New Net Neutrality Legislation

On February 7, as hearings were being held on net neutrality, Congressional Republicans said they were going to offer up three different versions of a bill intended to reinstate net neutrality principles. The newest bill, the Open Internet Act of 2019, was introduced by Rep Bob Latta of Ohio. They also offered up bills previously introduced by Rep. Greg Walden of Oregon and Sen John Thune of South Dakota.

All three bills would reestablish rules against ISP blocking web traffic, throttling customers or implementing paid-prioritization, which has been referred to as creating fast lanes that give some web traffic prioritization over other traffic. Hanging over all of these bills is a court review of a challenge of the FCC’s right to kill net neutrality – a successful challenge would reinstate the original FCC net neutrality rules. There are also a number of states poised to introduce their own net neutrality rules should the court challenge fail.

The court case and the threat of state net neutrality rules are prodding Congress to enact net neutrality legislation. Legislation has always been the preferred solution for imposing any major changes in regulation. When there’s no legislation, then rules like net neutrality are subject to being changed every time there is a new FCC or a new administration. Nobody in the country benefits – not ISPs and not citizens – when policies like net neutrality change every time there is a new administration.

These three bills were clearly influenced by the big ISPs. They include nearly the identical talking points that are being promoted by NCTA, the lobbying arm of the largest ISPs, headed by ex-FCC Commissioner Michael Powell. There are two primary differences in these bills and the original net neutrality rules that were established by the last FCC.

The first is a provision that the legislation would allow the ISPs to stray from the net neutrality principles if there is a ‘public benefit’ from doing so. That would allow ISPs to adopt any web practice they want as long as they can concoct a story about how the practice creates a public benefit. Since there are winners and losers from almost any network practice of ISPs, it wouldn’t be hard to identify those that benefit from a given practice. From a regulatory perspective, this is as close as we can come to a joke. If a regulated entity gets to decide when a regulation applies, then it’s not really a regulation.

The other big difference from the proposed legislation and the original net neutrality order is the lack of what is called a ‘general conduct standard’. The original net neutrality order understood that the Internet is a rapidly evolving and that any specific rules governing Internet behavior would be obsolete almost as soon as they are enacted. ISPs and the other big players on the web are able to design ways around almost any imaginable legislative rules.

The original net neutrality order took the tactic of establishing the three basic net neutrality principles but didn’t provide any specific direction on how the FCC was supposed to enforce them. The concept of the general conduct standard is that the FCC will look at each bad practice of an ISP to see if it violates the net neutrality principles. Any FCC ruling would thus be somewhat narrow, except that a ruling against a specific ISP practice would generally apply to others doing the same thing.

The original net neutrality order envisioned a cycle where the FCC rules against bad practices and the ISPs then try to find another way to get what they want – so there would be a continuous cycle of ISPs introducing questionable behavior with the FCC deciding each time if the new practice violates the intent of the net neutrality principles. This was a really clever solution for trying to regulate an industry that changes as quickly as the ISP and web world.

The proposed legislation does away with the general conduct standard. That means that the FCC would not have the ability to judge specific ISP behavior as meeting or not meeting the net neutrality standards. This would take all of the teeth out of net neutrality rules since the FCC would have little authority to ban specific bad practices. This was summarized most succinctly by former FCC Chairman Tom Wheeler who testified in the recent Congressional hearings that if Congress established net neutrality rules it ought to allow for “a referee on the field with the ability to throw the flag for unjust and unreasonable activity.”

The bottom line is that the proposed legislation would reintroduce the basic tenets of net neutrality but would give the FCC almost no authority to enforce the rules. It’s impossible to imagine these bills being passed by a divided Congress, so we’re back to waiting on the Courts or perhaps on states trying to regulate net neutrality on their own – meaning a long-term muddled period of regulatory uncertainty.

No New Telecom Act

For years it’s been obvious that we need a new telecom act. The Telecommunications Act of 1996 was largely aimed at promoting telephone competition and is now quaintly outdated. Today, carriers that want to provide traditional voice services still have to jump through a gauntlet of regulatory requirements while ISPs providing VoIP or no voice product have almost no regulation.

The 1996 Act is dated and some of its provisions cause unneeded problems within the industry. A good example is Google Fiber’s struggle getting onto poles in various cities. Google has shunned taking the regulated path, but in doing so they have not been availed the protections of the 1996 Act that provides access to poles, conduits and ducts. Since most new fiber builders are not offering traditional voice, the distinctions between regulated and unregulated carriers is out of date. But unless Congress changes the rules established by the 1996 Act, the FCC and the courts have choice but to enforce any explicit regulations required by that Act.

It’s also easy to overlook that the 1996 Act rewrote many of the rules for the cable industry. For example, some of the rules covered by the Act still require traditional cable providers to provide several specific tiers of cable service. It’s obvious that these rules no longer make sense and are hindering traditional cable companies from offering competitive small packages and the a la carte programming that customers clearly want.

At the 2018 State of the Net conference held last week Rep. Greg Walden, the chair of the House Energy & Commerce Committee said that he did not foresee any major telecom legislation this year, but rather piecemeal tweaks of telecom law to fix obvious problems. This same sentiment has been expressed by Sen John Thune who has the same role on the Senate Committee on Commerce, Science and Transportation. These committees are where telecom legislation begins.

We see this piecemeal approach in Congress right now. There are nearly a dozen proposed bills floating around Congress right now that have an impact on telecom. For example:

  • There are several bills that would simplify the paperwork to get funding from the Universal Service fund and would make it easier to fix telecom infrastructure after a natural disaster.
  • There are also several bills that would loosen or exempt telecom projects that get federal funding from having to undertake environmental and historic preservation reviews if facilities are placed in existing rights-of-ways.
  • There is a bill to streamline the application for placing telecom facilities on federal land, including a one-year shot-clock forcing a yes or no answer to an application.
  • There is a proposed bill that would require the FCC to monitor and improve broadband availability in ‘urban broadband deserts”.

There is nothing wrong with any of these bills and they propose to make changes that make sense. For example, the requirement to undertake environmental and historic preservation studies when using federal grant money probably added 15% of cost to projects funded by the BTOP program a few years ago. It makes no sense to do these studies when new telecom facilities are to be placed on existing poles or within the existing shoulders of roads. Tweaking the rules will save unneeded expense for future fiber projects.

But these bills are all small in scope and ignore the big issues. The time has probably come to eliminate telephone regulations, other than perhaps the few rules that directly protect consumers. It’s also time to open up access to poles and conduits to everybody without making them jump through the hurdles created by the 1996 Act. It’s time to eliminate any federal rules that dictate how cable networks must package their programming. There are number of these big issues that cannot be easily fixed by small piecemeal bills.

There is an even bigger issue looming over the creation of a new telecom act. The FCC has basically written itself out of the picture for regulating broadband. There are some aspects of broadband that need to be regulated and Congress would have to drag the FCC back into this role.

A new telecom act could create a fresh start for the industry and the FCC. All of the drama concerning Title II regulation of broadband was due to the fact that Congress failed to provide any guidance for regulating broadband. The FCC struggled over the last decade trying to find a backdoor way to justify governing some aspects of broadband – something the Congress could have fixed at any time by giving explicit authority to the FCC.

Regulating broadband one small inch at a time is not good policy. Any ISP can rattle off a list of a dozen things that don’t work as well as they would like. The only way to get the fresh start we need is with a new telecom act aimed at the new world we really live in. We are no longer a world that needs heavy telephone regulations or that should tell cable TV providers what to put on the air. What we need is a new framework that would empower the FCC to make sure that we can affordably build the fiber and wireless networks that are vital to our future. We need rules that require that broadband stay within affordable reach of most households. We need rules that prohibit ISPs from spying on customers. We really need Congress to do their jobs and restart the industry on a regulatory path that fits our times.