Weekly Update

Verizon’s net neutrality chickens come home to roost

Verizon just couldn’t leave bad enough alone. Back in 2010, when the FCC issued its Open Internet Order, many consumer advocates complained the rules did not go far enough to preserve and protect net neutrality, while a lot of ISPs quietly concluded they could live with the regs. But Verizon sued anyway, claiming the FCC had exceeded its statutory authority in imposing the rules.

At first, Verizon seemed to score a major victory when a federal appeals court agreed, and earlier this year threw out the FCC’s rules. While FCC chairman Tom Wheeler reacted quickly to propose new rules based on the court’s guideline, but those were viewed by critics as even weaker than the rules the court had vacated.

The months since, however, have seen an unprecedented groundswell of popular opinion in support of imposing much tougher rules, to be accomplished by reclassifying broadband internet access as a common carrier telecommunications service under Title II of the Communications Act, giving the FCC much broader legal authority to impose regulations on providers than the agency had invoked in issuing either the 2010 order or Chairman Wheeler’s proposed revisions.

As calls for reclassification grew louder, Verizon’s peers quietly fumed that the telco should have simply learned to live with the 2010 order instead of sowing the wind by suing to overturn them.

That fuming only grew hotter as FCC officials began hinting broadly back in September that some sort of (perhaps partial) reclassification was indeed in the works. This week, the chairman’s office all but leaked the plan to the Wall Street Journal confirming the ISPs’ worst fears. According to “people familiar with [Wheeler’s] thinking,” the FCC will propose reclassifying broadband access as a Title II telecommunications service with respect to ISPs’ interactions with third-party content and applications providers (“edge providers” in agency parlance) while leaving the consumer-facing, retail side of the business as a more lightly regulated Title I information service.

The plan appears closely modeled on a proposal submitted to the agency in May by Mozilla. The Mozilla plan called for bifurcating the ISP business into internet access and internet transit — a heretofore unnoticed distinction — and treating them differently for regulatory purposes. The consumer-facing access business could remain an information service, while the outward-facing transit business (i.e. hauling bits to and from end users) would be reclassified as a common carrier telecommunications service.

Seeing the whirlwind it could reap gathering force Verizon is now scrambling for cover. The telco submitted a white paper to the FCC this week comprising a sharply worded legal critique of reclassification, including so-called hybrid plans such as the Mozilla proposal, arguing they rely on imaginary statutory authority and warning they would not withstand legal challenge (which Verizon all-but threatens in its cover letter to the agency).

Ironically, Verizon actually has some unlikely allies among net neutrality proponents, at least as far as hybrid plans are concerned. Stanford University law professor Barbara van Schewick and a colleague, who advocate Title II reclassification in full, submitted their own white paper to the FCC this week in which they also criticize hybrid, bifurcated approaches, including the Mozilla plan, relying on substantially the same legal analysis as Verizon.

I have to assume that lawyers at the FCC (or outside counsel) are aware of the potential avenues of legal challenge and are confident they can address them, or else Wheeler would not have let the reclassification train get this far. But he may end up being the only one satisfied with the results.