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Commission Document Attachment

DOC-327104A5

DISSENTING STATEMENT OF

COMMISSIONER AJIT PAI

Re:
Protecting and Promoting the Open Internet, GN Docket No. 14-28.
A few years ago, Google’s then-CEO, Eric Schmidt, was quoted as saying: “The Internet is the
first thing that humanity has built that humanity doesn’t understand.”1 If that is so, every American who
cares about the future of the Internet should be wary about five unelected officials deciding its fate.
After the U.S. Court of Appeals here in Washington struck down the agency’s latest attempt to
regulate broadband providers’ network management practices,2 I recommended that the Commission seek
guidance from Congress instead of plowing ahead yet again on its own. In my view, recent events have
only confirmed the wisdom of that approach.
Let’s start by acknowledging the obvious: The Chairman’s proposal has sparked a vigorous
public debate. But we should not let that debate obscure some important common ground: namely, a
bipartisan consensus in favor of a free and open Internet. Indeed, this consensus reaches back at least a
decade. In 2004, then-FCC Chairman Michael Powell outlined four principles of Internet freedom: The
freedom to access lawful content, the freedom to use applications, the freedom to attach personal devices
to the network, and the freedom to obtain service plan information.3 One year later, the FCC
unanimously endorsed these principles when it adopted the Internet Policy Statement.4
Respect for these four Internet freedoms has aided the Internet’s tremendous growth over the last
decade. It has shielded online competitors from anticompetitive practices. It has fostered long-term
investments in broadband infrastructure. It has made the Internet an unprecedented platform for civic
engagement, commerce, entertainment, and more. And it has made the United States the epicenter of
online innovation. I support the four Internet freedoms, and I am committed to protecting them going
forward.
It’s not news that people of good faith disagree when it comes to the best way to maintain a free
and open Internet—or as I think of it, how best to preserve the four Internet freedoms for consumers.
Some would like to regulate broadband providers as utilities under Title II of the Communications Act.
This turn to common-carrier regulation would scrap the Clinton-era decision to let the Internet grow and
thrive free from price regulation and other obligations applicable to telephone carriers.5

1 See Jerome Taylor, Google chief: My fears for Generation Facebook, The Independent (Aug. 18, 2010), available
at
http://www.independent.co.uk/life-style/gadgets-and-tech/news/google-chief-my-fears-for-generation-facebook-
2055390.html.
2 Verizon Communications Inc. v. FCC, 740 F. 3d 623 (D.C. Cir. 2014).
3 Michael K. Powell, Chairman, FCC, Preserving Internet Freedom: Guiding Principles for the Industry (Feb. 8,
2004), available at http://go.usa.gov/8CZe.
4 Appropriate Framework for Broadband Access to the Internet over Wireline Facilities; Review of Regulatory
Requirements for Incumbent LEC Broadband Telecommunications Services; Computer III Further Remand
Proceedings: Bell Operating Company Provision of Enhanced Services; 1998 Biennial Regulatory Review-Review
of Computer III and ONA Safeguards and Requirements; Inquiry Concerning High-Speed Access to the Internet
Over Cable and Other Facilities Internet Over Cable Declaratory Ruling; Appropriate Regulatory Treatment for
Broadband Access to the Internet Over Cable Facilities
, GN Docket No. 00-185, CC Docket Nos. 02-33, 01-33, 98-
10, 95-20, CS Docket No. 02-52, Policy Statement, 20 FCC Rcd 14986 (2005).
5 See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report to Congress, 13 FCC Rcd
11501 (1998).

There are others—and I am one of them—who believe President Clinton and Congress got it right
in the Telecommunications Act of 1996 when they declared the policy of the United States to be
“preserv[ing] the vibrant and competitive free market that presently exists for the Internet . . . unfettered
by Federal or State regulation
.”6 They think that we should recognize the benefits made possible by the
regulatory regime that has been in place for most of the last decade. After all, nobody thinks of plain old
telephone service or utilities as cutting-edge. But everyone recognizes that the Internet has boundless
potential. And that’s because government didn’t set the bounds early on.
Today’s item strikes yet a third approach. It’s a lawyerly one that proposes a minimal-level-of-
access rule and a not-too-much-discrimination rule. It also allows for paid prioritization under
unspecified circumstances. To date, no one outside the building has asked me to support this proposal. It
brings to mind a Texas politician’s observation that there is nothing in the middle of the road but yellow
stripes and dead armadillos.
Nothing less than the future of the Internet depends on how we resolve this disagreement. What
we do will imperil or preserve Internet freedom. It will promote or deter broadband deployment to rural
consumers and infrastructure investment throughout our nation. It will brighten or hamper the future of
innovation both within networks and at their edge. It will determine whether control of the Internet will
reside with the U.S. government or the private sector. It will impact whether consumers are connected by
smart networks or dumb pipes. And it will advance or undermine American advocacy on the
international stage for an Internet free from government control.
A dispute this fundamental is not for us, five unelected individuals, to decide. Instead, it should
be resolved by the people’s elected representatives, those who choose the direction of government—and
those whom the American people can hold accountable for that choice.
I am therefore disappointed that today, rather than turning to Congress, we have chosen to take
matters into our own hands. It is all the more disappointing because we have been down this road before.
Our prior two attempts to go it alone ended in court defeats. Even with the newfangled tools the FCC will
try to pull out of its legal grab-bag, I am skeptical that the third time will be the charm.
For one, I see no legal path for the FCC to prohibit paid prioritization or the development of a
two-sided market—which appears to be the sine qua non objection by many to the Chairman’s proposal.
As the NPRM frankly acknowledges, section 706 of the Telecommunications Act “could not be used” for
such a ban.7 And while the NPRM resists saying it outright, neither could Title II. After all, Title II only
authorizes the FCC to prohibit “unjust or unreasonable discrimination”8 and both the Commission and the
courts have consistently interpreted that provision to allow carriers to charge different prices for different
services.9 Indeed, I have been unable to find even a single case in which the Commission found it
unlawfully discriminatory to offer a different (faster) service to customers at a different (higher) price.

6 47 U.S.C. § 230(b)(2) (emphasis added).
7 Notice of Proposed Rulemaking at para. 138.
8 47 U.S.C. § 202(a).
9 See, e.g., Development of Operational, Technical and Spectrum Requirements for Meeting Federal, State and
Local Public Safety Agency Communication Requirements Through the Year 2010; Establishment of Rules and
Requirements for Priority Access Service
, WT Docket No. 96-86, Second Report and Order, 15 FCC Rcd 16720
(2000) (finding Priority Access Service, a wireless priority service for both governmental and non-government
public safety personnel, “prima facie lawful” under section 202); Access Charge Reform; Price Cap Performance
Review for Local Exchange Carriers; Interexchange Carrier Purchases Of Switched Access Services Offered By
Competitive Local Exchange Carriers; Petition of US West Communications, Inc. for Forbearance from Regulation
as a Dominant Carrier in the Phoenix, Arizona MSA
, CC Docket Nos. 96-262, 94-1, 98-157, CCB/CPD File No. 98-
63, 14 FCC Rcd 14221 (1999) (granting dominant carriers pricing flexibility or special access services, allowing
(continued…)

For another, the legal consequences of moving forward with net-neutrality regulation are sure to
wreak havoc on the Internet economy, no matter which legal path we take. If we are to take the D.C.
Circuit at its word, section 706 grants the FCC virtually unfettered authority to encourage broadband
adoption and deployment.10 So if three members of the FCC think that more Americans would go online
if they knew their information would be secure, could we impose cybersecurity and encryption standards
on website operators? If three members of the FCC think that more Americans would purchase
broadband if edge providers were prohibited from targeted advertising, could we impose Do Not Track
regulations? Or if three members of the FCC think that more Americans would use the Internet if there
were greater privacy protections, could we follow the European Union and impose right-to-be-forgotten
mandates? And because section 706 gives state commissions authority equal to the FCC,11 every
broadband provider, every online innovator, every Internet-enabled entrepreneur may now have to
comply with differing regulations in each of the 50 states. Tesla, Uber, Airbnb, and countless others can
attest to the welcome that parochial regulators give to disruptive start-ups.
The Internet would fare no better under Title II, and the consequences are likely to be even worse.
Reclassification opens the door to actual access charges—tariffed charges that Internet service providers
could impose on edge providers, content delivery networks, and transit operators without their consent.
Indeed, one Title II option on the table would guarantee new Internet tolls by giving broadband ISPs no
option other than access charges to recover their regulated costs.12 Not only that, but reclassification
means a broadband price hike for every consumer in America—not exactly a move that will encourage
broadband adoption.13 And alongside tariffed access charges and higher consumer prices, other Title II
provisions—ranging from the disclosure of customer information14 to mandatory billing disclosures15—
would apply to broadband providers, edge providers, or really anyone in the Internet economy. And like
section 706, Title II puts state regulators on par with the FCC, meaning there may be 50 sets of access
charges to be paid, 50 different broadband fees to be assessed, 50 different privacy regimes to be
complied with, and 50 different types of mandatory disclosures to be made. As this suggests, a Title II
regime hardly lowers the barriers to competitive entry—starting a company doesn’t get you free legal
services. And it would hardly “provide certainty to all market participants and keep the costs of
regulation low,” as 150 Internet companies asked us to do last week.16
(Continued from previous page)
both higher charges for faster connections as well as individualized pricing and customers discounts); GTE
Telephone Operating Companies Tariff F.C.C. No. 1 et al.
, Transmittal Nos. 900, 102, 519, 621, 9 FCC Rcd 5758
(Common Carrier Bur. 1994) (approving tariffs for Government Emergency Telephone Service(GETS), a prioritized
telephone service, and additional charges therefor); see also, e.g., Interstate Commerce Commission v. Baltimore &
O.R. Co.
, 145 U.S. 263, 283–84 (1892) (noting that common carriers are “only bound to give the same terms to all
persons alike under the same conditions and circumstances,” and “any fact which produces an inequality of
condition and a change of circumstances justifies an inequality of charge”).
10 Verizon v. FCC, 740 F.3d 623, 639–40 (D.C. Cir. 2014).
11 47 U.S.C. § 1302(a) (“The Commission and each State commission with regulatory jurisdiction over
telecommunications services shall encourage the deployment on a reasonable and timely basis of advanced
telecommunications capability to all Americans . . . .” (emphasis added)).
12 See Notice of Proposed Rulemaking at paras. 151–52.
13 See 47 U.S.C. § 254(d) (imposing universal service fees on all telecommunications carriers).
14 See 47 U.S.C. § 222.
15 See 47 C.F.R. § 64.2401 (implementing 47 U.S.C. §§ 201(b), 258).
16 Letter from Amazon et al., to Chairman Wheeler and Commissioners Clyburn, Rosenworcel, Pai, and O’Rielly,
GN Docket No. 14-28 (May 7, 2014).

Finally, pursuing net-neutrality regulations under section 706 or Title II places in jeopardy every
other goal of this Commission in the communications marketplace. Most obviously, this pursuit injects
tremendous regulatory uncertainty into the market, chilling further broadband deployment,17 threatening
the $60 billion a year that private companies invest in their broadband networks, and potentially
jeopardizing some of the millions of jobs that depend on such investment.18 This brave new world will
deter new entrants and reduce competition in the broadband market.
This is no academic concern. Even with the cushion of market capitalization equivalent to
Comcast, Verizon, and T-Mobile combined, Google has already attested that our legacy regulations led it
not to offer phone service as part of Google Fiber.19 On the other end of the size spectrum, there are
thousands of smaller Internet service providers—wireless ISPs (WISPs), small-town cable operators,
electric cooperatives, and others—that don’t have the means or the margins to withstand a regulatory
onslaught. If they go dark, consumers they serve (including my parents, who are WISP subscribers in
rural Kansas) will be thrown offline.
On top of all this, undertaking such a “politically corrosive” rulemaking on dubious legal and
policy grounds will swamp what should be an independent, expert agency with years of litigation and
partisan division.20 That is not good for broadband deployment, that is not good for consumers, and that
is not good for future of the Internet.
For all of these reasons, I respectfully dissent.
* * *
Nevertheless, if we are going to act like our own mini-legislature and plunge the Commission into
this morass, we need to use a better process going forward. I agree with my colleague, Commissioner
Rosenworcel, that we have rushed headlong into this rulemaking by holding this vote today21—and when
there is any bipartisan agreement on net neutrality, that’s something to pay attention to. We have seen
over the past month what happens when the American people feel excluded from the Commission’s
deliberations. Indeed, on several recent issues, many say that the Commission has spent too much time
speaking at the American people and not enough time listening to them.
Going forward, we need to give the American people a full and fair opportunity to participate in
this process. And we must ensure that our decisions are based on a robust record.

17 See, e.g., Letter from Robert W. Quinn, Jr., Senior Vice President, AT&T, to Marlene H. Dortch, Secretary, FCC,
GN Docket No. 14-28, at 2–3 (May 9, 2014); Letter from Kathryn A. Zachem, Senior Vice President, Comcast
Corporation, to Marlene H. Dortch, Secretary, FCC, GN Docket No. 14-28, at 1–2 (May 12, 2014); Letter from Rick
Chessen, Senior Vice President, National Cable & Telecommunications Association, to Marlene H. Dortch,
Secretary, FCC, GN Docket No. 14-28, at 3 (May 14, 2014).
18 Letter from Thomas R. Stanton, Chairman & CEO, ADTRAN, et al., to Marlene H. Dortch, Secretary, FCC, GN
Docket No. 14-28 (May 13, 2014).
19 Alyson Raletz, Google Considers But Drops Plans to Include Phone Service, Too, Kansas City Business Journal
(Dec. 4, 2012), available at http://www.bizjournals.com/kansascity/blog/2012/12/google-considers-drops-phone-
service.html.
20 See Letter from Mitch McConnell, Senate Republican Leader, et al., to the Honorable Thomas Wheeler,
Chairman, FCC (May 13, 2014); Letter from John A. Boehner, Speak of the House, to the Honorable Thomas E.
Wheeler, Chairman, FCC (May 14, 2014); Letter from Fred Upton, Chairman, U.S. House of Representatives
Committee on Energy and Commerce, et al. to the Honorable Thomas E. Wheeler, Chairman, FCC (May 13, 2014).
21 See Remarks of Commissioner Jessica Rosenworcel at the Chief Officers of State Library Agencies Meeting (May
7, 2014), available at http://go.usa.gov/84SG; see also Letter from Senators Kelly Ayotte, Deb Fischer, and Dan
Coats, to the Honorable Tom Wheeler, Chairman, FCC (May 14, 2014), available at http://go.usa.gov/84Sz.

So what is the way forward? Here’s one suggestion. Just as we commissioned a series of
economic studies in past media-ownership proceedings,22 we should ask ten distinguished economists
from across the country to study the impact of our proposed regulations and alternative approaches on the
Internet ecosystem. To ensure that we obtain a wide range of perspectives, let each Commissioner pick
two authors. To ensure accuracy, each study should be peer reviewed. And to ensure public oversight,
we should host a series of hearings where Commissioners could question the authors of the studies and
the authors of those studies could discuss their differences. Surely the future of the Internet is no less
important than media ownership.
But we should not limit ourselves to economic studies. We should also engage computer
scientists, technologists, and other technical experts to tell us how they see the Internet’s infrastructure
and consumers’ online experience evolving. Their studies too should be subject to peer review and public
hearings.
Ultimately, any decisions we make on Internet regulation must be based on sound engineering
and an accurate understanding of how networks actually function. They should be informed by the
judicious and successful regulatory approach embraced by both Democrats and Republicans in recent
years. And they should avoid embroiling everyone, from the FCC to industry to the average American
consumer, in yet another years-long legal waiting game.
In short, getting the future of the Internet right is more important than getting this done right now.
After all, the Internet was free and open before the FCC’s net-neutrality rules took effect in November
2011. And it is still free and open today even though those rules are no longer in force. Going forward, I
hope that we will not rush headlong into enacting bad rules. We are not confronted with an immediate
crisis that requires immediate action. And if we are going to usurp Congress’s role and make
fundamental policy choices for the American people, we must do better than the process that led to
today’s vote.

22 FCC, 10 Research Studies on Media Ownership, http://go.usa.gov/8YSA.

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