Last Month's FCC Network Neutrality Items

Sorry this is so late, but it’s been a busy time, what with Passover and the rush for the FCC’s upcoming 700 MHz auction. But I figure it is still worthwhile to keep folks updated on net neutrality at the FCC.

Of course, last month’s FCC meeting had a lot going on. Take a gander at the agenda for the March FCC meeting (March 22). Notice anything unusual? Yep, it’s veerrrrrryyyyy loooooonnnnnggggg. Thirteen items. So long, in fact, that Chairman Martin called an “intermission” in the middle. At one point Commissioner McDowell sheepishly admited he was still drafting his separate statement on the item to be voted, becasuse he hadn’t gotten a chance beforehand.

I wish I had time to go into detail on these things. I hope to eventually catch up and write about things like the access to inside wiring proceeding and the digital radio rules.

But for now, I will limit myself to the declaratory ruling ruling on wireless services and the Notice of Inquiry on Net Neutrality. As discussed below, the FCC majority once again proves that while they can’t deregulate fast enough, taking action to protect our right to speak freely with one another always needs “more study.”

More below . . . .

First, I cannot resist a snarky little note on the length of the meeting. Why the long meeting? Bluntly, the Dems taking over Congress (and, specifically, Mssrs Dingel, Markey and Inoyue taking over the relevant committees) appear to be the best thing that ever happened for FCC productivity. While the Republicans — even when unhappy — have preferred to treat the Bush Administration and its officers with the same indulgence as kindly grandparents spoiling a six year old for the weekend, the Ds have about all the tolerance of nuns at your stereotypical Catholic School. “Mr. Martin! Where is your homework!” And any attempt at excuses gets met with a stern wrap on the knuckles with a ruler. Who says having the opposing power in Congress produces gridlock?

Martin, clever fellow that he is, has made a rather better adjustment than some of the others in the Bush Cabinet who keep telling the new Congress to butt out and go packing (not naming names, but he rhymes with “fun fahles”). While Martin has not backed down on key policy issues (still no investigation of the NSA taping phones without warrants — national security dontcha know), he has done his best to mollify critics on the Hill. That includes revving up the idling engines of the FCC and pushing out a whole bunch of long overdue or requested stuff.

But my post here addresses two wholly new items: the FCC’s Declaratory Ruling on wireles broadband, and its Notice of Inquiry on broadband net neutrality.

WIRELESS BROADBAND DECLARATORY RULING

Issue: How to treat broadband services offered over wireless?

What the FCC Did: The FCC issued a ruling which declared that broadband internet access offered via licensed or unlicensed wireless services is an “information service.” The analysis relies on the same analysis used for the 2002 Cable Declaratory Ruling, the 2005 Wireline Ruling, and the 2006 Broadband Over Powerlines (BPL) classification order. At the same time, the FCC continued to apply existing interconnection obligations and other obligations as mandated by applicable sections of the Communications Act and the specific rules of each wireless service. You can read the Commission’s Order here.

My Analysis: Well, I gave my basic analysis about a month ago when the story about the FCC declaratory ruling first surfaced. Because wireless is automatically a “Title III” service under the Communications Act, reclassifying wireless broadband as “Title I” is rather a useless waste of time. (If you need a refresher on why classification matters, you can check out my old Network Neutrality Primer). I still stand by that as the core of the basic legal issue, a fact the FCC appears to acknowledge by holding that:

35. Our decision today to classify wireless broadband Internet access service as an information service does not affect the general applicability of the spectrum allocation and licensing provisions of Title III and the Commission’s rules to this service. These provisions and rules continue to apply because the service is using radio spectrum.

When you also include that the Commission went out of its way to apply the various other statutes (like pole attachments and Section 251 interconnection) that already apply, you might be tempted to ask what the heck this Declaratory Order actually does. To the best of my ability as a lawyer to read this, I can only conclude that this is the single most masturbatory legal document I have seen since Playboy did its last “Women of the Law” issue.

Democratic Commissioners Copps and Adelstein concurred with the classification on the basis that it had the virtue of being consistent with previous Commission classification orders. But both also used their separate statements to make other important points. Commissioner Copps argued that the FCC must now turn to the question of how to apply the four principles to wireless. In particular, the part about being able to access any content and the ability to connect any device to the network.

Commissioner Adelstein used his seperate statement to ask what the order actually did and who the heck wanted it (since no one had asked for it). He added that the order may end up creating additional confusion because it now layers this regulatory classification over things that had previously been happily settled. Addelstein also suggested that instead of indulging themselves with some self-pleasuring pseudo-deregulation (my words, he was much more polite), the majority might instead turn its attention to some real wireless issues like pretexting, consumer protection, and getting incumbents to actually build out their wireless systems.

GENERAL BROADBAND PRACTICES NOTICE OF INQUIRY

In keeping with the “do nothing but look busy” theme for broadband, the Commission also adopted a Notice of Inquiry on what broadband access providers do to manage their traffic and how it impacts people. It is rather telling that while the FCC got the Declaratory Order out in a few days, and released the other items on the agenda, it still hasn’t released the text of the “Net Neutrality” NOI.

As you can see from this post by Public Knowledge’s Art Brodsky, most of us in the pro-NN camp view this as a delaying tactic by the Republicans to defer any action on network neutrality and try to provide political cover to those in Congress who want to hold up positive legislation like the Dorgan-Snowe net neutrality bill, or prevent further forward momentum such as the conditions in the AT&T-BS merger. For example, my employer Media Access Project, along with a coalition of other groups, has asked the FCC to incorporate net neutrality or open access conditions as part of the upcomming 700 MHz auction. Wanna bet the FCC now says “no thanks, lets see how the NOI comes out first.” Of course, at this rate, the NOI will not even be released before the FCC decides on service rules for the 700 MHz licenses. Or, as Commissioner Copps remarked years ago on another matter, this is a classic case of “Ready! FIRE! aim.”

I will add that past experience has made me extremely suspicious of FCC claims it wants real data on hot button political issues. Throw in last year’s revelation that the FCC apparently supressed and tried to destroy preliminary drafts of reports that came to the “wrong” conclusions on media ownership policies, and that the FCC STILL has not issued the broadcast localism report that it undertook with much fanfare in 2003. Finally, consider that the FCC has had the NN neutrality question and other consumer issues pending as part of the Further Notice of Proposed Rulemaking that it released as part of the broadband deregulation order in August 2005.

Do you wonder why I and my fellows in the pro-NN camp seem a shade shy on trust that the FCC will do a diligent speedy job, and instead suspect this merely the latest iteration of a regulatory version of Three Card Monte?

But wait, it gets worse! As I observed in a paper written some time back, the FCC’s decision to rely on voluntary filings rather than going out and doing real investigating creates a real problem of gathering evidence. Who are the people with all the evidence about whether the cable or telco incumbents engage in anticompetitive conduct, discriminatory tiering, or are investing heavily in an ability to do so in the future, or have built business plans around exploiting their market position? Why, it’s the cable and telco incumbents! Does anyone expect them to come trotting over, bundles of incriminating documents in hand, saying “oh please FCC, although you have decided not to compel us to produce these documents, and although we do not have to submit under oath subject to penalty of perjury, we just have to come forward and put all this stuff in the record because you need a full and complete record to make a policy that will best serve the American people.” Apparently, there are three such people: Martin, Tate and McDowell.

Consider for example this recent column by Cringley. He reports circumstantial evidence that Comcast is blocking his ability to send a fax via Vonage, and that he has received email from folks that cable cos were prioritizing their own traffic at the expense of others for years (while the cable co reps in DC publicly denyied even the ability to do such things, let alone a desire to engage in such anticompetitive conduct). The only people with evidence one way or another is Comcast. Do I think Comcast is going to ‘fess up in reply comments if I put this example in my comments to the NOI? Or will they go “scurilous and unfounded rumors! No evidence whatsoever! And, even if you could prove it, that’s just one isolated incident!”

Of course, most folks have forgotten by now how Comcast maintained that its failure to include a segment of ABC’s Nightline showing the (in)famous Comcast technician sleeping on the couch resulted from a “coding error” that coincidentally precisely snipped out the offending segment. But those of us who haven’t forgotten rather doubt that Comcast will ‘fess up to blocking Cringley, or anyone else.

Finally, and most importantly, I object to the NOI because the argument for net neutrality does not rest on market failure. Yes, I believe we win on the economic argument, as I have argued vigorously before. But as I observed in February with regard to Tim Wu’s wireless Cartefone paper, we can have plenty of really crappy outcomes for our democracy, our economy and our society that are not, technically “market failures.”

Which is ultimately why the whole underlying theory of the NOI is ass-backward, and completely contrary to the way the FCC and the federal courts thought about this thirty years ago when they created the first open access/network neutrality rules in the FCC Computer Inquiries (i.e. the regulation of the telco network that made the development of the internet even possible). Back then, the FCC (affirmed by the courts) started with the supposition that if an entity had the technical capability to mess with infromation traffic, and the economic incentive to mess with information traffic, then — unless prohibitted by regulation — that entity would mess with information traffic. Further, that preventing network operators from using their power to mess with networks served the First Amendment by enabling all citizens to speak freely to one another and receive news and information from a diversity of sources.

Judge Harold Greene, in breaking up the AT&T Monopoly and upholding the decision to forbid AT&T from entering the field of “electronic publishing” (as internet content was called back then), eloquently described this vital First Amendment interest and its application to what we now call “network neutrality.”

Based on competitive considerations alone, therefore, the Court might well be justified in barring AT & T from electronic publishing industry. Beyond that, AT & T’s entry into the electronic publishing market poses a substantial danger to First Amendment values.

The goal of the First Amendment is to achieve “the widest possible dissemination of information from diverse and antagonistic sources.” … This interest in diversity has been recognized time and again by various courts. In Red Lion Broadcasting v. FCC, 395 U.S. 367, 390, 89 S.Ct. 1794, 1806, 23 L.Ed.2d 371 (1969), for example, the Supreme Court observed that

[i]t is the purpose of the First Amendment to preserve an uninhibited marketplace of ideas in which truth will ultimately prevail, rather than to countenance monopolization of that market.

….Certainly, the Court does not here sit to decide on the allocation of broadcast licenses. Yet, like the FCC, it is called upon to make a judgment with respect to the public interest and, like the FCC, it must make that decision with respect to a regulated industry and a regulated company.

In determining whether the proposed decree is in the public interest, the Court must take into account the decree’s effects on other public policies, such as the First Amendment principle of diversity in dissemination of information to the American public….Consideration of this policy is especially appropriate because, as the Supreme Court has recognized, in promoting diversity in sources of information, the values underlying the First Amendment coincide with the policy of the antitrust laws…Applying this diversity principle to the issue here under discussion, it is clear that permitting AT & T to become an electronic publisher will not further the public interest.

Judge Greene then described, in eerily prescient terms, how consolidation in the media would create an even greater need to protect the internet from interference by network operators.

During the last thirty years, there has been an unremitting trend toward concentration in the ownership and control of the media. Diversity has disappeared in many areas; newspapers have gone out of business; others have merged; and much of the flow of news and editorial opinion appears more and more to be controlled and shaped by the three television networks and a handful of news magazines and metropolitan newspapers.

This concentration presents obvious dangers even today. Unless care is taken, both the concentration and the attendant dangers will be significantly increased by the new technologies. Indeed, it is not at all inconceivable that electronic publishing, with its speed and convenience will eventually overshadow the more traditional news media, and that a single electronic publisher would acquire substantial control over the provision of news in large parts of the United States….

In sum, for a variety of reasons, the entry of AT & T into electronic publishing involves risks to the public interest that are greater than those which would be involved by that company’s entry into other markets. Since under the Sherman Act, it is appropriate to bar a company from a market if the restriction is necessary to permit the development of competition in that market…and since First Amendment values, too, support a ban on electronic publishing by AT & T, the Court will require that the company be prohibited from entering that market.

United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131, 183-185 (D.D.C. 1982) (emphasis added, citations omitted)

No doubt to many these sentiments seem a quaint anachronism. Those who worship the Gods of the Market Place will regard them with scorn. But Judge Greene’s prophetic words still ring true. “Electronic publishing” now stands ready to “overshadow the more traditional news media,” and allowing a handfull of companies to control “the provision of news in large parts of the United States” posses a threat to our democracy that goes beyond the question of market failure or market efficiency.

As I have said many times, for this reason alone I would support network neutrality. To reduce the debate to a scavanger hunt for anticompetitive conduct, as the FCC’s Broadband Network Neutrality Notice of Inquiry does, disserves the First Amendment and our ability to govern ourselves.

Stay tuned . . . .