Evaluating the Title II Rainbow of Proposals for the FCC to Go Nuclear

Published September 29, 2014

While proposing to follow the D.C. Circuit Court’s roadmap in Verizon v. FCC to create a legal FCC regulatory framework for the Internet Age under the FCC’s 706 authorities, the FCC also invited proposals to potentially subject broadband to Title II common carrier utility regulation.

The FCC’s invitation has prompted a “rainbow of policy and legal proposals” that would explore “new ideas for protecting and promoting the open Internet” by imposing Title II telecommunications regulation on America’s Internet infrastructure.

This analysis will review and debunk what the FCC has suggested are the main Title II proposals at this time from: Public Knowledge, AOL, Rep. Eshoo/Silicon Valley, Professor Tim Wu, and Mozilla.

By way of background, the Title II policy debate is about who makes Internet infrastructure decisions, the businesses which have long done so, or government regulators; and the debate is also about who pays for it.

In a nutshell, Title II is legacy 1934 telephone monopoly utility regulation where Federal and State regulators, not business owners, make every substantive decision for the business: i.e. rates, terms, conditions, profit, quality, technology, services, devices, and what can be built when and where.

Hence Title II is oft-considered the regulatory “nuclear option” because its purpose is to destroy the current user-centric, Title I information services regulatory foundation, on top of which most everything about the American Internet today is built upon, in order to replace it with an obsolete Title II FCC-centric/empowering regulatory regime from 1934.

Title II is also considered the “nuclear option” because it would destroy much of the value of the nation’s $1.2 trillion in private investment in America’s wireline, wireless and satellite Internet infrastructure, and because the “fallout” from Title II reclassification could make the sector “radioactive” to future private investment.

Importantly, the common purpose behind all the Title II proposals is giving the FCC the regulatory power to impose a “zero-price” for downstream traffic via common carrier price regulation. Title II advocates all agree that only the user should have to pay for bandwidth, and that large edge companies should not have to pay anything for their outsized bandwidth consumption of video streaming because the user requested the video streams.

Behind the smokescreen of the “fast lane-slow lane” FCC debate is a largely hidden policy debate over who pays to fund America’s Internet infrastructure – everyone who benefits from it or only Internet consumers. Title II advocates want Internet consumers to subsidize Internet content producers without being transparent to consumers.

The “rainbow” of Title II “nuclear option” proposals range from maximal 1934 telephone monopoly utility regulation, to a variety of different tactical, partial or targeted Title II regulation.

The targeted Title II advocates imagine they can detonate a regulatory “tactical nuke” that can maximally-regulate ISPs with no fallout risk or harm to edge content producers, consumers, or the virtuous innovation cycle, just like policy makers imagined that they could use a “tactical nuke” in the Cold War that would only kill people, not destroy buildings, and not trigger the mutual-assured-destruction of nuclear war.

Full “Nuclear Option” Proposal from Public Knowledge: Public Knowledge’s FCC filingproposes full reclassification of broadband access, wireline and wireless, as a Title II common carrier service, without a presumption of forbearance.

Its argument is that the FCC got broadband regulation totally wrong and never should have classified broadband access as an information service, because the Internet needs Government public utility regulation, not private-sector facilities-based broadband competition, to well serve Internet users.

Simply, Public Knowledge is calling for the FCC to preemptively blow up America’s entire Internet regulatory foundation for both the FCC and the FTC in order to save the Internet frompotential harms.

AOL’s Title II “Nuclear Option” Plus Section 706: AOL’s proposes  that the FCC “use the entire legal arsenal available to it” to prevent ISPs from negotiating commercially reasonable payments from large edge content producers, like Netflix has done.

Tactical Title II “Nuclear Option” Proposals:

Rep Eshoo’s Silicon Valley “Light touch” Title II Section 202 “Nuclear Option” Proposal:Sensitive to the risk of “radioactive” fallout to Silicon Valley of a full Title II nuclear option, Rep. Eshoo has advocated for a “creative pathway” of reclassifying broadband as a 100% common carrier telecommunications service, but then forbearing over time from 99% of it, leaving just the Section 202 nondiscrimination requirement that Silicon Valley most wants.   

Apparently Silicon Valley imagines America’s legal code to be a binary series of ones and zeroes where the FCC can reprogram its Title II nuclear device to precisely delete legal code that one doesn’t want.

Obviously Silicon Valley does not understand that it is the regulatory classification of service that is actually “binary,” because it legally must be either a “one” information service, or a “zero” telecommunications service, it can’t be both. And Silicon Valley does not appreciate that FCC forbearance, or “deleting” is not like efficiently pushing a “delete” key, but is among the most inefficient, convoluted, and uncertain of FCC tools and processes.

Wu-Narenchania’s “Magical” Title II “Nuclear Option” Proposal: Professor Tim Wu, who coined the term “net neutrality,” told FCC staff in the FCC Chairman’s Office “We have the magical formula and it’ll solve all your problems” per the Washington Post. His proposalwould be a “surgical” “nuclear strike” by treating Internet backbone downstream/”sender side” transit to a consumer as a Title II common carrier telecommunications service while treating upstream/”receiver-side” transit to an edge provider as a Title I information service.

The hubris of this particular “nuclear option” imagines that the FCC can differentiate and nano-regulate commingled best-efforts Internet packet delivery of quadrillions of bits annually — by direction. In other words, it would be akin to ones and zeros packet traffic going in one direction like east would be regulated like a utility, but ones and zeros packet traffic going in another direction like west would not.

Ironically, this effort to avoid discrimination and achieve Professor Wu’s zero-price for downstream traffic would do so by discriminating against receiver-side-consumers by forcing them to subsidize FCC-favored, sender-side-edge-producers of content, which would enjoy zero-price delivery of packets.

In the past, the FCC’s implicit subsidy programs have had businesses subsidizing consumers’ services especially rural or disadvantaged consumers. Perversely, all Title II nuclear options discussed here are designed to set a zero-price for all downstream traffic so consumers are forced to subsidize big Silicon Valley content producers like Netflix, Google-YouTube, Amazon, Yahoo, etc.

Amazingly, Professor Wu proposes to impose the Title II “nuclear option” to the Internet backbone, which has never been subject to Title II regulation since the Federal government privatized the Internet backbone two decades ago. Price regulating one direction of this complex omni-directional network of networks could risk screwing up the Internet backbone market with collateral casualties for the whole Internet ecosystem.

Professor Wu’s fantastical proposal is the equivalent of a surgeon imagining he could safely operate on a person’s spinal cord to fix only neural signals coming from the brain to the body and not those going to the brain from the body – with no risk at all to the patient or liability for the FCC “hospital” authorizing the procedure!

Mozilla’s Title II “Nuclear Option” Proposal: When the FCC invites edge content producers an opportunity to ask for whatever they want to take from other people, under the political cover of promoting “innovation,” courtesy of the FCC, they naturally get greedy and feel entitled.

No kidding, Mozilla’s proposal actually asks the FCC “to create a new type of service, one that has never before been classified” … for “remote edge providers” … that “works a little like a doorman in a high-end condominium.” … “It would clearly wall off the Internet from the access service” with “protective rules.”

Ironically those interests who have long opposed “walled gardens” for Internet content as antithetical to a free and open Internet, now are proposing being “walled off” from any obligation to pay their fair share of the cost of Internet infrastructure that their special highest-traffic services cause for everyone else in the ecosystem. Even more ironically, Mozilla believes its “high-end” walled garden is entitled to a “doorman.”

Particularly problematic in Mozilla’s petition for “walled garden” special treatment for “remote edge providers” paid for by consumers, is no disclosure that most of Mozilla’s revenues for the last several years have come from Google.

Google has paid Mozilla ~$300m a year for the last three years to make Google the default search engine on Mozilla’s Firefox browser. At a minimum it is in the public interest for Mozilla and the FCC to be fully transparent that Mozilla has a very large financial conflict-of-interest in this debate.

The cumulative hypocrisy of Mozilla’s Title II proposal is legion.

In sum, the Title II policy debate is about who makes Internet infrastructure decisions, the businesses which have long done so, or government regulators, and also who pays for it.

It is all about whether or not the FCC will destroy everything Internet that was built upon the fundamental assumption of a user-centric, light-touch information services regulation, by reclassifying broadband as an FCC-centric common carrier utility telecommunications service to impose maximal regulation.

Title II is called the “nuclear option” for a reason – its broad and lasting destructiveness.

Is Congress paying attention?

All of these destructive Title II “nuclear option” proposals are all de facto legislative proposals that should be proposed to Congress for Congress’ consideration.

It would be wise for the FCC to be very respectful of Congress’ constitutional prerogatives here, given that the FCC is a creature of Congress, not a sovereign power in and of itself as Title II advocates imply.




FCC Open Internet Order Series


Part 1: The Many Vulnerabilities of an Open Internet [9-24-09]

Part 2: Why FCC proposed net neutrality regs unconstitutional, NPR Online Op-ed [9-24-09]

Part 3: Takeaways from FCC’s Proposed Open Internet Regs [10-22-09]

Part 4: How FCC Regulation Would Change the Internet [10-30-09]

Part 5: Is FCC Declaring ‘Open Season’ on Internet Freedom? [11-17-09]

Part 6: Critical Gaps in FCC’s Proposed Open Internet Regulations [11-30-09]

Part 7: Takeaways from the FCC’s Open Internet Further Inquiry [9-2-10]

Part 8: An FCC “Data-Driven” Double Standard? [10-27-10]

Part 9: Election Takeaways for the FCC [11-3-10]

Part 10: Irony of Little Openness in FCC Open Internet Reg-making [11-19-10]

Part 11: FCC Regulating Internet to Prevent Companies from Regulating Internet [11-22-10]

Part 12: Where is the FCC’s Legitimacy? [11-22-10]

Part 13: Will FCC Preserve or Change the Internet? [12-17-10]

Part 14: FCC Internet Price Regulation & Micro-management? [12-20-10]

Part 15: FCC Open Internet Decision Take-aways [12-21-10]

Part 16: FCC Defines Broadband Service as “BIAS”-ed [12-22-10]

Part 17: Why FCC’s Net Regs Need Administration/Congressional Regulatory Review [1-3-11]

Part 18: Welcome to the FCC-Centric Internet [1-25-11]

Part 19: FCC’s Net Regs in Conflict with President’s Pledges [1-26-11]

Part 20: Will FCC Respect President’s Call for “Least Burdensome” Regulation? [2-3-11]

Part 21: FCC’s In Search of Relevance in 706 Report [5-23-11]

Part 22: The FCC’s public wireless network blocks lawful Internet traffic [6-13-11]

Part 23: Why FCC Net Neutrality Regs Are So Vulnerable [9-8-11]

Part 24: Why Verizon Wins Appeal of FCC’s Net Regs [9-30-11]

Part 25: Supreme Court likely to leash FCC to the law [10-10-12]

Part 26: What Court Data Roaming Decision Means for FCC Open Internet Order [12-4-12]

Part 27: Oops! Crawford’s Model Broadband Nation, Korea, Opposes Net Neutrality [2-26-13]

Part 28: Little Impact on FCC Open Internet Order from SCOTUS Chevron Decision [5-21-13]

Part 29: More Legal Trouble for FCC’s Open Internet Order & Net Neutrality [6-2-13]

Part 30: U.S. Competition Beats EU Regulation in Broadband Race [6-21-13]

Part 31: Defending Google Fiber’s Reasonable Network Management [7-30-13]

Part 32: Capricious Net Neutrality Charges [8-7-13]

Part 33: Why FCC won’t pass Appeals Court’s oral exam [9-2-13]

Part 34: 5 BIG Implications from Court Signals on Net Neutrality – A Special Report [9-13-13]

Part 35: Dial-up Rules for the Broadband Age? My Daily Caller Op-ed Rebutting Marvin Ammori’s [11-6-13]

Part 36: Nattering Net Neutrality Nonsense Over AT&T’s Sponsored Data Offering [1-6-14]

Part 37: Is Net Neutrality Trying to Mutate into an Economic Entitlement? [1-12-14]

Part 38: Why Professor Crawford Has Title II Reclassification All Wrong [1-16-14]

Part 39: Title II Reclassification Would Violate President’s Executive Order [1-22-14]

Part 40: The Narrowing Net Neutrality Dispute [2-24-14]

Part 41: FCC’s Open Internet Order Do-over – Key Going Forward Takeaways [3-5-14]

Part 42: Net Neutrality is about Consumer Benefit not Corporate Welfare for Netflix [3-21-14]

Part 43: The Multi-speed Internet is Getting More Faster Speeds [4-28-14]

Part 44: Reality Check on the Electoral Politics of Net Neutrality [5-2-14]

Part 45: The “Aristechracy” Demands Consumers Subsidize Their Net Neutrality Free Lunch [5-8-14]

Part 46: Read AT&T’s Filing that Totally Debunks Title II Reclassification [5-9-14]

Part 47: Statement on FCC Open Internet NPRM [5-15-14]

Part 48: Net Neutrality Rhetoric: “Believe it or not!” [5-16-14]

Part 49: Top Ten Reasons Broadband Internet is not a Public Utility [5-20-14]

Part 50: Top Ten Reasons to Oppose Broadband Utility Regulation [5-28-14]

Part 51: Google’s Title II Broadband Utility Regulation Risks [6-3-14]

Part 52:  Exposing Netflix’ Biggest Net Neutrality Deceptions [6-5-14]

Part 53: Silicon Valley Naïve on Broadband Regulation (3 min video) [6-15-14]

Part 54: FCC’s Netflix Internet Peering Inquiry – Top Ten Questions [6-17-14]

Part 55: Interconnection is Different for Internet than Railroads or Electricity [6-26-14]

Part 56: Top Ten Failures of FCC Title II Utility Regulation [7-7-14]

Part 57: NetCompetition Statement & Comments on FCC Open Internet Order Remand [7-11-14]

Part 58: MD Rules Uber is a Common Carrier – Will FCC Agree? [8-6-14]

Part 59: Internet Peering Doesn’t Need Fixing – NetComp CommActUpdate Submission [8-11-14]

Part 60: Why is Silicon Valley Rebranding/Redefining Net Neutrality?  [9-2-14]

Part 61: the FCC’s Redefinition of Broadband Competition [9-4-14]

Part 62: NetCompetition Comments to FCC Opposing Title II Utility Regulation of Broadband [9-9-14]

Part 63: De-competition De-competition De-competition [9-14-14]

Part 64: The Forgotten Consumer in the Fast Lane Net Neutrality Debate [9-18-14]

Part 65: FTC Implicitly Urges FCC to Not Reclassify Broadband as a Utility [9-23-14]

[Originally published at PrecursorBlog]