If FCC gets its way, we’ll lose a lot more than net neutrality

The Republican-led Federal Communications Commission is preparing to overturn the two-year-old decision that invoked the FCC's Title II authority in order to impose net neutrality rules. It's possible the FCC could replace today's net neutrality rules with a weaker version, or it could decide to scrap net neutrality rules altogether.

Either way, what's almost certain is that the FCC will eliminate the Title II classification of Internet service providers. And that would have important effects on consumer protection that go beyond the core net neutrality rules that outlaw blocking, throttling, and paid prioritization. Without Title II's common carrier regulation, the FCC would have less authority to oversee the practices of Internet providers like Comcast, Charter, AT&T, and Verizon. Customers and websites harmed by ISPs would also have fewer recourses, both in front of the FCC and in courts of law.

Title II provisions related to broadband network construction, universal service, competition, network interconnection, and Internet access for disabled people would no longer apply. Rules requiring disclosure of hidden fees and data caps could be overturned, and the FCC would relinquish its role in evaluating whether ISPs can charge competitors for data cap exemptions.

FCC Commissioner Mignon Clyburn in November 2015.

Credit: Getty Images | Larry French

These aspects of Title II are part of why consumer advocacy groups and Web companies have teamed up to protest FCC Chairman Ajit Pai's plan to overturn the net neutrality order with today's "Internet-wide day of action to save net neutrality."

The consumer protection powers provided by Title II are also part of why the FCC's lone Democrat, Commissioner Mignon Clyburn, voted against Pai's plan to start the process of reversing the net neutrality rules.

Title II is "the most legally firm authority that we have... when it comes to protecting consumers," Clyburn told Ars this week. ISPs naturally answer to shareholders and try to maximize revenues and profit, but their financial incentives can clash with the public interest, she said. As the nation's expert agency on telecommunications, the FCC should be "the cop on the beat," according to Clyburn.

Title II also gives the FCC its universal service authority, which is crucial for making sure that all Americans—including those in rural areas—have access to telecommunications networks. "Taking that away would undercut the FCC's ability to ensure that there is universal service for broadband," Clyburn said.

In short, Title II "provides a known framework for legal analysis," Andrew Schwartzman, a Georgetown Law lecturer and attorney who specializes in media and telecommunications policy, told Ars. "Absent that, it's very unclear what basis there is to assess the practices of Title I information services," which is what ISPs will be classified as if the FCC goes through with its plan.

How Title II applies to broadband

To recap, in February 2015 the FCC's then-Democratic leadership classified both home and mobile broadband as a telecommunications service, ensuring that ISPs would be regulated as common carriers under Title II of the Communications Act. Title II is the same authority created by Congress to regulate AT&T's telephone monopoly in 1934, and ISPs have bitterly complained about being subject to utility-style regulation.

The FCC did not impose the most onerous Title II restrictions on ISPs. The FCC can pick and choose which parts of the statute apply to different kinds of providers in a process known as "forbearance." When bringing broadband under Title II, the FCC forbore from the sections it didn't want to apply.

“It’s a basic right”

Because of forbearance, the 2015 decision did not bring rate-of-return price regulation or tariffs to consumer broadband. Cable and fiber providers also weren't forced to lease wholesale access of their lines to competitors, something DSL providers had to do until 2005.

The FCC's 2015 decision did use Title II to prohibit ISPs from blocking or throttling lawful Internet content and to prohibit paid prioritization (i.e. "fast lanes" sold to websites that would pay for faster access to consumers). Those are the "bright-line" net neutrality rules, and they receive most of the attention in public debates on net neutrality.

But crucially, the FCC did not forbear from a few parts of Title II that protect consumers in other ways. Even in cases where there aren't bans on a specific practice, like blocking or throttling, Section 201 of Title II requires ISPs to be "just and reasonable" in their rates and practices. It's also illegal under Section 202 of Title II for companies classified as common carriers "to make any unjust or unreasonable discrimination" in rates, practices, or offering of services.

Broadband customers and companies that offer services to consumers over the Internet can complain directly to the FCC about unjust or unreasonable behavior. For example, a customer who is charged outrageous prices or data cap overage fees could claim that the charges are unjust and unreasonable and ask the FCC to intervene. This hasn't led to any FCC actions against ISPs yet, but the possibility exists and it could cause ISPs to be more careful in their pricing.

Anyone damaged by an ISP's unjust or unreasonable behavior can also sue the ISP in court because the FCC decided to apply Title II's Section 207 to broadband.

"It's a basic right," said Schwartzman, who also led a public interest telecommunications law firm called the Media Access Project from 1978 to 2012. "If there's any kind of practice or problem that a reluctant FCC does not want to address... a private party can go to court and get damages. It is a very important consumer protection that has teeth and provides a backstop."

Comcast, BitTorrent throttling, and net neutrality

But Comcast sued the FCC and got the decision overturned, forcing the FCC to find new ways to enforce net neutrality principles.

"The facts were not in dispute. They were guilty, but the commission couldn't come up with the legal basis to discipline them," Schwartzman said.

Comcast also settled a class-action lawsuit over the peer-to-peer throttling and agreed to net neutrality provisions as part of its merger with NBCUniversal, but the question of how the FCC would enforce net neutrality industry-wide still needed to be answered.

In 2010, the FCC imposed rules against blocking, throttling, and paid prioritization, but the organization did so without using Title II. Verizon sued and the rules were thrown out in 2014 by a federal appeals court, which said the FCC erred by imposing per se common carrier regulations without first declaring that ISPs are common carriers.

For example, the FCC's 2010 rule against paid prioritization left no room for "individualized bargaining" between ISPs and websites, judges wrote. As long as ISPs weren't common carriers, there had to be room for negotiation between ISPs and websites.

The FCC had thus tried to enforce net neutrality twice without Title II and been unsuccessful in court both times, Clyburn pointed out this week.

After the Verizon court decision, then-FCC Chairman Tom Wheeler initially proposed rules that would have allowed paid prioritization as long as each third-party service was offered similar, commercially reasonable terms. But he changed his mind, and the FCC invoked Title II in 2015, allowing for a strict ban on paid priority. Broadband industry lobby groups sued, but this time the FCC won and the rules remained in place.

The prospects for ISPs changed when Donald Trump won the presidency and appointed Pai to lead the FCC's new Republican majority. In May, the FCC approved a Notice of Proposed Rulemaking (NPRM) that proposes eliminating the Title II classification and seeks comment on what, if anything, should replace the current net neutrality rules. The FCC plans to take comments on its plan until August 16 (the docket is available here) and make a final decision sometime after that.

The story won't be over at that point, because net neutrality advocates could sue in an attempt to re-instate the Title II decision. (And the FCC could try to bring back Title II under any future Democratic president.) But courts have generally allowed the FCC to classify broadband however it wishes.

Key Title II provisions

Even if the Title II classification of ISPs somehow remains intact, the Pai FCC is unlikely to strongly enforce it. But future chairs who want to strictly regulate ISPs will have a much easier time if they don't have to re-start the lengthy process of reclassifying broadband under Title II.

Here's a look at some of the ways an FCC that wants to regulate ISPs could use Title II:

Interconnection payments

Remember the Netflix wars? Before the FCC's Title II decision, Netflix built a content delivery network and asked Internet providers for direct connections to their networks. Comcast, AT&T, Verizon, and Time Warner Cable all demanded payment. Netflix didn't want to pay the ISPs, so it kept delivering its video traffic through network transit providers such as Cogent—which also refused to pay the ISPs, saying the companies should send and receive traffic without payment.

Network links between the companies weren't upgraded as a result of the payment disputes, and for months Netflix customers suffered through slow video streams. Internet traffic from other Cogent customers suffered from congestion as well. Netflix finally paid up months before the Title II decision, but the disputes involving Cogent continued until the FCC's Title II decision helped put them to rest.

The FCC did not ban interconnection payments, but it allowed companies to bring complaints against ISPs that charge interconnection prices that violate the "just and reasonable" standard. The mere threat of complaints helped Cogent settle its disputes with ISPs. Level 3, another network operator, also settled disputes with ISPs when the FCC set up the complaint process.

If the FCC relinquishes its Title II authority over broadband providers, ISPs will regain the upper hand in interconnection negotiations with video providers and the network companies that carry traffic into consumer broadband networks. ISPs would be able to charge higher prices, potentially increasing the chance of disputes that lead to Internet congestion and a poor consumer experience.

Data cap exemptions

Exempting certain online services from data caps in exchange for payment—known as "zero-rating"—is opposed by many net neutrality activists. The Title II order did not ban such payments, but as with interconnection it allowed the FCC to review them and determine whether specific zero-rating implementations harmed consumers or ISPs' competitors.

Before leaving office at the end of President Obama's term, Wheeler concluded that AT&T and Verizon Wireless violated net neutrality rules by letting their own video services stream without counting against mobile data caps while charging other companies for the same privileged treatment. Pai quickly reversed this determination, and eliminating the Title II classification of broadband would rule out future net neutrality investigations into data cap exemptions.

Hidden fees and data caps

The Title II order expanded upon the FCC's pre-existing transparency rules by requiring more prominent public disclosures of data caps and hidden fees. ISPs were ordered to clearly detail all charges, such as modem rental and installation fees, and to disclose the full monthly prices that customers pay after any promotional pricing expires. Data caps and related overage fees or consequences for exceeding the caps (such as loss of service) also had to be clearly disclosed.

The 2015 decision also required ISPs to detail packet loss statistics as part of network performance disclosures; previously, ISPs were required to disclose speed and latency but not packet loss. The FCC in 2016 came up with broadband "nutrition labels" to help ISPs comply in a way that would make fees, data caps, and network performance more understandable for consumers.

Pai's FCC already exempted ISPs with 250,000 or fewer subscribers from the new disclosure rules. Pai made sure that this exemption would apply even to ISPs that are owned by much larger companies. As such, the FCC effectively exempted billion-dollar public companies from rules that can be complied with in just a few hours each year, Clyburn said at the time.

If the Title II order is overturned without this portion being replaced, even the biggest ISPs like Comcast won't have to follow the new transparency rules.

Preemption of state laws that outlaw competition

The Title II order did not forbear from Section 253, which allows the FCC to preempt state or local rules that prohibit companies from offering telecommunications service. The FCC used its Section 253 preemption authority less than two weeks ago when it blocked an exclusive license to build and operate a network issued by the state of Hawaii to a company called Sandwich Isles Communications. The exclusive license "effectively bars telecommunications competition on the Hawaiian home lands," the FCC's preemption decision said.

Section 253 would continue to apply to traditional telephone networks even if Title II no longer applies to broadband. But the US is moving toward a broadband-only future, so the Title II reversal could prevent the FCC from removing barriers to competition on next-generation networks, Clyburn said in her statement on the decision. To quote her writing:

[The exclusive license preemption] highlights the importance of section 253 of the Communications Act in enabling competition. And how useless it will likely be in a broadband-only world, if the Commission’s majority moves forward with its plan to reclassify broadband as an information service. Breaking down barriers to infrastructure deployment without Title II is about as effective as demolishing a wall by staring at it. Without a Title II telecommunications service at issue, today’s Order would not have been possible.

Losing preemption powers in broadband could also complicate efforts to boost competition in multi-unit apartment and condo buildings, Clyburn told Ars.

Web browsing privacy

President Trump and the Republican-controlled Congress already repealed the rules and took action preventing the FCC from issuing similar rules in the future. If Congress and Trump hadn't done that, the FCC eliminating its own Title II order would have wiped the rules out anyway.

Technically, Section 222 of Title II still applies to ISPs, requiring them to protect the confidentiality of "customer proprietary network information." But since there are no longer any broadband-specific privacy rules designed to implement that requirement, it's unclear what ISPs actually have to do to comply.

The Federal Trade Commission will be able to regulate ISPs' privacy practices if the Title II decision is overturned, because the FTC can regulate companies that aren't classified as common carriers. But FTC enforcement is less strict than the repealed FCC rules: the online advertising industry uses self-regulatory mechanisms in which websites let visitors opt out of personalized advertising based on browsing history, and websites can be punished by the Federal Trade Commission if they break their privacy promises.

Overturning Title II would eliminate the Section 222 requirement on ISPs, but the move would probably help consumers in this instance, since at least the FTC would be able enforce privacy commitments. But if the Title II privacy rules had taken effect on schedule, then Internet customers would have benefited from a stronger opt-in requirement. If ISPs are regulated by the FTC, they won't have to obtain consumers' opt-in consent before using or sharing browsing histories in order to serve targeted ads.

Pole attachments

The obscure issue of attaching cable or fiber wires to utility poles plays a fairly big role in broadband competition. If new ISPs can't get quick access to poles, construction is delayed or network buildouts become so cumbersome that they're not worth doing at all.

Google Fiber found this out the hard way in some cities where it had to wait for big ISPs to move their wires on each pole before Google Fiber could install its own. Two major cities passed rules letting newcomers like Google Fiber make all of the necessary wire adjustments on their own without waiting for incumbents, and these cities were promptly sued. (Charter and AT&T sued the local government in Louisville, Kentucky, while Comcast and AT&T sued the government in Nashville, Tennessee.)

Title II, as it happens, has a section applying the "just and reasonable" standard to rates, terms, and conditions for pole attachments and access to other infrastructure. The FCC's 2015 Title II order allowed this section to apply to broadband, giving the commission another source of authority in future rulemakings designed to speed up construction for broadband competitors.

The Pai FCC has begun a proceeding on pole attachments with the goal of shortening construction waiting periods, but eliminating the Title II classification could limit the reach of FCC regulation in this area.

"Title II means that companies that are deploying broadband have non-discriminatory access to those poles and [fiber] conduits at reasonable rates," Clyburn said.

The FCC's pole attachment rules apply to privately owned poles except when states opt out of the federal regime and come up with their own method of regulating pole attachments.

Broadband for poor people

In March 2016, the FCC expanded the Lifeline phone subsidy program so that it can also be used to buy Internet service. As a result, poor people can use a $9.25 monthly household subsidy to buy home Internet or mobile broadband.

The Title II reclassification played a role here via Section 254's universal service provisions, because it ensured that "the Universal Service Fund now applies to broadband networks," according to consumer advocacy group Public Knowledge. "The expansion allows eligible telecommunications carriers including broadband-only providers to offer subsidized broadband services to low-income consumers. However, if broadband were to lose its Title II classification, certain providers may no longer qualify to offer subsidized broadband services."

Separately, the Pai FCC has taken steps to limit the expansion of Lifeline broadband subsidies. Pai says he supports Lifeline being used for broadband, but his decision to eliminate a new nationwide approval process has made it more difficult for ISPs to gain approval to sell the subsidized plans to low-income consumers.

Title II helps ensure that the FCC is "on solid legal footing" to expand Lifeline broadband access, Clyburn said.

Disability access

The Title II order also applied sections of the statute related to access for people with disabilities, thus requiring ISPs "to ensure that the service is accessible to and usable by individuals with disabilities, if readily achievable." The provisions in this statute would continue to apply to landline and mobile phone operators, which were classified as common carriers before 2015. But without the Title II classification of broadband, people with disabilities would not have the same legal protections for broadband-specific services, even though there's a large gap in broadband access between people who have disabilities and those who don't.

Title II makes a difference in how explicitly the FCC can address issues such as hearing aid compatibility in a broadband context, Claude Aiken, Clyburn's wireline legal advisor, told Ars.

What's next

Pai has repeatedly made it clear that he intends to eliminate the Title II classification of broadband, so there probably isn't much hope of stopping the FCC from following through on the plan. The FCC could implement a weakened form of net neutrality rules, but even that might not happen as Pai's proposal argues that throttling of websites might somehow be good for consumers.