause appeared doomed after big tech companies like Google(s goog) and Facebook(s fb) decided to sit out the fight. While Yahoo(s yhoo) last week made a slight peep that Title II might be necessary to prevent discrimination, the rest of the Silicon Valley giants — apart from Netflix — have stayed mum. While the tech industry would have likely lost a lobbying battle to Comcast even if it had opened its check book, its absence from the fight all but guarantees the FCC will leave Title II on the shelf.
Not everyone is pessimistic, of course. Harold Feld, a VP at consumer interest group Public Knowledge, says that the level of public awareness this time is far higher than the last time the FCC debated net neutrality.
“A lot of this clever political analysis applies to the last war,” he said, noting that pundits have declared other FCC decisions to be foregone conclusions — and then been proved wrong.
Finally, there is the matter of Chairman Tom Wheeler, who holds the ultimate card in the Title II debate. He’s a former cable lobbyist, and seemed a pushover, but has also shown a recent independent streak — and even warned that he “won’t hesitate to use Title II.”
If Wheeler is reading this, he may wish to ponder the example of the man who said “speak softly and carry a big stick.” It was Teddy Roosevelt, who is the subject of another famous quote by a powerful corporate baron, who complained of the President that: ”We bought the son of a bitch, and then he didn’t stay bought.”