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The biggest danger to net neutrality is now political, not legal

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The White House stunned the tech and telecom world on Monday morning with a call for the FCC to take a full-blown, no-gimmick approach to net neutrality. In clear words, President Obama told the agency to use its Title II power to reclassify broadband providers as public utilities, and thereby snuff the industry’s plans for “fast lanes” and other schemes to favor some websites over others when delivering internet to consumers.

This appears to be great news for consumer advocates and the likes of Netflix, which has been at the mercy of repeated ISP shakedowns, but it’s still far too soon for them to pop the champagne. Even though President Obama, who delivered the news in a tweet (signed “-bo”), has given FCC Chairman Tom Wheeler an unexpected mandate to implement Title II, the powerful telecom industry will do all it can to put a stop to this.

On Monday morning, for instance, Verizon published a short statement reminding the FCC that a Title II approach “will face strong legal challenges.” The statement is a not-subtle message that Verizon will promptly drag the agency into another high-stakes lawsuit, like the one the company used to put the FCC in this net neutrality predicament in the first place.

But despite Verizon’s bluster, Wheeler is on very solid ground when it comes to using Title II. Who says? Why, the very court that blew up the FCC’s last set of net neutrality rules.

For those unfamiliar, this whole affair — which touched off John Oliver’s epic screed on “cable company fuckery” and more than 4 million public comments — began in January, when the Court of Appeals for the District of Columbia agreed with Verizon that the FCC could not use “information service” regulations to impose net neutrality on internet providers.

The D.C. ruling made clear that the FCC’s earlier “Open Internet” order was toast, but the court also threw the FCC an important lifeline by saying that the agency could impose such rules if it reclassified the internet providers under Title II. And that’s what President Obama has just suggested the FCC should do.

This means that while Verizon can sue the FCC and probably will (suing is something the company likes to do), it will almost certainly lose. Unlike the the mongrel “hybrid” proposal the FCC floated two weeks ago, an unambiguous Title II reclassification would be consistent with the letter of the appeals court’s ruling, and survive any legal challenges.

But even though the FCC is on fine legal footing, it turns out that Wheeler has far more to fear from Congress than he does from the courts.

Making the Chairman’s life “hell”

Even after a public swell of support for net neutrality this summer, few in Washington actually believed the FCC would go through with it. After all, in the absence of support from major tech players like Google and the clear backing of the White House, Wheeler had little reason to rile powerful players like Comcast and Verizon.

One industry source told me in September that he was confident that Wheeler would not go forward with Title II reclassification, in part because Republicans, on behalf of their telecom allies, would make the Chairman’s life “hell” if he did. More specifically, that “hell” in question would involve an endless series of subpoenas and committee circuses to tie up the agency and, more ominously, threats to use riders in must-pass bills to attack the independent agency’s budget.

The realpolitik thinking at the time, then, was that Wheeler would try to appease the net neutrality crowd with lip service to “open internet” principles, while also passing feckless “light touch” rules that would allow the Chairman to preserve his political capital for other priorities such as an ambitious-but-troubled spectrum auction.

Those calculations are all out the window now. President Obama has just changed the game by offering Wheeler broad political cover to go forward with net neutrality. The question now is if Wheeler will dare to use it.

Even though his Title II hand is much stronger than a week ago, he faces powerful new opposition in the form of a Republican-controlled Senate. And within hours of the President’s tweet, the GOP’s most prominent demagogue shot back with one of his own:

It’s a safe bet that this is just the opening shot in a coming cascade of political sludge that will characterize net neutrality as the spawn of socialism, liberal charity and more. And while the telecom giants have been relatively subtle in their messaging, that will change as Title II becomes a real possibility for the first time.

Indeed, Comcast has already issued a statement, saying Title II would be a “radical reversal that would harm investment and innovation” and telling Congress to put a stop to it. Since lawmakers are already pledging to rewrite the country’s outdated Communications Act, it’s a good bet net neutrality will now be on the agenda.

Net neutrality advocates, meanwhile, will be hard-pressed to pitch their message to a broader American public who has little love of the likes of cable companies, but who does not know or care about the intricacies of telecom regulation.

Ultimately, then, it will fall to Wheeler to decide how to play a tough hand that just got tougher. He may choose to side-step this fight in exchange for support on other issues. On the other hand, as one Washington insider told me, “So I guess if it’s already going to be hell, what’s a little more?”

8 Responses to “The biggest danger to net neutrality is now political, not legal”

  1. Richard Bennett

    Your story has one major error of fact and one major error of analysis. The court didn’t say the FCC had to reclassify in order to enact NN, it laid out two paths; the other was to apply the logic of the cellular data roaming order that allowed individualized bargaining under a “commercially reasonable” standard. The court has previously said that reclassifying as a mere pretext for increasing the agency’s power won’t fly.

    The analytical problem is that you seem to suppose a lack of coordination between the White House and the FCC, which is a major blunder on your part. The White House is staking out an extreme position in order to make the hybrid approach look like a compromise.

    You really should talk to someone like Larry Spiwak who understands telecom law before writing this stuff. His op-ed in the Hill today is first rate stuff.

  2. Mike Quinn

    The bias of this article is incredible. No mention that those opposed to the “net neutrality” issue would be from a position of concern of over regulation / nanny government which has shown an inability to create the social benefit they were presumed to be able to make. Look at the telephone regulation history with respect to emerging technologies and the regulators lethargic responses. Look at the tariff system failures. Even water, gas and electricity regulation is contemptible (and very political – not independent at all). Who writes the actual detail in the regulations, standards, and industry guidance documents? The very people who are to be regulated! To what goal? To protect their interests, not the public’s interest. See how things work in real life, not your dreams.
    Regulation is the problem, not the solution.

  3. Rann Xeroxx

    There is no right answer for this issue. If you start regulating ISPs, what are their incentives to grow or innovate? We see this time and time again with industries that get heavy government regulations. The reasons ISPs are trying these things are to generate profits, take away profits and you take away the capitalistic mechanism that help drive innovation.

    The best thing the government can do is to ensure there is more competition. Rejecting mergers and consolidation and allowing customers more choice of ISP provider regardless of who owns the pipes.

  4. John Willkie

    Most people who follow the FCC closely come to recognize that the Commission is independent (more or less) of the Executive Branch while being a create of Congress. This comes about because the Constitution doesn’t state that the ‘independent’ agency needs to be under the Executive. Congress proves this from time to time by restricting (‘fairness doctrine’) or enlarging (“do not call list”) FCC authority.

    The funny ‘point’ in this article was the unthought claim that the President’s words provide the FCC with “political cover.” Being that the FCC is not a creature of the Executive and that the President has no pull with the coming House or Senate majority, the observation is laughable. As noted in the yarn, putting language restricting FCC power to reclassify broadband under Title II in a must-pass bill will eliminate any political cover.

    It is also important to note that previous Democrat-controlled Congresses granted the FCC such reclassification authority, yet consistently told the FCC not to exercise such authority.

    Title II regulation of broadband will put this fast-growing industry under the same regulations imposed against monopoly railroads in 1887. “Forward” into the past!

  5. Gigaom needs some editors. This pointless ax-grinding piece falls well short of its usual standard. But grudges aside, congestion pricing remains an effective, efficient and moral tool for the allocation of resources. Arguments against it should present economic evidence beyond indignation.

    • Surprise! Content producers shill for content industry. The major broadband ISP’s have been charging for inbound traffic imbalance ever since their inception. These charges are passed back to content providers by way of transit and CDN pricing. Yet, the cost of transit has fallen from $1200/Mbps/month in 1998 to less than $1 in 2014. Bandwidth has never been cheaper for content providers. Yet, they and their minions here keep lobbying to dump more of their costs on home subscribers.

  6. The thought that refrigerator manufacturers would be forced to pay subsidies to the power company even though I pay the power company for power usage, is as ridiculous as comcast double billing both me as a customer, and netflix, despite the fact that I am the consumer who has contract for the home-haul ISP bandwidth.

    Glad to now see a pass through the heavy political lobbying from greedy oversized ISP’s.

    Can’t believe Ted Cruz’s political polarizing comment….. as if tea-party republican voters weren’t just as screwed too by the Comcast/Verizon political lobbying, though he’s shown before he’s out of touch his own party.