FTC Implicitly Urges FCC to Not Reclassify Broadband as a Utility

Published September 26, 2014

The FTC implicitly laid down an important jurisdictional, political, and public marker against FCC reclassification of broadband as a utility, in its recent FCC filing in the FCC’s Section 706 inquiry proceeding.

Respectfully outside of the Open Internet proceeding considering whether to reclassify broadband information services as a Title II common carrier (utility) telecommunication service, the FTC officially and deftly introduced key legal facts into the overall FCC record – that deftly have the practical and legal effect of opposing FCC reclassification of broadband Internet access service as a Title II common carrier – on the record.

The key FTC language is here: “Although [the FTC’s] Section 5 contains an exemption for ‘common carrier’ activities, this exemption does not apply to the provision of other services, even if offered by common carriers. Broadband Internet access services are not currently offered on a common carrier basis, and the FTC therefore has jurisdiction over such services.”  

Why is this relevant to the FCC’s Open Internet order consideration of reclassifying broadband as a common carrier utility?  

First, the FTC made a strong implicit case in its filing that the public interest and consumers are currently well protected with clear direct FTC statutory authority to protect consumers under:

  • Section 5 — that proscribes “deceptive” or “unfair” business practices;
  • FCRA — The Fair Credit Reporting Act — with its privacy and security-related obligations; and
  • COPPA — The Children’s Online Privacy Protection Act.

By implication, reclassification as a Title II common carrier would remove existing important FTC consumer protections that consumers and the market now count on – and that the FCC does not have the authority to fully replicate under Title II authority that predates the Internet by several decades.  

Second, the FCC reclassifying broadband as a common carrier in order to gain more regulatory power for the FCC at the direct expense of the FTC, when that is unnecessary given the Section 706 authority recognized by the DC Court of Appeals, would open the FCC to the hard-to-rebut charge that it was more concerned about the FCC and its regulatory power, than what is best for consumers, their claimed “customer” or “boss.”

Moreover, the FCC knows that the DC Court of Appeals would have access to this FTC filing and legal position in any potential legal challenge of the FCC reclassifying broadband as a Title II common carrier.

Simply, this filing effectively raises the bar for the FCC to justify to the court why they should uphold an FCC whipsaw decision to reclassify broadband. In general, jurisdictional turf fights with another Federal independent agency can undermine one’s otherwise high-ground in defending the public interest and the consumer.     

Third, if the FCC were to unilaterally reclassify broadband as a 1934 telecom common carrier service, which in turn would eliminate existing and necessary FTC consumer protections for parochial FCC purposes, it could seriously undermine the FCC’s credibility and influence with their Congressional overseers in the House and Senate, which plan a major update of the obsolete 1934 Communications Act that created the FCC.    

It’s easy for activist pressure groups to say the FCC should risk all and reclassify broadband when they don’t have to live with, or depend on, Congress.

Behind all the FCC’s “independent” agency bluster, it knows deep down that the FCC is a creature of Congress, just like the Interstate Commerce Commission (ICC) was a creature of Congress, when it regulated the railroads, airlines, trucking and bus lines as common carriers.

Tellingly, Congress abolished the ICC in 1995, the year before Congress passed the 1996 Telecom Act to move away from monopoly common carrier regulation and towards a competitive communications marketplace.

Anybody paying attention to Congress over the last few decades knows that Congress hasn’t been a supporter of common carrier regulation of industries for many decades.  

In sum, the FCC has signaled its preference for using court-approved Section 706 authority over the Title II “nuclear” option for the reason that 706 authorities could give the FCC 90% of the regulatory power upside of Title II that the FCC may want with <10% of the Congressional/legal blowback of a Title II reclassification.

Most simply, exercising 706 authorities is big FCC gain with little FCC pain, while Title II is maximal FCC pain for the slightest of net FCC gain over 706.  

Lastly, while the language of the FTC’s FCC filing was understated, there is nothing understated about the legal and political implications of it.

It provides an additional set of very good reasons for the FCC to protect consumers, while also protecting the FCC’s long term viability as a regulator in a world where Congress long ago abandoned common carrier regulation.  


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]


[Originally published at PrecursorBlog]