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New regulatory battle brewing over ISP classification
By Matthew Lasar | Last updated about 5 hours ago

A specter is haunting the Internet, the specter of Title II of the Communications Act—the section that regulates telecommunications common carriers and might eventually be used by the FCC to oversee broadband. "Exactly what kind of companies might get tangled up into this regulatory Rubik’s Cube?" worriedly asked FCC Commissioner Robert M. McDowell during a talk he gave to the Free State Foundation on Friday.

"Any Internet company that offers a voice application?" McDowell fretted. "With this newfound authority, why stop at voice apps? Isn't voice just another type of data app? As the distinction between network operators and application providers continues to blur at an eye-popping rate, how will the government be able to keep up?"

Over here at Ars, we're trying to keep up ourselves as the legal war over the FCC's authority to invoke open Internet rules seems poised to take a decisive legal shift—from a debate not just over the agency's authority to regulate the Net, but over whether it can be classified as a common carrier service. Clearly McDowell doesn't like this idea, but arguably it has been forced upon the open Internet movement. Here's why, and a preview of what the debate will look like for the foreseeable future.
Net neutrality, part deux

When last we left our net neutrality crusaders over at the FCC, they were taking a beating at the DC Circuit Court of Appeals, where Comcast is suing the agency over its Order sanctioning the company for P2P blocking. The judicial panel was skeptical, to put it mildly, about whether the agency's decision had any statutory teeth in it. They repeatedly noted that the move was based on the FCC's Internet Policy Statement, which itself was based on a policy statement in Title I of the Communications Act.

"Can they issue rules if it's just a—if all they have is a policy statement?" one panelist wondered out loud. The consensus seemed to be no. Indeed, it was "pretty strong that last week's oral argument on the Comcast/BitTorrent argument in front of the DC Circuit was an unmitigated disaster for the FCC," noted net neutrality fan Harold Feld over at Public Knowledge in an ex post facto blog entry.

But faster than you can say "if-at-first-you-don't-succeed," PK wrote up a proposal for the FCC to base Internet nondiscrimination enforcement not on Title I of the Act ("definitions"), but on Title II ("common carrier" services). Obviously we're exhuming a concept from the telephone monopoly era here. But defining ISPs as common carriers would seem suited to the FCC's purposes, given Title II's clear definition of what a common carrier can't do:

"It shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage."

The problem, of course, is that back at the beginning of this century, the FCC's majority declined to go down that road—picking another category out of Title I's definitional database to classify broadband as an "information" service. That category of provider makes information and electronic publishing access available via telecommunications, "but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service."
Three reasons

PK says it's time for the FCC to rethink that choice—for three reasons. First, this is not the AOL era any more—when consumers bought modems to get an e-mail account, chat rooms, games, shopping pages, and a web portal. Many consumers today buy a broadband account for one reason, to get high-speed Internet, then pick and choose the rest of these features on their own. In other words, last-mile service has become "disaggregated" from most information-based features, even domain name server buying. "The rise of web-based e-mail and 'cloud computing' has dramatically diminished the value of the information service offerings and made them easily separable from the underlying transmission," PK writes.

Second, the Commission's decision not to call ISPs common carriers was based, in part, on the expectation that competition in the broadband sector would flourish. That has not panned out. Some consumers can pick from two ISPs in their area, at best. Broadband Over Powerline (BPL) service has fizzed on the market and in court. And it's unclear whether you can really call mobile wireless competitive with wired service—given that the two biggest wireless carriers are Verizon and AT&T.

Finally, as even Verizon acknowledged in its recent joint filing with Google on the subject, there has to be a "backstop role" for the government to step in "if or when bad actors emerge anywhere in the Internet space." In those instances, intervention should be "surgical, swift and based on a finding of specific facts that establish such harm."

PK notes that when the government chose Title I rather than Title II as the basis of its authority, it said it did so because "consumer protection remains a priority for the Commission," adding that the FCC had "a duty to ensure that consumer protection objectives in the Act are met as the industry shifts from narrowband to broadband services." Some portion of the law has to back that duty up. And if the FCC chose to apply Title II to the 'Net, it wouldn't have to take much from the section—just the already mentioned antidiscrimination clause and Title II's interconnection requirements.
Internet time

McDowell, on the other hand, views the matter differently. While PK sees a relatively clear distinction between networks and applications, the Commissioner does not. ISPs now run huge server operations, he noted on Friday. "At the same time, broadband companies create and maintain software with millions of lines of code inside their systems. They also own app stores that are seamlessly connected to their networks. As technology advances, will the government be able to make the distinctions between applications and networks necessary under a new regulatory regime?"

And, McDowell asked, "will it be able to do so in Internet time?" Or will the FCC create a regulatory system that allows competing services to use the legal process to slow each other down rather than invest in their own growth? McDowell brought the debate back to the "priority access" issue that AT&T and the cable industry are pushing. As app developers write "new bandwidth intensive software" that some consumers want (but not others), broadband service providers "must be able to retain the freedom to be flexible and creative in their pricing," McDowell warned, or else the costs could be passed onto consumers as a whole.

Finally, the agency's senior Republican offered an international analogy that doubtless won him points with the Free State Foundation—"countries that regulate the Internet more tend to be less free," McDowell warned, citing Internet censorship in India and China. "Look around the globe: It is state-sponsored interference with the Web that is becoming the most troublesome." And once the government starts regulating the 'Net, "it becomes harder to pull back."

This is only a foretaste of the kind of dialogue we can expect if the DC Circuit officially rejects the FCC's Title I arguments and the agency opts for Title II common carrier-based proposals instead. But a significant dynamic should be noted here. Although net neutrality opponents may be pleased by their impending victory over Title I and the FCC's Comcast Order, the decision was, in fact, a very modest regulatory step. The agency didn't fine the ISP or set up any overarching rules. It just told Comcast to change course, something the company was doing anyway. The Commission clearly enforced Title I in the most case-by-case manner possible.

Now open Internet boosters, and perhaps the FCC, are looking at Title II, which has a lot more regulatory equipment in its toolkit. But if the agency implements this strategy, net neutrality foes will probably take it to court as well. If they win yet again, proponents of some kind of Internet non-discrimination enforcement system will abandon any attempt to regulate the 'Net via existing laws, and focus instead on getting a revision of the Communications Act from Congress. The fruits of that effort could be quite extensive, after all the compromising with various perspectives on Capitol Hill over copyright and indecency questions.

The point? There's still time for everyone to consider the possibility that the FCC's action regarding Comcast was the simplest, most conservative response to Internet ISP discrimination. It's also possible that the legal, political, and ideological campaign to squash it will only spawn ever more radical solutions to the problem.
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[url]http://arstechnica.com/telecom/news/2010/02/are-isps-common-carriers-let-the-debate-begin.ars[/url]
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Just ban teleco monopolies vertically stacked or otherwise, and maybe force all lines to be public then you wont need NN or to many rules as competition will take care of it all....