Commission Document Attachment

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DISSENTING STATEMENT OF

COMMISSIONER MICHAEL O’RIELLY

Re: Protecting and Promoting the Open Internet, GN Docket No. 14-28.

Today a majority of the Commission attempts to usurp the authority of Congress by re-writing the

Communications Act to suit its own “values” and political ends. The item claims to forbear from certain

monopoly-era Title II regulations while reserving the right to impose them using other provisions or at

some point in the future. The Commission abdicates its role as an expert agency by defining and

classifying services based on unsupported and unreasonable findings. It fails to account for substantial

differences between fixed and mobile technologies. It opens the door to apply these rules to edge

providers. It delegates substantial authority to the Bureaus, including how the rules will be interpreted

and enforced on a case-by-case basis. And, lest we forget how this proceeding started, it also reinstates

net neutrality rules. Indeed, it seems that every bad idea ever floated in the name of net neutrality has

come home to roost in this item.1

To read public statements over the last few weeks, one might think that this item uses Title II in

some limited way solely to provide support for net neutrality rules and to protect consumers. And a

casual observer might be misled to believe that the ends justify the means.

Along the way, however, the means became the end. Net neutrality is now the pretext for

deploying Title II to a far greater extent than anyone could have imagined just months ago. And that is

the reality that the Commission tried to hide by keeping the draft from the public and releasing a carefully

worded “fact” sheet in its place.

While I see no need for net neutrality rules, I am far more troubled by the dangerous course that

the Commission is now charting on Title II and the consequences it will have for broadband investment,

edge providers, and consumers. The Commission attempts to downplay the significance of Title II, but

make no mistake: this is not some make believe modernized Title II light that is somehow tailored to

preserve investment while protecting consumers from blocking or throttling. It is fauxbearance: all of

Title II applied through the backdoor of sections 201 and 202 of the Act, and section 706 of the 1996 Act.

Moreover, all of it is premised on a mythical “virtuous cycle”—not actual harms to edge providers or

consumers.

In some ways, this evolution is not surprising. I have consistently expressed concerns, across a

number of proceedings—tech transitions, text-to-911, over-the-top video, VoIP symmetry, etc.—that this

Commission has been slowly but steadily attempting to bring over-the-top and other IP services within its

reach.

Now the Commission goes all in and subjects broadband networks—the foundation of the

Internet—to Title II itself. Furthermore, because there is no limiting principle, other providers will

eventually be drawn in as well. I cannot support this monumental and unlawful power grab.

The Proceeding Did Not Provide Sufficient Notice and Opportunity for Comment

While the item claims that the decisions are a logical outgrowth of a few open ended questions

tacked on the NPRM, that argument is not at all persuasive. This is a clearly a situation where “interested

1 Perhaps not every bad idea. At least the Commission won’t be separately classifying and regulating “broadband

subscriber access service,” which was widely regarded to be an imaginary service.

parties would have had to divine the agency’s unspoken thoughts, because the final rule was surprisingly

distant from the proposed rule.”2

Interested parties effectively had no notice or opportunity to respond to the vast evolution that

took place from NPRM to final order. Key points include: the scope of the newly defined services,

including how they relate to each other; the legal analysis underlying the classification or reclassification

of each service; how forbearance would apply in the context of these newly defined services; and the

theory underlying forbearance, including using sections 201, 202, and 706 to backfill other provisions.3

The Findings are Not Supported by Evidence of Actual Harms

Even after enduring three weeks of spin, it is hard for me to believe that the Commission is

establishing an entire Title II/net neutrality regime to protect against hypothetical harms.4 There is not a

shred of evidence that any aspect of this structure is necessary. The D.C. Circuit called the prior, scaled-

down version a “prophylactic” approach. I call it guilt by imagination.

Moreover, the Commission, once again, takes a pass on performing a market power analysis in

favor of repetitive invocation of the “virtuous cycle” nonsense. That may have been good enough to

narrowly survive review when all that was at stake was net neutrality rules. But that’s no guarantee that

such flimsy reasoning will withstand another round (or two) of scrutiny now that all of Title II hangs in

the balance as well.

2 Agape Church, Inc. v. FCC, 738 F.3d 397, 411 (D.C. Cir. 2013).

3 See, e.g., Letter from Henry G. Hultquist, AT&T to Marlene H. Dortch, FCC, GN Docket Nos. 14-28 & 10-127 at

2 (filed Feb. 19, 2015) (AT&T Feb. 19, 2015 Ex Parte Letter),

http://apps.fcc.gov/ecfs/document/view?id=60001031079 (“The Commission’s failure to provide adequate notice for

a number of the proposals under consideration has resulted in a record that is bereft of support for the Commission's

actions. For example, the Commission has no record basis on which it could determine that every ISP holds itself

out as a common carrier. To give just one example, AT&T does not offer its GigaPower service indifferently to the

public, and there is no basis in the record on which the Commission could mandate that AT&T do so.”); Letter from

William H. Johnson, Verizon to Marlene H. Dortch, FCC, GN Docket Nos. 14-28 &10-127 at 4 (filed Feb. 19,

2015) (Verizon Feb, 19, 2015 Title II Ex Parte Letter), http://apps.fcc.gov/ecfs/document/view?id=60001031374" title="http://apps.fcc.gov/ecfs/document/view?id=60001031374">http://apps.fcc.gov/ecfs/document/view?id=60001031374

(“For starters, the Open Internet NPRM did not even mention “adjunct-to-basic” services, so the Commission cannot

justify its action on that rationale.”); Letter from Scott K. Bergmann, CTIA to Marlene H. Dortch, FCC, GN Docket

Nos. 14-28 & 10-127 at 6 (filed Dec. 22, 2014) (CTIA Dec. 22, 2014 White Paper),

http://apps.fcc.gov/ecfs/document/view?id=60001014008 (“[T]he Notice asked only whether mobile broadband

Internet access service ‘fit[s] … the definition of ‘commercial mobile radio service.’” ... “It never asked whether ‘the

definition’ – set out in Section 20.3 – should be changed, or provided notice that it might be.”)(internal citation

omitted); Letter from Kathryn A. Zachem, Comcast to Marlene H. Dortch, FCC, GN Docket Nos. 14-28 & 10-127

at 6 (filed Jan. 30, 2015) (Comcast Jan. 30, 2015 Ex Parte Letter),

http://apps.fcc.gov/ecfs/document/view?id=60001024748 (“As an initial matter, the Open Internet NPRM gave no

notice of any proposal to reclassify Internet traffic exchange as a Title II service. Although the NPRM raised the

prospect that the FCC could depart from its historical approach of excluding interconnection issues from open

Internet rules – asking whether it “should expand the scope of the open Internet rules to cover issues related to

traffic exchange” – it nowhere suggested that the Commission might reclassify ISPs’ interconnection-related

services to achieve that end.”) (internal citation omitted); Letter from Matthew A. Brill, Counsel to National Cable

& Telecommunications Association, to Marlene H. Dortch, FCC, GN Docket Nos. 14-28, 10-127 (Jan. 14, 2015)

(NCTA Jan. 14, 2015 Ex Parte Letter).

4 Nat’l Fuel Gas Supply Corp. v. FERC, 468 F.3d 831, 844 (D.C. Cir. 2006) (finding that “if [an agency] chooses to

rely solely on a theoretical threat, it will need to explain how the potential danger …unsupported by a record of

abuse, justifies such costly prophylactic rules”).

2

Title II is an Extreme Solution to an Imaginary Problem

While some providers may have been willing to live with net neutrality rules under section 706

based on nothing more than speculative harms, it is an entirely different matter to impose Title II without

concrete evidence that doing so is absolutely necessary. The item supposedly invokes Title II in order to

put the net neutrality rules on the firmest legal footing. But Title II is far more than a convenient legal

theory—it is a comprehensive set of regulations designed to rein in monopoly telephone companies. And

it is laden with decades of precedent that cannot be shrugged off with simple incantations like, “To the

extent our prior precedents suggest otherwise, for the reasons discussed in the text, we disavow such an

interpretation as applied to the open Internet context.”5

There is a reason that Title II has been called the nuclear option. No matter what the FCC tries to

do to limit the fallout (and it is not trying very hard to do that here) the decision will still impact

investments. As one analyst reportedly wrote just last week, “terminal growth rate assumptions need to

be lowered…Title II is about price regulation. It would be naïve to believe that the imposition of a regime

that is fundamentally about price regulation, in an industry that the FCC has now repeatedly declared to

be non-competitive, wouldn’t introduce risk to future pricing power.”6

While the FCC tailors certain statements from providers to reject assertions that Title II will

“substantially diminish overall broadband investment”, that doesn’t give me a lot of comfort.7 Even a

modest reduction is too great a price to pay when weighed against purely speculative harms. Moreover,

the harms to small ISPs will be disproportionately severe and the FCC gives them no reprieve from Title

II whatsoever.

Incredibly, the item gives significant weight to a theoretical cost of forgone innovation but gives

essentially no weight to the cost of forgone investment. I am far more concerned about the Americans

that will remain unserved as a result of our rules. Forget about an open Internet; they have no Internet.

We need to be focused on ways to promote deployment, and not in some roundabout virtuous cycle way,

but through proven deregulatory measures. I am very concerned that, far from a virtuous cycle, we are

creating a vicious cycle where regulation deters investment in broadband and that begets more regulation

to stimulate competition and deployment that will further deter investment. In other words, the beatings

will continue until morale improves.

The Commission's Decision to Classify Broadband Internet Access Service as a Telecommunications

Service is Contrary to Law and Fact

Notably, the item not only reverses its decision to treat broadband Internet access service as an

information service, but it also determines, for the first time, that Title II applies to the entire service—not

just a transmission component. As one provider put it, “the conclusion that retail ‘broadband Internet

access’ is a telecommunications service is contrary to the plain text of multiple provisions of the

5 See, e.g., supra note 715.

6 Kery Murakami, Wheeler Defends Proposed Net Neutrality Rules at NARUC, COMM. DAILY, Feb. 18, 2015, at

4, 6 (quoting Craig Moffett).

7 Supra para. 411.

3

Communications Act, decades of Commission decisions, and the views of all nine Supreme Court

Justices in [Brand X].”8

The item also gives short shrift to the argument that prior decisions to classify broadband Internet

access service as an information service “engendered serious reliance interests that must be taken into

account.”9

I am just as troubled by the substantial factual errors underlying the decision. Adherence to

“factually unsupportable assertion[s]” shows that the Commission has “abdicate[d] its role as the expert

federal agency on communications networks and services, and ignore[d] the administrative record in this

proceeding.”10

The Commission Cannot “Subsume” Internet Traffic Exchange into Broadband Internet Access Service

to Regulate it Under Title II

The record is replete with evidence that content providers and network operators enter into

interconnection relationships with ISPs through individually negotiated private agreements.11 Regardless

of the form they take—“peering,” “transit,” or “on-net-only”—providers do not hold themselves out to

serve the public indifferently.12 As such, these arrangements, which some mistakenly refer to as

“interconnection”, have never been regulated as common carriage services subject to Title II.13

Undeterred by this long history, the item concocts a novel service laundering scheme. It attempts

to transform this “interconnection” into a telecommunications service by “subsuming” it into another

service—broadband Internet access service. And just like that, retail broadband Internet access service is

no longer a last mile service; it is the entire “Internet traffic path”, including all Internet traffic

relationships.

This approach is riddled with holes. First, such “interconnection” has always been understood to

be distinct from the last mile, including in this proceeding.14 Second, the item does not show how this

8 Letter from Gary L. Phillips, AT&T to Marlene H. Dortch, FCC, GN Docket Nos. 14-28 &10-127 at 1 (filed Feb.

18, 2015) (AT&T Feb. 18, 2015 Fact Sheet Ex Parte Letter),

http://apps.fcc.gov/ecfs/document/view?id=60001030836.

9 FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009).

10 Letter from Austin H. Schlick, Google to Marlene H. Dortch, FCC, GN Docket Nos. 14-28 &10-127 at 3 (filed

Feb. 20, 2015) (Google Feb. 20, 2015 Ex Parte Letter), http://apps.fcc.gov/ecfs/document/view?id=60001032150.

11 See id. at 1. See also, e.g., Letter from William H. Johnson, Verizon to Marlene H. Dortch, FCC, GN Docket

Nos. 14-28 &10-127 at 1, 4-5 (filed Dec. 17, 2014) (Verizon Dec. 17, 2014 Interconnection Ex Parte Letter),

http://apps.fcc.gov/ecfs/document/view?id=60001010005; Letter from Gary L. Phillips, AT&T to Marlene H.

Dortch, FCC, GN Docket Nos. 14-28 &10-127 at 7-8 (filed Feb. 2, 2015) (AT&T Feb. 2, 2015 Common Carrier Ex

Parte Letter), http://apps.fcc.gov/ecfs/document/view?id=60001025387;" title="http://apps.fcc.gov/ecfs/document/view?id=60001025387;">http://apps.fcc.gov/ecfs/document/view?id=60001025387; Comcast Jan. 30, 2015 Ex Parte Letter at 2-

6.

12 AT&T Feb. 2, 2015 Common Carrier Ex Parte Letter at 7-8.

13 See, e.g., Verizon Communications Inc. and MCI, Inc. Applications for Approval of Transfer of Control, WC

Docket No. 05-75, Memorandum Opinion and Order, 20 FCC Rcd 18433, ¶ 133 (2005) (“[I]nterconnection between

Internet backbone providers has never been subject to direct government regulation.”).

14 See, e.g., Verizon Dec. 17, 2014 Interconnection Ex Parte Letter at 1 (“Both the previous Open Internet rules and

the Notice of Proposed Rulemaking in this proceeding focused on concerns relating to the management of traffic

(continued…)

4

service laundering scheme is consistent with precedent. Third, it depends on broadband Internet access

service being a telecommunications service, which it is not. Fourth, there was absolutely no notice for

this novel approach. Even parties that guessed that interconnection might be subject to Title II (despite

the lack of notice) clearly did not understand that the primary mechanism for doing so would be to re-

interpret broadband Internet access service to include interconnection.15

Moreover, this shift to regulate Internet traffic exchange highlights that the Commission’s real

end game has become imposing Title II on all parts of the Internet, not just setting up net neutrality rules.

In subjecting a thriving, competitive market to regulation in the name of net neutrality, the Commission is

trying to use a small hook and a thin line to reel in a very large whale. This line will surely break.

Mobile broadband services warrant different regulatory treatment

Similarly, this order, for the first time, subsumes mobile broadband services under Title II

common carrier regulation, reversing decades of precedent.

Until now, the Commission has followed

Congress’s mandate under section 332 of the Communications Act and has correctly exercised regulatory

restraint by classifying mobile broadband as an information service free from common carrier regulation

as required by the statute.16 Yet today, we use sleight of hand to change our definitions so that overnight

mobile broadband magically falls under the confines of Title II.

In subjecting wireless broadband to Title II, the majority ignores fundamental differences

between the wireless and fixed broadband industries and technologies. Unlike last century’s voice-only

telephone service, the wireless sector has developed and flourished in a fiercely competitive

(Continued from previous page)

within a broadband provider’s local network and over the last-mile connection to a subscriber. By contrast,

interconnection agreements inherently involve routing traffic between networks. Issues surrounding these

agreements, which relate to the physical connections between networks, are “very distinct” from issues concerning

the management of traffic over the last-mile….”) (internal citation omitted).

15 See, e.g., Comcast Jan. 30, 2015 Ex Parte Letter at 6 (“As an initial matter, the Open Internet NPRM gave no

notice of any proposal to reclassify Internet traffic exchange as a Title II service. Although the NPRM raised the

prospect that the FCC could depart from its historical approach of excluding interconnection issues from open

Internet rules – asking whether it ‘should expand the scope of the open Internet rules to cover issues related to traffic

exchange’ – it nowhere suggested that the Commission might reclassify ISPs’ interconnection-related services to

achieve that end”). As a backstop, the item notes in passing that BIAS provider practices with respect to such

interconnection are “for and in connection with” the BIAS service. This last second addition based on a last minute

ex parte filing cannot salvage this effort because there is no notice for this theory either.

16 47 U.S.C. § 332. In 1993, Congress codified section 332(c) differentiating between commercial and private

mobile services. Compare 47 U.S.C. § 332(c)(1) with id. § 332(c)(1); see also id. § 332(d) (providing definitions);

Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, 107 Stat. 312. Under the law, mobile broadband

has been treated as a “private mobile service” as opposed to a “commercial mobile service or the functional

equivalent of a commercial mobile service.” A “commercial mobile service” interconnects with the public switched

telephone network; whereas, a “private mobile service” does not. Because mobile broadband is not interconnected

and, therefore, a “commercial mobile service,” Section 332 of the Communications Act prevents the Commission

from regulating mobile broadband under Title II. Instead, mobile broadband is a “private mobile service” free from

common carrier regulation. See, e.g., Implementation of Sections 3(n) and 332 of the Communications Act,

Regulatory Treatment of Mobile Services, 9 FCC Rcd 1411, 1434 ¶¶ 54 (1994); Appropriate Regulatory Treatment

for Broadband Access to the Internet over Wireless Networks, Declaratory Ruling, 22 FCC Rcd 5901, 5915–21 ¶¶

37–56 (2007); Cellco Partnership v. FCC, 700 F.3d 534, 538 (D.C. Cir. 2012); Verizon v. FCC, 740 F.3d 623, 650

(D.C. Cir. 2014); see also Testimony of Robert M. McDowell, Partner, Wiley Rein LLP & Senior Fellow, Hudson

Institute, before the Senate Committee on Commerce, Science & Transportation, at 14-15,

http://www.commerce.senate.gov/public/?a=Files.Serve&File_id=14755dd8-95c7-45e0-a7b9-bfb33f222f45.

5

environment.17 Wireless consumers have ample choices and can readily switch between offerings.18 This

competition has yielded unparalleled investment and innovation, lower prices, higher speeds and product

differentiation as sector participants vie for an edge to attract and retain subscribers.19 Applying a

regulatory regime established for monopoly voice service to the dynamic mobile sector defies logic.

The majority also flagrantly ignores the fundamental technical and operational requirements

necessary for mobile broadband networks. Unlike fixed systems, mobile network capacity is constrained

by the relative scarcity of spectrum resources. Given this unique limitation, wireless providers must

maintain their ability to vigorously and nimbly mitigate the congestion inherent to wireless networks.20 I

expect that the rigid Title II rules adopted today will hamstring the smooth functioning of these networks.

Although some may argue that the exception for reasonable network management will allow such

flexibility, a case-by-case approach whereby a wireless provider’s congestion management practices are

judged after the fact by the Commission’s Enforcement Bureau is unlikely to provide much comfort to

wireless providers.

Finally, the majority defines mobile broadband as a telecommunications service without

adequately explaining its rationale for the drastic change of course.21 In addition, there has been no

meaningful opportunity for public comment on this change of definition.22 This action is nothing less

than an attempt to improperly capture mobile broadband under Title II, in direct contravention of

congressional intent,23 and it is not likely to survive judicial scrutiny.

17 See, e.g., Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report

and Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile

Services, WT Docket No. 13-135, Seventeenth Report, 29 FCC Rcd 15311, 15336 Chart III.2.A (WTB 2014)

(stating that approximately 99 percent of consumers have a choice of two or more competitors and more than 82

percent of Americans today have a choice of four or more mobile providers.).

18 Now more than any time in history, wireless consumers have the freedom to take advantage of myriad incentives

to switch providers, whether through early termination fee buyouts, unlocking, or one of various options to buy or

finance the latest mobile devices. See, e.g., Letter from Scott K. Bergmann, Vice President – Regulatory Affairs,

CTIA – The Wireless Association, to Marlene H. Dortch, GN Docket Nos. 14-28 & 10-127, at 3-5 (Feb. 10, 2015)

(CTIA Feb. 10, 2015 Ex Parte Letter).

19 And, to remain competitive, carriers will continue to deploy new technologies, upgrade current networks, improve

service offerings, and evolve to consistently meet or exceed consumer expectations. See, e.g., Testimony of

Meredith Attwell Baker, President and CEO, CTIA – The Wireless Association, before the House Energy &

Commerce Subcommittee on Communications and Technology, at 5 (Jan. 21, 2015),

http://docs.house.gov/meetings/IF/IF16/20150121/102832/HHRG-114-IF16-Wstate-BakerM-20150121-U1.pdf.

20 See, e.g., id. at 4 (stating that a single strand of fiber can carry more traffic than the entirety of spectrum allocated

for commercial wireless use); Letter from Scott Bergman, Vice President – Regulatory Affairs, CTIA – The

Wireless Association, to Marlene H. Dortch, Secretary, Federal Communications Commission, GN Docket Nos. 14-

28 & 10-127 (Oct. 6, 2014).

21 By doing so, my colleagues in the majority bring an end to the regulatory approach established by Congress,

implemented by the Commission and relied upon by the wireless sector. See CTIA Feb. 10, 2015 Ex Parte Letter at

5-10.

22 See, e.g., Letter from Gary L. Phillips, General Attorney & Assoc. General Counsel, AT&T, to Marlene H.

Dortch, Secretary, Federal Communications Commission, at 3 (Feb. 2, 2015) (AT&T Feb. 2, 2015 Ex Parte Letter);

CTIA Feb. 10, 2015 Ex Parte Letter at 13-14; CTIA Dec. 22, 2014 White Paper at 6; Letter from William H.

Johnson, Vice President & Associate General Counsel, Verizon, to Marlene H. Dortch, Secretary, Federal

Communications Commission, at 5-6 (Verizon Dec. 24, 2014 Ex Parte Letter).

23 See, e.g., AT&T Jan. 8, 2015 Ex Parte Letter; AT&T Feb. 2, 2015 Ex Parte Letter; CTIA Feb. 10, 2015 Ex Parte

Letter at 14-16; CTIA Dec. 22, 2014 White Paper at 2-19; Verizon Dec. 24, 2014 Ex Parte Letter.

6

The Promised Forbearance is Fauxbearance

Perhaps the most surprising—and troubling—aspect of the item is that it promises forbearance

from most of Title II but does not actually forbear from the substance of those provisions. Instead, the

item intends to provide the same protections using a few of the “core” Title II provisions that are retained:

chiefly, sections 201, 202, and 706. I call this maneuver fauxbearance.

The item is quite candid about this strategy, stating, “[A]pplying [sections 201 and 202] enables

us to protect consumers of broadband Internet access service from potentially harmful conduct by

broadband providers both by providing a basis for our open Internet rules and for the important statutory

backstop they provide regarding broadband provider practices more generally.”24 Indeed, in section

after section, the item claims to forbear from a provision but then quickly points to available protections

in other provisions that effectively gut the forbearance. It’s an end run for purposes of spin and allows

proponents to claim that it’s a new “modern Title II” when really it only would exclude 56 percent

directly and even then allow the inexcusably broad language of certain sections to govern. Suffice it to

say, the majority seems to be comfortable with suggesting that they can forbear from parts of Title II

because section 201 does it all anyway. I will highlight a just few examples in this meeting to make my

point:

Fauxbearance from Tariffing (sections 203, 204): To quote the item, “It is our predictive

judgment that [the protections in sections 201 and 202 of the Act] will be adequate to protect the interests

of consumers—including the interest in just, reasonable, and nondiscriminatory conduct—that might

otherwise be threatened by the actions of broadband providers. Importantly, broadband providers also are

subject to complaints and Commission enforcement in the event that they violate sections 201 or 202 of

the Act, the Open Internet Rules, or other elements of the core broadband Internet access requirements.”25

This is backdoor rate-setting authority.

Fauxbearance from Discontinuance Approval (section 214(a)): “Further, the conduct standards in

our open Internet rules provide important protections against reduction or impairment of broadband

Internet access service short of the complete cessation of providing that service.”26

Fauxbearance from Interconnection and Market-Opening (sections 251, 252, 256): “The

Commission retains authority under sections 201, 202 and the open Internet rules to require a provider of

broadband Internet access to address interconnection issues should they arise, including through

evaluating whether broadband providers’ conduct is just and reasonable on a case-by-case basis. We

therefore conclude that these remaining legal protections that apply with respect to providers of

broadband Internet access service will enable us to act if needed to ensure that a broadband provider does

not unreasonably refuse to provide service or interconnect.”27

The Commission Does Not Have Authority to Re-Write the Act

24 Supra para. 443 (emphasis added).

25 Supra para. 494.

26 Supra para. 505.

27 Supra para. 509.

7

The Supreme Court has made clear that “an agency has no power to ‘tailor’ legislation to

bureaucratic policy goals” by interpreting a statute to create a regulatory system “unrecognizable to the

Congress that designed it.”28 Yet the item attempts to do just that by engaging in a wholesale re-write of

the Communications Act to advance its own vision for the Internet.

The item casts its re-write as a “modernized” version of Title II. In doing so, the Commission

forgets that “it may not exercise its authority in a manner that is inconsistent with the administrative

structure that Congress enacted into law.”29 Congress gave us 48 provisions in Title II, but apparently all

we really need is section 151 (which establishes the FCC and gives it authority over all interstate service)

and 201 (which provides the substantive basis for all FCC rules). Or, to put it another way: “Presto, we

have a new statute”.30

Moreover, the Commission cannot cast aside specific provisions in favor of more general

provisions of the Act. If Congress had thought that sections 201 and 202 provided the authority necessary

to regulate interconnection, for example, then why was it compelled to add section 251 in 1996?

Additionally, the fact that the agency has forbearance authority does not justify the re-write.

Using Title II combined with forbearance to cherry pick its preferred provisions is an egregious abuse of

forbearance authority. As the D.C. Circuit has explained, “To further the deregulatory aims underlying

the 1996 overhaul of the Communications Act, Congress provided the FCC with the unusual authority to

forbear from enforcing provisions of the Act as well as its own regulations.”31 That is, forbearance was

intended to relieve carriers of existing regulations during a time of regulatory transition. It was not meant

to be used as a tool to selectively subject new services to previously inapplicable provisions.

This usurpation of Congressional authority is especially troubling given that Congress started the

process to legislate in this space. The FCC leadership did not even consider a brief pause to see that

process play out. Instead, they invited Congress to supplement the FCC’s re-write. Not surprisingly, the

FCC’s arrogance has already invited greater Congressional scrutiny and the FCC ultimately could see its

authority curtailed in many areas.

Case-by-case Enforcement Will be a Trap for the Unwary

The FCC “fact” sheet promised bright line rules, but the reality is that the bulk of this rulemaking

will be conducted through case-by-case adjudication, mostly at the Bureau level and in the courts. To be

sure, there are three bright line rules: no blocking, no throttling, and no paid prioritization. But those are

mere needles in a Title II haystack.

Many practices will be reviewed under the general conduct standard that will be, quite literally, a

catch-all. Moreover, rates, charges, and classifications will also be reviewed under the amorphous just

and reasonable standard in sections 201 and 202. Parties will have no way of knowing, in advance, how a

Bureau or the Commission—much less courts acting pursuant to sections 206 and 20732—will rule on a

28 Util. Air Reg. Grp. v. EPA, 134 S. Ct. 2427, at 2444, 2445 (2014).

29 Ragsdale v Wolverine World Wide, Inc., 535 U.S. 81, 91 (2002) (internal quotation marks omitted).

30 Verizon v. FCC, 740 F.3d 623, 663 (D.C. Cir. 2014) (Silberman, J., concurring in part and dissenting in part)).

31 Verizon and AT&T Inc. v. FCC, 770 F.3d 961, 964 (D.C. Cir. 2014).

32 Letter from Matthew A. Brill, NCTA to Marlene H. Dortch, FCC, GN Docket Nos. 14-28 & 10-127 at 5 (filed

Feb. 20, 2015) (NCTA Feb. 20, 2015 Ex Parte Letter), http://apps.fcc.gov/ecfs/document/view?id=60001031778" title="http://apps.fcc.gov/ecfs/document/view?id=60001031778">http://apps.fcc.gov/ecfs/document/view?id=60001031778

(“Private suits and damages awards have never been necessary to protect broadband consumers in the past, and

(continued…)

8

particular matter. There will be no certainty. Indeed, one public interest group called the catch-all a

“recipe for overreach and confusion”.33

The item notes that parties may seek an advisory opinion, which appears utterly useless: they are

only available in certain circumstances and are not binding. (I’m also not sure why any party would want

to refer itself to the Enforcement Bureau when its request could be used against it later.)

This is Just the Beginning

Although there are many caveats about what “this item” does, the Commission’s path forward is

clear. For example, the Commission claims that this item does not require broadband providers to

contribute to the federal universal service fund at this time. But that’s because it defers that decision to a

pending proceeding which is likely to result in new fees on broadband service.

Nor can providers take any comfort in the item’s other promises to refrain from further

regulation. In particular, the item repeatedly disavows any present intent to adopt ex ante rate regulation.

Banning paid prioritization is, itself, a form of ex ante rate regulation. The Commission expressly

contemplates examining, on a case-by-case basis, whether interconnection agreements are just and

reasonable under sections 201 and 202. That necessarily includes an evaluation of the rates, terms, and

conditions of such arrangements. The Commission also intends to review data allowances and usage-

based pricing plans on a case-by-case basis.

Moreover, last-mile ISPs aren’t the only ones that should be concerned by today’s actions. The

item attempts—albeit in a failed way—to carve out, for now, CDNs, transit providers, backbone

providers, edge providers, and certain specialized services, including e-readers. But the new legal

framework for telecommunications services has let the proverbial genie out of the bottle. The fact that

certain decisions will happen later does nothing to diminish the culpability of the current majority.

(Continued from previous page)

leaving these two provisions in place would be immensely destabilizing to the broadband industry.…The

Commission is all too familiar with the growing trend of class action lawsuits that aim to capitalize on ambiguities

in the Commission’s rulings—most notably in the context of the Telephone Consumer Protection Act (‘TCPA’). A

regime that exposes the broadband industry to similar threats of abusive litigation would be anything but ‘light

touch,’ and could be particularly devastating for smaller ISPs, many of which cannot afford the cost of litigating or

settling class action lawsuits.”) (internal citation omitted).

33 Electronic Frontier Foundation, Dear FCC: Rethink The Vague “General Conduct” Rule (Feb. 24, 2015),

https://www.eff.org/deeplinks/2015/02/dear-fcc-rethink-those-vague-general-conduct-rules.

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