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Regulating and Not Regulating the Internet

There is increasingly heated rhetoric in DC over whether or not the government should begin to “regulate the internet.” Such language is neither accurate nor new. This language implies that the government does not currently involve itself in governing the internet—an implication which is clearly untrue given a myriad of laws like CFAA, ECPA, DMCA, and CALEA (not to mention existing regulation of consumer phone lines used for dialup and “special access” lines used for high speed interconnection). It is more fundamentally inaccurate because referring simply to “the internet” blurs important distinctions, like the difference between communications transport providers and the communications that occur over those lines.

However, there is a genuine policy debate being had over the appropriate framework for regulation by the Federal Communications Commission. In light of recent events, the FCC is considering revising the way it has viewed broadband since the mid-2000s, and Congress is considering revising the FCC’s enabling statute—the Communications Act. At stake is the overall model for government regulation of certain aspects of internet communication. In order to understand the significance of this, we have to take a step back in time.

Before 2005

In pre-American British law, there prevailed a concept of “common carriage.” Providers of transport services to the general public were required to conduct their business on equal and fair terms for all comers. The idea was that all of society benefited when these general-purpose services, which facilitated many types of other commerce and cultural activities, were accessible to all. This principle was incorporated into American law via common-law precedent and ultimately a series of public laws culminating in the Communications Act of 1934. The structure of the Act remains today, albeit with modifications and grafts. The original Act included two regulatory regimes: Title II regulated Common Carriers (telegraph and telephone, at the time), whereas Title III regulated Radio (and, ultimately, broadcast TV). By 1984, it became necessary to add Title VI for Cable (Titles IV and V have assorted administrative provisions), and in 1996 the Act was revised to focus the FCC on regulating for competition rather than assuming that some of these markets would remain monopolies. During this period, early access to the internet began to emerge via dial-up modems. In a series of decisions called the Computer Inquiries, the FCC decided that it would continue to regulate phone lines used to access the internet as common carriers, but it disclaimed direct authority over any “enhanced” services that those lines were used to connect to. The 1996 Telecommunications act called these “enhanced” services “information services”, and called the underlying telephone-based “basic” transport services “telecommunications services”. Thus the FCC both did and did not “regulate the internet” in this era.

In any event, the trifurcated nature of the Communications Act put it on a collision course with technology convergence. By the early 2000s, broadband internet access via Cable had emerged. DSL was being treated as a common carrier, but how should the FCC treat Cable-based broadband? Should it classify it as a Title II common carrier, a Title VI cable service, or something else?

Brand X and Its Progeny

This question arose during a period in which a generally deregulatory spirit prevailed at the FCC and in Congress. The 1996 Telecommunications Act contained a great deal of hopeful language about the flourishing competition that it would usher in, making unneccessary decades of overbearing regulation. At the turn of the milennium, a variety of revolutionary networking platforms seemed just around the corner. The FCC decided that it should remove as much regulation from broadband as possible, and it had to choose between two basic approaches. First, it could declare that Cable-based broadband service was essentially the same thing as DSL-based broadband service, and regulate it under Title II (aka, a “telecommunications service”). This had the advantage of being consistent with decades of precedent, but the disadvantage of introducing a new regulatory regime to a portion of the services offered by cable operators, who had never before been subject to that sort of thing (except in the 9th Circuit, but that’s another story). The 1996 Act had given the FCC the authority to “forbear” from any obligations that it deemed unnecessary due to sufficient competition, so the FCC could still “deregulate” broadband to a significant extent. The other option was to reclassify cable broadband as a Title I service (aka, an “information service”). What is Title I, you ask? Well, there’s very little in Title I of the Communications Act (take a look). It mostly contains general pronouncements of the FCC’s purpose, so classifying a service as such is a more extreme way of deregulating a service. How extreme? We will return to this.

The FCC chose this more extreme approach, announcing its decision in the 2002 Cable Modem Order. This set off a prolonged series of legal actions, pitting the deregulatory-spirited FCC against those that wanted cable to be regulated under Title II so that operators could be forced to provide “open access” to competitors who would use their last-mile infrastructure (the same way that the phone company must allow alternative long distance carriers today). This all culminated in a decision by the 9th Circuit that Title I classification was unacceptable, and a reversal of that decision by the Supreme Court in 2005. The case is commonly referred to by its shorthand, Brand X. The majority opinion essentially states that the statute is ambiguous as to whether cable broadband is a Title I “information service” or Title II “telecommunications service”, and the Court deferred to the expert-agency: the FCC. The FCC immediately followed up by reclassifying DSL-based broadband as a Title I service as well, in order to develop a, “consistent regulatory framework across platforms.” At the same time, it released a Policy Statement outlining the so-called “Four Freedoms” that nevertheless would guide FCC policy on broadband. The extent to which such a statement was binding and enforceable would be the subject of the next chapter of the debate on “regulating the internet.”

Comcast v. FCC

After Brand X and the failure of advocates to gain “open access” provisions on broadband generally, much of the energy in the space focused to a fallback position: at the very least, they argued, the FCC should enforce its Policy Statement (aka, the “Four Freedoms”) which seemed to embody the spirit of some components of the non-discriminatory legacy of common carriage. This position came to be known as “net neutrality,” although the term has been subject to a diversity of definitions over the years and is also only one part of a potentially broader policy regime. In 2008, the FCC was forced to confront the issue when it was discovered that Comcast had begun interfering with the Bittorrent traffic of customers. The FCC sought to discipline Comcast under its untested Title I authority, Comcast thought that it had no such authority, and the DC Circuit Court agreed with Comcast. It appears that the Title I approach to deregulation was more extreme than even the FCC thought (although ex-Chairman Powell had no problem blaming the litigation strategy of the current FCC). To be clear, the Circuit Court said that the FCC did not have authority under Title I. But, what if the FCC had taken the alternate path back in 2002, deciding to classify broadband as a Title II service and “forbear” from all of the portions of the statute deemed irrelevant? Can the FCC still choose that path today?


Chairman Genachowski recently announced a proposed approach that would reclassify the transport portion of broadband as a Title II service, while simultaneously forbearing from the majority of the statute. This approach is motivated by the fact that Comcast cast a pall over the FCC’s ability to fulfill its explicit mandate from Congress to develop a National Broadband Plan, which requires regulatory jurisdiction in order for the FCC to be able to implement many of its components. I will discuss the reclassification debate in my next post. I’ll be at a very interesting event in DC tomorrow morning on the subject, titled The FCC’s Authority Over Broadband Access. For a preview of some of what will be discussed there, I recommend FCC General Counsel’s presentation from yesterday (starting at 30 minutes in), and Jon Neuchterlein’s comments at this year’s Silicon Flatirons conference. I am told that the event tomorrow will not be streamed live, but that the video will be posted online shortly thereafter. I’ll update this post when that happens. You can also follow tweets at #bbauth.

A New Communications Act?

In parallel, there has been growing attention to a revision of the Communications Act itself. The theory here is that the old structure just simply doesn’t speak sufficiently to the current telecommunications landscape. I’ll do a follow-up post on this topic as well, mapping out the poles of opinion on what such a revised Act should look like.

Bonus: If you just can’t get enough history and contemporary context on the structure of communications regulation, I did an audio interview with David Weinberger back in January 2009.

By Steve Schultze, Associate Director at the Center for Information Technology Policy

Filed Under


Even the most fervent advocates of this current FTC's style of NN policy knew it'd fall flat .. Suresh Ramasubramanian  –  May 29, 2010 3:16 PM

And comcast winning that round wasn’t a surprise. 

The FCC would need congress to help it through this patch (beyond the huge pain of undoing almost every opinion they’ve taken in this area, during past FCCs across administrations).  Getting pressured by liberal groups into trying what it tried got it slapped down hard, no surprise there at all.

http://news.cnet.com/8301-13578_3-20005834-38.html shows that congress isn’t likely to help the FCC do this at all. Declan hit the nail on the head, there, as usual.

What this debate needs is less spin and more facts Steve Schultze  –  May 29, 2010 3:35 PM

The purpose of my article was to help introduce better facts into the debate, but your comment unfortunately re-introduces spin and glosses over the details.

To begin with, you claim that “even the most fervent advocates” of net neutrality thought that the Title I approach would fall flat, but former Chairman Powell (hardly a net neutrality champion) said at the time that he thought the approach would be effective, and said (on MSNBC after the Comcast decision) that the FCC could have prevailed if it had a better litigation strategy.

Now, I agree that Comcast’s victory wasn’t a surprise.  I would have put money on them (especially in the hostile DC Circuit, and especially after hearing the resistance at oral arguments).

Whether or not the FCC needs Congressional help is a matter of interpretation of administrative law, and you don’t provide any reasoning for your opinion.  In any case, the FCC opinions you’re referring to are undoubtedly the four reclassification orders from 2002 to 2007.  It is true that the commission would have to provide a reasonable justification for reclassifying, but there are ample common-sense reasons for doing so (including changed technologies, markets, offerings, and consumer perceptions.)  Such an approach would be a change in course from those reclassification orders, but would be much more consistent with FCC policy for decades preceding them.

Declan’s article likewise glosses over important details as it tries to paint this debate purely about net neutrality (it has as much to do with the rest of the National Broadband Plan), implying that any legal approach to net neutrality enforcement is “flatly inconsistent” with the law according to the DC Circuit (rather than making clear the nuanced matter of Congressional delegation at issue), and a characterization that Congress has somehow spoken in unison to the reclassification issue (when in reality the relevant Congressional leaders take the opposite opinion).

I summarized my thoughts in a longer article Suresh Ramasubramanian  –  May 29, 2010 4:38 PM

http://www.circleid.com/posts/comcast_vs_the_fcc_a_reply_to_susan_crawfords_article/ Susan Crawford predicted way back that the FCC's move wouldnt stand up in court, without Congress modifying the law. Never mind whether the DC circuit was hostile to the idea or not. The debate is about the national broadband plan but has been almost entirely hijacked by pro and anti net neutrality debates, which have distracted the audience from a larger and much more interesting set of goals, I do agree with you there. ps: http://www.circleid.com/posts/its_the_internet_stupid_i_disagree/ as well, though written rather before this comcast vs fcc debacle and not directly related to it.

Ok, but you still haven't addressed reclassification Steve Schultze  –  May 29, 2010 5:46 PM

You started by saying, "the FCC would need congress to help it through this patch." However, nothing in your comments or earlier articles justifies this assertion. You seem to be conflating Comcast v. FCC with a non-existent case that addresses the merits of reclassification (and concludes in your favor). The closest thing we've got is Brand X, which if anything argues in the opposite direction (deference to administrative agencies under the Chevron doctrine). To be clear, this is not a partisan question, as you characterize it. It is a matter of law, and the law does not favor your position. If you'd like a quick sketch of the arguments on both sides, see my post from Thursday: http://managingmiracles.blogspot.com/2010/05/summary-of-fccs-authority-over.html Or wait for my more in-depth post on this topic in the near future. I would of course also welcome your thoughts on the legal merits.

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