Broadband Politics and Closed-Door Negotiations at the FCC

The last seven days at the FCC have been drama-filled, and that’s not something you can often say about an administrative agency. As I noted in my last post, the FCC is considering reclassifying broadband as a “common carrier” service. This would subject the access portion of the service to some additional regulations which currently do not apply, but have (to some extent) been applied in the past. Last Thursday, the FCC voted 3-2 along party lines to pursue a Notice of Inquiry about this approach and others, in order to help solidify its ability to enforce consumer protections and implement the National Broadband Plan in the wake of the Comcast decision in the DC Circuit Court. There was a great deal of politicking and rhetoric around the vote. Then, on Monday, the Wall Street Journal reported that lobbyists were engaged in closed-door meetings at the FCC, discussing possible legislative compromises that would obviate the need for reclassification. This led to public outcry from everyone who was not involved in the meetings, and allegations of misconduct by the FCC for its failure to disclose the meetings. If you sit through my description of the intricacies of reclassification, I promise to give you the juicy bits about the controversial meetings.

The Reclassification Vote and the NOI
As I explained in my previous post, the FCC faces a dilemma. The DC Circuit said it did not have the authority under Title I of the Communications Act to enforce the broadband openness principles it espoused in 2005. This cast into doubt the FCC’s ability to not only police violations of the principles but also to implement many portions of the National Broadband Plan. In the past, the Commission would have had unquestioned authority under Title II of the Act, but in a series of decisions from 2002-2007 it voluntarily “deregulated” broadband by classifying it as a Title I service. Chairman Genachowski has floated what he calls a “Third Way” approach in which broadband is not classified as a Title I service anymore, and is not subject to all provisions of Title II, but instead is classified under Title II but with extensive “forbearance” from portions of that title.

From a legal perspective, the main question is whether the FCC has the authority to reclassify the transmission component of broadband internet service as a Title II service. This gets into intricacies of how broadband service fits into statutory definitions of “information service” (aka Title I), “telecommunications”, “telecommunications service” (aka Title II), and the like. I was going to lay these out in detail, but in the interest of getting to the juicy stuff I will simply direct you to Harold Feld’s excellent post. For the “Third Way” approach to work, the FCC’s interpretation of a “telecommunications service” will have to be articulated to include broadband internet access while not also swallowing a variety of internet services that everyone thinks should remain unregulated — sites like Facebook, content delivery networks like Akamai, and digital media providers like Netflix. However, this narrow definition must not be so narrow that the FCC does not have jurisdiction to police the types of practices it is concerned about (for instance, providers should not be able to discriminate in their delivery of traffic simply by moving the discrimination from their transport layer of the network to the logical layer, or by partnering with an affiliated “ISP” that does discrimination for them). I am largely persuaded of Harold’s arguments, but the AT&T lobbyists present the other side as well. One argument that I don’t see anyone making (yet) is that presuming the transmission component is subject to Title II, the FCC would seem to have a much stronger argument for exercising ancillary jurisdiction with respect to interrelated components like non-facilities-based ISPs that rely on that transmission component.

The other legal debate involves an even more arcane discussion about whether — assuming there is a “telecommunications service” offered as part of broadband service — that “telecommunications service” is something that can be regulated separately from the other “information services” (Title I) that might be offered along with it. This includes things like an email address from your provider, DNS, Usenet, and the like. Providers have historically argued that these were inseparable from the internet access component, and the so-called “Stevens Report” of 1998 introduced the notion that the “inextricably intertwined” nature of broadband service might have the result of classifying all such services as entirely Title I “information services.” To the extent that this ever made any sense, it is far from true today. What consumers believe they are purchasing is access to the internet, and all of those other services are clearly extricable from a definitional and practical standpoint (indeed, customers can and do opt for competitors for all of them on a regular basis).

But none of these legal arguments are at the fore of the current debate, which is almost entirely political. Witness, for example, John Boehner’s claim that the “Third Way” approach was a “government takeover of the Internet,” Fred Upton’s (R-MI) claim that the approach is a “blind power grab,” modest Democratic sign-on to an industry-penned and reasoning-free opposition letter, and an attempt by Republican appropriators to block funding for the FCC unless they swore off the approach. This prompted a strong response from Democratic leaders indicating that any such effort would not see the light of day. Ultimately, the FCC voted in favor of the NOI to explore the issue. Amidst this tumult, the WSJ reported that the FCC had started closed-door meetings with industry representatives in order to discuss a possible legislative compromise.

Possible Legislation and Secret Meetings
It is not against the rules to communicate with the FCC about active proceedings. Indeed, such communications are part of a healthy policymaking process that solicits input from stakeholders. The FCC typically conducts proceedings under the “permit but disclose” regime in which all discussions pertaining to the given proceeding must be described in “ex parte” filings on the docket. Ars has a good overview of the ex parte regime. The NOI passed last week is subject to these rules.

Free Press Ad in 6/23 Washington Post

It therefore came as a surprise that a subset of industry players were secretly meeting with the FCC to discuss possible legislation that could make the NOI irrelevant. This issue is made even more egregious by the fact that the FCC just conducted a proceeding on improving ex parte disclosures, and the Chairman remarked:

“Given the complexity and importance of the issues that come before us, ex parte communications remain an essential part of our deliberative process. It is essential that industry and public stakeholders know the facts and arguments presented to us in order to express informed views.”

The Chairman’s Chief of Staff Edward Lazarus sought to explain away the obligation for ex parte disclosure, and nevertheless attached a brief disclosure letter from the meeting attendees that didn’t describe any of the details. There is perhaps a case to be made that the legislative options do not directly fall under the subject matter of the NOI, but even if this position were somehow legally justifiable it clearly falls afoul of the policy intent of the ex parte rules. Harold Feld has a great post in which he describes his nomination for “Worsht Ex Parte Ever“. The letter attached to the Lazarus post would certainly take the title if it were a formal ex parte letter. The industry participants in the meetings deserve some criticism, but ultimately the problems can only be resolved by the FCC by demanding comprehensive openness rather than perpetuating a culture of loopholes.

The public outcry continues, from both public interest groups and in the comments on the Lazarus post. If it’s true that the FCC admits internally that “they f*cked up”, they should do far more to regain the public’s trust in the integrity of the notice-and-comment process.

Update: The Lazarus post was just updated to replace the link to the brief disclosure letter with two new links to letters that describe themselves as Ex Parte letters. The first contains the exact same text as the original, and the second has a few bullet points.