Verizon Exec Challenges FCC Authority Over the Internet

Published March 24, 2010

The executive vice president of Verizon says the Federal Communications Commission does not have the explicit power to regulate the Internet, and should wait for Congress to grant it that authority.

Tom Tauke, a former Republican congressman who represented Iowa’s second district from 1979 to 1991, cautioned the FCC against exceeding its regulatory mandate in a speech to the New Democrat Network broadcast live over the Internet March 24.

“Thanks to the efforts of the Federal Communications Commission (FCC), we now have a National Broadband Plan, which lays out a vision for a vibrant broadband and Internet marketplace,” Tauke said. “In my view, the current statute is badly out of date.

“Now is the time to focus on updating the law affecting the Internet,” he added. “To fulfill broadband’s potential it’s time for Congress to take a fresh look at our nation’s communications policy framework.

Praise for Tauke
Adam Thierer, president of the Progress & Freedom Foundation in Washington, DC, said Tauke was right to note current telecommunications law has become, in the former congressman’s words, “irrelevant to the ecosystem that has developed.” The pressing question, however, is whether Tauke’s former colleagues on Capitol Hill will heed his suggestions.

“It remains to be seen if anyone in Congress will bite,” Thierer said. “Many policymakers’ idea of ‘reform’ is to just layer on more misguided regulations to the old system. It’s like attempting to renovate a dilapidated old home by adding a fresh coat of paint and new window treatments.

“That fact is, the foundations are still crumbling,” he added. “Fundamental change is needed, and fast.”

Questionable FCC Jurisdiction

In his 30-minute address, Tauke cited the pending federal lawsuit in which Comcast has challenged the FCC’s authority to punish the Internet service provider (ISP) for throttling the bandwidth of customers using bitTorrent programs to share huge files.

While Tauke declined to predict the outcome of that lawsuit, he hinted it will not go the FCC’s way, adding the case means it has become “clear that the debate over jurisdiction [isn’t] just an intellectual exercise.

“The authority of the FCC to regulate broadband providers under the so-called ‘Information Services’ title, or Title I, of the Communications Act [is] at best murky,” Tauke said. “In confronting this hard question about jurisdictional authority, we [are] also faced this policy question: If Title I and Title II don’t apply to the Internet space, what are you saying about the authority of government in this space?

“As our efforts to find common ground on the key issues became more difficult because of the disputes over agency jurisdiction, it is clear to me that we need a fresh look at what the role of government should be in the Internet ecosystem, and specifically at the statute governing the communications industry,” he said.

‘Restraint Born of Humility’
Tauke noted that in the previous Democratic presidency, that of Bill Clinton, then-FCC commissioner Bill Kennard stressed how vital it was in 1999 to let the free market flourish when broadband deployment was in its infancy.

“We need an intentional restraint born of humility … that we can’t predict where this market is going,” Tauke said, quoting Kennard. “In a market developing at these speeds, the FCC must follow a piece of advice as old as Western Civilization itself: first, do no harm. Call it a high-tech Hippocratic Oath. So with competition and deregulation as our touchstones, the FCC has taken a hands-off, deregulatory approach to the broadband market.

Broadband Investment Boom

“There is no doubt that those policies put in place by the Clinton Administration and the Bush Administration to jumpstart innovation and the spread of broadband worked,” Tauke added, noting that American broadband providers “have invested hundreds of billions of dollars for deployment of broadband networks” and that “Verizon alone has deployed more fiber than all the countries in Europe.”

“The result,” he added, “is that today about 96 percent of Americans have access to at least two providers of wireline broadband and as many as three wireless providers, and more than 55 million Americans can connect to a broadband network capable of delivering at least a 50mbps stream.

“The approach Bill Kennard talked about years ago of using a light regulatory hand to create a highly competitive marketplace has worked,” Tauke said. “Now, we need to put in place a framework that will continue to encourage ongoing investment and innovation for this vibrant ecosystem we see. This should be the cornerstone for a refreshed policy framework.”

Four Key Principles
Tauke offered four principles that should guide any federal regulation over the digital economy: (1) consumers must be fully empowered; (2) consumers must feel safe online; (3) consumers should have ready access to broadband; and (4) government must protect consumers and a “properly functioning free market.”

“Any new policy should put the users in charge,” Tauke said. “Consumers should have the ability to choose the devices and software they want, access whatever lawful content and applications they need, and obtain the products and services they desire on the move or at home.

“Empowered consumers are also well-informed consumers, who are able to make choices and decisions based on easily understood language and transparent business practices,” he added. “Providing consumers with more easily understood and relevant information about how their broadband connections will perform, for example, or how their applications may affect their broadband experience, or what consumers’ privacy expectations should be when they download content, helps promote competition and innovation.”

Promoting Online Security
Tauke also stressed that as online communication and commerce rise, “consumers must be confident that their online security and privacy are protected.”

To meet this goal, Tauke suggested the market should adopt behavioral advertising policies “that requires an easy to use process for affirmative consent from a user.”

Behavioral advertising, in which online ads are delivered to consumers based on where they surf on the Web, is among the most controversial areas of Internet policy. Many have advocated either a ban on the traffic-tracking necessary to deliver those ads, or at least a federal policy that requires a consumer to “opt-in” to the tracking.

‘Free Press’ Slams Speech
Free Press, a self-described “public interest” group that advocates stricter federal regulation of the Internet, said Tauke’s ideas would empower ISPs and harm consumers.

“This speech illustrates the incumbents’ desire for a toothless, do-nothing regulator,” said Josh Silver, director of Free Press in a statement. “After eight years of that, consumers are left with higher prices, lower speeds and ever-dwindling choices.”

James G. Lakely ([email protected]) is co-director of The Heartland Institute’s Center on the Digital Economy and managing editor of InfoTech & Telecom News.

For more information …

“Prepared remarks of Verizon Executive Vice President Tom Tauke,” speech to the New Democrat Network. March 24, 2010: