Comments of the R Street Institute in the Matter of Safeguarding and Securing the Open Internet

IN THE FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, D.C. 20554

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COMMENTS OF THE R STREET INSTITUTE 

Jonathan Myles Laurier Cannon
Policy Counsel
R Street Institute
1411 K St. NW
Suite 900
Washington, D.C. 20005
(202) 525-5717
[email protected] 

December 17, 2023

Introduction

The internet has become an essential part of society and our lives. As internet speeds got faster, technical innovation kept apace, with services and entertainment being offered in ways we never thought possible.^[1] One of the key factors in this explosive technological revolution was the light-touch framework that sparked the dotcom boom and kept us connected during the COVID-19 pandemic.^[2] Our networks were tested in new ways, and providers met that challenge, ensuring that we were able to work, stream and stay connected.^[3] 

Federal Communications Commission (FCC) Chairwoman Jessica Rosenworcel noted “[a]s a Nation, we responded to this crisis in an extraordinary way. We made a historic commitment to broadband for all.”^[4] She highlighted the internet’s open design as “creating without permission.”^[5] This all stands in stark contrast with the proposed rule now before the Commission.^[6] 

On Oct. 20, 2023, the FCC voted in a partisan fashion on a notice of proposed rulemaking (NPRM) to “reestablish the Federal Communications Commission’s authority over broadband internet access service (BIAS) by classifying it as a telecommunications service under Title II of the Communications Act of 1934.”^[7] This order, under the guise of net neutrality, would impose a heavy-handed common carriage regulatory framework that would stifle innovation, harm competition and counteract important investments the FCC has made to bridge the digital divide.

Although the R Street Institute (R Street) recognizes that broadband access is important, we believe there is little empirical evidence to suggest that new mandates are required. As the Information Technology and Innovation Foundation highlighted in a report “[t]he federal government has stated that food is essential, but it doesn’t regulate grocery stores; it provides food stamps.”^[8] The FCC can continue its efforts to ensure that broadband is ubiquitous, affordable and, most importantly, competitive. When it comes to regulation, less is more.

In his dissent during the open meeting, Commissioner Brendan Carr noted that average broadband speeds have increased by 260 percent since 2017, mobile has increased by 456 percent and competition has increased by 30 percent.^[9] With all signs of broadband trending in a positive direction and with that trajectory only continuing to grow in the post-COVID-19 world, the need to relitigate the Title II debate feels questionable. In 2017, it was a solution in search of a problem. Today, despite the moving goalposts, the only real problem presented before the commission is Title II itself.

In 2017, advocates argued that the Restoring Internet Freedom (RIF) Order would end “the internet as we know it.”^[10] This, as we know, was not the case, and the internet thrived in the aftermath of the RIF Order.^[11] There is also no evidence to suggest that any state’s own net neutrality laws prevented the internet from “loading one word at a time.”^[12] Yet the Commission has chosen to ignore these facts in favor of a political outcome.

In his statement on the NPRM, Commissioner Carr articulated succinctly that this rule will not signal:

The end of the internet as we know it, nor force websites to load one word at a time, but what it will do, however, is reduce competition, drive up costs, chill investments, and undo the decades of precedent that have fostered and promoted the free and open internet, the Commission claims to be “safeguarding” with this proposed rule.^[13] 

Imposing common carriage rules on the internet would “fundamentally transform the Internet by prohibiting Internet Service providers from choosing the content they want to transmit to consumers.”^[14] The rule would strip control of the internet “from the people and private internet service providers and give control to the Government,” which, as we saw in 2015, impacts “investment in infrastructure, content, and business.”^[15]

During a June 2023 Senate hearing, Sen. Ted Cruz pressed FCC commissioners on net neutrality. Commissioners Anna Gomez and Geoffrey Starks recognized that the hysterics were false and “hyperbolic.” Neither of the Commissioners could defend the record of the campaign against the RIF Order.^[16] 

There is little evidence as a matter of policy that reclassifying broadband under Title II would be sound. There is also no harm or loss of consumer welfare to justify this proposed change. Further, the Order goes beyond its predecessor to focus on other matters including national security, cyber security, privacy and public safety that can and should be addressed independently of Title II regulation.

In these comments, R Street will focus on the FCC’s authority to promulgate rules absent Title II classification, how the FCC’s actions will impair efforts to bridge the digital divide and the legal challenges this rule will almost certainly face if enacted.

I. Authority Exists to Protect Net Neutrality Principles Absent Title II

As R Street noted in our comments in 2017, “we support Net Neutrality and want to protect it going forward. However, the FCC’s current heavy-handed approach to Net Neutrality is ill-conceived.”^[17] This remains true five years in the aftermath of the RIF Order. We previously argued that “Title II of the Communications Act is a complex scheme of regulations designed for common carriers in an era when competition between multiple service providers was thought to be impossible.”^[18] Congress recognized that competition is a far better way to protect consumers than regulation, which was made clear in the Telecommunications Act of 1996 and has served consumers well.^[19]

Back in 2017, the Federal Trade Commission (FTC) sought comments on expanding its Section 5 authority to broadband internet access service.^[20] In the proceeding, numerous commenters discussed how the FTC, under its unfair and deceptive practice framework, was equipped to address alleged consumer harms from internet service providers.^[21] However, even with a litigious FTC, between 2017 and today there have not been any challenges to any conduct of internet service providers for alleged net neutrality violations.

One of the notable examples cited in advocating for net neutrality was in 2018 with the Santa Clara fire department.^[22] It was alleged that they were throttled for exceeding their data caps. The Congressional Research Service (CRS) highlighted that these situations “are heavily contested’ and that, even if the allegations in the Santa Clara case were true, the conduct would have been permitted under the 2015 Open Internet Order, which did not prohibit data caps.”^[23] 

Under its consumer welfare standard, the FTC is far better equipped to target providers who intentionally violate net neutrality principles. Under the Sherman Act, the FTC protects against “unfair methods of competition in or affecting commerce, and unfair or deceptive accounts or practices.”^[24] Section 5(n) focusses on unfair acts or practices that are “likely to cause substantial injury to consumers, which is not reasonably avoidable by consumers themselves.”^[25] 

Additionally, the FTC prevents companies from engaging in deceptive practices. A deceptive practice “involves a representation, omission, or practice that is likely to mislead consumers acting reasonably under the circumstances, and the representation, omission, or practice is material.”^[26] 

Title II would preclude the FTC from engaging ex post, as Title II preempts FTC enforcement against unfair or deceptive practices challenges. The 9th Circuit has held that common carrier exemption applies to common carriage activities, which would include all BIAS services under a Title II reclassification.^[27]

The FCC’s limited legal scope may impair its ability to target or enforce net neutrality violations effectively. Unlike prescriptive, and likely unconstitutional, regulatory overreach, the existing law provides a robust framework to protect consumers online. However, reclassifying under Title II will have a chilling effect that isolates the FTC as the cop on the beat.

Notably, Title II proponents have argued that in the aftermath of the RIF Order, the only vanguard protecting consumers online is states enacting their own net neutrality laws.^[28] However, there is little evidence to support this claim. The California law did not take force until the resolution of lawsuits in 2021.^[29] To avoid attempting to prove a negative, it is a large stretch to give California’s law credit for protecting consumers and providing net neutrality nationwide. There is little to no evidence suggesting that but for states passing their own laws, net neutrality abuses would have occurred. Also notably, most providers had already agreed to the practices California had codified into law before the RIF Order went into effect.^[30] Such agreement would limit the need for onerous rules, as the state patchwork of net neutrality laws would ensure that the United States had defacto net neutrality protections. However, this rule is not about net neutrality; it is a regulatory grab bag and an attempt to leverage every justification for heavy regulation and government control. The proposed rule uses national security, public safety, privacy and more to justify this regulatory overreach.

With the passage of the 2015 Open Internet Order, it is now abundantly clear that the heavy-handed Title II classification of broadband chilled investment.^[31] In 2017, the Phoenix Center released a study that revealed Title II had a detrimental effect on investment that resulted in about $150-$200 billion less capital investment in broadband than would have been expected without Title II reclassification.^[32] As we noted then and as remains true today with the FCC and the current administration’s efforts to close the digital divide, the reclassification of broadband as a Title II service will impede and frustrate current efforts to close both the access and affordability gaps of the digital divide.

If net neutrality is in fact necessary and a policy goal of the federal government, it would be more appropriate for Congress, not the FCC, to address this policy matter. Congress could act to codify the bright-line principles that a number of stakeholders have agreed upon. This would create certainty and avoid the never-ending game of ping-pong that takes place between administrations every time a new FCC chair is confirmed. There is bipartisan support for such proposals, and commonsense legislation could provide FCC authority to promulgate rules, without the need to impart heavy-handed utility control over the increasingly dynamic and competitive broadband marketplace.

II. Title II Imperils FCC Efforts to Bridge the Digital Divide

In the NPRM, the Commission argues that classifying BIAS as a telecommunications service under Title II will strengthen the FCC’s policy initiatives “to support the availability and affordability of BIAS through [Universal Service Fund] programs.” Congress created the Broadband Equity, Access and Deployment (BEAD) Program, which invested $42.5 billion to bridge the access gap of the digital divide.

BEAD, combined with affordability programs like the Universal Service Fund Programs and Affordable Connectivity Program, provides an once-in-a-lifetime chance to help connect those on the wrong side of the digital divide. However, between the Digital Discrimination Proceeding and Title II classification, these harmful efforts will likely deter providers from participating in these critical programs, preventing communities from reaping the benefits of high-speed, low-cost, competitive broadband products.

With all of the aforementioned programs, the Commission has worked tirelessly on a bipartisan basis in the public interest to ensure that customers have access and can afford to be part of the modern digital economy. Unnecessarily reimposing Title II, would be spiking the ball on the two-yard line. The Commission would be intentionally undermining their own efforts to bridge the digital divide by deterring investment and weakening the robust competition that has grown significantly in recent years as new solutions to connect Americans emerge. The FCC can and should continue to work in a bipartisan manner to address real challenges with novel solutions. Instead, the Commission has chosen to look backward at antiquated frameworks. Should the Commission continue to pursue this action, they will likely be met with a number of legal challenges.

III. Legal Challenges to the Notice of Proposed Rulemaking

A CRS report raised the potential legal challenges that this proceeding could face if enacted. By reclassifying BIAS as a Title II service, the FCC would likely be challenged for overstepping its legal authority.^[33] While previous attempts may have sustained Chevron deference scrutiny, the current court has expressed an appetite for curtailing or overruling Chevron’s deference.^[34] As the CRS noted, “the Supreme Court appears to be moving away from the Chevron framework in favor of an alternative interpretive principle, the ‘major questions doctrine.” ^[35] 

Loper Bright Enterprises v. Raimondo will directly address the question of whether Chevron should be “curtailed or overruled.”^[36] Should the court take steps to erode or weaken Chevron’s deference, any existing or future regulation would be under new scrutiny and likely would not sustain legal challenge.

Additionally, as many commenters are likely to note the “major questions doctrine” seems to be gaining prominence in jurisprudence. There is a simple question of whether the FCC has the authority to regulate broadband providers under Title II of the Telecommunications Act. According to experts, “the Commission lacks that authority.”^[37] If enacted as a final rule, the proposed order would likely fail under the newly established major questions doctrine.^[38] 

As they highlighted even back in 2017, then-Judge Brett Kavanaugh argued that reclassification under Title II was a major question, susceptible to being struck down by the Court.^[39] Kavanaugh argued that “the FCC’s 2015 net neutrality rule [was] one of the most consequential regulations ever issued by any executive or independent agency in the history of the United States.” The transformative impact of “imposing common-carrier obligations on internet service providers” resulted in broad “economic and political significance.” He continues to say that “the net neutrality rule is unlawful and must be vacated.”^[40] The new rule proposed by the current Commission goes beyond the 2015 in scope, authority and justification. The FCC lacked clear authority to issue the rule in 2015 and have not subsequently been granted authority since. Quoting the late Justice Antonin Scalia, “We expect Congress to speak clearly if it wishes to assign to an agency decision of vast ‘economic and political significance.”^[41] 

Most recently, the Supreme Court of the United States (SCOTUS) held in West Virginia v. Environmental Protection Agency that the agency lacked statutory authority to create a regulation in “cases in which the history and breadth of the authority that [the agency] has asserted, the economic and political significance of that assertion, provide a reason to hesitate before concluding that Congress meant to confer such authority.”^[42] The agency must point to “clear congressional authorization” for the authority it claims.^[43] The SCOTUS justices have also noted that “any new laws governing the lives of Americans are subject to the robust democratic process the Constitution demands.”^[44]As they argue, “[t]here is no doubt that under current law, the decision whether to reclassify broadband as a telecommunications service is a decision of great economic and political significance, and thus presents a major question.”^[45] 

The solicitors general argue that “[n]othing in Title II of the Communications Act itself or in any other statute gives the Commission the clear and unambiguous authority to classify broadband as a Title II telecommunications service subject to common carrier regulations, and the Commission cannot reasonably conclude otherwise.”^[46] Should the FCC continue to partake in this endeavor to again reclassify broadband, they will surely meet a legal challenge. Based on current court precedent, it seems unlikely to sustain a challenge under the major questions doctrine.

The FCC could avoid this litigation if it continues to follow the light-touch framework that built the internet. Changing course now would not only be unwise, but it could also be illegal. The Commission should look to Congress to address their concerns, without the FCC trying to rely on an antiquated statute from the 1930s designed for copper phone lines.^[47] 

IV. Conclusion

Though there has been constant back and forth of appropriate regulatory frameworks over the internet ecosystem, along with new rationalizations to justify a fundamental change to how the internet has been successfully administered for decades, there has been no new or prevailing evidence to support or necessitate a change. The agency should not ignore economic analysis showing the harms of reclassification. It is also unreasonable to create uncertainty for customers and providers, as every four to eight years, broadband classification and the rules of the internet could change. The FCC should not revive a mooted issue that lacks policy merit and will harm efforts to expand deployment and connect Americans on the wrong side of the digital divide.

For the aforementioned reasons, R Street urges the Commission to reject this misguided attempt at reclassification and instead retain the Commission’s light-touch regulatory framework that has served the internet in the three decades since it became commercially viable. The Commission should work with Congress to legislatively resolve the issue to avoid a fourth attempt at reclassification that is a likely result should this regulation be implemented and survive court scrutiny.

An open internet is best secured by the light-touch regulatory framework enshrined in the RIF Order. Congress can and should address potential consumer harms or grant the FCC authority to promulgate rules appropriately. Absent a clear directive from Congress, the FCC cannot act alone to wreak havoc on the internet ecosystem that has become an essential part of our society.

Respectfully submitted,

__/s/________________________
Jonathan Cannon, Esq.
Policy Counsel
R Street Institute
1411 K St. NW
Suite 900
Washington, D.C. 20005
(202) 525-5717
[email protected]   

[1] Federal Communications Commission, “Measuring Fixed Broadband – Twelfth Report,” (Jan. 6, 2023), available at https://www.fcc.gov/reports-research/reports/measuring-broadband-america/measuring-fixed-broadband-twelfth-report.

[2] WifiForward, “We didn’t break the Internet: the resiliency of our networks during the pandemic” (April 15, 2021), available at https://wififorward.org/news/we-didnt-break-the-internet-the-resiliency-of-our-networks-during-the-pandemic.  

[3] Id.

[4] Federal Communications Commission, “FCC Chairwoman Rosenworcel’s Net Neutrality Remarks” (Sept. 26, 2023), available at https://www.fcc.gov/document/fcc-chairwoman-rosenworcels-net-neutrality-remarks.

[5] Safeguarding and Securing the Open Internet, WC Docket No. 23-320.

[6] Id.

[7] Id.

[8] Information Technology and Innovation Foundation, Joe Kane, “The FCC’s ‘Ten Facts About Net Neutrality Protections’ Are Actually Myths” (Nov. 6, 2023), available at https://itif.org/publications/2023/11/06/fccs-ten-facts-about-net-neutrality-protections-are-actually-myths.

[9] Federal Communications Commission, Dissenting Statement of Commissioner Brendan Carr, Safeguarding and Securing the Open Internet, WC Docket No. 23-320 NPRM (Oct. 19, 2023) available at https://docs.fcc.gov/public/attachments/FCC-23-83A3.pdf. 

[10]Joe Concha, “CNN headline declares ‘end of the Internet as we know it’ after net neutrality,” The Hill (Dec. 14, 2017) available at https://thehill.com/homenews/media/364959-cnn-headline-declares-end-of-the-internet-as-we-know-it-after-net-neutrality.

[11] Restoring Internet Freedom Order, WC Docket No. 17-108, Report and Order (Jan 4, 2018).

[12] Senate Democrats, “@Senate Dems,” Twitter (Feb. 27, 2018, 11:38 AM) https://twitter.com/SenateDems/status/968525820410122240.

[13] Federal Communications Commission, Dissenting Statement of Commissioner Brendan Carr, Safeguarding and Securing the Open Internet, WC Docket No. 23-320 NPRM (Oct. 19, 2023) available at https://docs.fcc.gov/public/attachments/FCC-23-83A3.pdf. 

[14] Id. 

[15] U.S. Telecom Ass’n v. FCC, 855 F.3d at 426 (Kavanagh, J., dissenting from denial of rehearing en banc).

[16] Nominations Hearing: FCC, 118th Congress (June 22, 2023), https://www.commerce.senate.gov/2023/6/nominations-hearing-fcc.

[17] Comments of the R Street Institute, In the Matter of Restoring Internet Freedom, WC Docket No. 17-108 (2017) at 7.

[18] Id.

[19] Telecommunications Act of 1996, Pub. LA. No. 104-104, 110 Stat.

[20] Federal Trade Commission, “Hearings on Competition and Consumer Protection in the 21st Century,” available at https://www.ftc.gov/enforcement-policy/hearings-competition-consumer-protection/public-comment-topics-process.

[21] Comments of Americans for Tax Reform, Before the Federal Trade Commission, Competition and consumer protection issues in communication, information and media technology networks (Aug. 20, 2018), available at  https://www.atr.org/wp-content/uploads/2018/08/FTC-21st-Century-Hearings-Topic-21.pdf.

[22]Daniel Lyons, One More Time: The Verizon-Santa Clara Fire Dispute Has Nothing to Do with Net Neutrality, American Enterprise Institute (Nov. 13, 2019), available at https://www.aei.org/technology-and-innovation/one-more-time-the-verizon-santa-clara-fire-dispute-has-nothing-to-do-with-net-neutrality.

[23] In the Matter of Restoring Internet Freedom, 35 FCC Rcd. 12328 (2020).

[24] 15 U.S.C. §45(a)(1).

[25] Comments of Americans for Tax Reform, Before the Federal Trade Commission, Competition and consumer protection issues in communication, information and media technology networks. Available https://www.atr.org/wp-content/uploads/2018/08/FTC-21st-Century-Hearings-Topic-21.pdf at 6.

[26] Id. at 10.

[27] Id. at 7.

[28] Oversight of President Biden’s Broadband Takeover, 118th Congress, (Nov. 30, 2023), available at https://energycommerce.house.gov/events/communications-and-technology-subcommittee-hearing-oversight-of-president-biden-s-broadband-takeover. 

[29] Cecilia Kang, “California Wins Court Victory for Its Net Neutrality Law,” The New York Times (Feb. 25, 2021), available at https://nytimes.com/2021/02/23/technology/california-net-neutrality.html. 

[30] Dr. George S. Ford, “Net Neutrality, Reclassification and Investment: A Further Analysis,” Phoenix Center for Advanced Legal & Economic Public Policy Studies, (May 16, 2017), available at https://www.phoenix-center.org/perspectives/Perspective17-03Final.pdf.

[31] Id. at 5.

[32] Id. 

[33] CRS Report IF12513, “FCC Adopts Proposed Net Neutrality Rule,” Chris D. Linebaugh, and Patricia Moloney Figliola at 3, available at https://crsreports.congress.gov/product/pdf/IF/IF12513#:~:text=On October 19, 2023, the,and reinstate net neutrality rules.

[34] Chevron USA v. Natural Resource Defense Council, 467 U.S. 837 (1984); Zach Schonfeld, “Supreme Court to consider overruling Chevron doctrine,” The Hill (May 1, 2023), available at https://thehill.com/regulation/court-battles/3981417-supreme-court-to-consider-overruling-chevron-doctrine.

[35] CRS Report IF12513, “FCC Adopts Proposed Net Neutrality Rule,” Chris D. Linebaugh, and Patricia Moloney Figliola at 3, available at  https://crsreports.congress.gov/product/pdf/IF/IF12513#:~:text=On October 19, 2023, the,and reinstate net neutrality rules.

[36] Id. 

[37] Title II ‘Net Neutrality’ Broadband Rules Would Breach Major Questions Doctrine,” Donald B. Verrilli, Jr. and Ian Heath Gershengorn, (Sept. 20, 2023), available at https://aboutblaw.com/bazq at 12.

[38] Id. at 12.

[39] US Telecom v. Federal Communications Commission, 825 F.3d 674 (D.C. Cir. 2016).

[40] Id.

[41] Id.

[42] Title II ‘Net Neutrality’ Broadband Rules Would Breach Major Questions Doctrine,” Donald B. Verrilli, Jr. and Ian Heath Gershengorn, (Sept. 20, 2023), available at https://aboutblaw.com/bazq citing West Virginia v. EPA, 142. S. Ct. 2587 (2022).

[43] Id.

[44] Id. quoting National Federation of Independent Business v. Department of Labor, 142 S. Ct. at 665 (quoting Ala. Ass’n of Realtors, 141 S. Ct. at 2489).

[45] “Title II ‘Net Neutrality’ Broadband Rules Would Breach Major Questions Doctrine,” Donald B. Verrilli, Jr. and Ian Heath Gershengorn (Sept. 20, 2023), available at https://aboutblaw.com/bazq.

[46] Id.

[47] 47 U.SC §609.