Title II Forbearance Is Actually So Easy It Makes Me Want To Puke.

For those following the debate around whether to classify broadband access service as a “Title II” telecommunications service under the Communications Act of 1934, you may have heard about a thing called “forbearance.” For those unfamiliar with telecom law lingo, “forbearance” refers to  a special magic power that Congress gave the FCC as part of the Telecommunications Act of 1996 — the major edit/update Congress did almost 20 years ago. The 1996 Act added Section 10 (now codified at 47 U.S.C. 160) which gives the FCC the power to say “you know that specific provision of law that Congress passed? We decide it really doesn’t make sense for us to enforce it in some particular case, so we will “forbear” (hence the term ‘forbearance’) from enforcing it.” Or, as the D.C. Circuit explained in a case called Orloff v. Federal Communications Commission, once the FCC invokes forbearance and decides to forbear from a particular statute, the statute for all practical purposes disappears.

 

For those familiar with the argument, you will also know that the anti-Net Neutrality camp argues that getting the FCC to forbear from any rule is such a horribly complicated and detailed market-by-market analysis that the FCC couldn’t possibly grant the kind of broad, nationwide forbearance we would need to make Title II workable. As someone who actually lived through the 8 years of the Bush Administration and saw almost every single pro-competition provision of the 1996 Act stripped away by forbearance proceedings, I can only say “hah, I wish.”

Anyone who actually troubles to look up cases like Earthlink v. FCC or Ad Hoc Telecommunications Users Committee v. FCCor a bunch of other FCC and DC Circuit cases that are not that hard to find, you will discover that Forbearance is so easy it makes a consumer protection and rule of law guy like me want to puke. Srsly, the standards on this are so low, and so deferential to the FCC, that if Chairman Wheeler stands up at an open meeting and chants “Broadband is great, competition is good, be deregulated like you should. All in favor say ‘aye!'” — and then at least two other Commissioners vote yes — the DC Circuit will affirm it. Heck, according to ATT, Inc. v. FCCyou can even forbear as against potential obligations that don’t even exist yet.

Not that I expect mere facts to alter firmly held opinions that have become factesque. What Paul Krugman has termed the Very Serious People of telecom have all decided that Title II is a terrible onerous thing and that forbearance is just not going to make it work — despite the fact that the stupid cell phone you’re using couldn’t even have existed if Congress hadn’t made it Title II in 1993 by adding Section 332(c) of the Communications Act and the only non-Title II service we have other than broadband access — cable service — is widely regarded a monopolistic nightmare with all the innovating power of a fossilized brick. But the lawyer and eternal optimist in me keeps trying. So I unpack all this below — with lots of quotes because I know most of y’all not gonna actually click through to the cases.

Besides, I do a My Little Pony (MLP) mashup below because “Broadband is magic!” And that always cracks me up. . . .

 

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The Zombie Anti-Net Neutrality Arguments The D.C. Circuit Already Rejected.

I do not expect folks to be models of consistency, or to give up on arguments and talking points they have memorized. I also readily agree that a lot of times the same set of facts or a particular statute or set of cases can lend itself to multiple interpretations. but at some point — unless you are either a religious fanatic or deliberately disingenuous — you have a responsibility to admit that the courts disagree with you (at least when talking about law stuff).

 

For example, as I wrote after the oral argument in the Net Neutrality case (aka Verizon v. FCC) I think Judge Tatel and his fellow jurist are completely and utterly wrong on their interpretation of the supposed “common carrier prohibition” that prevents the FCC from banning paid prioritization entirely (as long as it is a Title I information service). I wish the FCC had appealed this to the Surpreme Court. But they didn’t. I wish the recent 10th Circuit case affirming the FCC on Intercarrier Compensation Reform had addressed this question and created a circuit split to take up to the Supreme Court. But they didn’t. So I’m stuck saying “I think this is stupid and totally contrary to the statute and Judge Tatel just made it up, but it’s the law until the Supreme Court says otherwise.”

 

I bring this up because, as John Oliver recently told everyone, the FCC has (to use Chairman Wheeler’s words) decided to “accept” the “invitation” of the D.C. Circuit to write new network neutrality rules based on the Court’s opinion in Verizon v. FCC.  That means we will play this case as the ground rules. So any arguments the D.C. Circuit already resolved are now decided as a matter of law. But whereas I — dumb lawyer that I am — accept that I am stuck with whatever ignorant, idiotic or just plain wrong thing the two-judge majority voted for, a lot of other people don’t. They go on spouting the same arguments that the D.C. Circuit already rejected AS IF NOTHING HAD HAPPENED while simultaneously arguing that since the D.C. Circuit struck down the network neutrality rules (which is not, in fact, what the court did), the FCC has no authority to make network neutrality rules (which is the complete opposite of what the court actually said.

I go through my list of “Zombie Anti-Net Neutrality Arguments The D.C. Circuit Already Killed Deaded Than A Dead Man On Dead Day In Deadville” below . . .

 

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My Handy Guide To The May 15 FCC Meeting: What The Heck Is An Open FCC Mtg And How Does It Work?

Even before Chairman Tom Wheeler proposed to issue a Notice of Proposed Rulemaking (NPRM) on possible new net neutrality rules to replace the ones vacated by the D.C. Cir. the May 15 Open Meeting of the Federal Communications Commission (FCC) promised to be one of the more important meetings in recent memory.  As a result, it has become one of the more contentious in recent memory as well.

 

In addition to the net neutrality NPRM, we have an Order deciding key issues for the upcoming incentive auction (aka the 600 MHz auction, aka that really complicated thing where we pay broadcasters to get off spectrum they got for free by simultaneously selling it to wireless companies for mobile broadband). This mega item has two fairly important side pieces from my perspective: the future of unlicensed use in the TV broadcast bands (aka the TV white spaces (TVWS) aka “super wifi” aka “engineers will never be allowed to name anything ever again”) and possible limits on how much spectrum any one company can acquire (aka the “no piggies rule” aka spectrum aggregation policies aka “lawyers are not allowed to name anything ever again either”). The TVWS item has its own satellite proceeding about wireless microphones and coexistence between wireless mics and unlicensed use in an ever shrinking broadcast band.

 

So for those of you first timers, and those of you who have gone so long without a contentious FCC meeting you’ve forgotten how it’s done, I’ve prepared this helpful guide on “what is an open FCC meeting and how does it work.”

 

Mechanics of the meeting below . . .

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Tom Wheeler and the Defining Question of Network Neutrality

Federal Communications Commission (FCC) Chairman Tom Wheeler caused quite a stir last week when he circulated a new Notice of Proposed Rulemaking on network neutrality. As reported by the press, the proposed rule moves away from generally prohibiting wireline broadband providers from offering “paid prioritization” (aka Internet “fast lanes”) to explicitly permitting wireline providers to offer paid prioritization subject to conditions designed to guard against anti-competitive and anti-consumer conduct.

 

Needless to say, this pleased just about nobody. Supporters of network neutrality regard paid prioritization as intrinsically anti-competitive and anti-consumer by making the Internet experience dependent on the ‘commercially reasonable’ deals of the network provider rather than the choice of the subscriber. By contrast, opponents of net neutrality oppose any limitations on what ISPs can do as “regulating the internet.” To employ a crude analogy, network neutrality supporters see Wheeler’s proposal as roughly the equivalent of teaching the rhythm method in sex ed, while opponents are outraged that Wheeler would teach anything other than pure abstinence.

 

What Wheeler has done here is to frame the defining question of network neutrality. The upcoming Notice of Proposed Rulemaking (NPRM) gives those of us who believe that paid prioritization is the opposite of net neutrality and an Open Internet the opportunity to make the case. Even more importantly, Wheeler has now confirmed that the May 15 NPRM will ask whether the FCC needs to reclassify broadband as a Title II “telecommunications service” so that the FCC will have sufficient authority to create real and effective network neutrality rules. (You can see Wheeler’s blog post setting out his proposed approach here, and his aggressive speech in the veritable heart of enemy territory — the 2104 Cable Show in Los Angeles) here.)

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My Insanely Long Field Guide To Understanding FCC Chairman Tom Wheeler Statement On Peering.

At the press conference following the Federal Communication Commission (FCC) March 31 Open Meeting, Chairman Tom Wheeler made the following observation:

 

“Interconnection is part of the Network Compact.” Peering “is just a $3.50 word for interconnection.”

 

Wheeler followed up this statement by explaining that there was a difference between “network neutrality” and the “open internet” on one hand and “interconnection” as the ‘path to the Internet’ on the other hand. While government has a critical role in monitoring peering/interconnection to protect the values of the Network Compact, it isn’t a network neutrality issue. You can see Wheeler’s full statement here (Start at 144:45 – 147:23 has unrelated stuff in middle) (transcript here).

 

After the meeting, the FCC released a separate statement that they really mean it when they say that they aren’t going to do peering as part of the Net Neutrality rules. While Brendan Sasso at National Journal gets points for noticing that “the FCC could decide to enact separate regulations on the issue or force Comcast to accept new rules in order to receive permission to buy Time Warner Cable,” most folks I’ve read in the press have broadly interpreted this as indicating the FCC will not look into the Comcast/Netflix dispute or complaints by Cogent and Level 3 about large edge-providers squeezing them for higher interconnection fees.

 

Personally, I think most people are totally misreading this. Wheeler’s statements make it look more likely to me that the FCC will start looking closely at the Internet peering market, not less likely, especially as part of the Comcast/TWC deal. Indeed, Comcast’s Chief Lobbyist David Cohen, who ranks in my book as one of the absolutely smartest and most effective telecom lobbyists ever, has already started backing away from earlier statements that regulators would ignore peering issues and that he expects them to look at the Comcast/Netflix deal. (Unsurprisingly, Cohen also said he expects regulators to find no problems with the deal and called Netflix CEO Reed Hasting’s arguments that this eviscerated net neutrality “hogwash.”)

 

Below, I will rant at considerable length that (a) Wheeler is right, this is not a “network neutrality” issue, but the same goddam interconnection issue that we have struggled with for more than a hundred years in every networked industry from railroads to electricity to broadband; (b) The FCC needs to actually look at this and study it and understand how the market works before it makes any decisions on what to do; and, (c) While Wheeler is not saying in any way, shape or form he actually plans to do anything before he has real information on which to base a decision, he is signaling — for anyone actually paying attention — that he is, in fact, going to actually look at this as part of his overall transition of the agency around his “Fourth Network Revolution” and “Network Compact” ideas.

 

 

While this last would seem pretty basic and obvious, it represents a significant change in policy from the previous insistence that IP magic pixie dust obscures all things Internet and makes them invisible to the FCC. Whether I agree with what Wheeler ultimately does or not — and I have no idea what he might ultimately do here, he could decide the market is competitive and working just fine — I don’t believe Wheeler is going to go around with his eyes and ears covered blathering about the magic nature of the Internet. I think Wheeler is actually going to check under the hood and see what actually makes the damn thing tick — and Comcast is just the company to help him do it.

 

Much ranting below . . .

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Globalstar’s Stellar Chutzpah: Trying To Hold Up New Free WiFi To Leverage “Licensed WiFi.”

 

A very few of us have paid much attention to something called the “Globalstar Petition.” Briefly, Globalstar would like a couple of billion dollars in free spectrum favors from the FCC to offer what it calls a “Terrestrial Low-Power Service” (TLPS) on its satellite frequencies. As Globalstar has the great good fortune to have frequencies right next to the 2.4 GHz band most popular for WiFi, Globalstar hopes to leverage existing WiFi equipment and offer a “paid, carrier grade” WiFi-like service.

 

Recently, Globalstar attracted my negative attention by trying to leverage a fairly important FCC proceeding to expand unlicensed spectrum use above 5 GHz. Globalstar has raised bogus interference issues in the 5 GHz proceeding, and rather unsubtly suggested to the FCC that it could solve the WiFi “traffic jam” by granting Globalstar’s Petition for spectrum goodies so we could have a pay for WiFi service instead of having more of that pesky free WiFi (you can find Globalstar’s extremely unsubtle quotes here on page 3 and here on page 2.

 

So it seems an opportune moment to explain:

 

  1. What’s going on with the Globalstar Petition;

 

  1. What’s going on with the UNII-1 Band in the 5 GHz proceeding;

 

  1. How Globalstar are being utterly unsubtle in their efforts to hold the 5 GHz proceeding to try to leverage their ask in their Petition; and,

 

  1. How Globalstar’s jerkwad-ittude in the UNII-1 proceeding raises serious concerns about Globalstar’s willingness to play nice with the 2.4 GHz band, which could undermine the entire “WiFi economy.”

 

More on Globalstar’s truly stellar chutzpah, and why the FCC may want to rethink granting the Globalstar Petition, below . . . .

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A Wide Range of Possible Outcomes In Net Neutrality Case.

The Tea Party/Libertarian/Generally Anti-Net Neutrality Crowd were dancing in the streets after the network neutrality oral argument and declaring total victory! This seems not only premature, but short-sighted. Until the oral argument, the anti-net neutrality crowd had predicted that the court would utterly reject the FCC’s efforts to extend its authority to broadband access on either statutory or First Amendment grounds. But, as I noted previously, the entire panel seemed comfortable with Section 706 providing some level of authority over broadband access. Also, no one seemed terribly interested in the First Amendment argument except Judge Silberman. So – given the usual caveats that one can never really know how things will come out after oral argument – it seems the FCC will come out of this with some authority after all.

 

OTOH, it is certainly fair to say that two of the three judges on the panel indicated the “Common Carrier Prohibition” (aka, the thing Tatel made up in the Data Roaming Case) applied to at least the “no discrimination” rule and possibly the “no blocking rule.” As the two together constitute the heart of network neutrality protections, getting those struck down would certainly constitute a big win for anti-net neutrality folks. It would also create a fine muddle of confusion around the scope of the FCC’s overall authority.

 

There are, however, a range of possible options and outcomes that could still happen, ranging from the unlikely extreme of total affirmance for the FCC (if Rogers persuades one of her colleagues) to total reversal on some other grounds (if Silberman persuades one of his colleagues on First Amendment or Administrative Procedure Act (APA) grounds). I explore these (and what they might mean for the long term) below . . . .

 

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Commissioner Pai: A ‘Consensus’ Of Incumbents Without Consumers Is No Consensus And means Disaster For 600 MHz.

Last week, the Federal Communications Commission (FCC) Wireless Bureau issued what should have been a fairly routine and highly technical Public Notice about possible alternative band plans for the 600 MHz Auction aka the Incentive Auction aka “that incredibly crazy, complicated deal Congress came up with last year where broadcasters sell back licenses to the FCC so the FCC can sell them to wireless companies.” Since public comment makes it clear that the various proposals present a lot of challenges (see my incredibly long and wonky explanation here), it shouldn’t surprise anyone that the Wireless Bureau asked for further comment after holding a band plan workshop a few weeks ago.

 

But Commissioner Pai issued a separate statement blasting the Wireless Bureau. In particular, Pai berated the Bureau for departing from what he called the “consensus framework” for one particular band plan – the band plan favored by AT&T, Verizon, the National Association of Broadcasters (NAB) and the largest equipment manufacturers. Pai ignored objections to the AT&/VZ/NAB plan and support from consumer groups (including Public Knowledge), competitors such as Sprint, or tech companies such as Microsoft. Over and over in his statement, Pai cited to the comments of AT&T, Verizon and NAB as proof of a “broad consensus” as if none of these objections existed.

As someone fairly active in this proceeding, who actually participated in the Band Plan Workshop, I am more than a little peeved. Yoo hoo! Commissioner Paaaaiiiiii!!! What am I, chopped liver? I am also more than a little irked at the allegations that the Bureau somehow behaved improperly in issuing the Public Notice. Pai’s accusation that the PN violates the Bureau’s delegated authority by soliciting comment on alternatives to the AT&T/VZ/NAB “consensus plan” appears designed to bully the Bureau into submission.

Setting my personal pique aside, as I keep trying to explain, letting the broadcasters and the largest wireless incumbents write the rules for the auction spells absolute disaster. If Pai genuinely wants to see a successful Incentive Auction, that means looking past industry “consensus” and getting into the very nasty and complicated details to figure out the right set of tradeoffs that will (a) get the broadcasters and wireless guys to the auction, but (b) not let them short the U.S. Treasury out of the cash it expects to collect in the process.

I vent and take one more shot at explaining this below . . . .

 

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Would Tom Wheeler Really Have Approved The AT&T/T-Mo Merger? Why I don’t Think So.

After weeks of speculation, it now appears certain that President Obama will nominate Thomas Wheeler to replace Julius Genachowski as Chair of the Federal Communications Commission (FCC), with Commissioner Mignon Clyburn to serve as acting until Wheeler’s nomination gets confirmed by the Senate. In recent weeks, Wheeler’s background as a lobbyist many years ago for first the cable industry and then the wireless industry have raised concerns that Wheeler remains more sympathetic to business interests than the public interest. As anyone who has read Public Knowledge’s official statement in response to the nomination can see, while we understand those concerns, we agree with many other public interest colleagues who think that Wheeler has an independent perspective and an open mind. Certainly we will have disagreements with the new Chairman (assuming Wheeler is confirmed), but we expect that Wheeler will actively work to promote competition and protect consumers.

 

Yeah, I know, that sounds like either wishful thinking or Washington insider talk. So allow me to explain my line of reasoning (since, unlike a number of other Wheeler supporters, I actually don’t know Wheeler at all). In particular, I want to tackle the current “Tom Wheeler would have approved the AT&T/T-Mobile merger in 2011.” It’s easy to say “oh, all that lobbying for the cable and wireless industry was long ago when they were scrappy upstarts. Why, that was so long ago that the cable industry were battling the broadcasters and the wireless industry were battling the telcos (as opposed to these days when the cable industry battles the telcos and the wireless industry battles the broadcasters)!” But if Wheeler was actually a supporter of AT&T/T-Mo, then it would seem to prove he still has sympathies to his old industry incumbent comrades.

 

I examine the People v. Tom Wheeler in the matter of AT&T/T-Mo below . . .

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Is Fear of Wireless Foreclosure “Speculative?” Depends. Is this About Intent Or Effect?

Recently, the Antitrust Division of the Department of Justice  (DOJ) filed these comments with the Federal Communications Commission (FCC) in the proceeding on spectrum aggregation limits (aka spectrum screen v. spectrum cap). The DOJ comments have some good stuff about the economics of the wireless industry and competition (in a theoretical way), and about why it is important to make sure potential competitors have spectrum, particularly low-band spectrum. Mostly, DOJ’s argument rests on the idea of “foreclosure,” that a wireless firm will bid on licenses at auction just to keep them out of the hands of competitors.

Asked about this on a recent earnings call, VZ CFO Fran Shammo basically said that there is no evidence that Verizon is bidding on licenses just to keep them out of the hands of rivals, so DOJ’s argument is “theoretical” and the FCC should not adopt any limits.

VZ basically argues that we should not worry about possible foreclosure unless there is evidence of an actual intent to foreclose. This treats a spectrum screen (and concern about foreclosure) as a precaution against bad actors. As long as bidding on licenses at auction makes sense for reasons other than foreclosure, and there is no evidence of any intent to foreclose, then everything should be just fine even if the outcome has the same effect as a foreclosure strategy (e.g., competitors don’t have enough spectrum to offer viable competing services.)

But the Communications Act does not work this way. Specifically, Section 309(j)(3)(B). Whether Verizon (or any other carrier’s) intent is as pure as the driven snow, or black as any comic opera villain, does not matter one iota. What matters is whether we avoid a “concentration of licenses” and “disseminate licenses among a wide variety of applicants” so that we “promot[e] economic opportunity and competition and ensur[e] that new and innovative technologies are readily accessible to the American people.”

As I will discuss below, the evidence from the 700 MHz auction and subsequent transactions demonstrates that we are feeling the effects of foreclosure, regardless of whether there was an actual intent to foreclose. As a result, the DOJ concern is not “theoretical,” but very real.

 

More below . . .

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