[Senate Hearing 114-180]
[From the U.S. Government Publishing Office]
S. Hrg. 114-180
PROTECTING THE INTERNET AND CONSUMERS THROUGH CONGRESSIONAL ACTION
=======================================================================
HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
JANUARY 21, 2015
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri MARIA CANTWELL, Washington
MARCO RUBIO, Florida CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin TOM UDALL, New Mexico
DEAN HELLER, Nevada JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado GARY PETERS, Michigan
STEVE DAINES, Montana
David Schwietert, Staff Director
Nick Rossi, Deputy Staff Director
Rebecca Seidel, General Counsel
Jason Van Beek, Deputy General Counsel
Kim Lipsky, Democratic Staff Director
Chris Day, Democratic Deputy Staff Director
Clint Odom, Democratic General Counsel and Policy Director
C O N T E N T S
----------
Page
Hearing held on January 21, 2015................................. 1
Statement of Senator Thune....................................... 1
Statement of Senator Nelson...................................... 3
Letter dated January 15, 2015 to Hon. Thomas Wheeler from
Stephen Bye, Chief Technology Officer, Sprint.............. 83
Letter dated January 20, 2015 to Hon. John Thune and Hon.
Bill Nelson from Chris Polychron, 2015 President, National
Association of REALTORS................................... 149
Statement of Senator Blunt....................................... 86
Statement of Senator Klobuchar................................... 88
Statement of Senator Moran....................................... 89
Statement of Senator Markey...................................... 91
Statement of Senator Heller...................................... 93
Statement of Senator Daines...................................... 96
Statement of Senator Booker...................................... 98
Article dated December 8, 2014 entitled ``Booker, King: Don't
destroy the open Internet'' by Cory Booker and Angus King.. 101
Letter dated January 21, 2015 to Hon. John Thune, Hon. Bill
Nelson, Hon. Roger Wicker and Hon. Brian Schatz from
Michael Beckerman, Internet Association.................... 103
Letter dated January 20, 2015 to Hon. John Thune and Hon.
Bill Nelson from ColorOfChange.org, Center for Media
Justice, Free Press, National Hispanic Media Coalition and
Presente.org............................................... 104
Letters from other organizations advocating for Title II..... 105
Statement of Senator Blumenthal.................................. 134
Statement of Senator Manchin..................................... 136
Statement of Senator Schatz...................................... 138
Prepared statement........................................... 140
Statement of Senator Peters...................................... 141
Statement of Senator Cantwell.................................... 146
Witnesses
Hon. Meredith Attwell Baker, President and CEO, CTIA--The
Wireless Association.......................................... 5
Prepared statement........................................... 6
Gene Kimmelman, President, Public Knowledge...................... 28
Prepared statement........................................... 29
Hon. Robert M. McDowell, Partner, Wiley Rein LLP and Senior
Fellow, Hudson Institute....................................... 37
Prepared statement........................................... 38
Paul Misener, Vice President, Global Public Policy, Amazon.com... 45
Prepared statement........................................... 47
W. Tom Simmons, Senior Vice President, Public Policy,
Midcontinent Communications.................................... 50
Prepared statement........................................... 52
Nicol E. Turner-Lee, Ph.D. Vice President and Chief Research and
Policy Officer, Multicultural Media, Telecom and Internet
Council (MMTC)................................................. 55
Prepared statement........................................... 57
Appendix
Hon. Tom Udall, U.S. Senator from New Mexico, prepared statement. 155
Response to written questions submitted to Hon. Meredith Attwell
Baker by:
Hon. Marco Rubio............................................. 155
Hon. Deb Fischer............................................. 157
Hon. Ron Johnson............................................. 158
Hon. Brian Schatz............................................ 159
Hon. Cory Booker............................................. 159
Hon. Tom Udall............................................... 160
Hon. Joe Manchin............................................. 160
Response to written questions submitted to Gene Kimmelman by:
Hon. Deb Fischer............................................. 162
Hon. Amy Klobuchar........................................... 163
Hon. Brian Schatz............................................ 163
Hon. Cory Booker............................................. 163
Hon. Tom Udall............................................... 165
Hon. Joe Manchin............................................. 165
Response to written questions submitted to Hon. Robert M.
McDowell by:
Hon. Marco Rubio............................................. 167
Hon. Deb Fischer............................................. 169
Hon. Ron Johnson............................................. 174
Hon. Brian Schatz............................................ 176
Hon. Cory Booker............................................. 177
Hon. Joe Manchin............................................. 181
Response to written questions submitted to Paul Misener by:
Hon. Deb Fischer............................................. 183
Hon. Brian Schatz............................................ 184
Hon. Cory Booker............................................. 184
Hon. Tom Udall............................................... 187
Hon. Joe Manchin............................................. 187
Response to written questions submitted to W. Tom Simmons by:
Hon. Deb Fischer............................................. 188
Hon. Brian Schatz............................................ 189
Hon. Cory Booker............................................. 190
Hon. Joe Manchin............................................. 190
Response to written questions submitted to Nicol E. Turner-Lee,
Ph.D. by:
Hon. Deb Fischer............................................. 191
Hon. Brian Schatz............................................ 193
Hon. Cory Booker............................................. 193
Hon. Joe Manchin............................................. 195
PROTECTING THE INTERNET
AND CONSUMERS THROUGH
CONGRESSIONAL ACTION
----------
WEDNESDAY, JANUARY 21, 2015
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 2:30 p.m. in room
SR-253, Russell Senate Office Building, Hon. John Thune,
Chairman of the Committee, presiding.
Present: Senators Thune [presiding], Wicker, Blunt, Heller,
Moran, Daines, Nelson, Cantwell, Klobuchar, Blumenthal, Schatz,
Markey, Booker, Manchin, and Peters.
OPENING STATEMENT OF HON. JOHN THUNE,
U.S. SENATOR FROM SOUTH DAKOTA
The Chairman. This hearing of the Senate Commerce, Science,
and Transportation Committee will come to order, and I
appreciate our panelists' indulgence. We were informed a while
back that we are going to have a number of votes. We are trying
to juggle it, and appreciate all of our Senators and those who
are participating in today's hearing, and their willingness to
work with us to try and accommodate that schedule.
Today we convene the Committee's first hearing of the 114th
Congress to consider an issue that has divided policymakers for
more than a decade: how best to protect the open Internet. The
Federal Communications Commission believes it already has the
answer: impose public utility regulations on the Internet. But
there is a well-founded fear that regulating the Internet, like
a public utility monopoly will harm its entrepreneurial nature,
chill investment, and lead to prolonged litigation.
Instead of using outdated regulations, I believe the most
enduring way to protect the Internet and individual Internet
users is through legislation that establishes clear rules of
the digital road as well as clear limits on the FCC's
regulatory authority.
Certainty about how consumers will be protected and
certainty about the government's role in the online world is
critical to preserve the Internet as an engine for innovation,
creativity, economic growth, and free expression. I want us to
pass legislation providing certainty that users will have
unfettered access to the entire Internet. I want us to pass
legislation that provides certainty for creators at the edge of
the Internet so that they can continue to reach users across
the Internet without interference.
I want us to pass legislation that provides certainty for
Internet service providers about precisely what rules they will
be required to follow. And I want us to pass legislation that
provides certainty for the FCC so that it can enforce legally
sound open Internet rules that survive beyond the current
Administration. The entire Internet needs this kind of
statutory certainty, and only--only--Congress can provide it.
Last week, I put forward a set of 11 principles that I
believe can be the framework for a bipartisan consensus. The
discussion draft that Chairman Upton and I released is our
attempt to put these principles into statutory text. The
details matter greatly in this debate, and we felt there could
be no progress toward a solution until legislators started
discussing those details.
I do not expect our draft to be a final product, but I also
believe that it is not a partisan starting point to the
conversation. We put forth a good faith proposal to find common
ground between the parties. We hope today's hearings will
facilitate the serious conversation around a long-term
solution.
I am willing to discuss how the 11 principles will be
implemented, and I am eager to get to work with my colleagues,
many of whom I have already spoken with. But I also want to be
clear that I will not compromise these principles, particularly
if doing so would leave the FCC's authority unbounded or if it
would leave open the possibility for harmful regulatory burdens
being leveled on the Internet.
Chairman Upton, Chairman Walden, and I have been working
with our colleagues on the Commerce Committees and across the
aisle since late last year to find a lasting resolution that
protects the open Internet. My colleague, the new Ranking
Member of this Committee, Senator Bill Nelson of Florida, has
been in serious and substantive discussions with me. I
appreciate his efforts, and they underscore that there is a
bipartisan interest in finding a legislative solution.
In the absence of clear legislative guidance, the FCC has
floundered for more than a decade to forge its own regulatory
powers from legal authorities crafted prior to the emergence of
the Internet as the most consequential communications platform
of our lifetime. We have now reached an unfortunate point where
both the President and the Chairman of the FCC feel compelled
to move forward using a toolbox built 80 years ago to regulate
a literal monopoly. And they do so without any apparent
interest in working with Congress to solve the FCC's legal
dilemma.
Even if the Executive Branch seems willing to go alone down
a politically toxic and legally uncertain path, I sincerely
hope that a willingness to collaborate develops within the
legislative branch. After a decade of failure and wasted
taxpayer resources, we should not continue to leave this issue
to a five-member regulatory agency. Congress needs to reassert
its responsibility to make policy and let the FCC do what it
does best: enforce clear statutory rules.
I want to work together with my colleagues to finally
settle the question of the FCC's authority over retail Internet
service. If Chairman Wheeler moves ahead as planned, however,
the only certainty is that the FCC will again find itself
tangled up in court for years to come.
Before I finish my remarks, I want to put forward a
challenge to the members of this committee. Let us find common
ground and forge a permanent solution. I have offered the
President an opportunity to engage. I have spoken with Chairman
Wheeler on numerous occasions, and I will engage any senator
who wants to find a workable legislative solution. Having the
FCC regulate the Internet as a public utility while Congress
sits idly on the sideline is an outcome that will prove to be
shortsighted. Let us find a consensus solution that none of us
have to call a compromise. I look forward to hearing from our
diverse panel of experts today and also to working with my
colleagues in the coming days and weeks.
With that, I yield to my distinguished Ranking Member, the
Senator from Florida, Senator Nelson.
STATEMENT OF HON. BILL NELSON,
U.S. SENATOR FROM FLORIDA
Senator Nelson. Mr. Chairman, indeed it has been a pleasure
working with you as we have been having discussions on this
issue and many others over the past several months, and there
will be many areas that we will be able to carry forth this
bipartisan tradition. The interest in this particular topic is
evident by the lines still waiting outside of the door to get
in. I thank you for calling this hearing, and as we said in the
organizational meeting yesterday, I look forward continuing the
work with you in this committee's proud tradition of working in
a bipartisan fashion.
The Internet has become an essential part of our everyday
lives. You will be hearing a lot more about national security
and the place that the Internet plays in cybersecurity. Many of
us are almost constantly connected to the Internet--at school,
at work, or at play. Computers, tablets, and smart phones are
certainly within arm's reach and in most of our pockets.
Access to broadband research and the broadband Internet
service is no longer a luxury item. It is a basic service that
provides a vital link to our friends, and our family, and the
rest of society. And because it is an integral part of how we
live today, there is broad agreement today among consumers in
many parts of the industry and in Congress that we have to
protect a free and open Internet. That was always the case. For
years we heard from some that net neutrality ``was a solution
in search of a problem.'' Well, I am glad that we moved beyond
that tired talking point and are here today to discuss how we
can preserve a free and open Internet.
That is an essential step, and I fully appreciate how far
many of our colleagues have come on this issue in a very short
time. And one indication of that is over four million Americans
have taken the time to weigh in directly with the FCC to
express their desire for strong net neutrality protections.
They do not want their access to websites and services blocked.
They want to know more about their Internet service and the
overall performance of the connection, and they are certainly
worried about their broadband provider picking winners and
losers on the Internet by regulating those content companies
who refuse to pay a toll to a slow lane of service.
So as the Chairman and I have been talking about these
issues for some time, I want to continue those discussions. But
I want to be clear about what is important to this Senator, and
I believe it is to most of the consumers. First, we need to be
vigilant in protecting consumers' interest. Theirs is the lens
through which we must see any proposal on net neutrality, the
consumers' interest. And, second, while I appreciate and
respect the desire by businesses for certainty of the
investment and the operation, and that is a legitimate concern
that we want to help protect, I remain concerned about any
proposal that would strip away the FCC's tools to enforce
essential consumer protections for broadband service.
The Internet is evolving at a blistering pace. The Internet
that we know today likely will be vastly different a decade
from now. Take, for example, when we started the space program,
when we put up John Glenn, we did not even know if the eyeballs
were going to stay in the eye sockets. And now we are at a
point that we are seriously discussing, and the President said
last night we are sending humans to Mars. That is the goal.
Things evolve. Things change at a blistering pace. And the
Internet is one of them, this ever-evolving Internet. This
senator believes that we need a regulator who is not frozen in
time, and the FCC must have authority that is flexible enough
that it can respond to a changing world. If we put a strait
jacket on the Commission, we may very well miss the future and
leave the Agency powerless and American consumers defenseless
to deal with the emerging problems.
For over 80 years, Congress has tasked the FCC with
preventing unjust practices, stopping unreasonable
discrimination, protecting competition, and promoting the
public interest. These are not mere abstract ideals.
And so, without this flexible authority, the FCC could not
have successfully extended universal service funding to
broadband or to ensure the privacy of sensitive consumer
information. These laws and principles have made the U.S.
telecommunications market the envy of the world, and they
should not be discarded.
And so finally, some maintain that we must have
congressional action on net neutrality prior to the FCC action.
I do not share that idea. It is more important to get the issue
right than it is to get it done right now. The stakes are too
high. The consumers' interest are at stake. The future of the
Internet is at stake.
The congressional prerogative to act does not cease merely
because an agency has moved forward and done its job. And
similarly, an agency is not always required to cease its
reasoned consideration of an issue merely because Congress may
be examining the same concern at the same time of which we have
that legitimate authority and responsibility to do. And to that
end, this senator welcomes the FCC's efforts to put in place
necessary consumer protections for the Internet. I look forward
to reviewing the particulars of the Chairman of the FCC's
proposal next month.
I want to thank the witness today for appearing, and I look
forward to hearing your testimony.
The Chairman. Thank you, Senator Nelson. We have a very
distinguished and impressive group of panelists today to speak
to this issue, and I am going to introduce each of them, and
then we will start left to right with Ms. Baker. Honorable
Meredith Attwell Baker is President and CEO of CTIA, which is
the wireless association here in Washington, D.C.; Mr. Gene
Kimmelman, President and CEO of Public Knowledge; the Honorable
Robert McDowell, Senior Fellow at the Hudson Institute; Mr.
Paul Misener, Vice President of Global Public Policy at
Amazon.com; Mr. Tom Simmons, Senior Vice President of Public
Policy at Midcontinent Communications from my home state of
South Dakota; and Dr. Nicol Turner-Lee, Vice President and
Chief Researcher and Policy Officer, Multicultural Media &
Telecommunications Council here in Washington, D.C.
Thank you all for being here, and we will start on my left
and your right. Ms. Baker?
STATEMENT OF HON. MEREDITH ATTWELL BAKER, PRESIDENT AND CEO,
CTIA--THE WIRELESS ASSOCIATION
Commissioner Baker. All right. Chairman Thune, Ranking
Member Nelson, and members of the Committee, thank you for
inviting me to share the wireless industry's perspective on the
importance of an open Internet. At the outset I want to be
clear: America's wireless industry supports an open Internet.
Wireless users demand it in a marketplace where competition has
never been more vigorous.
In the past 20 years, the wireless industry has grown from
a luxury product to a key driver of economic growth. We all
benefit from faster speeds, more services, and lower prices.
The U.S. is the global leader in wireless by almost any metric
and is at the forefront of mobile innovation in health,
automotive, and payment fields.
Central to that growth was Congress's foresight in
establishing Section 332 and a mobile-specific regulatory
framework outside of Title II. Congress has the opportunity to
provide the same stability for broadband. We greatly appreciate
this committee's work to develop a regulatory foundation for
future innovation with common sense net neutrality provisions.
The draft bill is an excellent start and offers a viable
path to preserve an open Internet with enforceable requirement.
Properly crafted legislation will guarantee the protections the
President has called for while allowing broadband providers to
continue to invest billions, create jobs, and develop
innovation products. We do not ask that wireless be exempt from
any new laws, only that the new requirements reflect our
industry, our technology, and our inherent differences.
I want to highlight three key differences. First, mobile
services are technically different and depend upon limited
spectrum resources. This requires substantial network
management millisecond by millisecond to deliver service to
consumers. Remarkably, there is more bandwidth in a single
strand of fiber than in all of the spectrum allocated for
commercial mobile services.
Second, we are competitively different. More than eight out
of 10 Americans can choose from four or more broadband
providers. This fierce competition is driving new services,
offerings, and differentiation that benefits consumers. Third,
we are evolutionarily different. 4G networks are less than 5
years old. The future is bright with advancements like LTE
broadcast, 5G services, and connected life applications.
It is vital that any legislation is sufficiently flexible
to preserve the competition, differentiation, and innovation
mobile consumers enjoy today. While we are optimistic that the
process on the Hill will enhance the wireless experience for
all Americans, we have significant reservations with the FCC's
proposed path of Title II. The application of Title II in any
form to wireless broadband would harm consumers and our
economy.
Title II was designed for another technology in another era
in which competition was largely nonexistent and innovation
came slowly, if it all. Given our industry's great success with
mobile broadband outside of Title II, we have significant
concerns with how Title II and its 682 pages of regulation
would apply to the dynamic mobile broadband space.
If the Commission proceeds with Title II as opposed to the
Section 706 path the Court contemplated a year ago, the
wireless industry will have no choice but to look to the
courts. Given the clear language of Section 332, we have every
confidence that we would prevail, but it is not our preferred
course.
Under Section 332, mobile broadband is legally different,
too. In 1993, Congress exempted future non-voice mobile
services, like mobile broadband, from common carriage
regulation. It did so unambiguously. The Commission and the
courts have repeatedly found that wireless broadband is not a
common carriage service. The FCC lacks the statutory authority
to change course, and litigation would harm consumers with a
year or more of uncertainty and delay.
As leaders across the globe are trying to replicate our
mobile success and embrace 5G, this is the wrong time to inject
uncertainty and delay into our Nation's efforts. We risk
falling behind when the stakes have never been higher for our
connected life and global competitiveness. The better approach
would be for Congress to act and end this debate. Doing so
would free us to turn to pressing, bipartisan issues, like
spectrum reform and Com Act modernization. By acting, Congress
can ensure that the United States remains the most dynamic and
innovative mobile ecosystem.
Thank you for the opportunity to appear on today's panel,
and I look forward to your questions.
[The prepared statement of Commissioner Baker follows:]
Prepared Statement of Meredith Attwell Baker, President and CEO,
CTIA--The Wireless Association
Chairman Thune, Ranking Member Nelson, and members of the
Committee, thank you for inviting me to share the wireless industry's
perspective on the importance of an open Internet.
At the outset, I want to be clear: America's wireless industry
fully supports an open Internet, and the mobile Internet is open today.
Wireless users demand it and in a marketplace where competition has
never been more vigorous or barriers to switching lower, mobile
broadband providers know that providing consumers with a robust,
reliable, open Internet experience is a business imperative.
A Strong Foundation. More than twenty years ago, wireless
communications was very new and did not fit cleanly in the FCC's
traditional Title II telephone rules. Future investment and innovation
were in jeopardy because of substantial Federal and state regulatory
overhang. Congress acted decisively in 1993, establishing a Federal
mobile-specific regulatory approach under Section 332 of the
Communications Act with clear rules for mobile voice services and other
mobile offerings.
Under this successful regime, the wireless industry has grown from
a luxury product to a key driver of economic growth upon which nearly
every American relies. For 44 percent of Americans, their only phone is
their mobile phone, and the wireless industry is now larger than the
agriculture, hospitality, automotive and airplane industries.\1\ Prices
per megabyte have fallen 99 percent from 2005 to 2013,\2\ and mobile
broadband use has grown 51 times over since 2008.\3\
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\1\ Centers for Disease Control, Wireless Substitution: Early
Release of Estimates from the National Health Interview Survey,
January-June 2014, http://www.cdc.gov/nchs/data/nhis/earlyrelease/
wireless201412.pdf; Recon Analytics, The Wireless Industry: The
Essential Engine of U.S. Economic Growth, http://reconanalytics.com/wp-
content/uploads/2012/04/Wireless-The-Ubiquitous-Engine-by-Recon-
Analytics-1.pdf.
\2\ The Boston Consulting Group, The Mobile Revolution: How Mobile
Technologies Drive a Trillion-Dollar Impact (Jan. 15, 2015), https://
www.bcgperspectives.com/content/articles/.
telecommunications_technology_business_transformation_mobile_revolution/
\3\ Cisco, VNI Mobile Forecast Highlights, 2013--2018, http://
www.cisco.com/assets/sol/sp/vni/forecast_highlights_mobile/
index.html# Country (Filter by Country (United States), then select
2013 Year in Review).
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We all benefit from faster speeds, more services, and lower prices,
as well as innovative devices and applications unimagined and
unforeseen a decade or even a year ago. The U.S. wireless ecosystem is
envied around the world as mobility is now at the forefront of
American-driven innovation in the health, automotive, payment, and
education fields. Small businesses that incorporate mobility are
witnessing revenues growing twice as fast, and work forces are growing
eight times faster than their non-mobile peers.\4\ Mobility has never
been more central to our Nation's global competitiveness and our
future.
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\4\ The Boston Consulting Group, The Mobile Revolution: How Mobile
Technologies Drive a Trillion-Dollar Impact (Jan. 15, 2015), https://
www.bcgperspectives.com/content/articles/
telecommunications_technology_business_transformation_mobile_revolution/.
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A Clear Opportunity. Congress has the opportunity to provide the
same regulatory stability for broadband as it did for all of mobility
in 1993. We face significant regulatory uncertainty and ongoing legal
debate over the FCC's authority over broadband and network management.
We greatly appreciate this Committee's work and foresight with today's
hearing to develop a solid regulatory foundation for future innovation
and investment in mobile broadband with common sense net neutrality
provisions that provide certainty for all affected stakeholders. The
need for clarity is felt by all, from large to small, including
regional and small providers serving the most rural and remote parts of
our country, east to west from New Hampshire to Alaska, and north and
south from the shores of Lake Superior across northern Wisconsin and
the upper Peninsula of Michigan to the gulf coast of Mississippi.
The draft bill is an excellent start and offers a reasonable path
toward ensuring the preservation of an open Internet with real,
enforceable requirements. Properly crafted legislation will guarantee
the protections the President has called for and would allow mobile
broadband providers to continue to invest billions, create jobs, and
bring innovative products to all Americans.
Importantly, we do not ask that wireless be exempt from any new
laws, only that any new requirements reflect our industry, our
technology, and our inherent differences. It is vital that any
legislation is sufficiently flexible to preserve the competition,
differentiation, and innovation mobile consumers' enjoy and reflect the
unique, sometimes millisecond by millisecond technical challenges that
wireless networks face as they provide service to America's 350 million
wireless subscribers.
The FCC's Parallel Path. While we are optimistic that the process
on the Hill will enhance the wireless experience for all Americans, we
have significant reservations with the path currently contemplated by
the FCC. This is at least the third time the FCC has tried to establish
jurisdiction over net neutrality. Unfortunately, it appears the
Commission may yield to ill-conceived calls for ``platform parity'' by
imposing 1930s-era wired rules on wireless broadband services. CTIA
believes the application of Title II, in any form, to wireless
broadband would harm consumers and our economy, and is counter to the
framework for mobile services Congress established in 1993. We view the
Commission's apparent decision to move forward based on Title II as
another missed opportunity. The Commission could achieve all of its
public policy objectives with mobile-specific rules under Section 706
of the Communications Act: a path the D.C. Circuit clearly signaled
could withstand judicial scrutiny if properly structured.
Nonetheless, the Commission appears poised to move forward under
Title II even though the reality is that Title II was designed for
another technology and another era, an era in which competition was
largely non-existent and innovation came slowly, if it came at all.
Rules designed for homes with a single black rotary phone and families
waiting until after 11 p.m. before they could affordably make long
distance calls: No choice, just voice, and highly regulated prices.
Mobile is Different. America's wireless industry is the exact
opposite. Much of the credit for that goes to CTIA's members, whose
investment, innovation, and relentless competitive drive has made high-
quality wireless service available to nearly every American. This
amazing evolution in the way we communicate, access the Internet, and
conduct business has occurred at a pace dramatically faster than the
speed at which traditional wired service or electricity--services
regulated under Title II or Title II-like, utility-style regimes with
their origins in the Interstate Commerce Act of 1887--became available
across the country.
Given our industry's great success with mobile broadband outside of
Title II, we have significant concerns with how Title II--and its 1000
rules and 682 pages of regulation--would apply to the dynamic mobile
broadband space. Any new rules must be mobile-specific and designed for
our networks, not superimposed on them, because mobile broadband is
different. Encouragingly, over two thirds of Americans agree that
wireless services should not be subject to same exact requirements as
wired broadband options.
I want to highlight four key differences that explain why. First,
mobile services are technically different, completely dependent upon
limited spectrum resources requiring nimble and dynamic network
management to deliver service to consumers on the go.\5\ There is more
bandwidth in a single strand of fiber than in all of the spectrum
allocated for commercial mobile services. In recognition of its
fundamental technical differences, some have suggested that mobile
broadband could be accommodated solely through a reasonable network
management exception. While reasonable network management is a
necessity for mobile wireless, that approach would not fully reflect
the significant additional differences that characterize the mobile
broadband industry.
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\5\ Dr. Jeffrey H. Reed and Dr. Nishith D. Tripathi, Net Neutrality
and Technical Challenges of Mobile Broadband Networks (Sept. 4, 2014),
http://www.ctia.org/docs/default-source/default-document-library/net-
neutrality-and-technical-challenges-of-mobile-broadband-networks-9.pdf.
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Second, we are competitively different: More than 8 out of 10
Americans can choose from 4 or more mobile broadband providers.\6\ This
fierce competition is driving new services, offerings, differentiation
and options like Music Freedom and Sponsored Data that benefit
consumers. No one wants a one-size-fits-all mobile Internet experience.
A competitive market also drives sustained investment. Relying on
mobile-specific open Internet rules, the wireless industry has invested
$121 billion over the last four years alone.\7\
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\6\ Federal Communications Commission, Annual Report and Analysis
of Competitive Market Conditions With Respect to Mobile Wireless,
Including Commercial Mobile Services, Seventeenth Report (Dec. 18,
2014), Chart III.A.2, https://apps.fcc.gov/edocs_public/attachmatch/DA-
14-1862A1.pdf.
\7\ CTIA-The Wireless Association, Annualized Wireless Industry
Survey Results--December 1985 to December 2013, http://www.ctia.org/
docs/default-source/Facts-Stats/ctia_survey_ye
_2013_graphics-final.pdf?sfvrsn=2; AT&T Financial and Operational
Results (3Q 2014), http://www.att.com/Investor/Earnings/3q14/
master_3q14.pdf; Verizon Condensed Consolidated Statements of Income
(3Q 2014), http://www.verizon.com/about/file/3713/
download?token=EKXz8Nx9; T-Mobile 3rd Quarter 2014 Financial Results,
http://investor.t-mobile.com/Cache/
1001191498.PDF?Y=&O=PDF&D=&fid=1001191498&T=&iid=4091145; David Barden,
Bank of America U.S. Wireless Matrix (Nov. 18, 2014); NTELOS Holding
Corp. Reports Third Quarter 2014 Results (Oct. 31, 2014), http://
ir.ntelos.com/press-releases/detail/1214/; U.S. Cellular Reports third
Quarter 2014 Results (Oct. 31, 2014), http://investors.uscellular.com/
news/news-release-details/2014/US-Cellular-reports-third-quarter-2014-
results/default.aspx; Jennifer Fritsche, Quick And Dirty: Q4 2014 Big 4
Wireless Preview, Wells Fargo Equity Research (Jan. 14, 2015).
---------------------------------------------------------------------------
Third, we are evolutionarily different. Wireless is still an early
stage technology. 4G networks are less than 5 years old, the modern
smartphone only 7, and we are just beginning to see options like VoLTE,
LTE Broadcast, LTE Advanced as well as the promise of the next
generation of wireless, 5G. The need for a mobile specific approach
with respect to new connected life applications is particularly clear
as the network management requirements for such services are still in
development. For instance, General Motors recently explained that
``neither we nor our mobile network operator suppliers can predict all
of the techniques that may need to deliver [connected car] services to
our customers.'' \8\ The risk of applying wired rules on wireless
services ``would . . . constrain the innovation [GM is] seeking to
provide.''
---------------------------------------------------------------------------
\8\ General Motors Ex Parte, FCC GN Docket 14-28 (Oct. 9, 2014),
http://apps.fcc.gov/ecfs/document/view?id=60000972470.
---------------------------------------------------------------------------
And fourth, and potentially most relevant for today's discussion,
mobile broadband is legally different. In 1993, Congress in section 332
exempted non-voice services--private mobile radio services (PMRS) like
mobile broadband--from common carriage regulation.\9\ It did so
unambiguously, saying those services ``shall not'' be subject to common
carriage obligations. Based on this clear articulation of congressional
intent, the Commission itself has repeatedly found that wireless
broadband service may not be classified as a common carriage service.
And the U.S. Court of Appeals has twice held that ``Mobile-data
providers are statutorily immune, perhaps twice over, from treatment as
common carriers.'' \10\ This clear line of precedent underscores the
riskiness of a Commission attempt to classify broadband as a Title II
service now.\11\
---------------------------------------------------------------------------
\9\ See appended White Paper, ``Section 332's Bar Against Common
Carrier Treatment of Mobile Broadband: A Legal Analysis'' at 9.
\10\ Cellco P'Ship v. FCC, 700 F.3d 534, 538 (D.C. Cir. 2012); see
also Verizon v. FCC, 740 F.3d 623, 650 (D.C. Cir. 2014).
\11\ Suggestions that the regulatory framework for CMRS, or mobile
voice services, is an appropriate comparison for the Commission's
desired Title II with forbearance approach is misguided and
misunderstand Congress's clear direction in 1993. Broadband Internet
access and CMRS are fundamentally different services governed by
disparate Congressional provisions. The use of the Commission's
``forbearance'' authority to impose expansive new regulatory mandates,
rather than to remove existing regulation, would upend the deregulatory
purposes for which Congress enacted the forbearance provisions in
Section 332(c). In 1993, Congress directed the Commission to apply some
Title II common-carrier mandates on CMRS mobile voice services. In
sharp contrast, and at the same time, Congress expressly prohibited the
Commission from treating services like mobile broadband as common
carrier offerings subject to Title II. There is a vast difference
between applying Title II's obligations to voice CMRS offerings, as
Congress directed, and applying such mandates to mobile broadband,
contrary to Congress's clear directive. Further, the very use of
forbearance to establish a new affirmative regulatory mandate for
services that have never before been subjected to Title II turns
Congress' statutory design on its head. Forbearance was designed as a
deregulatory tool: The very term ``forbear'' means to ``restrain an
impulse to do something'' or ``refrain.'' This, of course, is what the
Commission did with respect to CMRS under Section 332(c)--it reduced
and eliminated existing regulation. There is no evidence whatsoever
that Congress intended the Commission to use forbearance as a key tool
in applying Title II to services that never were subject to common
carrier regulation. Reclassifying broadband as Title II and then
forbearing is a regulatory path that only Congress, not the Commission,
could pursue.
---------------------------------------------------------------------------
The Significant Risk of Title II. Accordingly, if the Commission
proceeds down the Title II path, the wireless industry will have no
choice but to look to the Court of Appeals for a remedy. Given the
clarity of Section 332, and years of FCC and judicial precedent, we
have every confidence we would prevail in such an effort,\12\ but it is
not our preferred course. Litigation inevitably involves more delay and
uncertainty, an outcome that is antithetical to investment and the
fast-paced technological evolution of the U.S. wireless industry.
Consumers would be harmed as we would all lose a year, if not much
longer, in regulatory limbo. This harm may be particularly acute for
rural consumers, as a collection of regional providers explained that
``[a]pplying an outdated and backward-looking Title II common-carriage
regime to our services would . . . stifle innovation and investment and
would do a disservice to rural America.'' \13\
---------------------------------------------------------------------------
\12\ While Section 332 provides an absolute bar to imposing common
carrier duties on mobile broadband providers, mobile broadband also
fits squarely under the definition of ``information services'' under
the Communications Act, which is an additional and equally valid bar on
applying Title II to mobile broadband. The Commission has correctly
concluded that ``[w]ireless broadband Internet access service offers a
single, integrated service to end users, Internet access, that
inextricably combines the transmission of data with computer
processing, information provision, and computer interactivity, for the
purpose of enabling end users to run a variety of applications.''
Appropriate Regulatory Treatment for Broadband Access to the Internet
Over Wireless Networks, Declaratory Ruling, 22 FCC Rcd 5901, 5911 26
(2007).
\13\ Bluegrass Cellular, Inc. et al Ex Parte, FCC GN Docket 14-28
(Nov. 14, 2014), http://apps.fcc.gov/ecfs/document/view?id=60000983742.
---------------------------------------------------------------------------
As leaders across the globe are trying to replicate our mobile
success and embrace 5G, this is the exact wrong time to inject
uncertainty into our Nation's efforts. We risk falling behind when the
stakes have never been higher for our future connected life and global
competitiveness.
After more than a decade of debate, the better approach would be
for Congress to act and set the ground rules for a generation of new
investment, allowing us to get these questions behind us so that we all
can turn to pressing bipartisan issues like spectrum policy and
modernization of the Communications Act. These key steps will ensure
that the United States remains the most dynamic, innovative, and open
mobile ecosystem in the world.
Thank you for the opportunity to appear on today's panel. I look
forward to your questions.
______
Attachment
Section 332's Bar Against Common Carrier Treatment of Mobile Broadband:
A Legal Analysis
Table of Contents
Introduction
I. The Act Prohibits the Commission from Subjecting Mobile Broadband to
Common Carrier Mandates
A. Mobile Broadband is Not CMRS
B. Mobile Broadband is Not the ``Functional Equivalent'' of
CMRS
C. Mobile Broadband is PMRS and Immune From Common Carrier
Regulation
II. Mobile Broadband Is An Integrated Information Service With No
Separate ``Telecommunications Service'' Component
III. The Act Bars Any ``Hybrid'' Reclassification Approach to Mobile
Broadband
A. Section 332 Prohibits the Commission From Subjecting a
Hybrid ``Service'' to Common Carrier Mandates
B. Section 3 Precludes the Commission From Pursuing The Hybrid
Approach
Conclusion
______
Introduction
While CTIA--The Wireless Association (``CTIA'') and its members
are committed to preserving an open mobile Internet, any new rules in
this area must rest on a solid legal foundation--one that is consistent
with the Communications Act of 1934, as amended (the ``Act'') and will
withstand judicial scrutiny. And on one point in particular, the Act is
clear: Under Section 332, mobile broadband may not, under any
circumstances, be subjected to common carrier treatment under Title II.
The Commission may move forward to help preserve an Open Internet
pursuant to section 706, but may not legally apply Title II mandates to
mobile broadband services.
Specifically, Section 332 erects barriers to common carrier
regulation of mobile broadband that extend beyond the restrictions that
other provisions of the Act establish for broadband offerings
generally. Moreover, this bar applies regardless of whether the
Commission wrongly reverses 15 years of precedent and declares that the
broadband offering sold to end users includes a distinct
telecommunications service or if it pursues a ``hybrid'' approach that,
for the first time, identifies a distinct ``service'' purportedly
offered to edge providers and declares that to be a telecommunications
service.
Several parties attempt to read the Section 332 prohibition out of
the statute, articulating far-fetched theories under which the
provision simply does not mean what it says. Their arguments are not
properly addressed in this proceeding, as the Commission has not
provided any notice to support the legislative rules they seek here. In
any event, those arguments cannot be squared with the statutory text or
this Commission's decisions. As the Commission held 20 years ago and
the D.C. Circuit has confirmed, Congress intended only mobile offerings
that mimic traditional telephone service to be subject to common
carrier treatment. All other mobile offerings, including mobile
broadband, are ``private'' offerings, for which Section 332 expressly
prohibits common carrier treatment. There is thus no lawful basis for
subjecting mobile broadband offerings to common carrier obligations.
I. The Act Prohibits the Commission from Subjecting Mobile Broadband to
Common Carrier Mandates
Section 332(c) forbids the Commission from subjecting services that
are not CMRS or the functional equivalent thereof to common carrier
mandates. Section 332(c)(2) provides that the Commission ``shall not''
treat any private mobile service (``PMRS'') provider ``as a common
carrier for any purpose.'' 47 U.S.C. Sec. 332(c)(2). Section 332(d)(3),
in turn, defines PMRS as ``any mobile service. . .that is not a
commercial mobile service or the functional equivalent of a commercial
mobile service, as specified by regulation by the Commission.'' Id.
Sec. 332(d)(3).
Thus, the Commission may only subject mobile broadband services to
Title II if those services are commercial mobile services (``CMRS'') or
the functional equivalent of CMRS. As detailed below, they are not.
A. Mobile Broadband is Not CMRS
Section 332(d) defines CMRS as an ``interconnected service'' made
available for profit to a substantial portion of the public, id.
Sec. 332(d)(1), and defines ``interconnected service'' to mean
``service that is interconnected with the public switched network (as
such terms are defined by regulation by the Commission),'' id.
Sec. 332(d)(2).
The Commission first interpreted the key terms CMRS and PMRS in
1994's Second CMRS Order. Implementation of Sections 3(n) and 332 of
the Communications Act; Regulatory Treatment of Mobile Services, 9 FCC
Rcd 1411, 1434 54 (1994) (``Second CMRS Order''). In defining the
``public switched network'' component of the CMRS definition, the
Commission emphasized that Congress was referring to the traditional
telephone network:
[A]ny switched common carrier service that is interconnected
with the traditional local exchange or interexchange switched
network will be defined as part of that network for purposes of
our definition of ``commercial mobile radio services.''
. . . We agree . . . that use of the North American Numbering
Plan by carriers providing or obtaining access to the public
switched network is a key element in defining the network
because participation in the North American Numbering Plan
provides the participant with ubiquitous access to all other
participants in the Plan.
Id. at 1436-37 59-60 (emphases added). Accordingly, in section
20.3, the Commission defined ``public switched network'' to mean
``[a]ny common carrier switched network . . . including local exchange
carriers, interexchange carriers, and mobile service providers, that
use the North American Numbering Plan in connection with the provision
of switched services.'' 47 C.F.R. Sec. 20.3.\1\
---------------------------------------------------------------------------
\1\ This language unequivocally rebuts Vonage's suggestion, Letter
from William B. Wilhelm, Counsel for Vonage Holdings Corp., to Marlene
H. Dortch, Secretary, FCC, GN Docket Nos. 14-28, 10-127 at 6 (Dec. 11,
2014) (``Vonage Letter''), that the Commission ``explicitly rejected''
an interpretation linking the CMRS definition to voice services
traversing the traditional telephone network.
---------------------------------------------------------------------------
More recently, in 2007, the Commission explained that Section
332(c) and its implementing rules barred it from classifying mobile
broadband as common carriage. It first found that ``mobile wireless
broadband Internet access service does not fit within the definition of
`commercial mobile service' because it is not an `interconnected
service.' '' Appropriate Regulatory Treatment for Broadband Access to
the Internet over Wireless Networks, Declaratory Ruling, 22 FCC Rcd
5901, 5916-17 41-43 (2007) (``Wireless Broadband Order''). The
Commission reiterated its 1994 determinations that the CMRS definition
requires ``interconnect[ion] with the traditional local exchange or
interexchange switched network,'' and that `` `use of the North
American Numbering Plan by carriers providing or obtaining access to
the public switched network is a key element in defining the network.'
'' Id. at 5917 44, quoting Second CMRS Order, 9 FCC Rcd at 1436-37
59-60. Because ``[m]obile wireless broadband Internet access service in
and of itself does not provide this capability to communicate with all
users of the public switched network,'' it ``does not meet the
definition of `interconnected service,'' and therefore is not CMRS.
Wireless Broadband Order at 5917-18 45, citing 47 C.F.R. Sec. 20.3.
The Act calls for common carrier treatment only of CMRS, not of PMRS,
and thus precludes such treatment for mobile broadband. Id. at 5919-20
48-51. While the Commission noted that, in the Second CMRS Order, it
had stated that the public switched network was `` `continuously
growing and changing because of new technology and increasing demand,'
'' the Commission held that both ``section 332 and [its] implementing
rules did not contemplate wireless broadband Internet access service as
provided today.'' Id. at 5918 45 n.119.
The Commission reiterated this core point under Chairman
Genachowski, stating in a 2012 brief to the D.C. Circuit that ``CMRS is
defined as a mobile service that is `provided for profit,'
`interconnected' to the public switched telephone network.'' Brief for
Respondents, Cellco P'ship v. FCC, Case Nos. 11-1135, 11-1136, at 7
(D.C. Cir. Mar. 8, 2012) (emphasis added).
The D.C. Circuit has twice confirmed that Section 332, as long
interpreted by this Commission, precludes the Commission from
regulating mobile broadband as common carriage. First, in the 2012
Cellco decision on data roaming, the court explained that ``section 332
specifies that providers of `commercial mobile services,' such as
wireless voice-telephone service, are common carriers, whereas
providers of other mobile services are exempt from common carrier
status.'' Cellco P'Ship v. FCC, 700 F.3d 534, 538 (D.C. Cir. 2012). The
court determined that this framework erects a ``statutory exclusion of
mobile-internet providers from common carrier status.'' Id. at 544.
Given the separate bar against common-carrier treatment of information
services, the court noted further, mobile broadband providers were
``statutorily immune, perhaps twice over,'' from such treatment. Id. at
538. Therefore, ``[e]ven though wireless carriers ordinarily provide
their customers with voice and data services under a single contract,
they must comply with Title II's common carrier requirements only in
furnishing voice service.'' Id. at 538.
In 2014, the D.C. Circuit again addressed the issue in its review
of the Commission's Open Internet Order. In that order, the Commission
conceded that Section 332(c)(2) bars the application of common carrier
mandates to mobile broadband, but argued that the provision did not
constrain its actions because the rules it was adopting did not impose
common carriage. Preserving the Open Internet, Report and Order, 25 FCC
Rcd 17905, 17950 79 & n.247 (2010), aff'd in part, vacated and
remanded in part sub nom. Verizon v. FCC, 740 F.3d 623 (D.C. Cir.
2014). The court disagreed with this latter proposition in Verizon,
overturned the Commission's rules, and emphasized that ``treatment of
mobile broadband providers as common carriers would violate section
332.'' Verizon, 740 F.3d at 650.
The Commission may not reverse itself and declare that mobile
broadband is CMRS. A handful of commenters have argued that the
Commission should amend its current rules in section 20.3 to redefine
the ``public switched network'' to include the Internet. See Letter
from Michael Calabrese, Director of the Wireless Future Project, Open
Technology Institute (``OTI''), New America Foundation to Marlene H.
Dortch, Secretary, FCC, GN Docket Nos. 14-28, 10-127 (Nov. 10, 2014)
(``OTI Letter''); Vonage Letter; Letter from Gene Kimmelman, President,
Public Knowledge (``PK''), to Marlene H. Dortch, Secretary, FCC, GN
Docket Nos. 10-127, 14-28 (Nov. 7, 2014) (``PK Letter''); Letter from
Harold Feld, Sr. Vice President, PK, Michael Calabrese, Director,
Wireless Future Project, OTI and Erik Stallman, Director of the Open
Internet Project, Center for Democracy & Technology (``CDT''), to
Marlene H. Dortch, Secretary, FCC, GN Docket Nos. 14-28, 10-127 (Dec.
11, 2014) (filed as Public Interest Organizations) (``OTI/PK/CDT
Letter''); Letter from Marvin Ammori to Marlene H. Dortch, Secretary,
FCC, GN Docket No. 14-28 (Nov. 12, 2014) (``Ammori Letter''). This
argument fails--the Commission has no authority to pursue such an
interpretation of section 332.
As an initial matter, the Commission has not provided the requisite
notice for any such amendment. The Administrative Procedure Act
(``APA'') requires an agency to provide notice of proposed rule
changes. See 5 U.S.C. Sec. 553. An ``[a]gency notice must describe the
range of alternatives being considered with reasonable specificity.''
Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 549
(D.C. Cir. 1983). Here, the Notice asked only whether mobile broadband
Internet access service ``fit[s] . . . the definition of `commercial
mobile radio service.' '' Protecting and Promoting the Open Internet,
Notice of Proposed Rulemaking, 29 FCC Rcd 5561, 5614 150 (2014). It
never asked whether ``the definition''--set out in Section 20.3--should
be changed, or provided notice that it might be. Indeed, while the
Notice proposed specific additions and changes to various Commission's
rules, it never raised the possibility of amending section 20.3.
Comments in the record cannot substitute for the required notice from
the Commission. The legally mandated ``notice necessarily must come--if
at all--from the agency.'' Small Refiner, 705 F.2d at 549. Thus, the
Commission could not amend section 20.3 without first providing notice
and seeking comment on such a modification. Moreover, any amendment to
Section 20.3 would have implications well beyond the Open Internet
context and could well affect the interests of parties not
participating in this docket, further compounding the notice failure.
Moreover, if it were not legally barred from amending Section 20.3 (and
it is), the absence of notice creates substantial risk that any such
amendment would fail to account for the broad and substantial
implications stemming from expansion of the CMRS definition.
In any event, there is no statutory basis for the reinterpretation
urged by these commenters. While Section 332 directs the Commission to
define ``public switched network'' by regulation, that definition must
be consistent with the statutory text and congressional intent. Here,
whatever limited discretion the Commission has as to that definition,
it cannot be interpreted broadly enough to cover the broadband
Internet.
Indeed, when Congress used the term ``public switched network'' in
1993, it did so knowing that the Commission and the courts had
routinely used that term interchangeably with ``public switched
telephone network.'' \2\ It is axiomatic that, when Congress
``borrows'' a term of art that has been given meaning by the courts or
the relevant agency, it ``intended [that term] to have its established
meaning.'' McDermott Int'l, Inc. v. Wilander, 498 U.S. 337, 342 (1991).
In this case, Congress--like the courts and the Commission before it--
used ``public switched network'' to mean ``public switched telephone
network.''
---------------------------------------------------------------------------
\2\ See Ad Hoc Telecommunications Users Committee v. FCC, 680 F.2d
790, 793 (D.C. Cir. 1982) (``[WATS] calls are switched onto the
interstate long distance telephone network, known as the public
switched network, the same network over which regular long distance
calls travel.'') (quoted in American Tel. and Tel. Co.; Revisions to
Tariff F.C.C. No. 259, Wide Area Telecommunications Service (WATS),
Memorandum Opinion and Order, 91 FCC2d 338, 344 16 (1982)); Amendment
of Part 22 of the Commission's Rules Relating to License Renewals in
the Domestic Public Cellular Radio Telecommunications Service, Report
and Order, 7 FCC Rcd 719, 720 9 (1992) (Commission's cellular service
policy is to ``encourage the creation of a nationwide, seamless system,
interconnected with the public switched network so that cellular and
landline telephone customers can communicate with each other on a
universal basis.'') (emphasis added)), recon. on other grounds, 8 FCC
Rcd 2834 (1993), further recon. on other grounds, 9 FCC Rcd 4487
(1994); Provision of Access for 800 Service, 6 FCC Rcd 5421, 5421 1
n.3 (1991) (``800 numbers generally must be translated into [plain old
telephone service] numbers before 800 calls can be transmitted over the
public switched network.''), recon. on other grounds, 8 FCC Rcd 1038
(1993); Telecommunications Services for Hearing-Impaired and Speech-
Impaired Individuals, and the Americans with Disabilities Act of 1990,
Notice of Proposed Rulemaking, 5 FCC Rcd 7187, 7190 20 (1990)
(``subscribers to every telephone common carriers' interstate service,
including private line, public switched network services, and other
common carrier services''); MTS and WATS Market Structure, Order
Inviting Further Comments, 1985 FCC LEXIS 2900 at *2 (Fed.-State Jt.
Bd. 1985) (``costs involved in the provision of access to the public
switched network[] are assigned . . . on the same basis as . . . the
local loop used by subscribers to access the switched telephone
network.'') (emphasis added)); Applications of Winter Park Tel. Co.,
Memorandum Opinion and Order, 84 FCC2d 689, 690 2 n.3 (1981) (``the
public switched network interconnects all telephones in the
country.'').
---------------------------------------------------------------------------
This point is confirmed by the text of the more recently enacted
Section 1422(b)(1), which established the FirstNet public safety radio
network. In that provision, adopted in 2012, Congress distinguished
between the ``public switched network,'' on the one hand, and the
``public Internet,'' on the other, demonstrating that nearly 20 years
after 1993, Congress continued to view these as different and separate
networks. 47 U.S.C. Sec. 1422(b)(1). This fact belies any suggestion
that Congress used the term ``public switched network'' in a way that
could be interpreted to include the broadband Internet.
Moreover, Section 332(d)(2) addresses interconnection with ``the
public switched network.'' Congress's use of that phrasing demonstrates
that it meant for there to be only one such network; the CMRS
definition does not contemplate offerings that interconnect with either
of two separate networks.
The relevant legislative history further confirms that the
Congressional understanding is inconsistent with defining the Internet
to be the ``public switched network.'' The Conference Report
accompanying the legislation confirms that, though Congress used the
term ``public switched network,'' it viewed that term as synonymous
with ``the Public switched telephone network.'' H.R. Rep. No. 103-213,
at 495 (1993) (Conf. Rep.) (emphasis added) (``OBRA Conference
Report''). OTI, PK, and CDT claim that the legislative history supports
the opposite reading, but they have misread the Conference Committee's
Report. Citing page 495 of the Conference Report, they contend that the
House version of the bill used the term ``public switched telephone
network,'' and that the Conference Committee chose the Senate version,
which dropped the word ``telephone.'' See OTI/PK/CDT Letter at 3-4; OTI
Letter at 7-8. These groups exclaim in bold, italicized text that
Congress ``expressly delet[ed] the word `telephone' from Section 332's
references to `public switched network,' '' but this is not true. The
House and Senate versions of the bill (attached as Exhibit 1) both used
the term ``public switched network.'' See 139 Cong. Rec.
H2997 (reproducing H.R. 2264, the House's version of the
bill, which (in section 5205(d)(1)(B)) required that a service be
``interconnected . . . with the public switched network'' in order to
qualify as CMRS). Therefore, the claim that Congress chose statutory
text that used the term ``public switched network'' over text that used
``public switched telephone network'' is factually wrong. The
Conference Report language to which OTI, PK, and CDT refer (attached as
Exhibit 2) does not quote the House bill, but rather describes it--and
characterizes it as requiring interconnection ``with the Public
switched telephone network,'' OBRA Conference Report at 495, even
though the legislation itself used the term ``public switched
network.'' This, of course, confirms (rather than refutes) the
conclusion that Congress meant the term ``public switched network'' to
mean ``public switched telephone network,'' and that the Commission
cannot adopt a contrary definition in section 20.3 of its rules.
Lacking any textual basis for their claims, commenters resort to
conclusory assertions regarding Congress's intent. OTI, PK, and CDT
state that ``it would have been extraordinarily shortsighted if
Congress had tied the Commission's hands to such a degree that only
wireless services directly interconnected with the telephone system and
using the North American Numbering Plan (NANP) could be regulated as a
common carrier[s] for any purpose.'' OTI/PK/CDT Letter at 6-7; OTI
Letter at 2. But this argument simply assumes the point it purports to
prove--that Congress would have wanted the Commission to subject mobile
broadband to common carrier requirements. In fact, the evidence shows
otherwise: Congress specifically established CMRS and PMRS as distinct
categories, specifically limited CMRS to offerings that interconnected
to the public switched telephone network, specifically deemed all other
offerings to be PMRS, and specifically exempted PMRS from common
carrier treatment. These actions show that Congress intended to exempt
mobile Internet offerings from common carrier regulation. As noted
above, the Commission recognized this very point, explaining that
``section 332 . . . did not contemplate wireless broadband Internet
access service as provided today.'' Wireless Broadband Order, 22 FCC
Rcd at 5918 45 n.119.
That point is bolstered, not undercut, by the fact that Congress in
1993 was aware of the emerging Internet. See OTI/PK/CDT Letter at 4;
OTI Letter at 5. If Congress had intended to encompass Internet access
services that are distinct from the PSTN within the definition of CMRS,
it could--and would--have done so. But it chose instead to draw a sharp
distinction between traditional common-carrier offerings and other
offerings, and exempted the latter from common carrier regulations.
Indeed, this was Congress's principal intention in adopting Section
332(c)--namely, to ensure that common carrier voice services
interconnected with the traditional network were treated alike while
encouraging investment and innovation in new, advanced networks by
leaving them unburdened by those rules.
Likewise, Ammori suggests that the Commission can redefine the
statutory terms because ``the Internet is so central to American life
and business that it has become the Nation's 21st Century public
switched network and the current definition should be seen as
outdated.'' Ammori Letter at 2. This, however, is a policy choice for
Congress to make, not the Commission. Congress did not tie the CMRS
designation to the ``centrality'' of the network a service uses, but
instead limited the term to services that interconnect with the public
switched telephone network. In any event, there is more than a little
irony in this argument, given that the mobile broadband Internet has
become ``central to American life'' without being classified as CMRS or
subject to common-carrier duties. There is thus no reason to believe
that Congress would have intended the mobile broadband Internet's
importance to provide a basis to include it within the definition of
the public switched network, or that the courts would ever accept such
an interpretation.
The Commission may not determine that mobile broadband is
interconnected. OTI and Vonage further argue that mobile broadband
already is an interconnected service as that term is currently defined,
because (in OTI's words) ``broadband users quite readily can call any
telephone number they wish using their broadband connection.'' OTI
Letter at 5. See also Vonage Letter at 5 (contending that the statute
never uses the term ``in and of itself'' and suggesting that one
service (mobile broadband) can be regulated based on the
characteristics of a different service).
The Commission has already expressly rejected that argument. In the
Wireless Broadband Order, it held that, even though VoIP or other
applications that ride over mobile broadband Internet service may
provide an interconnected service, the underlying mobile broadband
service ``itself is not an `interconnected service' as the Commission
has defined the term.'' Wireless Broadband Order, 22 FCC Rcd at 5917-18
45. In short, services are classified and regulated on the basis of
their own features. Mobile broadband might well facilitate use of VoIP
offerings, but the provision of a VoIP offering is atop the broadband
service, and constitutes its own offering. Mobile broadband does not
provide dial tone, does not offer the user access to NANP endpoints,
and does not ``interconnect[]'' with the public switched network.
Broadband service allows access to video, but it is not a broadcast
television or cable service. It offers access to Facebook and Instagram
and LinkedIn, but it is not a social network. Broadband is not a
newspaper or a financial service, even though users can read headlines
or purchase stocks online, nor is broadband a bookstore, a music
streaming service, or a search engine. So too, broadband is not VoIP,
and cannot be said to offer interconnection with the public switched
network simply because its users can access other services that do.
Indeed, the suggestion that over-the-top VoIP services interconnect
with the PSTN is itself untrue: These providers historically have
delivered traffic to a local exchange carrier, and it is that carrier--
not the VoIP provider, let alone the mobile broadband provider--that
interconnects with the PSTN. See, e.g., Time Warner Cable Request for
Declaratory Ruling that Competitive Local Exchange Carriers May Obtain
Interconnection Under Section 251 of the Communications Act of 1934, as
Amended, to Provide Wholesale Telecommunications Services to VoIP
Providers, Memorandum Opinion and Order, 22 FCC Rcd 3513, 3514 2 (WCB
2007).
Other claims seeking to conflate VoIP with mobile broadband for
classification purposes are similarly misguided. First, the assertion
that the need to use a VoIP application is no different from the need
to use an end-user device, and thus not determinative of whether mobile
broadband service qualifies as CMRS, see OTI/PK/CDT Letter at 5-6;
Ammori Letter at 1-2, is simply wrong. The VoIP application is distinct
from the broadband offering over which it rides and, as Commission
precedent establishes, must be evaluated on its own terms. Second, it
is irrelevant whether VoIP applications ``come bundled with'' a
device's ``operating system.'' OTI/PK/CDT Letter at 6. Rather, VoIP and
mobile broadband are distinct, and each is subject to its own
regulatory framework. Finally, while commenters might not like
Congress's framework, the need to use a separate application to access
a particular service is relevant to classification questions. Indeed,
the Commission in 2007 held that the ``need to rely on another service
or application'' was not only relevant, but determinative as to
classification of a service. Wireless Broadband Order, 22 FCC Rcd at
5917-18 45.
Ultimately, the approach advocated by Vonage and others would upend
the Commission's entire regulatory framework by conflating over-the-top
services of all types with the broadband offerings on which they ride.
The effects of such a framework would reverberate throughout the
Internet ecosystem, eviscerating decades' worth of Commission precedent
and creating debilitating uncertainty. The Commission must reject this
outcome, particularly where, as here, the absence of APA notice has
left it without the benefit of comprehensive and meaningful comment on
these issues.
B. Mobile Broadband is Not the ``Functional Equivalent'' of CMRS
OTI, PK, and CDT contend that that the Commission should deem
mobile broadband the ``functional equivalent'' of CMRS, see OTI/PK/CDT
Letter at 6-8; OTI Letter at 4-8; PK Letter at 3-5. That argument,
however, is not presented here, as the Notice does not raise this
question (which would require a significant factual record), and, in
any case, its proponents cannot overcome the hurdles erected by
Congress.
The FCC Has Failed to Provide Notice. The Commission has not
provided notice that it might deem mobile broadband the ``functional
equivalent'' of CMRS. As mentioned above, the Notice asked only whether
mobile broadband might be deemed CMRS. But the term ``functional
equivalence'' does not appear in the definition of CMRS. Rather, it
appears in the definition of PMRS, which is defined to include ``any
mobile service . . . that is not a commercial mobile service or the
functional equivalent of a commercial mobile service, as specified by
regulation by the Commission.'' Id. Sec. 332(d)(3). Having declined to
seek comment on the PMRS definition generally or the ``functional
equivalent'' language in particular, the Commission cannot ``specify by
regulation'' based on the existing record that mobile broadband is the
functional equivalent of CMRS.
The Commission cannot rely on Administrative Procedure Act's
exception for interpretive rules to excuse its failure to provide
notice and an opportunity to comment the ``functional equivalence''
question. As noted above, Congress specifically directed that any
service deemed the functional equivalent of CMRS would be ``specified
by regulation by the Commission.'' 47 U.S.C. Sec. 332(d)(3). Where a
``statute defines a duty in terms of agency regulations, those
regulations are considered legislative rules.'' USTA v. FCC, 400 F.3d
29, 38 (D.C. Cir. 2005). Even aside from that clear Congressional
directive to use legislative rules to identify services that are the
functional equivalent of CMRS, a declaration that a service is the
functional equivalent of CMRS meets the test for a legislative rule
because it would have `` `legal effect.' '' American Min. Cong. v. Mine
Safety & Health Admin., 995 F.2d 1106, 1112 (D.C. Cir. 1993).
Specifically, in the ``absence of the rule there would not be an
adequate legislative basis for . . . agency action to . . . ensure the
performance of duties''--namely, the common carrier obligations that
some urge the Commission to impose on providers of wireless broadband
Internet access services. Id. As the D.C. Circuit recently reiterated,
the ``most important factor'' in determining whether a rule is
legislative or interpretive is ``the actual legal effect (or lack
thereof) of the agency action in question on regulated entities.''
National Min. Ass'n v. McCarthy, 758 F.3d 243, 252 (D.C. Cir. 2014).
The effect of any ``interpretation'' of Sec. 332(d)(3) finding that
wireless broadband Internet access is the functional equivalent of
CMRS--indeed, the very purpose of such an interpretation--is to impose
new common-carrier obligations on providers of that service. For all
these reasons, the Commission could not adopt a rule finding that
wireless broadband Internet access is the functional equivalent of CMRS
without first providing notice and comment--which the Commission has
never provided.
Mobile Broadband is Not the Functional Equivalent to CMRS. Nor is
there any factual or legal basis for a finding of functional
equivalence. ``Congress's purpose,'' the Commission has concluded, was
to treat as CMRS only a `` `mobile service that gives its customers the
capability to communicate to or receive communication from other users
of the public switched network.' '' Wireless Broadband Order, 22 FCC
Rcd at 5917 44. Congress intended the hallmark of CMRS to be the
provision of interconnected service through use of the PSTN. No service
lacking this essential attribute could amount to a functional
equivalent of CMRS. The functional equivalent language was intended to
ensure that `` `similar services are accorded similar regulatory
treatment.' '' Second CMRS Order, 9 FCC Rcd at 1418 13 (quoting OBRA
Conference Report at 494). To that end, the Commission observed that
the primary criterion in determining whether a given service is the
functional equivalent of CMRS is ``whether the service is a close
substitute for CMRS,'' id. at 1448 80.\3\ It further made clear that
it was principally concerned with traditional economic criteria for
substitutability: ``For example, we will evaluate whether changes in
price for the service under examination, or for the comparable
commercial service, would prompt customers to change from one service
to the other.'' Id. There is no evidence in the record that customers
are dropping CMRS in favor of mobile broadband--and particularly no
evidence that they are doing so in favor of mobile broadband itself. In
all events, the need to develop a record as to such issues demonstrates
why it would be both necessary and appropriate to seek comments on
these matters, which the Commission has never done, before addressing
these claims.
---------------------------------------------------------------------------
\3\ Thus, for example, the Commission found that automatic vehicle
monitoring systems ``do not offer interconnected service'' and thus are
presumptively classified as PMRS, but explained that, if they ``develop
interconnected service capability in the future . . . they will be
subject to reclassification.'' Second CMRS Order, 9 FCC Rcd at 1453
99. Likewise, 220-222 MHz private land mobile services ``that are not
interconnected . . . will be presumptively classified as PMRS,'' id. at
1452 95, and SMR services might be either, depending on whether they
are interconnected, id. at 1451 90-91.
---------------------------------------------------------------------------
Contrary to some parties' apparent belief, references to the House
Report's discussion of ``private carriers'' that were ``permitted to
offer what are essentially common carrier services,'' OTI/PK/CDT Letter
at 7, quoting H.R. Rep. 103-111 at 586-87, in fact undercut these
parties' functional equivalence argument. That Report explicitly
recognized that the functional equivalence prong was limited to
services that were ``interconnected with the public switched telephone
network.'' See id. (emphasis added).
OTI contends that ``mobile broadband is . . . the functional
equivalent of what a commercial mobile service was in 1993,'' OTI
Letter at 4, because its users can access the PSTN ``through use of
VoIP applications,'' id. at 6. Others similarly contend that the
Commission should deem mobile broadband CMRS's functional equivalent
because ``phones using mobile broadband are capable of replicating the
functions of CMRS phones.'' PK November 7 Letter at 5; Vonage Letter at
9. As noted above, however, these arguments confuse the service offered
by a VoIP provider (and its CLEC partner) from the separate broadband
Internet access offering.
Public Knowledge's suggestion that mobile broadband is (or is about
to become) ``indistinguishable from Title II wireline service'' is
flatly wrong. The two services differ dramatically: VoIP offers only
the ability to engage in voice communications, whereas mobile broadband
``inextricably combines the transmission of data with computer
processing, information provision, and computer interactivity, for the
purpose of enabling end users to run a variety of applications,''
Wireless Broadband Order, 22 FCC Rcd at 5911 26, including ``e-mail,
newsgroups, and interaction with or hosting of web pages,'' id. at 5910
25, not to mention the huge array of apps that have arisen since the
Wireless Broadband Order's release. Indeed, the repeated references to
VoIP highlights that mobile broadband is not the functional equivalent
of CMRS--the mobile broadband service that carries VoIP traffic is not
in and of itself the voice service offered by either CMRS or VoIP, and
mobile broadband is not a ``close substitute'' for mobile voice.
(Similarly, voice over LTE (``VoLTE'') is a distinct offering and
cannot render the broadband offering CMRS.) In all events, even if this
position were potentially tenable--and it is not--the Commission would
need to create a factual record as to the substitutability of these
services using traditional economic analysis. The Commission has not
even sought to create such a record to date.
Nor is there any merit to the claim that the Commission must deem
mobile broadband the functional equivalent of CMRS to resolve a
potential contradiction between (1) Section 3's requirement that a
telecommunications service be subject to common carrier requirements
and (2) Section 332(c)(2)'s prohibition against subjecting PMRS to such
requirements. See OTI Letter at 2; Ammori Letter at 1; OTI/PK/CDT
Letter at 8-9. OTI, PK, CDT, and Ammori have things backwards: if there
were any conflicting commands in the statute, they should lead the
Commission to adhere to its correct conclusion that broadband Internet
access is an integrated information service, rather than to ignore the
plain language of Section 332, under which mobile broadband is not CMRS
or its functional equivalent. In addition, the canon of construction
that a ``specific provision controls over one of more general
application,'' e.g., Gozlon-Peretz v. United States, 498 U.S. 395, 407
(1991), resolves any possible conflict. That canon requires that the
Commission give effect to the more specific requirements of Section
332, which govern wireless providers, and which were intended to ensure
that private mobile services such as mobile broadband remained immune
from common carrier mandates. Notably, Congress in that section decided
that common carrier status would turn not solely on whether a wireless
provider's service meets the definition of telecommunications service
in Section 153(53), but also on whether that service meets the narrower
definition of CMRS in Section 332(d)(1) or is its functional
equivalent. Because wireless broadband Internet access is PMRS, the
Commission must enforce Congress's specific and unambiguous command
that PMRS ``shall not . . . be treated as a common carrier for any
purpose,'' 47 U.S.C. Sec. 332(c)(2) (emphases added), regardless of the
Commission's applications of the definitions of telecommunications
service and information service in Section 153.
C. Mobile Broadband is PMRS and Immune From Common Carrier Regulation
PMRS, as noted above, is defined by statute to mean ``any mobile
service . . . that is not a commercial mobile service or the functional
equivalent of a commercial mobile service, as specified by regulation
by the Commission.'' Id. Sec. 332(d)(3).
Vonage is wrong to suggest that this provision is immaterial
because sections 301 and 303 give the Commission authority over mobile
service that is ``independent of Section 332.'' Vonage Letter at 3-4.
The D.C. Circuit firmly rejected this position in both Cellco and
Verizon, explaining that Section 332's limitations trump affirmative
grants of power elsewhere in the Act. Thus, in Cellco, the court
``concluded that Title III authorizes the Commission to promulgate the
data roaming rule,'' but nevertheless had to face ``the critical
issue''--whether the rule on review ``contravene[d] the Communications
Act's prohibition against treating mobile-internet providers as common
carriers.'' Cellco, 700 F.3d at 544. The Verizon court likewise held
that, notwithstanding provisions affording the FCC regulatory authority
over broadband service, it was ``obvious that the Commission would
violate the Communications Act were it to regulate broadband providers
as common carriers.'' Verizon, 740 F.3d at 650.
For the reasons discussed above, mobile broadband is not, and
cannot be, either CMRS or its functional equivalent. It therefore is
PMRS, and cannot be subject to common carrier requirements.
II. Mobile Broadband Is An Integrated Information Service With No
Separate ``Telecommunications Service'' Component
As explained above, Section 332 provides an independent and
complete barrier to imposing common carrier duties on mobile broadband
providers. But there is a separate, and equally sufficient, barrier to
imposing those duties: mobile broadband services meet the definition of
``information service'' and the Commission cannot sub-divide mobile
broadband services into distinct ``telecommunications service'' and
``information service'' components.
As the Supreme Court explained in Brand X, the classification of
broadband service rests first and foremost ``on the factual particulars
of how Internet technology works and how it is provided.'' Nat'l Cable
& Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 991 (2005)
(``Brand X''). Ever since the Commission's 1998 Report to Congress,
which concluded that broadband providers ``conjoin the data transport
with data processing, information provision, and other computer-
mediated offerings, thereby creating an information service,'' Federal-
State Joint Board on Universal Service, Report to Congress, 13 FCC Rcd
11501, 11540 81 (1998), the Commission consistently has held that
broadband Internet access is an integrated information service, see,
e.g., Wireless Broadband Order, 22 FCC Rcd 5901. The Supreme Court, of
course, has upheld that approach. See Brand X, 545 U.S. 967. When the
Commission examined mobile broadband in 2007, it held that ``[w]ireless
broadband Internet access service offers a single, integrated service
to end users, Internet access, that inextricably combines the
transmission of data with computer processing, information provision,
and computer interactivity, for the purpose of enabling end users to
run a variety of applications,'' and concluded that wireless broadband
``meets the statutory definition of an information service under the
Act.'' Wireless Broadband Order, 22 FCC Rcd at 5911 26.
If anything, the transmission and processing functions of mobile
broadband have become more integrated since 2007. As Drs. Jeffrey Reed
and Nishith Tripathi explain in a paper that CTIA has entered into the
record, as mobile technologies and networks have evolved, ``subscribers
are increasingly using advanced networks for multiple simultaneous data
services,'' necessitating ``[e]xtensive and complex processing in the
mobile broadband network. . . .'' Dr. Jeffrey H. Reed and Dr. Nishith
D. Tripathi, Net Neutrality and Technical Challenges of Mobile
Broadband Networks at 31, attached to Letter from Scott Bergmann, CTIA,
to Marlene H. Dortch, FCC, GN Docket Nos. 14-28, 10-127 (filed Sept. 4,
2014). They show that this tight integration between transmission and
processing is essential whether the user is browsing a website, engaged
in mobile video conferencing, or undertaking any of the myriad other
activities made possible by mobile broadband. Indeed, ``[t]he nodes of
the entire wireless network infrastructure work together to present a
single unified view of the network to the subscriber's device and to
provide service-specific QoS for a user's services according to the
3GPP LTE framework'' Id. Thus, the factual premises that previously led
the Commission to classify mobile broadband Internet access offerings
as integrated information services compel the same result even more so
today.
Further, a decision splitting broadband Internet access into
discrete ``telecommunications service'' and ``information service''
components would be especially vulnerable on appeal in light the
Supreme Court's 2009 decision in FCC v. Fox Television Stations, Inc.
556 U.S. 502 (2009). That decision held that an agency must ``provide a
more detailed justification'' for changing course ``than what would
suffice for a new policy created on a blank slate'' in two
circumstances: (1) when ``its new policy rests upon factual findings
that contradict those which underlay its prior policy'' and (2) ``when
its prior policy has engendered serious reliance interests that must be
taken into account.'' In those cases, ``a reasoned explanation is
needed for disregarding facts and circumstances that underlay or were
engendered by the prior policy.'' Id. at 515. Any decision to
reclassify mobile broadband service would implicate both of these
circumstances, because it would (1) reflect new factual findings
contradicting previous findings and (2) disrupt established reliance
interests.
Indeed, the Commission expressly invited the reliance at issue
here: When it classified mobile broadband as an integrated information
service more than seven years ago, it explained that ``[t]hrough this
classification, we provide the regulatory certainty needed to help spur
growth and deployment of these services.'' Wireless Broadband Order, 22
FCC Rcd at 5911 27. The result has been clear: America's wireless
companies have ``invested hundreds of billions of dollars in their
networks in reasonable reliance on their Title I status.'' See Comments
of TechFreedom, GN Docket Nos. 14-28, et al, at 95 (July 17, 2014).
Wireless providers have invested over $113 billion in capital
expenditures since 2010 alone, including a record $33 billion in 2013.
See CTIA Ex Parte, Protecting and Promoting the Open Internet, GN
Docket No. 14-28 (Oct. 1, 2014), http://apps.fcc.gov/ecfs/document/
view?id=60000
870154.
III. The Act Bars Any ``Hybrid'' Reclassification Approach to Mobile
Broadband
Any effort to pursue a so-called ``hybrid'' reclassification of
mobile broadband service would likewise be unlawful. As CTIA
understands the hybrid approach, the Commission would leave intact its
prior holdings that broadband Internet access service provided to
subscribers is an integrated information service, but would, for the
very first time, identify a new ``remote host service'' that is
provided by the broadband provider to the edge (or content) provider,
and declare that offering to be a telecommunications service. See
Mozilla, Petition to Recognize Remote Delivery Services in Terminating
Access Networks and Classify Such Services as Telecommunications
Services under Title II of the Communications Act, GN Docket Nos. 14-
28, 10-127 & 09-191 at 4-5, 9 (May 5, 2014); Letter from Tim Wu and
Tejas Narechania, Columbia Law School, to Marlene H. Dortch, FCC, Open
Internet Remand, GN Docket No. 14-28 (Apr. 14, 2014). The hybrid
approach has multiple legal infirmities that apply in the context of
fixed and mobile services alike, as well as separate mobile-specific
barriers grounded in Section 332(c)(2). And like ``complete''
reclassification, hybrid reclassification of mobile broadband is simply
incompatible with the facts.
A. Section 332 Prohibits the Commission From Subjecting a Hybrid
``Service'' to Common Carrier Mandates
Section 332(c)(2) bars the Commission from imposing common carrier
regulation on a mobile broadband provider's ``service'' offered to edge
providers. Again, the ``service'' at issue is the broadband provider's
delivery of the edge provider's content to the broadband provider's own
subscriber over its last-mile facilities, purportedly on the edge
provider's behalf. This ``service'' clearly is not CMRS or its
equivalent, both because it is not ``interconnected'' with the public
switched network (which, as discussed above, means the public switched
telephone network) and also because it is not offered ``for profit.''
As a threshold matter, one commenter, Public Knowledge, seeks to
evade the Section 332(c) analysis by asserting that `` `[s]ender-side'
broadband. . .is not mobile or necessarily wireless,'' given that the
edge provider's server ``sits at a fixed location.'' Letter from Harold
Feld, Public Knowledge, to Marlene H. Dortch, FCC, GN Docket Nos. 10-
127, 14-28 (Oct. 24, 2014). The statute, however, dictates otherwise.
Section 332(d) establishes that both PMRS and CMRS are mobile services
``as defined in section 153 of this title,'' (i.e., Section 3 of the
Act). 47 U.S.C. Sec. 332(d)(1) & (d)(3) (emphasis added). That
provision defines the term ``mobile service'' to mean ``a radio
communication service carried on between mobile stations or receivers
and land stations, and by mobile stations communicating among
themselves,'' and specifies that the term includes ``both one-way and
two-way radio communication services.'' Id. Sec. 153(33). Under this
statutory definition, mobile broadband providers are indisputably
providing a ``mobile service'' even with respect to the edge provider.
In particular, the delivery of content over the wireless last mile is
``a radio communication service carried on between mobile stations or
receivers and land stations,'' and it is such even if one conceives of
the sender-side service as a ``one-way'' service.
Thus, the offering at issue is a ``mobile service'' under Section 3
and is either PMRS or CMRS. For the reasons discussed herein, it is
clearly PMRS, and immune from common carrier treatment.
First, like the service that broadband providers offer to their
subscribers, any service that might be understood to be provided to
edge providers is not ``interconnected'' as that term is used in
Section 332. Specifically, that service does not allow the edge
provider to connect to ``[a]ny common carrier switched network, whether
by wire or radio, . . . that uses the North American Numbering Plan in
connection with the provision of switched services.'' 47 C.F.R.
Sec. 20.3 (definition of public switched network) (emphasis added).
Indeed, when a broadband provider delivers an edge provider's content
to the broadband subscriber, that subscriber is the only entity to whom
the edge provider can send its content. The edge provider cannot choose
to send content even to other entities connected to the Internet, much
less to recipients on networks using NANP numbering. Congress imbued
the term ``interconnected'' with a specific meaning, tied to the public
switched telephone network, and any effort to ignore that intent would
unlawfully collapse the framework established by Congress.
Second, under Section 332(d)(1), CMRS is a mobile service ``that is
provided for profit and makes interconnected service available.'' Id.
Sec. 332(d)(1). Thus, whereas Congress only required that a ``fee'' be
charged in order for an offering to be a telecommunications service, it
required even more for a service to be CMRS--that is, such a service
must be provided ``for profit.'' As discussed above, any ``service''
offered by broadband providers to edge providers in connection with the
delivery of broadband traffic to end users is not offered to such edge
providers ``for a fee''--and it certainly is not offered ``for
profit.'' Indeed, even if there were merit to Mozilla's claim that the
fees paid to broadband providers by their subscribers satisfy the Act's
``for a fee'' requirement with respect to the ``service'' broadband
providers offer to edge providers, that argument still would fail to
demonstrate that the service is provided to the edge provider ``for
profit.'' In that case, the only service that the broadband provider
offers ``for profit'' is the service to its subscriber--i.e., the
entity that pays the broadband provider for the service.
B. Section 3 Precludes the Commission From Pursuing The Hybrid Approach
Moreover, even if broadband providers offer a ``service'' to edge
providers as described above, it is not a ``telecommunications
service'' under Section 3 of the Act. Section 3(53) defines the term
``telecommunications service'' to mean ``the offering of
telecommunications for a fee directly to the public, or to such classes
of users as to be effectively available directly to the public.'' 47
U.S.C. Sec. 153(53). Any such hybrid ``service'' is not offered ``to
the public,'' is not made available ``for a fee,'' and, in any event,
is not even ``telecommunications.''
First, if such a ``service'' exists, broadband providers do not
offer it ``directly to the public, or to such classes of users as to be
effectively available directly to the public.'' In fact, broadband
providers do not offer any service ``directly'' to edge providers. They
only offer their services directly to their own subscribers. Edge
providers, in turn, buy service from other entities--including their
own broadband providers, transiting providers, content delivery
networks, and so on. They have a direct relationship with those
entities, not with the subscriber's broadband provider.
Second, even if broadband providers offer a ``service'' to edge
providers, they do not offer that service ``for a fee,'' as the
``telecommunications service'' definition requires. Broadband providers
collect fees from their subscribers, and CTIA is not aware of any
circumstances in which a broadband provider collects a fee from an edge
provider as compensation for the broadband provider's delivery, to its
subscriber, of that edge provider's content.
Mozilla has argued that the Act's ``for a fee'' requirement is
satisfied by the monies that broadband providers collect from their own
subscribers. See Comments of Mozilla, GN Docket Nos. 14-28, 10-127 at
12 (July 15, 2014). This argument fails, because ``the plain meaning of
the Communications Act. . .suggests that the entity to which the
service is offered must pay the fee, not some other party.'' Barbara
van Schewick and Alec Schierenbeck, Comments on Mozilla's Proposal at
2-3, 7-8, attached to Letter from Barbara van Schewick, Stanford Law
School, to Marlene H. Dortch, FCC, GN Dockets 14-28, 09-191 (Oct. 30,
2014). The Commission has held as much: Just as Mozilla suggests that a
broadband provider can be understood to provide a telecommunications
service to an edge provider when the ``fee'' the broadband provider
receives is from a third party (its own subscriber), a competitive LEC
argued in 2011 that it could be deemed to be providing a
telecommunications service to a party to whom it delivered traffic when
the fee that it received was from a third party (in that case, an
interexchange carrier that paid it access charges in connection with
the traffic). See Qwest Communications Co., LLC v. Northern Valley
Communications, LLC, Memorandum Opinion and Order, 26 FCC Rcd 8332,
8337-38 10 (2011) (quoting Northern Valley's Answer and Legal
Analysis at 18-22). The Commission disagreed: `` `[I]n order [for the
service provider's offering] to be a telecommunications service, the
service provider must assess a fee for its service' ''--i.e., the
service that is being deemed a ``telecommunications service''--rather
than for a different service it provides to a different entity. Id.
(quoting Petition for Declaratory Ruling that pulver.com's Free World
Dialup is Neither Telecommunications Nor a Telecommunications Service,
Memorandum Opinion and Order, 19 FCC Rcd 3307, 3312-13, 10 (2004))
(emphasis added). That logic applies with equal force here: For the
``service'' offered by broadband providers to edge providers to be a
telecommunications service, the broadband providers must charge the
edge providers a fee for that service. They do not, and the hybrid
approach is therefore unlawful.
Conclusion
For the reasons discussed herein, the Act bars the Commission from
reclassifying broadband Internet services as including a distinct
telecommunications service component, and from pursuing the ``hybrid''
approach. Instead, it should adopt a regulatory framework grounded in
its Section 706 powers. This remains the best legal path to preserving
an open Internet.
Respectfully submitted,
CTIA--The Wireless Association
Michael F. Altschul
Scott K. Bergmann
Krista L. Witanowski
CTIA--The Wireless Association
1400 16th Street, NW, Suite 600
Washington, DC 20036
Adam D. Krinsky
Russell P. Hanser
Wilkinson Barker Knauer, LLP
2300 N Street, NW, Suite 700
Washington, DC 20037
Michael K. Kellogg
Scott H. Angstreich
KELLOGG, HUBER, HANSEN, TODD, EVANS & FIGEL, P.L.L.C.
Sumner Square
1615 M Street, NW, Suite 400
Washington, DC 20036
December 22, 2014
EXHIBIT 1
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
EXHIBIT 2
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
GENE KIMMELMAN, PRESIDENT, PUBLIC KNOWLEDGE
Mr. Kimmelman. Thank you, Mr. Chairman. On behalf of Public
Knowledge, a non-profit that promotes creativity, freedom of
expression, and an affordable and open Internet and
communications platform, I really appreciate the opportunity to
testify today.
Mr. Chairman, I would like to start by congratulating you
on ascending to the throne of this committee. Your staff has
been wonderful in reaching out, and debating issues, and
engaging with us, and we really look forward to working with
you in the coming years. And of course I can always say the
same, Senator Nelson, for you and your wonderful staff. It is a
pleasure working with you.
It is really quite a pleasure to see bipartisan statements
on this committee about the importance of many of the critical
principles that are necessary for an open Internet. It is
really an important bipartisan step that I applaud you for. But
I must also say that we are extremely pleased to see the FCC
moving forward with strong net neutrality rules to preserve an
open Internet, and to address what millions of consumers, small
businesses, innovators, civil rights organizations have been
asking for, and that is preserving freedom on the Internet and
ensuring adequate tools for policing that to promote freedom of
expression on that important platform of communications.
We really appreciate your desire in Congress to review all
the important policies that govern communications, and look
forward to working with you on that. However, I must urge
caution in this area in more than three decades of work with
the Congress and communications regulators, the expert agency.
It is very important that whatever you do not interfere with
rules that the agency appropriately can promulgate or legislate
in a manner that could cause more harm than good.
Now, what do I mean by that? My experience is that Congress
is great, really wonderful, and has accomplished a lot when it
is establishing principles and goals for communications and
many other policy areas. That is what you do best. That is what
has worked in the past. And then delegating authority to an
expert agency to work out all the details and manage the rules
of the road. And in this space what that has done is enable us
to go from landline services to wireless services, from
broadcast to cable, from traditional telecom to broadband
services.
But given the tremendous dynamism in this area as well, the
technology changing so fast, it is also important to make sure
that we are preparing for what is the next generation of
offerings for consumers, that we are looking forward and not
just backward.
It is extremely dangerous, I believe, for the Congress to
step in and try to micromanage what is best left to an expert
agency. Now, what I mean here? In this draft legislation, you
address a number of important areas--blocking, pay
prioritization. But general non-discrimination that is harmful
to competition and freedom of expression, what about that? What
might the next generation of that be? Caps on services, usage
caps? Some kind of new fast lanes that are based on quality,
not speed? Some kind of preferential arrangement for Comcast,
an AT&T, a Verizon for its own affiliated services? I do not
know what those might be, but it is absolutely critical that we
do not need to come back to Congress every time we worry about
discrimination, but that an expert agency has the authority to
deal with that.
In legislating, you need to not just worry about this
dynamism. Keep in mind that these are companies, wonderful
companies, that have been found by the courts following agency
action to have an incentive and an opportunity to discriminate.
Why? Not because they are bad, but that it is profit
maximization for these companies. And it is with that incentive
that we need a policeman, in this case the FCC, to monitor what
they do. So we need the FCC to be able to exercise all of its
authority, use all of its tools that are necessary to address
these dangers. And we believe that requires Title II, which it
does not appear the draft legislation contemplates.
And if you are serious about legislating, we also urge you
to look at the tried and true tools that have protected
consumers in so many ways, whether it is their privacy, or the
rights of the disabled, or extending services to rural America,
or providing subsidies for low income people who could not
afford essential services, we need to make sure those tools are
available as well in the broadband area for these services.
Unfortunately, again, it does not appear the draft legislation
provides those tools for the FCC.
So in conclusion, I urge you as you consider evaluating
what the FCC does, to let them go. Do what you do best, monitor
them. Step in if they have done it inappropriately, and
consider all the forward-looking needs that we have for
consumers in the broadband era. Thank you so much.
[The prepared statement of Mr. Kimmelman follows:]
Prepared Statement of Gene Kimmelman, President, Public Knowledge
Public Knowledge,\1\ along with millions of consumers, civil and
media rights groups,\2\ small businesses, and innovative start-up
companies, believes that application of Title II authority under the
Communications Act is critical to preserve and promote an open Internet
that is affordable to all and fully supportive of freedom of
expression.\3\ We therefore support the FCC's current efforts to adopt
Title II rules in response to the most recent DC Circuit court ruling.
Public Knowledge also believes it is entirely appropriate for Congress
to consider updating the Act to address inadequacies in law and to
guide the FCC's understanding of Congressional intent. However, the
draft legislation proposed by Chairman Thune on January 16, 2015,
raises a number of serious concerns about how and when such
Congressional intervention is warranted, and raises many questions
about the specific tools Congress must empower the FCC to use in order
to effectively preserve and promote an open, affordable,
nondiscriminatory Internet.
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\1\ I would like to thank Kristine DeBry, Harold Feld, Kate
Forscey, Jodie Griffin, Chris Lewis, Sherwin Siy, and Michael Weinberg
for their substantial contributions to this testimony.
\2\ See Open Letter to Latino Community Urging Support for Real
Network Neutrality, signed by the National Hispanic Media Coalition,
Center for Media Justice and other groups (July 14, 2014). Available at
http://centerformediajustice.org/2014/07/open-letter-to-latino-
community-urging-support-for-real-network-neutrality/
\3\ See Letter from Voices for Internet Freedom to Tom Wheeler,
Chairman, FCC, GN Docket No. 14-28 (Nov. 3, 2014), http://apps.fcc.gov/
ecfs/document/view?id=60000978248; Letter from Comptel, Engine, the
Computer & Communications Industry Ass'n, and Internet Freedom Business
Alliance to Tom Wheeler, Chairman, FCC, GN Docket No. 14-28 (Dec. 30,
2104), http://apps.fcc.gov/ecfs/document/view?id=60001011438; Jonathan
Weisman, Shifting Politics of Net Neutrality Debate Ahead of FCC Vote,
N.Y. Times (Jan. 19, 2015) (``The F.C.C. has received four million
comments on net neutrality--overwhelmingly in favor--ahead of its Feb.
26 decision day.'').
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Public Knowledge cares about keeping the Internet open because the
Internet has become--as Congress has repeatedly recognized in past
legislation \4\--the essential communications service of the 21st
Century. As communication, commerce, and civic engagement increasingly
depend on broadband Internet access, it becomes even more critical to
ensure that the Internet remains open for all Americans to participate
online to the best of their abilities. Fortunately, in Title II,
Congress has already given the FCC the flexibility to do just that.
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\4\ Broadband Data Improvement Act, Pub. L. No. 110-385, Sec. 102
(2008).
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The Speed of Broadband Evolution Lends Itself to Agency Oversight
Since the first publicly reported case of online blocking occurred
in 2005, when a rural telephone company called Madison River blocked
competing VoIP calls, our dependence on reliable access to an open
Internet--and the costs of unreasonable blocking--has continued to grow
exponentially. The broadband environment has become increasingly more
complex, and the Congress has already given the FCC a wide variety of
tools to address it. In 2005, at the time of the Madison River case, no
one seriously considered that children in rural areas could not do
their homework unless the FCC reformed the Universal Service Fund to
promote affordable access. Few people were even aware of bandwidth
caps, let alone considering how bandwidth caps might have profound
impact on our economy or the future of innovation. Congress in 2005
could not have anticipated that broadband providers might track our
every move with ``Super Cookies,'' or considered the impact of
broadband services on our ability to complete phone calls to rural
exchanges, the impact of broadband on our 9-1-1 system, or how
broadband policy and an open Internet would become a concern in
retransmission consent negotiations. But all of these policy
considerations, and more, now crowd the FCC's docket.
Insisting that protections for the open Internet must include a ban
on paid prioritization, and that net neutrality rules equally to
wireless, is not at all the same as saying that these two things are
the only elements of wise communications policy. To the contrary, as
affirmed just last year by a 5-0 vote of the Federal Communications
Commission, our communications policy has always embodied the broader
fundamental traditional values of service to all Americans,
competition, consumer protection, and public safety.\5\ Further, as
discussed below, even the Commission's decisions to reclassify
broadband as a Title I service occurred against a backdrop of
expectation that it retained the authority to address both potential
future conduct that would threaten the open Internet.\6\
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\5\ Technology Transitions, et al., GN Docket No. 13-5, et al.,
Order, Report and Order and Further Notice of Proposed Rulemaking,
Report and Order, Order and Further Notice of Proposed Rulemaking,
Proposal for Ongoing Data Initiative, 29 FCC Rcd 1433 (2014)
(Technology Transitions Order).
\6\ Broadband Industry Practices, Notice of Inquiry, WC Docket No.
07-52 (2007). See also id., Statement of Chairman Kevin J. Martin; see
also, Inquiry Concerning High-Speed Access to the Internet Over Cable
and Other Facilities, GN Docket No. 00-185; Internet Over Cable
Declaratory Ruling; Appropriate Regulatory Treatment for Broadband
Access to the Internet Over Cable Facilities, CS Docket No. 02-52,
Declaratory Ruling and Notice of Proposed Rulemaking, 17 FCC Rcd. 4798
(2002) (Cable Modem Order), aff'd, Nat'l Cable & Telecomm. Ass'n v.
Brand X Internet Servs., 545 U.S. 967 (2005), at 108-112.
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As then-Chairman Michael Powell explained in his concurring
statement to the Cable Modem Order: ``The Commission's willingness to
ask searching questions about competitive access, universal service and
other important policy issues demonstrates its commitment to explore,
evaluate and make responsible judgments about the regulatory
framework.'' \7\ The draft legislation would, for the first time,
remove the ability of the FCC to ``make responsible judgments about the
regulatory framework.''
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\7\ See Cable Modem Declaratory Ruling, Separate Statement of
Chairman Michael K. Powell (2002).
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Congress Best Succeeds When it Legislates Around Broad Principles and
Allows Flexibility for Technological Innovation and Economic
Change
The Communications Act of 1934 has survived so long for the same
reason that legislation based on fundamental principles--such as the
Federal Trade Commission Act of 1914 and the Sherman Antitrust Act of
1894--have survived for so long. It relies on broad principles enacted
by Congress and flexible administration by an expert agency capable of
handling rapid technological and economic change. This focus on
fundamental values such as service to all Americans and consumer
protection--rather than focusing on ``clarity'' and ``certainty''
around the issues of the moment--made the United States the undisputed
leader in telecommunications policy and technology. We are the Nation
that put a phone on every farm. We are the Nation that invented the
modern wireless industry. We are the Nation that invented the Internet.
In all these cases, Title II played a vital part in ensuring our
global leadership. The Carterfone proceeding and the Computer Inquiries
of the 1970s and 1980s made the modern Internet possible. They also
demonstrate the value of rulemaking flexibility. Both proceedings
responded to changes in technology Congress could not have predicted in
1934 when it created Title II. Although Carterfone was initially a
single adjudication, the Commission quickly found this constant case-
by-case approach inherently unworkable and detrimental to the evolution
of an independent customer equipment market. The Commission therefore
shifted to its Title II Rulemaking authority to create network
attachment rules, a development widely praised as paving the way for
such innovations as the answering machine (the predecessor to modern
voice-mail service), the fax machine, and ultimately the dial up
modem--the necessary precursor to today's Internet.\8\
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\8\ FCC Office of Plans and Policy Working Paper #31, ``The FCC and
the Unregulation of the Internet, July 1999.
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Similarly, the FCC's initial Computer proceedings that created the
distinction between ``enhanced services'' (now ``information
services'') and telecommunications services took place against a
background of changing technology. Again, the Commission first tried to
distinguish between ``enhanced services'' and ``telecommunications
services'' through adjudication.\9\, and again this proved unworkable.
Rather than providing the certainty necessary for businesses to
innovate and technology to develop, reliance on case-by-case
adjudication proved costly, time consuming, and confusing. As a
consequence, the Commission adopted a set of bright line rules in its
Computer II proceeding \10\ that allowed a wide range of services,
including the dial-up Internet, to flourish. As technology and the
marketplace continued to evolve rapidly, the Commission responded in
the Computer III proceeding \11\ by relaxing its rules to reflect the
breakup of the Bell monopoly and their relevant changes.
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\9\ Reg. and Policy Problems Presented by the Interdependence of
Computer and Communications Services, Final Decision, 28 FCC 2d 267
(1971) (Computer I).
\10\ In the Matter of Amendment of Section 64.702 of the
Commission's Rules and Regulations (Second Computer Inquiry), 77 FCC 2d
384 (1980) (Computer II Final Decision).
\11\ In the Matter of Amendment of Sections 64.702 of the
Commission's Rules and Regulations (Third Computer Inquiry), Phase II
Report and Order, 104 F.C.C.2d 958 (1986) (Computer III Phase II
Order).
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When Congress has legislated to exercise appropriate oversight, it
has generally recognized the need to preserve regulatory flexibility by
enhancing rulemaking authority. Congress' actions in 1993 \12\, which
lay the foundation for the modern wireless industry, illustrate how
Congress has exercised its responsibility for oversight and used its
legislative authority to direct the Commission. For more than a decade,
the FCC struggled to find the appropriate regulatory framework for
mobile wireless voice services. The Commission relied on case-by-case
adjudication to determine which services were subject to Title II and
thus eligible for interconnection rights and access to phone numbers,
and which services were not Title II and therefore not eligible for
interconnection. (It is important to stress that the nascent wireless
industry wanted to be classified as a Title II service to gain the pro-
competitive benefits of Title II classification.)
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\12\ Omnibus Reconciliation Act of 1993, Pub. L. No. 103-66,
enacted August 10, 1993.
---------------------------------------------------------------------------
The 1993 Act included numerous innovations.\13\ Most importantly,
Congress replaced the FCC's case-by-case adjudication with a regulatory
classification for ``commercial mobile radio service'' (CMRS). While
specifying the general principle for common definition, it explicitly
required that the FCC define the statutory terms via regulation.
Congress also explicitly classified CMRS as Title II, but gave the FCC
the flexibility to forbear from any provisions that it found
unnecessary.
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\13\ For example, the 1993 Act gave the FCC the authority to
conduct spectrum auctions, which it left to the FCC to define by rule
subject to guidance from Congress on general principles. See Id.at
Sec. 309(j).
---------------------------------------------------------------------------
Finally, in 1996, Congress enacted the most sweeping reform of the
Communications Act since its inception. In doing so, it benefitted
tremendously from more than two decades of FCC rulemaking efforts to
introduce competition into the voice and video marketplace. The 1996
Act did not abolish Title II or seek to eliminate FCC rulemaking
authority. To the contrary, Congress depended on the FCC to use the
combination of Title II rulemaking and forbearance both to shift the
industry to a more competitive footing and to ensure that the
fundamental values of consumer protection, universal service,
competition, and public safety remained central to our critical
communications infrastructure.
As these examples show, and as Congress has repeatedly recognized
in its periodic updates of the Communications Act, rulemaking authority
provides critical flexibility for the Commission to adapt existing
rules to rapidly evolving technology and the ever-shifting marketplace.
A statute captures a single moment in time. It works best, therefore,
when focused on broad and timeless principles--fundamental values such
as consumer protection, competition, universal service, and public
safety--rather than trying to account for every single detail.
The one exception to this pattern was when Congress passed the
Cable Act of 1984. In an effort to provide ``certainty'' and
``clarity,'' Congress stripped both the FCC and local franchising
authorities of the bulk of consumer protection authority. Congress
instead included specific provisions to address the handful of specific
issues that had emerged in the 15 years the FCC had regulated cable
pursuant to its ancillary authority. Congress assumed that by
legislating in detail, and addressing the problems immediately before
it, the 1984 Cable Act would promote both competition and innovation to
the benefit of consumers.
Instead of promoting competition and innovation to the benefit of
consumers, the 1984 Cable Act created a concentrated industry marked by
escalating prices and poor customer service. Cable operators, free from
regulatory oversight, worked quickly to crush incipient competition and
leverage their control over programmers. The situation deteriorated so
rapidly and thoroughly that, after only eight years, Congress enacted
an almost complete and sweeping reversal of its 1984 legislation. The
Cable Consumer Protection and Competition Act of 1992, unlike its 1984
predecessor, empowered the FCC to address anticompetitive practices and
promote competition in broad terms.
Measuring The Draft legislation Against This Legislative Background
Both Houses of Congress have already expressed interest in
conducting a thorough reexamination of the Communications Act similar
to the bipartisan effort that culminated in the passage of the
Telecommunications Act of 1996. Today's draft legislation,
unfortunately, resembles the catastrophically unsuccessful Cable Act of
1984. Like the Cable Act of 1984, it has elevated ``certainty'' over
flexibility and focused on today's headlines rather than on timeless
fundamental principles.
Prioritization Was Never The Only Concern For An Open Internet
When the FCC reclassified cable modem service as an information
service in 2002, it recognized that it needed to address critical
``social policies'' such as privacy and universal service.\14\ The FCC
also relied on its broader authority to address new issues, such as the
first case of VoIP blocking.\15\ When the FCC issued its Wireline
Reclassification Order \16\ and accompanying Open Internet Principles,
it simultaneously issued a further notice of proposed rulemaking to
address concerns around consumer protection, reliability, national
security, disability access, and universal service.\17\ Critically, the
Open Internet Principles were never considered on their own as an
adequate replacement for Title II. Rather, in reclassifying broadband
as an information service, the Commission assumed it would have
sufficient authority--via ancillary authority or through other
statutory provisions--to address consumer protection, disability
access, and universal service through future rulemakings.
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\14\ See, e.g., Cable Modem Order at 72, 110-112.
\15\ Madison River Communications, LLC and Affiliated Companies,
File No. EB-05-IH-0110, Consent Decree (2005).
\16\ Appropriate Framework for Broadband Access To The Internet
Over Wireline Facilities, CC Docket No. 02-33; Universal Service
Obligations of Broadband Providers, Review of Regulatory Requirements
for Incumbent LEC Broadband Telecommunications Services, CC Docket No.
01-337; Computer III Further Remand Proceedings: Bell Operating Company
Provision of Enhanced Services, 1998 Biennial Review--Review of
Computer III ONA Safeguards and Requirements, CC Docket Nos. 95-20, 98-
10; Conditional Petition of Verizon Telephone Companies for Forbearance
under 47 U.S.C. Sec. 160(c) With Regard to Broadband Services Provided
By Fiber to the Premises; Petition of Verizon Telephone Companies for
Declaratory Ruling Or, Alternatively, For Interim Waiver With Regard To
Broadband Services Provided Via Fiber to the Premises, WC Docket No.
04-242; Consumer Protection In The Broadband Era, WC Docket No. 05-271,
Report & Order and Notice of Proposed Rulemaking, Policy Statement, 20
FCC Rcd 14853 (2005) (``Wireline Framework Order'').
\17\ See Wireline Framework Order at 146-159; See also Statement
of Chairman Kevin Martin (``government will continue to have a role in
this dynamic, new broadband marketplace. Together with our state
colleagues, the Commission must vigilantly ensure that law enforcement
and consumer protection needs continue to be met''); Statement of
Commissioner Kathleen Q. Abernathy (``The Commission has already made
clear its intention to ensure access to emergency services as Americans
transition to packet-switched communications technologies, irrespective
of how those services are classified under the Communications Act. As
we make clear in today's Notice, we will now turn our attention to
other ``social policy'' requirements, such as those involving
disability access, slamming, and consumer privacy.'')
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In 2006, Congress considered legislation similar to the draft
legislation here as part of the Communications Opportunity, Promotion,
and Enhancement Act of 2006 (COPE Act).\18\ Then, as now, the bill
proposed to strip the FCC of its regulatory authority and limit the FCC
to case-by-case adjudication. Even in 2006, this limitation was
considered too drastic and the entire effort to reform the
Communications Act crashed on the unwillingness of drafters to allow
sufficient flexibility for the FCC. The approach taken in the COPE
legislation has grown less suitable with the passage of time.
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\18\ 109th Congress, H.R. 5252 & S. 2686.
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When the D.C. Circuit made it clear in the Comcast case that it
intended to dramatically scale back the applicability of ancillary
jurisdiction, Public Knowledge was the first organization to urge the
FCC to reclassify broadband as a Title II service precisely because
only Title II could provide adequate authority to protect our
traditional fundamental values of consumer protection, service to all
Americans, reliability, and competition.\19\ Public Knowledge has
continued to press for Title II not only as the most straightforward
way to prevent blocking or paid prioritization, but also as the only
way to continue to protect the fundamental values that have made our
communications infrastructure the envy of the world.
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\19\ Ex parte Submission of Public Knowledge, GN Docket 09-191
(filed Jan. 28, 2010).
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Congress should therefore follow the successful approach that it
took in 1993 when Congress used Title II to lay the groundwork for the
current wireless industry,\20\ and in the approach Congress took in
1996 when it used Title II to create the modern telecommunications
market.
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\20\ Omnibus Reconciliation Act of 1993, Pub. L. No. 103-66,
Sec. 6002(b)(2)(A)(iii).
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The FCC Needs Rulemaking Flexibility
In 2006, both Democrats and Republicans rejected the COPE Act
proposal to limit FCC authority over broadband to adjudication of non-
discrimination principles. Lawmakers found it inadequate to protect the
open Internet and preserve our fundamental values. This approach
remains inadequate today. Without rulemaking authority, the FCC cannot
address new circumstances that have already become part of the public
debate. Nor can it address pressing consumer protection issues, as
envisioned when the FCC initially classified broadband as an
information service.
The lack of rulemaking authority of the Federal Trade Commission is
frequently cited as one of the weaknesses of the agency, and
specifically one of the reasons why it cannot adequately address
concerns about network neutrality. As discussed at length above, while
adjudication is a useful tool in specific circumstances, it does not
replace the ability of rulemaking to respond to changes in a dynamic
marketplace. The process of rulemaking allows all stakeholders to come
together in a well-defined and deliberative process subject to judicial
review. It allows the FCC to keep itself informed of technological and
marketplace developments, and to make necessary adjustments or correct
mistakes.
Rulemaking also provides certainty. It ensures consumers can expect
the same level of protection for a service regardless of the specific
provider or the specific facts of any given case. It simplifies the
process of consumer protection for both consumers and the agency.
Development of a body of case law takes time, and litigating the first
cases can create enormous expense. Rather than creating clarity and
certainty, the draft legislation would appear to open the door to
endless litigation as the only means to clarify the statutory language.
Rather than permitting consumer protections to evolve in concert with
the changing broadband marketplace and adjust to changes in technology,
the shift to adjudication will create ossification and leave consumers
dangerously exposed as a body of relevant case law slowly develops.
As noted above, eliminating the FCC's rulemaking authority would
not be a return to the status quo, but a dramatic shift. The FCC has
always assumed it has rulemaking authority since it first reclassified.
When the D.C. Circuit rejected the FCC's theory of ancillary authority
in 2010, the FCC switched to a theory of regulatory authority using
Section 706 of the 1996 Act.\21\ The FCC has relied on Section 706
authority--which the draft legislation would eliminate--to sustain its
ongoing efforts to reform Universal Service and ensure ubiquitous,
affordable access to all Americans in accordance with Section 254,\22\
the Broadband Data Improvement Act of 2008,\23\ and the relevant
sections of the American Recovery Act of 2009.\24\
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\21\ Now codified at 47 U.S.C. Sec. 1302.
\22\ 47 U.S.C. Sec. 254
\23\ Broadband Data Improvement Act of 2008, Pub. L. No. 110-385
(Oct 10, 2008)
\24\ American Recovery and Investment Act of 2009, Pub. L. No. 111-
115 (Feb. 17, 2009).
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Even while the FCC considered other sources of rulemaking
authority, the FCC explicitly left Title II as an option should it ever
become necessary. If Congress intends to remove this option, it needs
to provide the FCC with an equally flexible tool to replace Title II.
Congress Cuts Short FCC Authority To Address Vital Public Policies
It is important, therefore, to review the list of consumer
protections and pro-competitive policies found in Title II which this
draft legislation would foreclose by prohibiting the Commission from
classifying broadband as Title II and by eliminating Section 706 as a
separate source of authority.
Consumer privacy (Section 222)
Truth in billing regulations (derived from Section 201)
Authority to resolve complaints with regard to overcharges
or unreasonable billing practices, deceptive practices, failure
to provide adequate facilities to support promised services, or
otherwise address consumer protection issues (derived from
Section 201)
Authority to address service to all Americans, carrier of
last resort, or refusal to serve based on race, religion, or
national origin (Section 202)
Authority over 9-1-1 (Section 251)
Authority over interconnection (Section 251)
Ability to compel broadband providers to report outages, or
provide other necessary information to compile relevant
information so that the Commission may assess deployment,
affordability, ability to support critical services such as 9-
1-1 or national defense, impact on small businesses, or
otherwise ascertain any pertinent information relevant to
wireline broadband deployment. (Sections 214, 215, 218, 256,
257 and 1302 (Section 706))
Universal Service Fund reform (Sections 254, 1302)
Disability access (Section 255)
Access to pole attachments for broadband providers not
offering bundled video or Title II telecommunications (Section
224)
Liability for acts and omissions of agents, so that
companies cannot use contractors or subsidiaries to avoid
responsibility for anti-consumer conduct (Section 217)
Preemption of state regulation (Sections 253, 1302)
As noted above, elimination of Section 706 as a source of
regulatory authority would appear to make it effectively impossible for
the Commission to collect information necessary to determine whether
advanced telecommunications services are being adequately deployed to
all Americans in a timely manner, or to otherwise ascertain essential
information as to our national broadband infrastructure.\25\
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\25\ Comcast Corp. v. FCC, 600 F.3d 642, 659 (D.C. Cir. 2009)
(interpreting clause stating that Section 256 does not ``expand any
existing authority'' as negating ancillary authority).
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It is also noteworthy that in 2006, when Congress considered
similar legislation as part of COPE, Congress includes a provision
expressly preempting state prohibitions on municipal broadband, a
provision that enjoyed bipartisan support.\26\ Here, the legislation
proposes to eliminate the primary source of authority for Federal
preemption of these restrictions without providing any replacement.
Given that deployment of competing high-speed broadband systems is
generally recognized today as even more critical than it was in 2006,
repeal of Section 706 authority without providing any replacement to
address this issue would be a step backward from where Republicans and
Democrats were on this issue ten years ago.
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\26\ H.R. 5252, Sec. 4.
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Problems With Alternative Sources Of Authority
Proponents of the draft legislation note that the Commission may
have other sources of authority to achieve these goals--notably Title
III for wireless services and Title VI for cable services.
Additionally, proponents of the draft legislation argue that by
classifying broadband as an ``information service,'' that the
Commission's ancillary authority remains intact.
As an initial problem, it is hard to reconcile this defense of the
language with the stated goal of providing certainty. Instead of the
well-known and established contours of Title II, the legislation would
require the Commission to hunt among its possible sources of authority.
Even where authority arguably exists, it may apply only to one
technology (e.g., wireless, or cable operators) but not others.
Additionally, the judicial expansion of the ``common carrier
prohibition,'' and the judicial hostility to exercise of the FCC's
ancillary authority create further uncertainty. In Echostar Satellite
LLC v. FCC,\27\ the D.C. Circuit held that because ancillary authority
is not ``delegated by Congress,'' the court will not defer to any
Commission use of ancillary authority under Chevron.\28\ The loss of
Chevron deference for FCC actions using ancillary authority
significantly undermines its usefulness as a source of authority and
invites judges to substitute their own judgment for that of the
agency--hardly a recipe for clarity and certainty.
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\27\ 704 F.3d 992 (D.C. Cir. 2013).
\28\ Id. at 998 n.3. Additionally, the case takes a generally
narrow view of the FCC's ability to enforce device attachment rules
through 629. The case is generally instructive of the narrow way the
D.C. Circuit has read the Commission's Title VI authority, suggesting
why it would be unduly optimistic to rely on anything in Title VI as a
source of authority for broadband.
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The same is true of the common carrier prohibition. The D.C.
Circuit has issued two opinions that shed light on what constitutes a
``core common carrier obligation'' that the FCC may not impose on an
information service.\29\ It has limited the usefulness of this guidance
by saying that any too rigid or inflexible application of a rule could
transform it into a ``common carrier obligation'' and leave enforcement
open to an ``as applied'' challenge.\30\ Again, this seems a recipe for
confusion and chaos rather than clarity and certainty.
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\29\ Cellco v. FCC, 700 F.3d 534 (D.C. Cir. 2013); Verizon v. FCC,
740 F.3d 623 (D.C. Cir. 2014).
\30\ Cellco v. FCC at 548-549.
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Finally, we cannot ignore the enormous preclusive effect Congress
has when it acts. This legislation explicitly proposes to severely
curtail and limit the scope of FCC authority over broadband Internet
access service, and shield broadband providers from the consumer
protections in Title II. Any attempt by the FCC to protect consumers
using other sources of authority would need to overcome the argument
that Congress deliberately intended to foreclose Commission action and
limit it to the language of this specific provision.
Example: How The Draft Legislation Effectively Curtails FCC
Jurisdiction Over Interconnection
Although the language does not explicitly eliminate any FCC
authority over interconnection, it eliminates any application of
Section 251 \31\ to broadband or any other ``advanced telecommunication
service'' by prohibiting Title II classification. It is hard to see how
the FCC could find authority for any jurisdiction over broadband
interconnection under this statute. Even if it did find jurisdiction
under a theory of ancillary authority or from some other source,
interconnection is a quintessential common carrier obligation. Finally,
even if the FCC found jurisdiction, and promulgated an interconnection
rule sufficiently vague to avoid the common carrier prohibition, the
FCC would face the argument that this is precisely the sort of
regulation Congress intended to prohibit when it passed the draft
legislation.
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\31\ 47 USC Sec. 251.
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The Draft Legislative Language Does Not Appear To Address Existing
Forms of Discrimination, Let Alone Provide Adequate Authority
For Future Forms Of Discrimination Or Other Threats To The Open
Internet
Additionally, the language proposed to address threats to the open
Internet does not address conduct that would have been reachable under
the Commission's 2010 rules. In this regard, the draft legislation is
clearly a step backward, rather than a step forward, and does not
appear to comport with the traditional understanding of network
neutrality.
By changing the broader principle of `no discrimination' into the
very narrow and limited case of `no paid prioritization or throttling,'
the draft legislation falls short of even the inadequate rules of 2010,
let alone the more robust protections offered by Title II. For example,
these rules would not have prevented AT&T from limiting FaceTime to
particular tiers of service--as it tried to do in 2012. It would not
address discriminatory use of data caps, such as Comcast has used to
favor its own streaming content over that of rivals. It would not
address potential issues arising at Internet interconnection, the
gateway to the last mile. Even worse, by eliminating any flexibility on
rulemaking or enforcement, the bill would prevent the FCC from
addressing any new forms of discrimination and threats to openness that
arise.
If the proposed rule cannot even stop forms of discrimination we've
already seen, how can it possibly protect the open Internet going
forward?
Furthermore, the exemption for specialized services combined with
the lack of rulemaking authority creates a potential loophole to sell
prioritized service to specific applications or content simply by
calling these fast lanes ``specialized services.'' It is true that the
FCC's 2010 rule had a similar loophole, but the FCC announced it would
continue to address this with future rulemakings. This draft
legislation creates the same loophole, but strips the FCC of the power
to plug it. While the draft legislation prohibits specialized services
that are clearly a sham, it gives the FCC no power to define this and
leaves open specialized services that effectively create fast lanes but
with some fig leaf alternative explanation.
The Draft Legislation Creates An Enormous Loophole For Censorship and
Surveillance
The language of the draft legislation also creates a significant
loophole that could allow censorship, surveillance, or other actions
that thwart the Internet's openness under the guise of preventing
copyright infringement or any other ``unlawful activity.'' A bill that
would permit ISPs to inspect and discriminate among Internet traffic so
long as they can argue they are simply engaging in ``reasonable
efforts'' to prevent infringement or illegal activity could do
irreparable damage to any Congressional or agency efforts to protect an
open Internet.
Although the FCC has in the past included limited exceptions to its
open Internet rules for copyright measures,\32\ this is significantly
less worrisome than the draft legislation. An agency creating a rule
with an exception for copyright infringement is worlds apart from a law
that prevents the expert agency from using any authority to act against
discriminatory behavior if the ISP can argue its efforts were designed
to prevent infringement or any other illegal activity.
---------------------------------------------------------------------------
\32\ See Preserving the Open Internet, GN Docket No. 09-191,
Broadband Industry Practices, WC Docket No. 07-52, Report and Order,
111, Appendix A Sec. 8.9 (Dec. 23, 2010) (``Nothing in this part
prohibits reasonable efforts by a provider of broadband Internet access
service to address copyright infringement or other unlawful
activity.'').
---------------------------------------------------------------------------
This is not just an academic distinction. After all, the litigation
that sparked multiple rounds of agency rulemakings on net neutrality
was centered around Comcast limiting access to peer-to-peer
applications like BitTorrent, regardless of the legality of the actual
content being transmitted.\33\ It is not so difficult to imagine
actions that explicitly or implicitly favor established content
distributors at the expense of technologies or platforms that could
potentially be used to infringe copyright, with carriers using the
copyright infringement loophole of the draft legislation to circumvent
open Internet enforcement.
---------------------------------------------------------------------------
\33\ Formal Complaint of Free Press and Public Knowledge Against
Comcast Corporation for Secretly Degrading Peer-to-Peer Applications
(Nov. 1, 2007), https://www.publicknowledge.org/pdf/
fp_pk_comcast_complaint.pdf.
---------------------------------------------------------------------------
Additionally, by elevating this exception in statutory language,
Congress would invite others to use this provision well beyond its
intended purpose. For Congress to affirmatively create such an
exception, despite already stating that open Internet rules are
subordinate to existing laws governing law enforcement access, the
statute appears to create permission for unlawful surveillance. Because
broadband Internet access is the basis for provision of voice-over-IP
services protected by Section 222, and other electronic communication
protected by ECPA,\34\ this apparent invitation for broadband access
providers to `voluntarily' spy on their customers risks undermining
Congress' ongoing efforts to balance civil liberties with law
enforcement and national security concerns.
---------------------------------------------------------------------------
\34\ 18 U.S.C. Sec. 2701 et seq.
---------------------------------------------------------------------------
Similarly, by uniquely elevating intellectual property within the
context of the Communications Act, the draft legislation may be argued
to expand the requirement for broadband operators to take measures to
read and intercept arguably infringing traffic well beyond the existing
safe harbor requirements under the Digital Millennium Copyright Act
\35\ and the Communications Decency Act.\36\ Unlike regulatory
language, which is often merely explanatory and clearly limited, it is
a canon of statutory interpretation that every word of legislation is
to be given substantive meaning. Congress should not create new
ambiguities and uncertainties in an already contentious area of law.
---------------------------------------------------------------------------
\35\ 17 U.S.C. Sec. 512.
\36\ 47 U.S.C. Sec. 230(c)(1). The breadth of the bill's exception
for efforts targeted at any ``other unlawful activity'' not only
encompasses alleged copyright infringement, but a wide range of
allegations, including defamation, misappropriation, discrimination,
breaches of contracts, and a host of others.
---------------------------------------------------------------------------
Precluding the Use of Title II Through Legislation Raises Serious
Concerns
Those seeking to limit FCC authority like to recite the mantra
``first do no harm.'' While we appreciate Congress' role in updating
the Communications Act periodically, we remain concerned that the draft
legislation is likely to cause more harm than benefit. We urge the FCC
to move forward on Title II rules and urge Congress to evaluate those
in light of broader policy goals and the concerns we raise about the
draft.
The history of the development of our modern communications
landscape demonstrates that Title II preserves critical values,
promotes competition and investment, and is flexible enough to
accommodate changes in technology and the marketplace. The concerns
that Title II is insufficiently flexible for broadband can--and
should--be thoroughly examined in this fuller context. In doing so,
Congress can continue to protect the fundamental values of our
communications system.
STATEMENT OF HON. ROBERT M. McDOWELL, PARTNER, WILEY REIN LLP
AND SENIOR FELLOW, HUDSON INSTITUTE
Commissioner McDowell. Thank you, Mr. Chairman, and Ranking
Member Nelson, and all the distinguished members of the
Committee. It is really an honor to be back here before you
again. I am a partner at Wiley Rein and as a Senior Fellow of
the Hudson Institute's Center for Economics of the Internet.
Nonetheless, I am not testifying today on behalf of any client
of Wiley Rein or on behalf of the Hudson Institute. Any
opinions I express today are purely my own.
From my perspective, by the way, I think it is quite
appropriate for your first hearing of the new Congress to be
focused on the future of the Internet. I have always supported
the goals of an open Internet that maximizes freedom, and that
is precisely what the private sector built as the Internet
migrated further away from government control.
We are here today, however, because the FCC is on the brink
of applying an antiquated, but powerful, 80-year-old law to the
dynamic and ever-evolving Internet. Title II of the
Communications Act of 1934 was designed in an era when people
held their phones with two hands. While I was a Commissioner, I
kept my grandmother's 1950s black rotary dial phone from San
Angelo, Texas on my desk to remind me of the lack of innovation
and investment produced by Title II. On her birthday--you all
may remember this--we kids would stay up past 11 p.m. to call
her because the heavy-handed regulatory capture of Title II
produced artificially high long distance rates, which came down
just a little, late at night.
The FCC's Chairman, a friend of mine, maintains that the
so-called just and reasonable standard of Sections 201 and 202
will be good policy for America's world-leading Internet
economy. He and I are both students of history, so let us allow
history to be our guide to test that premise.
Since President Franklin D. Roosevelt signed Title II into
law, the principles underpinning Sections 201 and 202 have been
litigated in Federal appellate courts nearly 400 times, with
the last decision being rendered as recently as 2012. That
equates to an average of five court cases per year since Title
II became law. And those are only cases that involve the just
and reasonable standard and not other aspects of Title II,
which my friend, Gene Kimmelman, has suggested also be included
in new FCC rules.
Similarly, within the FCC itself, the just and reasonable
standard has been litigated in administrative proceedings 1,069
times. That equates to more than 13 cases per year since
inception of Title II. In short, ``just and reasonable'' is
perhaps the most litigated term telecommunications
jurisprudence. Applying it to the Internet would create a
billable hours bonanza for telecom lawyers, so really I should
be all for this. But is this what we want America's 21st
century tech policy to look like? To put a finer point on it,
do we want the robust Internet economy to be shaped by
engineers, consumers, and entrepreneurs, or lawyers?
Today, policymakers have a choice in front of them, a sharp
choice. Do they want to protect an open Internet, or do they
want broader government engineering of the Internet ecosphere?
The draft bill, although imperfect, attains the ostensible
policy goals net neutrality proponents have advocated for years
by essentially restating existing law, but allowing the FCC to
enforce it. For instance, the bill prohibits anti-competitive
throttling and paid prioritization. It also mandates
transparency for consumers and much more.
These are also the goals outlined by President Obama in his
Directive to the FCC of November 10. Logically then, net
neutrality proponents should be happy with the goals of the
draft, but some want more than their stated goals. They want
Title II and the power that comes with it. But make no mistake:
Title II would drag America's tech sector under its purview.
The Supreme Court said as much when it held in 2005 that
reclassification of broadband Internet under Title II, ``would
subject to mandatory common carrier regulation all information
service providers that use telecommunications as an input to
provide information services to the public.'' Translated, if
you think you are merely a content, or application provider, or
a tech company, after Title II reclassification you could be
eventually regulated like an old-fashioned phone company. This
is especially true as tech and telecom companies continue to
morph to look like one another. And FCC attempts to refrain or
forebear from the vast majority of Title II's 1,000 or so
requirements will likely fail an appeal because any reasons
given to justify sweeping forbearance logically undercut the
reasons for applying Title II to begin with. In other words,
Title II classification and massive forbearance contradict each
other.
Although I continue to advocate for a comprehensive rewrite
of our communications laws to focus more on consumer
protection, as Senator Nelson pointed out, rather than outdated
technology-centric approaches, the draft in front of the Senate
today provides all sides of this debate with the opportunity to
declare victory. The last question is, will they?
Thank you very much, and I look forward to your questions.
[The prepared statement of Mr. McDowell follows:]
Prepared Statement of Hon. Robert M. Mcdowell, Partner, Wiley Rein LLP
and Senior Fellow, Hudson Institute
Overview
Chairman Thune, Ranking Member Nelson and distinguished Members of
the Committee, thank you for having me testify before you today. My
name is Robert McDowell. From 2006 until 2013, I served as a
Commissioner of the Federal Communications Commission (FCC). Currently,
I am a partner of the internationally recognized law firm of Wiley Rein
LLP. I am also a Senior Fellow at the Hudson Institute's Center for
Economics of the Internet, a non-profit, non-partisan policy research
organization. Nonetheless, I am not testifying today on behalf of any
client of Wiley Rein or on behalf of the Hudson Institute. The opinions
I express today are strictly my own.
I am especially honored to be testifying at the first substantive
hearing of this Committee in the 114th Congress. From my biased
perspective, it is quite appropriate that your first hearing is focused
on the future of Internet freedom.
I have always supported policies that promote an open and freedom-
enhancing Internet. That is precisely what the American private sector
built as the result of long-standing and bipartisan public policy that
insulated the Net from unnecessary regulation.
During my tenure at the FCC, the issue of government regulation of
Internet network management, or ``net neutrality,'' came before me
several times in a variety of contexts. I am deeply familiar with the
arguments for and against new regulations in this area. I voted against
the Commission's first two attempts to issue new rules for many
reasons, not the least of which was that the FCC was reaching beyond
the powers Congress gave it. Each time, the appellate courts largely
agreed and largely struck down the FCC's attempt to regulate in this
space.\1\
---------------------------------------------------------------------------
\1\ Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014); Comcast Corp. v.
FCC, 600 F.3d 642 (D.C. Cir. 2010).
---------------------------------------------------------------------------
The 114th Congress has a historic opportunity to end the debate by
forging ahead with a legislative alternative.
In the meantime, however, the FCC faces one of the most important
questions in its 80-year history: are its intentions to protect an open
Internet, or merely to establish its unlimited power over the entire
Internet ecosphere? FCC Chairman Tom Wheeler says we will have an
answer on February 26.
As he said at the Consumer Electronics Show on January 7, his
preference is to depart from Clinton-era bipartisan policy and classify
the Internet as a ``utility'' using Title II of the Communications Act
of 1934.\2\ Chairman Wheeler noted that while the Commission initially
considered a regulatory approach under Section 706, such an approach--
based on a ``commercially reasonable'' standard--was deemed
insufficient because ``commercially reasonable could be interpreted as
what is reasonable for the ISPs, not what's reasonable for consumers or
innovators.'' \3\ Instead, Chairman Wheeler indicated that the
Commission will impose the Title II ``just and reasonable''
standard.\4\
---------------------------------------------------------------------------
\2\ 47 U.S.C. Sec. 201 et seq.
\3\ Hon. Tom Wheeler, Chairman, FCC, Address to the 2015
International Consumer Electronics Show (Jan. 7, 2015).
\4\ Id. (noting that the FCC will ``propose rules that say no
blocking, no throttling, [and no] paid prioritization,'' and that the
``yardstick against which behavior should be measured . . . is just and
reasonable'').
---------------------------------------------------------------------------
I am deeply familiar with Title II, having studied its mandates for
seven years as a senior Commissioner on the FCC and as an attorney for
more than 24 years in the telecommunications arena. I can say with
confidence that bringing down the blunt ``command-and-control'' sledge
hammer of Title II onto the Internet will eventually cause collateral
damage to America's tech economy.
As ``tech'' and ``telecom'' companies morph to look like each other
by deploying their own massive fiber and wireless networks embedded
with software and content to better serve consumers, Title II will end
up regulating all such companies under its ``mother-may-I-innovate''
dictates. The Supreme Court said as much in 2005 in its Brand X
decision.\5\
---------------------------------------------------------------------------
\5\ NCTA v. Brand X Internet Servs., 545 U.S. 967, 994 (2005)
(``[Reclassification] would subject to mandatory common-carrier
regulation all information-service providers that use
telecommunications as an input to provide information service to the
public.'').
---------------------------------------------------------------------------
Furthermore, as the Progressive Policy Institute determined last
year, Title II regulation of the Net could trigger state and local
regulations, taxes and fees costing consumers ``a whopping $15
billion'' a year. And that's ``on top of the adverse impact on
consumers of less investment and slower innovation that would result''
from Title II.\6\
---------------------------------------------------------------------------
\6\ Robert Litan and Hal Singer, Outdated Regulations Will Make
Consumers Pay More for Broadband, Progressive Policy Institute, at 1
(Dec. 1, 2014).
---------------------------------------------------------------------------
And make no mistake, trying to refrain, or ``forbear,'' from
applying most of Title II's approximately 1,000 heavy-handed
requirements while selecting only a few, as proposed by Chairman
Wheeler, will make an FCC order impossible to defend in court because
the picking and choosing between who gets regulated and who does not
will look arbitrary and politically-driven to appellate judges.
The tragedy of this debate is that no one, including phone,
wireless and cable companies, has ever contested the goals of keeping
the Internet open. It has been open and freedom-enhancing since it was
privatized in the mid-1990s due to market forces and protections under
existing antitrust and consumer protection laws. Instead, the fight has
devolved into a question of how overreaching and heavy-handed the FCC
would be in pursuing its ostensible goals.
It's time to choose a different path and put to rest this debate.
Although I still hope for a comprehensive rewrite of our Nation's
communications laws, the legislation being considered today has the
potential to provide all sides with a way out.
For net neutrality supporters, they would achieve their long-
sought-after goals of: adding protections for consumers and tech start-
ups; ensuring Internet service providers could not unlawfully block or
throttle content and applications or impose anticompetitive paid
prioritization requirements; creating Congressionally-defined
enforcement authority for the FCC in this space, and more. They would
also be able to enjoy, for the first time, the certainty that a court
cannot hand them another loss, or that a future FCC could not roll back
the rules.
For opponents of new FCC rules, the bill would: take the specter of
Title II off the table; restore regulatory certainty; protect freedom
of speech; clip the FCC back onto its Congressional leash so it can't
regulate the entire Net; and create a legal firewall that would protect
investment and innovation in the computer network infrastructures that
underpin the Internet ecosphere.
The unelected FCC stands at a fork in the road. If it rushes down
the Title II lane, it will own the consequences: decreased investment,
a hobbled tech sector, new taxes and fees on consumers and global
regulators emboldened to regulate the Net like an old-fashioned phone
company as well.\7\ Going in this direction would reveal that having
full power over the Net economy was what the FCC really wanted all
along.
---------------------------------------------------------------------------
\7\ Expansion of the government's reach into the operations of the
Internet is only providing cover and encouragement to foreign
governments as well as multilateral and intergovernmental institutions
that want to have, as Vladimir Putin said, ``international control of
the Internet.'' Vladimir Putin, Prime Minister of the Russian
Federation, Working Day, Prime Minister Vladimir Putin Meets with
Secretary General of the International Telecommunications Union
Hamadoun Toure, Gov't Of The Russian Fed'n (June 15, 2011), available
at http://premier.gov.ru/eng/events/news/15601/.
---------------------------------------------------------------------------
In the other direction, however, the FCC can attain its and the
White House's stated policy goals, be protected by Congressional
action, and bask in the glow of achieving a bipartisan consensus of
historic proportions. The future of the Internet, and America's digital
economy, deserve no less.
Extended Analysis
Classifying Broadband as a ``Utility''--Style Common Carrier Under
Title II of the Communications Act of 1934 Would Generate
Litigation and Uncertainty, Cause Unintended Consequences and
Undermine Growth in the Entire Internet
Ecosystem
The notion that retrofitting Title II, an antiquated--but
powerful--80-year-old statute designed for the copper-based, analog,
voice-only phone monopolies of the early 20th Century, would somehow be
good for the dynamic and ever-evolving Internet ecosphere is a faulty
premise. Title II has the potential to be devastating to the entire
Internet ecosystem. While I was a Commissioner, I kept my grandmother's
1950s black rotary-dial phone from San Angelo, Texas in my office as a
reminder of the lack of innovation and investment produced by Title II.
The law erroneously presumed that a natural monopoly for
telecommunications would always exist and, accordingly, it froze in
place the technologies of the day. As a result, America was denied the
benefits of entrepreneurial risk taking such as new investment,
innovation, lower prices and improved consumer choice. Over time,
markets, regulators and legislators were able to create a deregulatory
environment that fostered a virtuous cycle of investment and innovation
that obviated the need for regulation.
During my 24 year career in the telecommunications space, I have
become quite familiar with the Communications Act. As the FCC moves
forward with its plan to impose Title II onto the Internet, even if
ostensibly ``lightly,'' \8\ I am deeply concerned about the
ramifications of excavating an ancient law that was written when people
held their phones in two hands and applying it not only to America's
beautifully chaotic tech sector but also to technologies and services
that have not yet been invented.
---------------------------------------------------------------------------
\8\ See Wheeler, supra note 3.
---------------------------------------------------------------------------
As a threshold matter, FCC Chairman Tom Wheeler's proposal to apply
sections 201 and 202 \9\ to Internet access will inevitably lead to
litigation. Not only will the legality of the FCC's new order be
challenged, but subsequent enforcement actions will be as well.
---------------------------------------------------------------------------
\9\ Id.
---------------------------------------------------------------------------
Let's allow history to be our guide. Since being signed into law by
President Franklin D. Roosevelt in 1934, the principles underpinning
sections 201 and 202 have spawned nearly 400 court cases.\10\ The first
appellate case was decided in 1936 \11\ and the most recent appellate
court decision was handed down in 2012.\12\ Additionally, as the result
of decades of administrative litigation, the FCC itself has issued over
1,000 decisions attempting to apply the same ``just and reasonable''
standard Chairman Wheeler proposes today.
---------------------------------------------------------------------------
\10\ This estimate of court cases was determined by researching
cases citing the ``just and reasonable'' or ``unjust or unreasonable''
standards in the context of sections 201(b) and 202(a) of the
Communications Act. The cases included in this estimate vary with
respect to the depth of analysis involved and provide a general context
as to the amount of litigation sections 201 and 202 have spawned over
the years. See, e.g., Global Crossing Telecomms., Inc. v. Metrophones
Telecomms., Inc., 550 U.S. 45, 47 (2007); Ambassador, Inc. v. United
States, 325 U.S. 317, 323 (1945); AT&T Co. v. United States, 299 U.S.
232, 246-47 (1936); Cellco P'ship v. FCC, 700 F.3d 534, 548 (D.C. Cir.
2012); Virgin Islands Tel. Corp. v. FCC, 444 F.3d 666, 669-70 (D.C.
Cir. 2006); AT&T Corp. v. FCC, 448 F.3d 426, 435 (D.C. Cir. 2006);
Nat'l Ass'n of State Util. Consumer Advocates v. FCC, 372 F.3d 454,
456, 460 (D.C. Cir. 2004); Orloff v. FCC, 352 F.3d 415, 419 (D.C. Cir.
2003); Hi-Tech Furnace Sys., Inc. v. FCC, 224 F.3d 781, 792 (D.C. Cir.
2000); Bell Atlantic Tel. Co. v. FCC, 79 F.3d 1195, 1202 (D.C. Cir.
1996); Am. Message Centers v. FCC, 50 F.3d 35, 39 (D.C. Cir. 1995); MCI
Telecommunications Corp. v. FCC, 59 F.3d 1407, 1414 (D.C. Cir. 1995);
Capital Network Sys., Inc. v. FCC, 28 F.3d 201, 204 (D.C. Cir. 1994);
Nat'l Rural Telecom Ass'n v. FCC, 988 F.2d 174, 184 (D.C. Cir. 1993);
Illinois Bell Tel. Co. v. FCC, 988 F.2d 1254, 1260 (D.C. Cir. 1993);
Competitive Telecomms. Ass'n v. FCC, 998 F.2d 1058, 1064 (D.C. Cir.
1993); MCI Telecomms. Corp. v. FCC, 917 F.2d 30, 39 (D.C. Cir. 1990);
MCI Telecomms. Corp. v. FCC, 842 F.2d 1296, 1303 (D.C. Cir. 1988); Ad
Hoc Telecomms. Users Comm. v. FCC, 680 F.2d 790, 795 (D.C. Cir. 1982);
Am. Broad. Companies, Inc. v. FCC, 663 F.2d 133, 138 (D.C. Cir. 1980);
MCI Telecomms. Corp. v. FCC, 627 F.2d 322, 336 (D.C. Cir. 1980); AT&T
Co. v. FCC, 449 F.2d 439, 450 (2d Cir. 1971).
\11\ AT&T Co., 299 U.S. at 246-47.
\12\ Cellco P'ship., 700 F.3d at 548.
---------------------------------------------------------------------------
In short, the term ``just and reasonable'' is perhaps the most
litigated phrase in telecommunications jurisprudence. Is this what we
want America's 21st Century tech policy to look like? And I say this as
an attorney, with all due respect to my fellow practitioners: do we
want our world-leading Internet economy to be shaped by engineers,
consumers and entrepreneurs, or lawyers?
Additionally, not only would a new Title II regime, however
``skinny,'' produce an abundance of lawsuits and uncertainty, but the
premise of applying it to begin with is flawed as well. Proponents of
regulating the Internet under Title II argue that doing so would
prevent ``two-sided markets,'' usage-based pricing and
``discrimination'' \13\ of Internet traffic. In fact, the exact
opposite is true. Not only does Title II allow usage-based pricing,
that is exactly what it is designed to regulate.\14\ Not only does it
allow for the ``reasonable'' discrimination of traffic, it mandates
that similarly situated producers of traffic can be charged similar
rates if those rates are just or reasonable.\15\ Title II would not
prevent network operators from charging some content and application--
or ``edge''--providers to carry their Internet traffic. Indeed, Title
II would allow for a ``sending party pays'' construct that some
American edge providers and network operators are battling against
together in international regulatory arenas.\16\ Furthermore, it would
provide cover and encouragement to the Vladimir Putins of the world who
are looking to regulate the Internet globally.
---------------------------------------------------------------------------
\13\ The term ``discrimination'' is often misused in the net
neutrality debate. Discrimination can have many meanings. To a network
engineer, discrimination is absolutely necessary and means having the
ability to manage Internet Protocol networks. For instance, consumers
downloading movies want those video bits to arrive on their screens
quickly and without interference from other Internet traffic such as e-
mail or voice over Internet protocol (VoIP) communications. Similarly,
a caller using VoIP in an emergency wants his/her call to 911 to take
priority over Internet traffic carrying a cat video. Another example is
Internet traffic carrying heart monitoring data from a patient to his/
her doctor. During a medical crisis, the patient will want
discrimination, thus allowing life-saving data to reach the doctor as
quickly as possible and ahead of other traffic. This is also known as
``prioritization,'' something net neutrality proponents oppose.
Treating all Internet traffic ``equally,'' as many net neutrality
proponents want, would undermine the beneficial aspects of allowing the
freedom to innovate through the ability to discriminate in the
engineering context. What should not be permitted, and is prohibited
under existing antitrust and consumer protection laws, is
discrimination that has an anticompetitive effect that harms consumers.
Boiling the net neutrality debate down to the bumper sticker of ``treat
all Internet traffic equally'' may have popular appeal, but it is a
misleading slogan that will likely have dangerous implications if it is
codified as public policy.
\14\ 47 U.S.C. Sec. Sec. 201-202.
\15\ Id. Sec. 202(a).
\16\ Revisions of the International Telecommunications
Regulations--Proposals for High Level Principles to be Introduced in
the ITRs, ETNO, CWG-WCIT12 Contribution 109, at 2 (2012), available at
http://www.itu.int/md/T09-CWG.WCIT12-C-0109/en.
---------------------------------------------------------------------------
At the consumer level, industry analysts have concluded that new
utility-like economic regulation of the Internet would likely ``have
the perverse effect of raising prices to all users'' (hitting low-
income users the hardest), and some users would likely see the end of
their service entirely.\17\
---------------------------------------------------------------------------
\17\ Howard Buskirk, Investors, Analysts Uneasy About FCC Direction
on Net Neutrality, Comm. Daily, Oct. 2, 2009, at 2; see also National
Cable & Telecommunications Association Comments at 19 and Verizon and
Verizon Wireless Reply Comments at 17-18 to Preserving the Open
Internet, GN Docket No. 09-191; Street Talk, CableFAX, June 14, 2010
(``But while it's business as usual now, capital investment will come
down if Title II becomes a reality, said Credit Suisse telecom services
dir[ector] Jonathan Chaplin. He said the next place companies would
look to capture some of the return is costs, which would mean jobs.'').
---------------------------------------------------------------------------
Finally, a Title II framework would lay a broad-based legal
foundation for the Commission eventually to regulate the entire
Internet ecosystem--not just network operations, but content,
applications and potentially devices. Such is the goal of the
influential thought-leader of the movement, the man who coined the term
``net neutrality,'' Columbia law professor, Timothy Wu. He provided
refreshingly honest testimony alongside me at a House Judiciary
Committee hearing on net neutrality last June.\18\ His influence over
shaping the arc of net neutrality policies is not merely theoretical--
it is real and highly effective. For example, Professor Wu has
tremendous influence at the FCC, having authored the first-ever net
neutrality merger conditions during the Commission's approval of the
AT&T/BellSouth transaction in 2006.\19\ In short, the ultimate policy
goal of many Title II proponents is comprehensive industrial policy for
the entire Internet space.
---------------------------------------------------------------------------
\18\ See House Judiciary Subcommittee on Regulatory Reform,
Commercial and Antitrust Law, Net Neutrality: Is Antitrust Law More
Effective than Regulation in Protecting Consumers and Innovation?,
113th Congress, 2nd sess., 2014 (testimony of Timothy Wu), available at
http://judiciary.house.gov/_cache/files/bcecca84-4169-4a47-a202-
5e90c83ae876/wu-testimony.pdf. (noting that state manipulation of the
Net would shape ``not merely economic policy, not merely competition
policy, but also media policy, social policy'' and ``oversight of the
political process'').
\19\ Spencer E. Ante, Tim Wu, Freedom Fighter, Bus. Wk., Nov. 8,
2007, available at http://www.businessweek.com/stories/2007-11-08/tim-
wu-freedom-fighterbusinessweek-business-news-stock-market-and-
financial-advice; Robert M. McDowell, This is Why the Government Should
Never Control the Internet, Wash. Post, July 14, 2014, available at
http://www.washington
post.com/posteverything/wp/2014/07/14/this-is-why-the-government-
should-never-control-the-internet/.
---------------------------------------------------------------------------
Furthermore, turning information services into telecommunications
services via a de novo classification effort by the FCC would render
drawing a principled line between broadband service providers and other
entities that combine transmission with information processing or
storage, such as the content delivery networks that give us Netflix
movies or YouTube videos, impossible. In short, as ``tech'' and
``telecom'' companies blend their technologies and business operations,
or ``converge,'' to better serve consumers, the differences between
them are disappearing. Many such companies have thousands of miles of
fiber (embedded with intelligence and content) that connect servers and
routers all over the country to deliver a slurry of ones and zeros
(which present themselves to consumers as voice, data and video
services) as quickly as possible to consumers. Designed in 1934, Title
II is incapable of seeing these 21st Century technological distinctions
and is likely to draw all such companies under its powerful purview.
The Supreme Court has warned that this scenario could develop. It held
in its Brand X decision in 2005 that ``[reclassification] would subject
to mandatory common-carrier regulation all information-service
providers that use telecommunications as an input to provide
information service to the public.'' \20\ Or, as Robert Litan recently
explained, ``[t]here is a very slippery slope from having designated
ISPs as being subject to common carriage regulation to having to
include other forms of Internet transmissions as well because they
arguably use `telecommunications services', the legal hook in Title II
for its application.'' \21\ That captures nearly any edge provider that
owns even the smallest amount of transmission, processing, storage or
caching facilities.
---------------------------------------------------------------------------
\20\ Brand X, 545 U.S. at 994.
\21\ See Robert E. Litan, Regulating Internet Access as a Public
Utility: A Boomerang on Tech If It Happens, Economic Studies at
Brookings, at 2 (June 2, 2014).
---------------------------------------------------------------------------
This analysis is neither new nor partisan.\22\ In fact, the
Clinton-era FCC Chairman, William Kennard, presciently said in 1998:
---------------------------------------------------------------------------
\22\ American Internet policy enjoys a rich heritage of
bipartisanship. The Clinton-Gore-era flexible ``hands-off'' approach to
Internet governance, and other Internet policy matters, has been
supported by both Republicans and Democrats in Congress and the FCC for
over two decades. These policies have served not only American
consumers and the U.S. economy well, but also have helped spread
freedom and prosperity across the globe through the power of the mobile
Internet. This year, Congress has an opportunity to recast American
Internet policy in a constructive and bipartisan manner worthy of its
heritage.
Turning specifically to the matter of Internet access, we note
that classifying Internet access services as telecommunications
services could have significant consequences for the global
development of the Internet. We recognize the unique qualities
of the Internet, and do not presume that legacy regulatory
frameworks are appropriately applied to it.\23\
---------------------------------------------------------------------------
\23\ Federal-State Joint Board on Universal Service, CC Docket No.
96-45, Report to Congress, 13 FCC Rcd 11501, 82 (1998).
---------------------------------------------------------------------------
Just two years later, he reiterated:
It just doesn't make sense to apply hundred-year-old
regulations meant for copper wires and giant switching stations
to the IP networks of today. . . . We now know that decisions
once made by governments can be made better and faster by
consumers, and we know that markets can move faster than
laws.\24\
---------------------------------------------------------------------------
\24\ Hon. William E. Kennard, Chairman, FCC, Remarks at the Voice
Over Net Conference: Internet Telephony--America Is Waiting (Sept. 12,
2000).
And here's what the Clinton White House had to say about placing
legacy regulations on the Internet: ``We should not assume. . .that the
regulatory frameworks established over the past sixty years for
telecommunications, radio and television fit the Internet.'' \25\
---------------------------------------------------------------------------
\25\ The White House, A Framework for Global Electronic Commerce
(July 1, 1997).
---------------------------------------------------------------------------
Rather than applying the 80-year old Communications Act to the
Internet, if Congress believes that a change is needed to protect
consumers, entrepreneurs, innovation and free markets, it should
consider new legislation that is narrowly tailored and reflects the
market realities of the early 21st Century. Even more importantly,
Congress should consider a comprehensive update of our communications
laws, and I hope that would be a topic for a future hearing.
Wireless Broadband Is Different from Wireline Internet Services and
Should Not Be Subject to Rigid Rules
The American wireless industry has been a crown jewel of the
American economy for over 30 years. In fact, since its inception, the
domestic wireless industry has invested more than $430 billion in
infrastructure.\26\ The White House Office of Science and Technology
has noted that ``[a]nnual investment in U.S. wireless networks grew
more than 40 percent between 2009 and 2012, from $21 billion to $30
billion.'' \27\
---------------------------------------------------------------------------
\26\ CTIA--The Wireless Association, CTIA's Wireless Industry
Summary Report: Year-End 2013 Results (2014), available at http://
www.ctia.org/docs/default-source/Facts-Stats/ctia_survey_
ye_2013_graphics-final.pdf?sfvrsn=2; John C. Hodulik, et al., U.S.
Wireless 411: Version 5, UBS, Nov. 25, 2014, at 10.
\27\ FCC, Fact Sheet: Internet Growth and Development (2014),
available at https://apps.fcc.gov/edocs_public/attachmatch/DOC-
325653A1.pdf.
---------------------------------------------------------------------------
Analysts' projections estimate that between 2013 and 2017 wireless
infrastructure investment will generate as much as $1.2 trillion in
economic growth and create (directly and indirectly) up to 1.2 million
new jobs.\28\ This will result in an estimated $85 to $87 billion of
economic growth each year from 2013 through 2017, giving a 2.2 percent
boost in GDP by 2017.\29\ Furthermore, the use of unlicensed spectrum,
like Wi-Fi, generates an estimated $62 billion a year for the U.S.
economy.\30\
---------------------------------------------------------------------------
\28\ Alan Pearce, J. Richard Carlson & Michael Pagano, Wireless
Broadband Infrastructure: A Catalyst for GDP and Job Growth 2013-2017
(2013), available at http://www.pcia.com/images/
IAE_Infrastructure_and_Economy_Fall_2013.PDF.
\29\ Id.
\30\ Consumer Electronics Association, Unlicensed Spectrum and the
American Economy: Quantifying the Market Size and Diversity of
Unlicensed Devices (2014), available at http://www.ce.org/
CorporateSite/media/gla/CEAUnlicensedSpectrumWhitePaper-FINAL-
052814.pdf.
---------------------------------------------------------------------------
Wireless carriers are investing in the world's best infrastructure
because competition is fierce. According to an FCC report released just
last month, as of January 2014, 93.8 percent of the U.S. population had
access to at least three mobile broadband providers, and 83.8 percent
lived in areas with coverage by four or more mobile broadband
providers.\31\ Robust competition is providing a strong check against
anti-competitive behavior. Accordingly, the long-standing and
bipartisan consensus regarding public policy in the wireless space has
been to allow competition to obviate the need for command-and-control
regulation and industrial policy. As the statistics reveal, this hands-
off approach has produced a constructive explosion of entrepreneurial
brilliance which is benefiting consumers. Now is not the time to put
our gains at risk by injecting rigid regulations into a thriving
competitive market.
---------------------------------------------------------------------------
\31\ Implementation of Section 6002(b) of the Omnibus Budget
Reconciliation Act of 1993; Annual Report and Analysis of Competitive
Mobile Conditions with Respect to Commercial Mobile Services,
Seventeenth Report, WT Docket No. 13-135, Table III.A.v (rel. Dec. 18,
2014).
---------------------------------------------------------------------------
Furthermore, America is leading the world in 4G wireless
technologies and services, or LTE. U.S. consumers account for more than
37 percent of the world's LTE subscribers even though America is home
to less than five percent of the world's population.\32\ By contrast,
Western Europe, with a population greater than the U.S., accounts for
just 13 percent of the world's LTE subscribers.\33\
---------------------------------------------------------------------------
\32\ Ovum's Informa Telecoms & Media World Cellular Information
Service (WCIS+) (as of Sept. 2014).
\33\ 4G Americas, Global LTE Connections (as of Sept. 2014),
available at http://www.4gamericas.org/
index.cfm?fuseaction=page&pageid=2055.
---------------------------------------------------------------------------
Dominance in 4G penetration and adoption is giving America a
decisive advantage in the highly competitive global marketplace. We
didn't get here through government mandates or industrial policy,
however. Investment in new wireless technologies, unfettered by
unnecessary government regulation, is producing faster mobile data
connection speeds. Specifically, average mobile connection speeds in
the U.S. are 30 percent higher than in Western Europe.\34\ Best of all,
that gap is expected to grow. As the ``Internet of Everything''
(``IoE'') explodes to connect billions more devices to the Net--through
mobile technologies, from cars to health monitoring equipment to
inventory control technologies--it will transform the global economy
and America will have an advantage over our economic rivals.\35\
---------------------------------------------------------------------------
\34\ See Cisco VNI Forecast Highlights, available at http://
www.cisco.com/web/solutions/sp/vni/vni_forecast_highlights/index.html.
\35\ See Deloitte, How policy actions could enhance or imperil
America's mobile broadband competitiveness, Sept. 2014, at 17,
available at http://www2.deloitte.com/content/dam/Deloitte/us/
Documents/technology-media-telecommunications/us-tmt-mobile-index-
09262014.pdf (``Bullish industry forecasts include an estimate of 26
billion installed Internet of things units by 2020, impacting the
global supply chain, and a prediction of 24 billion connected devices
globally by 2016, resulting in a $1.2 trillion impact to North American
economies from revenues, cost reductions, or service improvements.'').
---------------------------------------------------------------------------
New phone-monopoly-style regulations applied to wireless broadband
by the FCC, however, could inhibit investment and innovation, and
America could lose her competitive advantage in the mobile and IoE
space.
In view of the unique characteristics of wireless broadband, it was
the bipartisan and unanimous consensus of the FCC in its 2010 Open
Internet Order that the heart of new net neutrality rules not be
applied to wireless broadband services.\36\ The primary reason for
treating wireless and wireline differently is that mobile broadband
technologies use shared networks. Wireless consumers may not realize
it, but they are sharing bandwidth with their neighbors. The sharing of
wireless bandwidth creates a host of technical and operational
challenges associated with the availability of capacity, the lack of
predictability about consumer demand and the scarcity of spectrum. As
such, the intricate art of network management of wireless networks is
far different from that of fiber or coaxial-based networks.\37\
Applying rigid, one-size-fits-all regulations to mobile broadband would
tie the hands of engineers trying to maximize network efficiency for
consumers as they are forced to live under new government supervision.
Innovation, investment and consumer well-being would be at risk as new
rules would create uncertainty and spark a counterproductive
regulation/litigation cycle.\38\ Any new legislation should take into
account the unique characteristics of wireless broadband.
---------------------------------------------------------------------------
\36\ Preserving the Open Internet, GN Docket No. 09-191, WC Docket
No. 07-52, Report and Order, 25 FCC Rcd 17905, 80-92 (2010).
\37\ For instance, according to CTIA--The Wireless Association, ``a
single fiber strand can carry 1,000 times more bits per second than a
10 GHz radio channel.'' Reply Comments of CTIA--The Wireless
Association, GN Docket Nos. 14-28, 10-127, at 3 (filed Sept. 15, 2014).
Wireless technologies are, indeed, different and highly complex, and
should not be burdened by new ``one-size-fits-all'' regulation.
\38\ See Robert Litan and Hal Singer, The Best Path Forward on Net
Neutrality, Progressive Policy Institute, at 8 (Sept. 4, 2014) (noting
that ``a heavy-handed Title II approach could risk substantial core
investment without generating any offsetting incremental investment at
the edge'').
---------------------------------------------------------------------------
Furthermore, as a matter of law, Congress would have to act to
create a new framework for wireless broadband. The FCC cannot
accomplish this on its own. In Title III, Congress wisely prohibited
the FCC from regulating wireless broadband services as common carriage
under Title II.\39\ It is a misconception that Section 332 provides the
FCC with the power to regulate wireless broadband under Title II, as
Chairman Wheeler stated at the Consumer Electronics Show two weeks ago.
In fact, the U.S. Court of Appeals for the D.C. Circuit has held
recently that wireless broadband providers ``are statutorily immune,
perhaps twice over, from treatment as common carriers.'' \40\
---------------------------------------------------------------------------
\39\ 47 U.S.C. Sec. 332(c)(2).
\40\ Cellco P'ship, 700 F.3d at 538.
---------------------------------------------------------------------------
In Section 332, Congress codified an important distinction between
a ``commercial'' mobile service and ``private'' mobile service.\41\ A
commercial mobile service ``interconnects'' with the public switched
telephone network (``PTSN'').\42\ A private mobile service, by
contrast, is not interconnected with the PSTN.\43\ By definition,
wireless broadband does not connect to the PSTN because it is an
Internet access service.
---------------------------------------------------------------------------
\41\ 47 U.S.C. Sec. 332(d).
\42\ Id. Sec. 332(d)(1); see also 47 C.F.R. Sec. 20.3.
\43\ 47 U.S.C. Sec. 332(d)(3).
---------------------------------------------------------------------------
In 1993, Congress enacted legislation mandating that the FCC treat
these two services differently.\44\ For commercial mobile services, or
traditional voice cellular services connected to the PSTN, Congress
instructed the FCC to impose narrowly defined common carrier
regulations.\45\ For private mobile services, including what are now
mobile broadband services, however, Congress declared that ``[a] person
engaged in the provision of a service that is a private mobile service
shall not, insofar as such person is so engaged, be treated as a common
carrier for any purpose.'' \46\ In short, to be ``treated as a common
carrier'' means the FCC cannot impose Title II-style public utility
regulation on a wireless broadband service provider.\47\
---------------------------------------------------------------------------
\44\ Pub. L. No. 103-66, 107 Stat. 312 (1993).
\45\ Id. Sec. 332(c)(1).
\46\ Id. Sec. 332(c)(2).
\47\ Verizon, 740 F.3d at 652; 47 U.S.C. Sec. Sec. 201, 202. Even
though wireless carriers will often provide their customers with both
commercial and private mobile services under a single contract, the FCC
may only treat wireless carriers as common carriers under Title II when
they are providing traditional mobile voice services. See Cellco, 700
F.3d at 538.
---------------------------------------------------------------------------
Simply put, Congress has already spoken: Section 332 clearly bars
the FCC from regulating wireless broadband under Title II.\48\ Attempts
to circumvent Congress's direct mandate will be overturned in court.
---------------------------------------------------------------------------
\48\ 47 U.S.C. Sec. 332(c)(2).
---------------------------------------------------------------------------
Conclusion
The Internet ecosphere is blossoming beautifully, resulting in the
most positive and constructive transformation of the human condition in
history. If Congress chooses to act, it should do so in a tailored
manner. In the meantime, while the directly elected representatives of
the American people work together in good faith on these issues, the
FCC should delay further action.
Thank you for the opportunity to testify and I look forward to your
questions.
The Chairman. Thank you, Mr. McDowell.
Mr. Misener?
STATEMENT OF PAUL MISENER, VICE PRESIDENT, GLOBAL PUBLIC
POLICY, AMAZON.COM
Mr. Misener. Thank you, Mr. Chairman, and Ranking Member
Nelson. I really appreciate the opportunity to testify today.
Thank you for your attention to this very important topic. I
will be focusing on your draft bill.
Amazon has long supported maintaining the fundamental
openness of the Internet, which has been so beneficial to
consumers and innovation. Now, there is widespread acceptance
of the need for government action to ensure that Internet
openness. Now policymakers need only to decide how to ensure
that Internet openness of net neutrality is maintained and
effective.
At Amazon, our consistent business practice is to start
with customers and work backward. That is, we begin projects by
determining what customers want and how we can innovate for
them. Here in the context of net neutrality public policy, we
have done the same. We take our position from our customers:
that is, consumers' point of view.
Consumers want to keep the fundamental openness of the
Internet and the choice it provides. Consumers will recognize
if net neutrality is taken from them, and if net neutrality is
taken, they will not care how or, for example, where in the
network infrastructure it is taken. We believe that the FCC has
ample existing authority to maintain net neutrality, but
obviously Congress has the power to set new policies for net
neutrality either entirely through a new statute or through a
mix of new and existing statute.
Amazon remains very grateful for Congress's continuing
attention to net neutrality. The topic certainly is worth your
vigilant oversight. Thank you also, Mr. Chairman, for creating
and sharing your discussion draft bill and for providing me the
opportunity to being discussing it today.
The principles of net neutrality contained in the
discussion draft are excellent. For example, the draft clearly
acknowledges that throttling and paid prioritization must be
banned, that net neutrality protections must apply to wireless
as well as to wire lines, and that providers must disclose
their practices. Of course, for these excellent principles of
Internet openness to be meaningful to consumers, they need to
be effective. In at least three instances, however, the
discussion draft could be interpreted to undermine that
effectiveness, so that the bill should be modified accordingly.
First, in subsection (d), while requiring consumer choice,
the bill would explicitly exempt specialized services from that
requirement. This could create a huge loophole if, for example,
specialized services involve the prioritization of some content
and services just like prescribed paid prioritization. Consumer
choice is baked into the Internet. Nothing would protect
consumer choice more than protecting the open Internet from
interference by broadband Internet access providers.
Second, in subsection (f), the discussion draft would
permit broadband Internet access providers to engage in
``reasonable network management.'' But any claim of reasonable
network management should be viewed suspiciously if in practice
it undermines prohibitions of blocking, throttling, and paid
prioritization, et cetera.
Third, the discussion draft is unclear or silent on an
important point of clarification. Which part of a broadband
Internet access service provider's network is covered by the
net neutrality protections? As indicated earlier, a consumer
will not care where in her service provider's network any
interference occurs, only whether it occurs. In sum, these
three areas of the discussion draft should be modified in order
to ensure that Internet openness of net neutrality is
maintained and effective.
In addition, the discussion draft should be modified to
provide adequate legal detail and certainty to consumers and
businesses in the Internet ecosystem. Like all businesses,
Internet companies need confidence in the state of law and
regulation in order to innovate and invest in products and
services on behalf of their customers. Details, including the
factors that would be considered during formal complaint
procedures, are essential for businesses and consumers to have
the confidence to make informed choices about investments and
purchases.
We believe that the FCC should be empowered to create
adequate legal certainty and detail through effective
enforcement tools and notice and comment rulemaking, but the
discussion draft bill would limit the FCC in several ways. So
Section B says the FCC may not expand Internet openness
obligations beyond the obligations established in the bill. If
the intention here is to establish a ceiling for these
obligations, this is Congress's prerogative for sure, and we
would support a provision like this if the bill went only so
far.
However, with such a ceiling in place, it is not necessary
to rescind the FCC's authority under Title II of the
Communications Act, as in Subsection (e), which could leave the
Agency helpless to address improper behaviors well within the
authority below the ceiling, and would leave consumers and
businesses in the Internet ecosystem without adequate certainty
about FCC's enforcement powers.
Also because Subsection (b) could be interpreted to bar the
FCC from notice and comment and rulemaking in this area, if
that's the intent, we would oppose it. Directing the FCC not to
expand statutorily established obligations is one thing. But we
believe it would be a mistake to prohibit the Commission from
providing through notice and comment rulemaking adequate legal
detail and certainty consumers and businesses.
So in conclusion, Mr. Chairman, I look forward to working
with you, and the Committee, and the FCC to ensure that the
Internet openness of net neutrality is maintained and
effective. And I welcome your questions. Thank you.
[The prepared statement of Mr. Misener follows:]
Prepared Statement of Paul Misener, Vice President for Global Public
Policy, Amazon.com
Thank you, Chairman Thune and Ranking Member Nelson. My name is
Paul Misener, and I am Amazon's Vice President for Global Public
Policy. Thank you for your attention to this important topic; for
calling this hearing; and for inviting me to testify.
I. Introduction
Amazon has long supported maintaining the fundamental openness of
the Internet, which has been so beneficial to consumers and innovation.
We made our first FCC filing in support of the open Internet over
twelve years ago, even before the term ``net neutrality'' was coined.
Amazon also has long joined with other parties in support of net
neutrality. A decade ago, we were a leading member of a coalition that
included dozens of companies, as well as dozens of public interest
groups from across the political spectrum. At the time, many
policymakers questioned the benefits of Internet openness, and whether
such benefits needed to be ensured by government. But now there is
widespread acceptance of the need for government action to ensure
Internet openness; now policymakers need only decide how to ensure that
the Internet openness of net neutrality is maintained and effective.
Amazon currently supports net neutrality through the Internet
Association, as well as directly and through other organizations.
At Amazon, our consistent business practice is to start with
customers and work backwards. That is, we begin projects by determining
what customers want and how we can innovate for them. Here, in the
context of net neutrality public policy, we have done the same: we take
our position from our customers'--consumers'--point of view.
Consumers want to keep the fundamental openness of the Internet and
the choice it provides. After two decades of the World Wide Web, it's
no longer a novelty: Consumers have come to expect and demand openness
and choice on the Internet--to demand net neutrality. Consumers also
have come to understand that bits are bits; that it shouldn't be any
harder or more expensive for their broadband Internet access service
provider to deliver one bit over another, and that there's no technical
or other inherent reason to discriminate against one bit over another,
or prioritize one bit over another.
Consumers will recognize if net neutrality is taken from them. And
if their net neutrality is taken, they won't care how or, for example,
where in the network infrastructure it is taken: If net neutrality is
taken at one point in the network, rather than another, consumers won't
care. They are results-oriented: At the end of public policy
discussions and decisions, consumers ultimately will judge whether
Internet openness was ensured--whether they got to keep net neutrality,
or whether it was taken away from them.
II. Legal Authority
Consumers certainly will be results-oriented in their assessment of
what particular legal authority the United States Government uses to
ensure that net neutrality is maintained: The authority will either
work, or it won't. We believe that the FCC has ample existing statutory
authority to maintain net neutrality, and we welcome Chairman Wheeler's
attention to this issue and his efforts to use his statutorily-granted
authority in a measured, focused way. We would not want discussions of
new statutory authority to derail or delay Chairman Wheeler's work but,
like he recently has said, we also would welcome additional statutory
direction from Congress.
Some telecom lawyers believe the FCC cannot fully maintain historic
net neutrality protections employing only the provisions of Section 706
of the Telecommunications Act. Recent litigation suggests they are
right. Such lawyers also point out that the FCC could ``un-forebear''
the entirety of Title II of the Communications Act for this purpose,
and they are right. But some other telecom lawyers believe that if the
FCC reinstated all of Title II, there would be myriad unintended
consequences unrelated to net neutrality. They are probably right, too,
and Amazon is focused on strong, enforceable net neutrality
protections, so we don't support a complete return to Title II here. We
have concluded that reinstating only a few provisions of Title II--
particularly all or parts of Sections 201, 202, and 208--plus relying
on other existing statute, including Section 706, would be adequate to
maintain net neutrality without creating unintended consequences.
But, of course, these approaches are within the confines of
existing statutory authority. Obviously, Congress has the power to set
new policies for net neutrality, either entirely through a new statute,
or through a mix of new and existing statutory authority.
III. Discussion Draft
Amazon remains very grateful for Congress's continuing attention to
net neutrality. The topic certainly is worthy of your vigilant
oversight. Thank you also, Mr. Chairman, for creating and sharing your
Discussion Draft bill, and for providing me the opportunity to begin
discussing it today. I look forward to continuing conversations about
net neutrality protections in the coming weeks and months.
The principles of net neutrality contained in the Discussion Draft
are excellent: For example, the draft clearly acknowledges that
throttling and paid prioritization must be banned; that net neutrality
protections must apply to wireless, as well as wireline; and that
providers must disclose their practices.
Of course, for these excellent principles of Internet openness to
be meaningful to consumers, they need to be effective. In at least
three instances, however, the Discussion Draft could be interpreted to
undermine that effectiveness, so the bill should be modified
accordingly to ensure that the Internet openness of net neutrality is
maintained and effective.
First, in Subsection (d), while requiring ``Consumer Choice,'' the
bill would explicitly exempt ``specialized services'' from that
requirement. This could create a huge loophole if, for example,
specialized services involved the prioritization of some content and
services, just like proscribed ``paid prioritization,'' the only
difference being that the content or service prioritized came from the
broadband Internet access service provider itself, instead of a third
party.
Subsection (d)(1) reads, ``Nothing in this section shall be
construed to limit consumer choice of service plans or consumers'
control over their chosen broadband Internet access service. . . .''
Hopefully, no one wants to limit actual consumer choice. Indeed,
consumer choice is exactly what advocates of net neutrality have been
trying to preserve and protect for over a dozen years. But other than
the ``specialized services'' that are explicitly exempted from the
consumer choice requirement, it is not obvious what part of the bill
might be construed as limiting consumer choice. Almost explicitly,
therefore, the bill acknowledges that the provision of such specialized
services would defeat consumer choice and the Internet openness of net
neutrality, despite the limitations of Subsection (d)(2).
Consumer choice is baked into the Internet. Nothing would protect
consumer choice more than protecting the open Internet from
interference by broadband Internet access service providers. As I have
described in previous testimony before Congress, the Internet is
fundamentally different--both in technical design and practical
operation--from other major media, including newspapers, radio
broadcasting, satellite TV, and cable. In those media, content is
``pushed'' out to consumers--and thus fills up the papers, channel, or
channels--in the hope that many consumers will want to read, hear, or
watch the content. In contrast, Internet consumers ``pull'' to
themselves the content of their choosing, so Internet content does not
fill a broadband Internet access provider's network unless a consumer
has pulled it through there. Again, the open Internet is all about
consumer choice, so Subsection (d) is unnecessary if this bill
otherwise would ensure the Internet openness of net neutrality.
If, contrary to these concerns, the purpose of Subsection (d) is to
ensure that consumers are allowed to choose among various, non-
discriminatory plans based on bit rates or monthly data volumes, then
there are ways to say that more clearly: Something along the lines of,
``Nothing in this section should be construed to limit the ability of
consumers to choose to pay for higher or lower data rates or volumes of
broadband Internet access service based on their individual needs.'' We
agree that it makes no sense to require an infrequent e-mail user to
pay the same for Internet access as a 24/7 gamer and, if such a
clarification is needed, we would support it. But the current language
of Subsection (d) does not accomplish this goal and introduces the
other noted problems.
Second, in Subsection (f), the Discussion Draft bill would permit
broadband Internet access providers to engage in ``reasonable network
management.'' This is a standard caveat to net neutrality, and we
support it, at least in theory. But particularly with the inclusion of
wireless broadband in the ambit of net neutrality protections, any
claim of reasonable network management should be viewed very
suspiciously if, in practice, it undermines prohibitions of blocking,
throttling, paid prioritization, etc., or if it tends to favor content
or services offered by the broadband provider itself.
Third, the Discussion Draft bill is unclear or silent on an
important point of clarification: Which parts of a broadband Internet
access service provider's network are covered by the net neutrality
protections? As indicated earlier, a consumer will not care where in
her service provider's network any interference with net neutrality
occurs, only whether it occurs. Providers should not be allowed to
accomplish blocking, throttling, paid prioritization, etc., further
upstream in the network, just because the bill could be construed to
address only the network facilities closer to consumers, such as the
``last mile.'' If, by this possible omission and limitation of FCC
powers, net neutrality were made ineffective by allowing the otherwise
prohibited behaviors to occur further upstream, consumers would rightly
judge their net neutrality to have been taken away.
In sum, these three areas of the Discussion Draft bill should be
modified in order to ensure that the Internet openness of net
neutrality is maintained and effective.
In addition, the Discussion Draft should be modified to provide
adequate legal detail and certainty to consumers and businesses in the
Internet ecosystem. Although the Discussion Draft's net neutrality
principles are promising, they also are fairly general. And, although
the Discussion Draft would require, in Subsection (a)(5), broadband
Internet providers to disclose their practices, these disclosures would
merely reflect what providers currently are doing, not what they would
be legally permitted to do.
Like all businesses, Internet companies need confidence in the
state of law and regulation in order to innovate and invest in products
and services on behalf of their customers. They need to know, with a
reasonable degree of certainty, whether a new product or service could
be deployed without interference by broadband Internet access service
providers. Certainty does not require legal certitude, but it does
require confidence-inspiring transparency, predictability, stability,
and fairness. Yet statutes are necessarily less detailed than agency-
written rules. And such details--including the factors that would be
considered during formal complaint procedures--are essential for
businesses and consumers to have the confidence to make informed
choices about investments and purchases.
We believe that the FCC should be empowered to create adequate
legal certainty and detail through effective enforcement tools and
notice and comment rulemaking. But the Discussion Draft bill would
limit the FCC in several ways. Subsection (b) says that the FCC ``may
not expand . . . Internet openness obligations . . . beyond the
obligations established'' in the bill ``whether by rulemaking or
otherwise.'' The word ``expand'' is vague, but if the intention here is
to establish a ceiling for these obligations, i.e., a cap on the FCC's
authority respecting the substantive provisions of the bill, this is
Congress's prerogative and reasonable expectation; we certainly don't
support allowing an agency to act beyond its statutory authority, and
would support a provision like this, if the bill went only so far.
However, with such a ceiling in place, it is not necessary to
rescind the FCC's authority under Title II of the Communications Act,
as in Subsection (e). Summarily blocking the FCC's use of existing
statutory enforcement authority could leave the agency helpless to
address improper behaviors well within its authority under the ceiling
created in Subsection (b), and would leave consumers and businesses in
the Internet ecosystem without adequate certainty about the FCC's
enforcement powers. With so much at stake for consumers and businesses,
this very real possibility should not be left to chance. We believe
that the FCC's Title II authority should be maintained to ensure the
effectiveness of Internet openness, subject to any reasonable
substantive ceiling on Internet openness obligations.
Also, in part because Subsection (b) directs the FCC to establish
``formal complaint procedures'' and ``enforce the obligations [of the
bill] though adjudication of complaints,'' this provision could be
interpreted to bar the FCC from notice and comment rulemaking in this
area. If that is the intent, we oppose it. Directing the FCC not to
``expand'' statutorily-established obligations is one thing, but we
believe it would be a mistake to prohibit the Commission from
providing, through notice and comment rulemaking, adequate legal detail
and certainty to consumers and businesses. Outlining the parameters
around permissible forms of ``reasonable network management'' is but
one example of where the FCC could provide important detail to
consumers and businesses through notice and comment rulemaking. Notice
and comment rulemaking also would more readily expose any attempt by
the FCC to ``expand'' the open Internet obligations of the bill, and
thus would promote the core purpose of this subsection. And notice and
comment rulemaking provides an important avenue for public
participation in the work of government agencies; this avenue should
not be blocked for net neutrality.
Thus, at a minimum, Subsection (e) should be amended to ensure that
the FCC retains its Title II tools, subject to a substantive ceiling on
Internet openness obligations, such as included in Subsection (b)(1),
which itself should be clarified to allow the FCC to provide, through
notice and comment rulemaking, adequate legal detail and certainty to
consumers and businesses.
IV. Conclusion
In conclusion, Mr. Chairman, I look forward to working with you,
your committee, and the FCC to ensure that the Internet openness of net
neutrality is maintained and effective.
And I welcome your questions.
The Chairman. Thank you, Mr. Misener.
Mr. Simmons?
STATEMENT OF W. TOM SIMMONS, SENIOR VICE PRESIDENT, PUBLIC
POLICY, MIDCONTINENT COMMUNICATIONS
Mr. Simmons. Chairman Thune, Ranking Member Nelson, members
of the Committee, thank you so much for inviting me here today
to discuss how Congress can update our Internet laws to ensure
vigorous broadband investment and an open Internet for the
future. My name is Tom Simmons. I am the Senior Vice President
of Public Policy for Midcontinent Communications.
Midcontinent is the leading provider of cable television,
telephone, high-speed Internet access, and cable advertising
services in North Dakota, South Dakota, and Minnesota. Our
communities vary in size from densities of five to 116 homes
per mile of cable plant, and their population ranges from less
than 125 in Dodge, North Dakota to more than 160,000 in Sioux
Falls, South Dakota. Our mission is to ensure that the rural
communities we serve are at the leading edge of technology.
The FCC's decision a decade ago to regulate Internet
service only lightly encouraged Midcontinent to invest nearly
$400 million in our networks over the past 10 years. We
recently doubled our customers' download speeds, and just this
past November we unveiled our new gigabit initiative, which
will make gigabit Internet speeds available that are five times
faster than our current best, and about 35 times faster than
the average high-speed Internet access speed in the country
today. Once complete, gigabit Internet access will be available
to the majority of our customers, including those in some of
our most rural areas of the country.
And we're not alone in our investment. Since 1996, ISPs
Internet service providers have invested $1.3 trillion in their
broadband networks. Last year, ISPs invested more in America
than any other non-financial sector. Today, more than 85
percent of U.S. homes have access to networks that can achieve
100 megabit speeds or faster. The overall Internet economy in
the U.S. supports 869,000 jobs. In 2014 alone, Midcontinent's
customers' bandwidth usage increased by 77 percent, and
bandwidth consumption is doubling for us every 15 months.
Midcontinent has a tremendous business incentive to invest, but
not if we are subjected to regulation that limits our ability
to innovate.
Midcontinent supports the draft legislation. It would
establish basic principles of Internet fairness and set this
country on a path to regulatory certainty and stability. It
would ensure that broadband customers can enjoy unconstrained
use of the service they pay for, that the FCC can protect
consumers, that Internet-based businesses can invest without
concern that an ISP can interfere with their access to
customers, and that ISPs can develop their service freely. And
it would accomplish all these goals without dragging the
provision of Internet service back to the monopoly telephone
era.
Many of the draft's obligations reflect our existing
business practices. Every Internet user should be able to
access any lawful content service or application they choose.
Purposely throttling customers would directly interfere with
our business strategy of offering the fastest-possible
broadband speeds. And no ISP has adopted a strategy of paid
prioritization, even in the absence of rules.
The draft legislation also wisely protects the need for
network management. ISPs need to utilize reasonable network
management practices to ensure customers are getting the
maximum benefits of their broadband service, and to protect
consumers against harmful cyber intrusion. The draft
legislation's transparencies principles strike an appropriate
balance between consumers' need for and the right to clear and
easy-to-understand information about the broadband service, and
the need to ensure that in the name of transparency, potential
wrongdoers do not have a road map for the best means of
thwarting safeguards that we put in place to protect the
network.
While we can support well-crafted regulations, we are
adamantly opposed to the imposition of an outdated common
carrier regulatory regime. Imposing Title II regulations would
work against the government's policy goals of increasing
broadband deployment and adoption. The regulatory burdens and
costs associated with a Title II approach would have a
significant and disproportionate impact on our ability to
invest further in our broadband networks.
Title II proponents often point to the FCC's forbearance
authority which is intended to allow the FCC to alleviate some
of Title II's regulatory burdens as a simple solution to our
concerns. But in reality, those same Title II proponents are
pressing the FCC not to forbear from vast swathes of Title II
now that they think the reclassification decision might be
going their way.
While it seems clear that applying a Title II regulatory
framework to broadband Internet access will only interfere with
the dynamic Internet, the FCC is poised to take just that step.
Truly there is a better way, and the proposed legislation is an
important part of finding the right path forward. Therefore, I
urge the Committee to move forward with a bipartisan draft so
that Midcontinent and others can continue to ensure that all
Americans, including those in rural America, receive the full
potential of America's broadband networks.
Thank you so much again for inviting me to be here today,
and we look forward to working with you on these very important
measures.
[The prepared statement of Mr. Simmons follows:]
Prepared Statement of W. Tom Simmons, Senior Vice President,
Midcontinent Communications
Chairman Thune, Ranking Member Nelson, and Members of the
Committee, thank you for inviting me here today to share my thoughts on
the ways Congress can update our Internet laws to ensure vigorous
broadband investment and an open Internet for the future. I also
appreciate the opportunity to address the proposed legislation for
achieving these goals.
My name is Tom Simmons and I am the Senior Vice President of Public
Policy for Midcontinent Communications. Midcontinent is the leading
provider of cable television services, as well as local and long
distance telephone service, high-speed Internet access services, and
cable advertising services in North Dakota, South Dakota, and
Minnesota. Midcontinent's service area includes over 335 communities
serving approximately 300,000 customers. The communities we represent
vary in size from densities of 5 to 116 homes per mile of cable plant,
and their population ranges from less than 125 in Dodge, North Dakota
to our largest community, Sioux Falls, South Dakota, which has a
population of more than 160,000.
Innovation and foresight have shaped Midcontinent's course for more
than 80 years. At Midcontinent, we have made it our mission to ensure
that the rural communities we serve are at the leading edge of
technology. Our goal throughout our footprint is always to continue to
find ways not only to meet, but to exceed the communications needs of
our customers.
A Positive Regulatory Environment Has Spurred Broadband Investment
The Federal Communications Commission's (``FCC'') decision a decade
ago to lightly regulate Internet service encouraged Midcontinent to
invest nearly $400 million in our networks over the past 10 years and
to make our network increasingly faster and more robust. This past
summer, we doubled our customers' download speeds, raising the speed of
the standard wideband 1.0 service tier from 30 Mbps to 60 Mbps and the
fastest wideband 3.0 tier from 100 Mbps to 200 Mbps.
In November 2014, Midcontinent unveiled our exciting new Gigabit
Initiative. Our new investment will make gigabit Internet speeds
available to approximately 600,000 homes and 55,000 businesses along a
high-capacity fiber network that covers more than 7,600 miles in North
Dakota, South Dakota and Minnesota. Our network will offer download
speeds that are five times faster than our current best and 35 times
faster than the average high-speed Internet access speed in America.
And we are not limiting these speeds to a few neighborhoods in the
largest cities. Once the initiative is complete in 2017, gigabit
Internet access will be available to the majority of our customers,
including those in some of the most rural areas of our country.
Midcontinent's decision to make these investments has been driven
by the knowledge that we will not be limited in our ability to use that
investment to create and develop the most compelling broadband service
offerings possible. Unconstrained by the type of regulations that
preclude and hinder our innovation in the television space, we are
incented to continue to invest and expand. And we are not alone in this
approach. Since 1996, ISPs have invested $1.3 trillion in their
broadband networks. Last year, ISPs invested more in America than any
other nonfinancial sector. Today, more than 85 percent of U.S. homes
have access to networks that can achieve 100 Mbps speeds or faster. The
overall Internet economy in the U.S. supports 869,000 jobs.
Midcontinent Supports Open Internet Principles
While the FCC's light regulatory touch has created an environment
that enables investment and innovation by increasing the odds of a
positive return on investment, our business decisions are also driven
by consumer demand. Our decision to upgrade our network's capacity and
download speeds was made in response to our customers' ever increasing
demand for--and expectation of--fast and unfettered access to any
lawful content, applications, and services. In 2014 alone,
Midcontinent's customers' bandwidth usage increased by 77 percent, and
we see bandwidth consumption doubling every 15 months. Midcontinent has
a tremendous business incentive to ensure that we continue to have the
enhanced bandwidth to deliver a superior user experience.
An important part of a positive user experience is ensuring a free
and open Internet. From a business perspective, it makes no sense for
us to engage in any behavior that would alienate our current and future
customers. We do not engage in anti-consumer practices such as
throttling or blocking disfavored content or the use of devices because
our customers would not tolerate it. Cable ISPs continued to abide by
open Internet principles even after the FCC's net neutrality rules were
overturned because many of them make good business sense. The fact is,
while it is popular to view the current net neutrality debate as an
``us versus them'', ``David versus Goliath'' battle with broadband ISPs
as the villain of the piece, Midcontinent, and the cable broadband
industry as a whole, agree with the widespread consensus that certain
open Internet principles promote the virtuous cycle of innovation and
investment that characterizes the Internet economy.
Midcontinent Supports The Draft Legislation
The draft legislation would establish basic principles of Internet
fairness and set this country on a path to regulatory certainty and
stability that would incite the broadband deployment that invigorates
our American economy. The draft's thoughtful approach ensures that
broadband Internet access service will meet consumers' expectations for
unconstrained use of the service they pay for, that the FCC has the
ability to protect consumers from any adverse consequences of a bad
actor, that Internet businesses can invest and grow without concern
that an ISP can interfere with their access to potential customers, and
that ISPs can create, grow and develop their service freely, subject to
important restrictions on anticompetitive behavior. And it will
accomplish all these goals without dragging the provision of Internet
service back to the monopoly telephone era, resulting in years of
litigation, uncertainty and the stifling of innovation and investment
enthusiasm.
As I mentioned, many of the draft's obligations reflect the
business practices of most ISPs today. There is little debate, for
example, that every Internet user should be able to access any lawful
content, service, or application that they choose. ISPs like
Midcontinent do not engage in blocking practices because we understand
that our customers purchase our services because they want access to
their favorite content, services, and applications, and they want to
explore the many new offerings emerging every day. ISPs have nothing to
gain and everything to lose by restricting customers' access to lawful
Internet offerings.
Similarly, broadband providers like Midcontinent constantly upgrade
their networks to enhance capacity and offer faster speeds to
anticipate and get in front of increased consumer demand. Purposely
throttling customers would directly interfere with our business
strategy of offering the fastest possible broadband speeds. And despite
the apocalyptic warnings of a two-tier Internet, no ISP has adopted a
strategy of paid prioritization, even in the absence of rules, as there
is no real business case today that favors it.
At the same time, we commend the draft legislation for its careful
preservation of consumers' ability to choose service plans and features
they want. No rule should preclude customers from being able to select
the service plan or features they want to receive.
The draft legislation also wisely protects the need for network
management. Even the most vocal net neutrality advocates recognize that
ISPs need to utilize reasonable network management practices to ensure
customers are getting the maximum benefits of their broadband service.
ISP networks are flooded every day with spam attacks, viruses, and
times of network congestion. ISPs devote significant time and energy to
protecting consumers and the networks against harmful cyber intrusions,
and to ensuring that traffic flows as smoothly as possible.
The draft legislation's transparency principles strike an
appropriate balance between consumers' need for, and right to, clear
and easy-to-understand information about their broadband service so
that they can make informed choices, and ISPs' concern that the rules
not require so much network information to be posted publicly that
potential wrongdoers have a roadmap to the best means of thwarting
safeguards put in place to protect the network.
The cable industry supports each of these open Internet principles.
Why wouldn't we? The same open Internet economy that has brought
tremendous opportunities to consumers and given birth to industry
giants like Google, Amazon, and Netflix has also created significant
incentives for ISPs to expand deployment of high-speed broadband
infrastructure to all corners of the country.
While it often seems that those of us engaged in the net neutrality
debate have diametrically opposing views, the truth is that we are all
working towards the same goal--a sensible public policy that preserves
and facilitates the ``virtuous circle'' of innovation, demand for
Internet services, and deployment of broadband infrastructure. The only
point of debate is how to get there. We commend the Committee on its
carefully balanced approach.
Title II Would Be the Wrong Approach
Despite the fact that ISPs have no real incentives to violate the
principles of the open Internet, making rules arguably unnecessary, we
at Midcontinent understand the concerns that have led us to where we
are today, and so we are not necessarily opposed to well-crafted
regulations that would effectively support the twin goals of preserving
the open Internet and encouraging continued innovation and investment.
But we are adamantly opposed to the imposition of an outdated common
carrier regulatory regime that is not equipped to govern the modern
communications market.
Title II of the Communications Act was designed for the 1930s
telephone monopoly era, and carries with it thousands of common carrier
regulations that could stifle our industry's ability to continue
deploying the next generation of high-speed networks. Taking this
radical and destructive step to fix what isn't even broken simply makes
no sense.
As the representative of a relatively small broadband ISP that
serves a predominantly rural area, I strongly believe that imposing
Title II regulations would work against the government's policy goals
of increasing broadband deployment and adoption. The regulatory burdens
and costs associated with a Title II approach would have a significant
and disproportionate impact on Midcontinent's--and other small and
medium-sized providers'--ability to invest further in our broadband
networks.
The idea that Title II reclassification would harm providers'
ability to obtain the capital needed to invest is not merely
speculation. Roughly 90 percent of the $73 billion invested in
telecommunications infrastructure in 2013 was spent on those industry
segments that are exempt from Title II regulation. There can be no
better example of the market's disdain for Title II services than
Google's decision to forgo offering voice services over their newly
built fiber infrastructure due to concerns about common carrier
regulation.
Title II proponents often argue that common carrier regulations
offer clear and simple answers to difficult policy questions. This is
demonstrably false. Attempting to impose an outdated regulatory
framework on the modern communications system has led to rampant
uncertainty and confusion. The FCC has struggled in a variety of
contexts (including special access regulation, universal service
reform, network unbundling) to develop clear and effective policies
that adapt outdated regulations to today's complex marketplace. Many
point to the FCC's forbearance authority, which is intended to allow
the FCC to alleviate some of Title II's regulatory burdens, as the
simple solution to any regulatory dilemma. In reality, many of those
same Title II proponents who once claimed that forbearance would be
easy are now pressing the FCC not to forbear from vast swaths of Title
II now that they think the reclassification decision is going their
way.
Given these realities, it seems clear that applying the Title II
regulatory framework to broadband Internet access service will serve
only to interfere with the dynamic Internet marketplace that has had a
profound impact to the way we live and work. Yet the FCC is poised to
take just this step. Truly there is a better solution to be found, and
the proposed legislation is an important part of finding the right path
forward. I urge the Committee to move forward with a bipartisan draft
so that Midcontinent and others can continue to ensure that all
Americans--including those in rural America--receive the full potential
of America's broadband networks.
Thank you again for inviting me here today, and we look forward to
working with all of you on these important issues.
The Chairman. Thank you, Mr. Simmons.
Dr. Turner-Lee?
STATEMENT OF NICOL E. TURNER-LEE, Ph.D.,
VICE PRESIDENT AND CHIEF RESEARCH
AND POLICY OFFICER, MULTICULTURAL MEDIA,
TELECOM AND INTERNET COUNCIL (MMTC)
Dr. Turner-Lee. I am a little short, so I have to pull up.
Chairman Thune, Ranking Member Nelson, and distinguished
members of the Committee, I am honored to appear before the
Committee to address this Nation's efforts to preserve the open
Internet, particularly as it concerns communities of color and
other more vulnerable populations.
And I have to say to keep my job as Vice President and
Chief Research and Policy Officer that we changed our name
today, and so for the record, we just became the Multicultural
Media, Telecom and Internet Council after 28 years. And for
those of you that are less familiar with MMTC, what we
primarily do is work to preserve and expand opportunity, equal
access, and ownership among people of color, particularly
minority and women business enterprises, and we proudly partner
with groups that consist of the National Urban League, LULAC,
AAJC, Rainbow Push Coalition, among others, to actually advance
that mission.
And our groups have been intricately involved with this
issue for quite some time. We have been actively engaged in the
debate as historically disadvantaged communities embark on a
journey toward first class digital citizenship and all of its
opportunities. So today we applaud the draft legislation
addressing the President's values as a starting point for
further discussion.
And I would like to bring to your attention three issues,
and my statement is on record in much more detail, but my time
is best spent on these points. I would first like to highlight
the unique benefits that the open Internet brings to people of
color and vulnerable populations, and encourage the Committee's
consideration of legislation that promotes an open Internet.
And finally in my testimony, I would like to offer two friendly
recommendations to the legislation that will promote the open
Internet while at the same ensuring consumer protections.
Let me start by saying that broadband access adoption and
digital literacy are civil rights prerequisites. Broadband
allows all Americans to gain new skills, secure good jobs,
obtain a quality education, and receive greater access to
healthcare. Today, however, too many Americans still do not
benefit from all that broadband enables. The rate of broadband
adoption among vulnerable populations is disproportionately
low, contributing to a persistent digital divide.
Despite growth in minority home broadband adoption, rates
among African-Americans and Hispanics are still lower than
whites. African-Americans over the age of 65, for example,
still exhibit especially low rates. Forty-five percent of
African-American seniors are Internet users, and only 30
percent have broadband at home compared to 63 percent and 51,
respectively, for white seniors. Non-users, overall, cite
perceived lack of relevance, affordability, and the lack of a
device in that order as their prime reasons for not being
online. So closing the digital divide should and must be an
important goal for policymakers, and steering the right course
of action to promote and protect an open Internet is one way
for us to get there.
Now, Congress has had a proud history of recognizing
structural injustices in our society and acting to correct
them. In the 1860s, Congress framed and passed the 13th, 14th,
and 15th Amendments which ended slavery, extended equal policy,
and enfranchised millions of Americans for the first time. In
the 1960s, Congress enacted the Civil Rights Act of 1964, the
Voting Rights Act of 1965, and the Fair Housing Act of 1968,
all due in great measure to a great man whose birthday we just
celebrated.
And today, Congress has the opportunity to show that
leadership yet again. By enacting a legislative solution that
preserves the open Internet we all have to come to enjoy,
Congress can extend the promise of justice, equality, and
democracy for all, and avoid a legal quagmire that will lead
the unending uncertainty for our economy and citizens.
An open Internet stimulates demand for broadband, which in
turn stimulates investment in infrastructure and innovation,
all too important to multicultural communities and vulnerable
populations. It is our belief at MMTC increased investment in
broadband also improves access adoption, and the types of
innovations that we like to drive in our communities, including
tele-health, distance learning, and open government.
For the past 20 years, the FCC chairs from both political
parties' administrations that have charted a successful
regulatory paradigm for the Internet and communities of color
have benefited from that. Although overall broadband adoption
by people of color has lagged, for example, certain categories
have not. Nearly 75 percent of African-Americans and 70 percent
of Hispanic cell phone owners use their devices to access the
Internet, more than the overall population. And people of color
have embraced broadband as a tool of empowerment under the
current rules as evidenced in places like Ferguson, Missouri,
New York City, and Columbus, Ohio.
These stats should tell us that we need to continue this
progress, but unfortunately recent efforts by the FCC to enact
meaningful open Internet rules have failed. Last year the D.C.
Circuit Court struck down key portions of the Commission's Open
Internet Order. Now, notwithstanding the current regulatory
framework that has allowed broadband to flourish and take hold,
the FCC is considering the imposition of Title II regulation,
which we at MMTC believe is ill suited to the current
realities. Imposing such a heavy-handed framework on the
Internet would only serve to stifle broad band's deployment,
discourage investment, and harm innovation. It would also place
uncertainty for consumers to regressive taxation on universal
service and potential ambiguity on consumer enforcements.
Some have argued that the FCC could reduce the adverse
effects of Title II regulation through judicious applications
of forbearance authority. We think that suggestion misses the
point. Even if the Commission could exercise its forbearance
authority in a productive manner, it would take years to sort
out an appropriately calibrated set of rules. And meanwhile,
this regulatory uncertainty harms communities of colors for the
reasons I have already mentioned.
The bottom line is that even if the Commission were to
forbear, delay would stifle the progress we have seen in
connected communities of color and put us behind on the
discussion of areas that matter the most of us, universal
service, ensuring public safety, as well as digital redlining.
I would like to just close really quickly with two
additional amendments that we think could actually enhance
this. First, as Congress considers the bill, Congress should
address the harmful practice of digital redlining. Digital
redlining is the refusal to build and service lower income
communities on the same terms as well as wealthier communities.
It imposes, in essence, digital segregation.
Sadly, as the experience of this country shows, segregation
harms and degrades all, and we cannot bring that into the
digital age. Congress should empower the FCC to prohibit
digital redlining, and, therefore, ensure equal access for all,
and that could be considered under the FCC's current 706
authority.
Second, we think to enhance the consumer protections in the
bill, perhaps there is a way to suggest something that we
actually put into record, which is the creation of an
accessible, affordable, and expedited procedure for the
reporting and resolution of complaints. Modeled after the
probable cause paradigm in Title 7 of the Civil Rights of 1964,
we feel that the precise details of that structure could be
applied to the communications ecosystem, and, therefore, allow
people to get their complaints heard without feeling like they
have to have a lawyer.
So in closing, the time is now to get past the morass of a
debate that has been lingering for more than a decade. And with
Congress's discussion and guidance on the issue, I think we can
make it happen. So we offer those, and I welcome any questions,
and we're here to help in the crafting of this legislation.
[The prepared statement of Dr. Turner-Lee follows:]
Prepared Statement of Nicol E. Turner-Lee, Ph.D., Vice President and
Chief Research & Policy Officer, Multicultural, Media, Telecom and
Internet Council (MMTC)
Introduction
Chairman Thune, Ranking Member Nelson, distinguished Members of the
Committee, esteemed colleagues on the panel, I am pleased and honored
to appear before the Committee today to address this Nation's efforts
to preserve the open Internet--particularly as it concerns our Nation's
communities of color and other vulnerable populations including the
economically disadvantaged, seniors and people with disabilities. I
currently serve as Vice President and Chief Research & Policy Officer
of the Multicultural Media, Telecom and Internet Council, previously
known as the Minority Media and Telecommunications Council (``MMTC'').
It is my privilege to help lead this national not-for-profit
organization that for 28 years has been dedicated to promoting and
preserving equal opportunity and civil rights in the mass media,
telecommunications, and broadband industries. The MMTC proudly
represents historic civil rights and advocacy organizations such as the
NAACP, the National Urban League, LULAC--and hundreds of others. In a
previous role, I served as Vice President and first Director of the
Media and Technology Institute of the Joint Center for Political and
Economic Studies where we developed the first comprehensive study on
minority broadband adoption.\1\
---------------------------------------------------------------------------
\1\ See Nicol Turner-Lee, Jon P. Gant and Joseph Miller, National
Minority Broadband Adoption: Comparative Trends in Adoption, Acceptance
and Use, Joint Center for Political and Economic Studies (March 2010),
available at http://jointcenter.org/sites/default/files/MTI_
BROADBAND_REPORT_WEB.pdf (last visited January 19, 2015).
---------------------------------------------------------------------------
At MMTC, we believe that every consumer, entrepreneur, and business
has the right to an accessible and open Internet. An open Internet is
essential to enabling all Americans--including and especially Americans
of color and other vulnerable groups--to experience first class digital
citizenship in the 21st century.
Digital citizenship is the new passport that guarantees full access
to the opportunities powered by broadband and the Internet, especially
those applications and broadband-enabled devices that help promote
physical wellness, civic engagement, wealth creation, economic
development and educational readiness. The cost of digital exclusion-
whether as consumers or producers-is too high to ignore for people of
color and other vulnerable populations. With new technology
transforming how we live, learn and earn in our society, it is
imperative that no one is left behind: especially your constituents
striving to break through the daily challenges of social and economic
isolation. Policies that deter efforts to foster broadband adoption
will have a profound effect on people of color, particularly those who
have not adopted Internet access and as a result are unable to
participate fully in society through job search, civic discourse and
access to government services. It is essential that we assess these
``opportunity costs'' for consumers as this discussion is elevated
toward a legislative solution.
Consistent with these views, I would like to bring three issues to
the Committee's attention today. First, I would like to highlight the
unique benefits that an open Internet brings to people of color and
vulnerable populations, and explain why MMTC--along with a diverse
range of other nonprofit, consumer, and labor organizations, as well as
businesses and scholars--came out in support of open Internet rules
based on the Federal Communications Commission's (FCC) Section 706
regulatory authority, rather than the Commission's Title II authority
that applies to legacy utilities.\2\ Second, I would like to encourage
the Committee to consider a legislative proposal to promote an open
Internet, provided it preserves the Commission's ability to protect
consumers. Third, I would like to offer two friendly recommendations
that are designed to ensure: (1) that all consumers are included in the
promise of first class citizenship in the digital age; and (2) that
policymakers refocus on other critical broadband priorities that can
render positive net impacts for historically disenfranchised
communities, such as such as prohibiting redlining, promoting universal
service, and ensuring public safety.
---------------------------------------------------------------------------
\2\ See generally Comments of the National Minority Organizations,
FCC GN Docket No. 14-28 (July 18, 2014). See also Comments of the
Chicagoland Black Chamber of Commerce (July 17, 2014); Comments of the
U.S. National Black Chamber of Commerce, National Gay & Lesbian Chamber
of Commerce, U.S. Hispanic Chamber of Commerce, and U.S. Pan Asian
American Chamber of Commerce (July 18, 2014); Comments of the Black
Women's Roundtable (July 18, 2014); Florida State Hispanic Chamber of
Commerce (July 14, 2014); Asian Americans Advancing Justice (July 15,
2014); Comments of the Communications Workers of America and National
Association for the Advancement of Colored People (July 15, 2014);
Comments of League of United Latin American Citizens, National Action
Network, National Association for the Advancement of Colored People,
the National Coalition on Black Civic Participation, and the National
Urban League (July 18, 2014).
---------------------------------------------------------------------------
I. An Open Internet Benefits Communities of Color
As the Nation recognizes the legacy of the Reverend Dr. Martin
Luther King, Jr. this week, we can all acknowledge that the journey
towards civil and human rights is incomplete. Recent events in
Ferguson, Missouri, Columbus, Ohio, and New York City serve as painful
reminders. Today, broadband access, adoption and digital literacy join
the suite of civil rights prerequisites to first class citizenship in
the digital age. Broadband is essential for living a life of equal
opportunity in the 21st Century. And broadband access allows all
Americans--African American, white, Latino, Asian, women, men, abled,
and disabled--to gain new skills, secure good jobs, obtain a quality
education, and receive greater access to healthcare through state of
the art tele-health technologies. Broadband has also become the new
broadcast, streaming in ``real time'' what transpires both nationally
and internationally, and in recent history mobilizing people around
social change.
Too many Americans, however, still do not benefit from all that
broadband enables. They do not have general Internet access or have not
adopted broadband technology at home.\3\ This problem is particularly
acute in many communities of color and among the poor, seniors and less
educated citizens, contributing to a persistent ``digital divide.''
Despite increases in minority home broadband adoption over the past few
years, African Americans and Hispanics are still not getting broadband
connections at home in sufficient numbers. This is especially the case
among two demographic subgroups within minority populations: elderly
minorities and those with limited formal education.\4\ Recent data from
the Pew Research Center found that older African Americans, as well as
those that had not attended college, are significantly less likely to
go online or have residential broadband access compared to whites of
similar demographic profiles.\5\ In the case of African Americans,
individuals age 65 and older have especially low rates of adoption when
compared to whites. Forty-five percent of African American seniors are
Internet users and 30 percent have broadband at home as compared to 63
percent and 51 percent respectively for whites.\6\ While younger,
college educated, and higher-income African Americans are just as
likely as their white counterparts to use the Internet and to have home
broadband access, these statistics are less promising as socioeconomic
status and educational attainment levels decline.
---------------------------------------------------------------------------
\3\ See FCC, Connecting America: The National Broadband Plan 167-68
(2010) (``National Broadband Plan''); David Honig, Esq. & Nicol Turner-
Lee, Ph.D., MMTC, Refocusing Broadband Policy: The New Opportunity
Agenda for People of Color 7-8 (Nov. 21, 2013) (``MMTC White Paper'').
\4\ Aaron Smith, Pew Research Center, African Americans and
Technology Use, A Demographic Portrait, 1-17 (Jan. 6, 2014), available
at http://www.pewInternet.org/files/2014/01/African-Americans-and-
Technology-Use.pdf (last visited January 19, 2015).
\5\ Id.
\6\ Id.
---------------------------------------------------------------------------
Nearly 70 percent of Hispanic Americans access the Internet through
cell phone devices.\7\ Less than 60 percent of Hispanics, however, have
a home broadband connection,\8\ which may impose some limitations when
applying for jobs or completing certain homework assignments.
---------------------------------------------------------------------------
\7\ See Maeve Duggan & Aaron Smith, Pew Research Center, Cell
Internet Use (Sept. 2013) available at http://www.pewInternet.org/
files/old-media//Files/Reports/2013/PIP_CellInter
netUse2013.pdf (last visited January 19, 2015).
\8\ See Pew Research Internet Project, Pew Research Center,
Broadband Technology Fact Sheet (2015), available at http://
www.pewInternet.org/fact-sheets/broadband-technology-fact-sheet/ (last
visited January 19, 2015).
---------------------------------------------------------------------------
Non-Internet users cite a perceived lack of relevance,
affordability, and the lack of an Internet-capable device as their
prime reasons for not being online.\9\ And, as a recent study conducted
by the National Telecommunications and Information Administration,
which included analysis from two FCC economists, found, approximately
two-thirds of non-subscribing households say they will not subscribe to
broadband at any price.\10\ Closing the digital divide, therefore, must
be a vital goal for policy makers: Our challenge is to look toward
promoting adoption. Historically disadvantaged groups often have the
most to gain from accessing broadband technology.
---------------------------------------------------------------------------
\9\ Id.
\10\ See Carare, Octavian and McGovern, Chris and Noriega, Raquel
and Schwarz, Jay A., The Willingness to Pay for Broadband of Non-
Adopters in the U.S.: Estimates from a Multi-State Survey (November 18,
2014). Information Economics and Policy, Forthcoming. Available at
SSRN: http://ssrn.com/abstract=2375867 or http://dx.doi.org/10.2139/
ssrn.2375867 (Last accessed January 20, 2015).
---------------------------------------------------------------------------
The current debate concerning whether and how the Commission might
regulate the Internet has largely over-shadowed the adoption crisis.
Last year, MMTC and a coalition of 45 highly respected, national civil
rights, social service and professional organizations representing
millions of constituents, urged the Commission to focus its broadband
policies on promoting engagement, adoption and informed broadband use
by communities of color, and to exercise its authority to promote
broadband to protect all consumers' rights to an open Internet. These
groups, including the National Coalition on Black Civic Participation,
Rainbow PUSH Coalition, MANA--A Latina Organization, National Hispanic
Caucus of State Legislators and National Organization of Black County
Officials, asked the Commission to establish an accessible, affordable,
and expedited procedure for the resolution of complaints. Modeled after
the probable cause paradigm in Title VII of the 1964 Civil Rights Act,
which ensures equal employment opportunity, our proposal sought to
complement the Commission's Ombudsperson proposal and the Commission's
efforts to expand transparency. Other national civil rights
organizations--including the National Urban League, the National Action
Network, the NAACP, and the League of United Latin American Citizens--
also urged the Commission not to use its Title II authority.
We all agree with President Obama that this Nation needs to advance
and enforce those values undergirding Internet openness. In our joint
filing, our coalition urged the Commission to take a straightforward
approach that includes \11\:
---------------------------------------------------------------------------
\11\ See Comments of the National Minority Organizations 11-12, FCC
GN Docket No. 14-28 (July 18, 2014).
The immediate reinstatement of no-blocking rules to protect
---------------------------------------------------------------------------
consumers.
Creation of a new rule barring commercially unreasonable
actions, while affording participants in the broadband economy,
particularly minority entrepreneurs, the opportunity to enter
into new types of reasonable commercial arrangements,\12\ and
through monitoring by FCC's Office of Communications Business
Opportunities, ensuring that minority entrepreneurs are never
overlooked by carriers seeking to develop new commercial
arrangements.
---------------------------------------------------------------------------
\12\ See In the Matter of Protecting & Promoting the Open Internet,
29 F.C.C. Rcd. 5561, 116 (2014).
The establishment of a rebuttable presumption against paid
prioritization that protects against ``fast lanes'' and any
corresponding degradation of other content, while ensuring that
such presumption could be overcome by business models that
sufficiently protect consumers and have the potential to
benefit consumer welfare (for example, telemedicine
applications).\13\
---------------------------------------------------------------------------
\13\ As indicated in our Comments, any prioritized service that
overcomes the presumption would remain subject to enforcement, and
consumers would be able to obtain rapid relief by working with the
Ombudsperson and through the complaint process modeled after the
probable cause paradigm found in Title VII of the 1964 Civil Rights
Act.
The need for greater transparency and enforceable disclosure
---------------------------------------------------------------------------
requirements to maintain online consumer protections.
The reigning in of bad actors, especially those engaged in
blocking, as the D.C. Circuit confirmed the Commission has the
authority to do.\14\
---------------------------------------------------------------------------
\14\ See Verizon v. FCC, 740 F.3d 623, 655 (D.C. Cir. 2014).
Like our President, we believe that an open Internet stimulates
demand for broadband, which in turn stimulates investment in broadband
infrastructure.\15\ Increased investment in broadband infrastructure
improves access in all communities.\16\ This is especially true in poor
and low-income communities that tend to be affected most by increases
or decreases in investment and concomitant price changes.\17\ This is
basic economics.\18\ That is why our Coalition opposes Title II
reclassification of broadband as a telecommunications service.
---------------------------------------------------------------------------
\15\ See, e.g., Daniel A. Lyons, Internet Policy's Next Frontier:
Usage-Based Broadband Pricing, 66 Fed. Comm. L.J. 1, 31 (2013)
(explaining that an economically rational network operator faced with
regular congestion (demand) will ``invest capital to expand the network
and provide more bandwidth to all users'').
\16\ See National Broadband Plan, supra note 3, at 129.
\17\ See, e.g., Kevin A. Hassett & Robert J. Shapiro, Georgetown
Center for Business and Public Policy, Towards Universal Broadband:
Flexible Broadband Pricing and the Digital Divide 12 (Aug. 2009)
(``Towards Universal Broadband''), available at http://www.gcbpp.org/
files/Academic_Papers/AP_Hassett_Shapiro_Towards.pdf (last visited
January 19, 2015).
\18\ See, e.g., J. Gregory Sidak, A Consumer-Welfare Approach to
Network Neutrality Regulation of the Internet, 2 J. Comp. L. & Econ.
349, 357 (2006) (``Private investors will fund the construction of a
broadband network only if they have a reasonable expectation that the
company making that investment will recover the cost of its investment,
including a competitive (risk-adjusted) return on capital.'')
---------------------------------------------------------------------------
We believe that preserving the open Internet is one of the
fundamental civil rights issues of our time. And that is why this is an
issue that Congress should address.
II. Congress is Well Positioned to Preserve the Open Internet
Congress has a proud history of recognizing structural injustices
in our society and acting to correct them. In the 1860s, Congress
framed and passed the Thirteenth, Fourteenth, and Fifteenth Amendments,
which ended slavery, extended equal protection, and enfranchised
millions of Americans for the first time. In the 1960s, Congress
enacted the Civil Rights Act of 1964, the Voting Rights Act of 1965 and
the Fair Housing Act of 1968--all due in great measure, I hasten to
add, to the work of a man whose birthday we celebrated this past
weekend.
Today, Congress has the opportunity to show leadership yet again.
By enacting a legislative solution that preserves the open Internet,
Congress can extend the promise of justice, equality, and democracy not
only to all citizens, but especially to communities of color and more
vulnerable groups who are most in need of the opportunity provided by
access to high-speed broadband.
For the past 20 years, FCC Chairs from both political parties have
charted a successful regulatory paradigm for the Internet.\19\ And
although overall adoption of broadband by people of color has
lagged,\20\ innovation among certain broadband technologies has not.
For example, nearly 75 percent of African American and 68 percent of
Hispanic cell phone owners use their devices to access the
Internet,\21\ and these numbers are increasing.\22\ African Americans
and Latinos use smartphones for non-voice applications, such as web
surfing and accessing multimedia content, at a higher rate than the
population in general.\23\ Asian Americans have adopted smartphones at
a higher rate than the total U.S. population.\24\ And people of color
have largely embraced social media, such as Twitter and Instagram.\25\
This along with the increasing availability of Wi-Fi services through
fixed broadband providers has enabled mobility, which is critically
important to communities of color. These are encouraging signs as
wireless becomes the new broadcast for American citizens and
demonstrates that the broadband market is both dynamic and competitive
in wireless and wireline. Yet, policymakers must act to ensure that
this progress continues.
---------------------------------------------------------------------------
\19\ See, e.g., Michael Powell, Chairman, FCC, Preserving Internet
Freedom: Guiding Principles for the Industry, at 2 (Feb, 8, 2004)
available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-
243556A1.pdf (articulating four principles); Julius Genachowski,
Chairman, FCC, Statement re Preserving the Open Internet (2010),
available at https://apps.fcc.gov/edocs_public/attachmatch/FCC-10-
201A2.pdf (last visited January 19, 2015) (``The rules . . . we adopt
today are rooted in ideas first articulated by Republican Chairmen . .
. and endorsed in a unanimous FCC policy statement in 2005.'').
\20\ See MMTC White Paper, supra note 3, at 7.
\21\ Maeve Duggan and Aaron Smith, Pew Research Center's Internet &
American Life Project, Cell Internet Use 2013 5 (Sept. 16, 2013),
available at http://pewInternet.org/Reports/2013/Cell-Internet.aspx
(last visited January 19, 2015).
\22\ Id. at 7.
\23\ See Kathryn Zickuhr & Aaron Smith, Pew Research Center's
Internet & American Life Project, Home Broadband 2013 (Aug. 26, 2013)
available at http://pewInternet.org/Reports/2013/Broadband.aspx. See
also Nielsen, More of What We Want: The Cross Platform Report of Q1
2014 (June 30, 2014) (``Nielsen''), available at http://
www.nielsen.com/us/en/insights/reports/2014/more-of-what-we-want.html
(last visited January 17, 2015). (reporting that African Americans and
Hispanics are more likely than other ethnic groups to watch video on
demand).
\24\ Nielsen, Significant, Sophisticated, and Savvy: The Asian
American Consumer 19 (2013), available at http://www.aaja.org/wp-
content/uploads/2013/12/Nielsen-Asian-American-Consumer-Report-2013.pdf
(last visited January 19, 2015).
\25\ See Yoree Koh, Twitter Users' Diversity Becomes an Ad Selling
Point, The Wall Street Journal (Jan. 20, 2014), available at http://
online.wsj.com/news/articles/SB100014240527023044
19104579323442346646168?mg=reno64-wsj (last visited July 14, 2014);
Nielsen, supra note 23, at 11.
---------------------------------------------------------------------------
Although the Internet has remained open, recent efforts by the FCC
to enact prospective open Internet rules have not succeeded. Last year,
the D.C. Circuit struck down significant portions of the Commission's
Open Internet Order, while offering a roadmap to potentially
sustainable rules.\26\ Now the agency is considering the imposition of
Title II regulations on the Internet notwithstanding the current
regulatory framework that has allowed broadband to flourish. But Title
II was designed for a telephone era that assumed monopoly control of
the communications infrastructure and regulated accordingly.\27\ Its
tools include common carriage, rate regulation, and the imposition of
increased access charges and taxes.\28\
---------------------------------------------------------------------------
\26\ See Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014).
\27\ See Robert Litan, Brookings Inst., Regulating Internet Access
as a Public Utility 2 (June 2, 2014) available at http://
www.brookings.edu/ /media/research/files/papers/2014/06/
regulating_Internet_access_public_utility_litan/
regulating_Internet_access_public_utility_
litan.pdf (last visited January 19, 2015).
\28\ See id. at 1.
---------------------------------------------------------------------------
Monopoly control of the broadband marketplace is not what we have
today.\29\ Because Title II is ill suited to current realities,
imposing its heavy-handed framework on the broadband marketplace would
only serve to discourage investment and stifle infrastructure
deployment.\30\ The effects of this investment dis-incentivizing
approach could disproportionately impact communities where lower
adoption makes the economics of deployment more challenging. It also
threatens those innovations inspired by broadband and the Internet to
address and solve problems that hold our communities hostage, such as
chronic disease, the absence of robust educational resources, and ``in
line'' versus ``online'' government services. In short, just as the
costs of digital exclusion are high, so are the risks associated with
Title II.
---------------------------------------------------------------------------
\29\ See id. at 2 (``[Title II] never was intended . . . to apply
to services that were not characterized by monopoly, such as Internet
access.'').
\30\ See Comments of the Communications Workers of America and
National Association for the Advancement of Colored People, FCC GN
Docket No. 14-28 (July 15, 2014).
---------------------------------------------------------------------------
Some have argued that the FCC could reduce the adverse effects of
Title II regulation through judicious application of its forbearance
authority.\31\ Although this suggestion is well intentioned, it misses
the point. Even if the Commission could exercise its forbearance
authority in a productive manner, it would take years to sort out an
appropriately calibrated set of rules, whether due to lengthy
rulemakings or litigation. Meanwhile, this regulatory uncertainty would
send capital to the sidelines. The economic literature suggests that
these regulatory uncertainty effects would disproportionately harm
communities of color.\32\ The bottom line is that even if the
Commission were to exercise its forbearance authority, the delay
inherent in the process would likely stifle the progress we have seen
in connecting communities of color. Our communities deserve better than
this.
---------------------------------------------------------------------------
\31\ See, e.g., Statement by the President on Internet Neutrality,
Daily Comp. Pres. Doc. No. 00841, 2 (Nov. 10, 2014).
\32\ See, e.g., Hassett & Shapiro, supra note 17, at 4-5, 12
(linking increased private investment with increased minority access);
J. Gregory Sidak, A Consumer-Welfare Approach to Network Neutrality
Regulation of the Internet, 2 J. Comp. L. & Econ. 349, 466-67 (2006)
(explaining that marginal broadband users--who tend to be minorities--
are most affected by price increases).
---------------------------------------------------------------------------
Congress should act to preserve the open Internet, and with it the
promise of first class digital citizenship and equal opportunity for
all. Congress has the ability to amend the Communications Act to
provide strong, bright-line open Internet protections. That is why MMTC
and four dozen national minority organizations have urged the
Commission to preserve the open Internet without implementing Title II
regulations. We encourage Congress to follow the same effective course.
III. MMTC'S Recommendations
As Congress considers how best to achieve these goals, we ask that
they keep all options on the table. The legislative proposal should
transition to a legislative debate for how to get past this morass so
we can address other issues causing strain in the telecommunications
ecosystem. Along those lines, we believe it is imperative that Congress
narrowly target its effort in resolving the issue of the open Internet,
and not attempt to diminish the FCC's authority to address other
important consumer protection issues such as prohibiting redlining,
promoting universal service, and ensuring public safety.
To this point, I would like to offer two recommendations that I
believe are consistent with the spirit of the ``eleven principles for
bipartisan rules in the Internet Age'' that the Committee has laid
out.\33\
---------------------------------------------------------------------------
\33\ See Republican Press Office, Press Release, Congressional
Leaders Unveil Draft Legislation Ensuring Consumer Protections and
Innovative Internet (Jan. 16, 2015), available at http://1.usa.gov/
1wgzCia (last visited January 19, 2015).
---------------------------------------------------------------------------
First, Congress should address, or at a minimum reinforce the FCC's
ability to address, the practice of ``digital redlining.'' ``Digital
redlining'' is the refusal to build and serve lower-income communities
on the same terms as wealthier communities.\34\ It imposes, in essence,
digital segregation. Sadly, as the experience of our country shows,
both de jure and de facto segregation harms and degrades all of us--
especially the most vulnerable among us. This is no less true in the
digital age. Congress has recognized this in the past, which is why it
has directed the Commission to collect demographic information
concerning unserved areas when it measures deployment of advanced
telecommunications capability.\35\ Speaking in Cedar Rapids last week,
President Obama observed that high-speed broadband is ``not a luxury,
it's a necessity.'' \36\ Congress should build on its past work and the
President's observation by empowering the FCC to prohibit digital
redlining and thereby ensure equal access for all.
---------------------------------------------------------------------------
\34\ Broadband & Social Justice, Press Release, MMTC Urges
Government to Address Digital Redlining; Ensure Equitable Access for
All (Jan. 15, 2015), http://broadbandandsocialjustice.org
/2015/01/mmtc-urges-government-to-address-digital-redlining-ensure-
equitable-access-for-all/ (last visited Jan. 17, 2015).
\35\ See Broadband Data Services Improvement Act, Pub. L. No. 110-
385, Sec. 103, 122 Stat. 4095, 4096-97 (2008) (codified at 47 U.S.C.
Sec. 1302(c)).
\36\ Remarks by the President on Promoting Community Broadband
(Jan. 14, 2015), available at http://www.whitehouse.gov/the-press-
office/2015/01/14/remarks-president-promoting-community-broadband (last
visited January 19, 2015).
---------------------------------------------------------------------------
Second, Congress should ensure that its open Internet rules will be
enforced. This requires the creation of an accessible, affordable, and
expedited procedure for the reporting and resolution of complaints. As
mentioned, one approach would be to use a consumer-friendly complaint
process modeled on the probable cause paradigm in Title VII of the
Civil Rights Act of 1964.\37\ Congress designed Title VII to offer
rapid and affordable remedies for employment discrimination faced by
women and people of color.\38\ Under Title VII, a complainant receives
an expedited ruling from the EEOC, and does not need to hire a lawyer
or write a complicated filing. The same ought to be true in the context
of broadband. Instead of the formal and often byzantine process
envisioned by Section 208 of the Communications Act,\39\ consumers
ought to have an effective, straightforward, expeditious way to provide
the Commission with enough information to determine whether there is a
prima facie case of specific or systemic harm. If the Commission finds
probable cause to believe that its rules have been violated, the agency
could immediately implement a mediation process or take enforcement
action. Whatever the precise details of this mechanism, the core
principle remains the same: consumers, particularly individuals from
vulnerable populations, deserve an accessible, affordable, and
expedited procedure for ensuring that their government protects them
from harm.
---------------------------------------------------------------------------
\37\ See Civil Rights Act of 1964, Pub. L. No 88-352, 78 Stat. 241
(1964) (codified as amended at 42 U.S.C. Sec. Sec. 2000e et. seq.)
\38\ See 42 U.S.C. Sec. 2000e-2 (prohibiting employment
discrimination on the basis of ``race, color, religion, sex, or
national origin'').
\39\ See 47 U.S.C. Sec. 208. Section 208 directs complainants to
submit a petition to the Commission, the Commission then forwards the
complaint to the common carrier for response, and the Commission may
then open an investigation.
---------------------------------------------------------------------------
Honorable Members of the Committee, we are at an impasse. If we do
not act, the largest sacrifice will be the next generation: children
from all classes, races and educational backgrounds may never
experience the possibilities that new technology can offer to our
communities, our Nation, and their world.
Thank you again for the opportunity to testify, and I look forward
to your questions.
______
Appendix A
Minority Media and Telecommunications Council--November 21, 2013
Refocusing Broadband Policy: The New Opportunity Agenda
for People of Color
By David Honig, Esq. and Nicol Turner-Lee, Ph.D.
Table of Contents
I. Introduction
II. The State of Digital Equity
III. The Impact of Internet Regulation on Broadband Adoption
Recapping the History of Broadband Policies
The FCC's Proposed New Regulatory Framework
The Impact of FCC Regulatory Decisions on Broadband Adoption
IV. Refocusing Broadband Policy to Advance Digital Inclusion for People
of Color
Modernizing the E-rate and Using Broadband to Transform U.S.
Education
Facilitating Telemedicine and Mobile Health Innovation
Expanding Digital Employment and Entrepreneurship for People of
Color
Rolling Back the Regressive Taxation of Wireless Services and
E-Commerce that Hinders Broadband Adoption and Use
V. A Call to Action
About the Authors
Endnotes
List of Figures
Figure 1: Barriers To Broadband Adoption--Minority Communities
Figure 2: Trends In Broadband Adoption Rates Across Demographic Groups:
2005-2013
Figure 3: A Snapshot Of Key Metrics For The U.S. Broadband Market
______
Executive Summary
People of color have long been involved in and impacted by
communications policy issues. From the denial of broadcast licenses to
minority entrepreneurs dating back to the 1930s to the censure of
political activists of color during highly charged social justice
debates of the 1960s, people of color have long advocated for inclusion
in this space. More recently, people of color and their communities
have been greatly affected by a lack of digital resources and
information to further their economic, civic and educational goals.
These particular issues involve, for example, low levels of computer
ownership, major gaps in digital literacy, failing schools, lack of
awareness of the benefits and uses of broadband, regressive taxation of
advanced communications services (especially wireless), and inadequate
access to spectrum, capital, and opportunity for multicultural digital
entrepreneurs.
As such, the core concern for advancing broadband adoption and
digital innovation in the U.S. is to assure that first class digital
citizenship is afforded to people of color and other vulnerable groups
that include low-income populations, seniors and people with
disabilities. A passport to digital citizenship guarantees full access
to the opportunities powered by broadband and the Internet, especially
those applications and Internet-enabled devices that drive physical
wellness, wealth creation and educational readiness. With nearly half
of the African American and Hispanic community unconnected to these
resources, policymakers should champion broadband policies that
facilitate, not stifle, digital diversity, inclusion and
entrepreneurship.
While broadband access is more readily available to consumers where
they live and work, the last few years have underscored a simple fact
about broadband adoption dynamics: they are extremely complex and
unique to each user group. And for communities of color, the barriers
that are impeding more robust adoption and use of broadband are many in
number and multifaceted in nature.
Encouraging a more inclusive digital ecosystem could not be more
timely. Recent debates on Internet regulation, particularly net
neutrality, have minimized the importance of these critical issues and
largely overshadowed the adoption crisis. Overwhelmingly, public,
private and community stakeholders all desire to create and maintain an
``open Internet,'' yet some of these same discussions have driven apart
the very parties that should be working together to address inequities
in digital access that diminish opportunities for minority consumers.
In an effort to return concerns about broadband adoption and
digital equity to the forefront, this paper calls forth broadband
policies that are focused on closing the digital divide and bringing
more people of color into the innovation age. In doing so, this paper
explores current trends in minority broadband adoption and assesses how
current policy debates are supporting or detracting from strategies to
promote higher adoption rates in minority communities. In the end, the
paper outlines a more progressive agenda to achieve first class digital
citizenship for people of color, including:
1. Modernizing E-rate and using broadband to transform education;
2. Facilitating universal telemedicine and mobile health innovation;
3. Expanding digital employment and entrepreneurship opportunities
for people of color; and,
4. Rolling back the regressive taxation of wireless services and e-
commerce that hinders broadband adoption and use.
This agenda is by no means exhaustive. Numerous other issues must
be addressed before communities of color can be fully included in
ongoing broadband debates. Indeed, there is likely to be disagreement
regarding which issues to prioritize. Such debate is welcomed and
encouraged, provided, of course, that collective attention remains
focused on adoption and notions of digital equality. In an environment
where advocates and community leaders are working together to connect
the unconnected, bolster digital literacy, modernize public policy
frameworks, and spread the good news about broadband, it's vital that
the esoteric debates focused on Internet regulation not be permitted to
consume all of the energies and time that must be devoted to these
aforementioned issues.
I. Introduction
People of color have long been involved in and impacted by
communications policy issues. From the denial of broadcast licenses to
minority entrepreneurs dating back to the 1930s to the censure of
political activists of color during highly charged social justice
debates of the 1960s, people of color have long advocated for inclusion
in this space. More recently, people of color and their communities
have been greatly affected by a lack of digital resources and
information to further their economic, civic and educational goals.
These particular issues involve, for example, low levels of computer
ownership, major gaps in digital literacy, failing schools, lack of
awareness of the benefits and uses of broadband, regressive taxation of
advanced communications services (especially wireless), and inadequate
access to spectrum, capital, and opportunity for multicultural digital
entrepreneurs.
As such, the core concern for advancing broadband adoption and
digital innovation in the U.S. is to assure that first class digital
citizenship is afforded to people of color and other vulnerable groups
that include low-income populations, seniors and people with
disabilities. A passport to digital citizenship guarantees full access
to the opportunities powered by broadband and the Internet, especially
those applications and Internet-enabled devices that drive physical
wellness, wealth creation and educational readiness. With nearly half
of the African American and Hispanic community unconnected to these
resources, policymakers should champion broadband policies that
facilitate, not stifle, digital diversity, inclusion and
entrepreneurship.
While broadband access is more readily available to consumers where
they live and work, the last few years have underscored a simple fact
about broadband adoption dynamics: they are extremely complex and
unique to each user group.\1\ And for communities of color, the
barriers that are impeding more robust adoption and use of broadband
are many in number and multifaceted in nature (See Figure 1).
Figure 1: Barriers To Broadband Adoption--Minority Communities \2\
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Given these barriers, it is imperative that policymakers focus more
resources on these complex but solvable problems. Addressing these
barriers will require a significant commitment of time, funding, and
patience to carefully tailor and target outreach and digital literacy
programs. Successfully designed and deployed, these efforts have proven
to be extremely successful in connecting unconnected minorities, even
though they can be a challenge to implement.\3\
Federal policymakers should also foster a balanced environment that
encourages the type of multi-stakeholder collaboration that is
essential to bringing more minorities online. The U.S. Department of
Commerce's National Telecommunications and Information Administration
(NTIA) has done an exceptional job in working with local stakeholders
to design and deploy community-specific outreach and training programs.
The Connect2Compete program, an outgrowth of efforts by the Federal
Communications Commission (FCC) in this space, recently launched a new
national radio and broadcast ad campaign, in partnership with the Ad
Council, to promote the benefits of broadband to millions of
Americans.\4\ As to be discussed in this paper, continuing forward with
this type of ``collaborate first'' instead of a ``regulate first''
approach cultivates a more proactive environment for addressing
broadband adoption issues.
Encouraging a more inclusive digital ecosystem could not be more
timely. Recent debates on Internet regulation, particularly net
neutrality, have minimized the importance of these critical issues.
Overwhelmingly, public, private and community stakeholders all desire
to create and maintain an ``open Internet,'' yet some of these same
discussions have driven apart the very parties that should be working
together to address inequities in digital access that diminish
opportunities for minority consumers.
In an effort to return concerns about broadband adoption and
digital equity to the forefront, this paper calls forth broadband
policies that are focused on closing the digital divide. In doing so,
this paper explores current trends in minority broadband adoption and
assesses how current policy debates are supporting or detracting from
strategies to promote higher adoption rates in minority communities. In
the end, the paper outlines a more progressive agenda to achieve first
class, digital citizenship for people of color and ensuring that people
experience the economic benefits that access and use of broadband
provides.
Section I of the paper summarizes current data on broadband
adoption among African Americans and Hispanics. Section II examines
current debates on Internet policy that can advance or limit broadband
adoption rates in communities of color. Section III, the final section,
outlines a pathway that ensures increased engagement of people of color
in the digital economy. In Section III, four core policy areas that are
both pragmatic and targeted in scope are introduced to close the
digital divide: (1) modernizing E-rate and using broadband to transform
education; (2) facilitating universal telemedicine and mobile health
innovation; (3) expanding digital employment and entrepreneurship
opportunities for people of color; and (4) rolling back the regressive
taxation of wireless services and e-commerce that hinders broadband
adoption and use.
This agenda is by no means exhaustive. Numerous other issues must
be addressed before communities of color can be fully included in
ongoing broadband debates. Indeed, there is likely to be disagreement
regarding which issues to prioritize. Such debate is welcomed and
encouraged, provided, of course, that collective attention remains
focused on adoption and notions of digital equality. In an environment
where advocates and community leaders are working together to connect
the unconnected, bolster digital literacy, modernize public policy
frameworks, and spread the good news about broadband, it's vital that
the esoteric debates focused on Internet regulation not be permitted to
consume all of the energies and time that must be devoted to these
aforementioned issues.
II. The State of Digital Equity
Broadband is the foundation upon which the 21st century economy is
being built. It is rapidly transforming virtually every aspect of
modern life--from how we communicate to how we receive medical care to
the types of businesses that develop in under-served communities. And
most important for minorities and any other group that has been pushed
to the margins of society, broadband represents the apex of equality--
an on-ramp to a digital world where everyone can compete on a level
playing field.\5\ Striking the right balance between tinkering with
policy and helping to forge the partnerships and collaborations needed
to close the digital divide are all core to the recalibration of
broadband policy, especially if these groups are to benefit from the
digital economy.
Despite slight increases in minority broadband adoption over the
last few years, African Americans and Hispanics are still under-
adopting.\6\ Figure 2 provides a historical overview of the digital
divides that has plagued these communities for much of the last decade.
Figure 2: Trends In Broadband Adoption Rates Across Demographic Groups:
2005-2013
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
As shown in Figure 2, African Americans have experienced a 50
percent increase in broadband adoption, while Hispanics are only at
half of that rate of growth in the last eight years. Increasing mobile
Internet use by people of color can partially explain higher levels of
broadband adoption among minorities. According to recent research by
the Pew Internet and American Life Project, 63 percent of Americans use
their cell phone to access the Internet or use e-mail; and, one in five
cell owners do most of their online browsing on their phone.\17\
Seventy four percent of African Americans are cell phone Internet users
as compared to 68 percent of Hispanics and 59 percent of whites.\18\
Low-income populations, less-educated and younger Internet users were
also more likely to go online using their cell phones at higher rates
than wealthier, more educated and older populations.\19\
The emergence of smartphones has contributed to the expanded use of
the mobile Internet by people of color. In 2013, Pew research found
that 56 percent of American adults own a smartphone of some kind,
compared with 70 percent who have broadband at home.\20\ In their study
of smartphone usage, Pew research found that African Americans and
Latinos over-indexed in their use of these devices for non-voice
applications such as web surfing, playing games and accessing
multimedia content.\21\ A report issued by the Joint Center for
Political and Economic Studies mirrored these findings reporting that
46 percent of whites have smartphones compared to 49 percent of African
Americans and Hispanics.\22\ E-mail (90 percent), online social media
(82 percent) and research for school or work (70 percent) were the
primary activities of Internet users connecting solely through a
smartphone.\23\ While the Joint Center study concluded that access to
multiple Internet-enabled devices (i.e., home broadband, tablet and
smartphone) increases the likelihood that individuals will access more
welfare-enhancing content such as jobs, health/medical information and
e-commerce, wireless access is clearly addressing one major barrier to
adoption--the absence of a home broadband connection for people of
color.\24\
While the promise of broadband is being realized by some, a large
number of African Americans and Hispanics are still not online, citing
relevance first and the lack of digital literacy skills second as
critical reasons. Among non-Internet users, recent Pew research found
that 15 percent of American adults over the age of 18 were not
online.\25\ According to this data, 34 percent of non-Internet users
reported that the Internet was just not that relevant to them, pointing
to the lack of interest, desire and need for it as the main reasons for
lack of a connection.\26\ Digital illiteracy was cited by 32 percent of
survey respondents as to the reason for their lack of a connection,
while 19 percent cited the expense of service and/or computer as
another reason for not getting online.\27\
According to Pew's research on why people are not getting online,
24 percent of Hispanics are non-Internet users as compared to 15
percent of African Americans, and 14 percent of Whites.\28\ Seniors,
low-income populations, and rural residents also ranked high as non-
Internet users.\29\ When these variables are combined with race and
ethnicity, disparities in broadband adoption rates are even more
dramatic.
Despite their lack of online use, non-Internet users reported, both
in 2010 and 2013, adequate availability of and access to broadband
services either at home, through family members or friends, or at their
place of employment.\30\ Compared to 2010 Pew data, access to Internet
resources is even greater now--only seven percent of study respondents
reported no access to an Internet Service Provider (ISP) in 2013.\31\
This finding alone suggests that the market for broadband services
has blossomed over the last decade, despite gaps in demand. Some
researchers and advocates would also argue that the certainty provided
by a long-standing, minimalist regulatory approach to broadband policy
served to preserve and expand the ecosystem, resulting in both
continued investment in infrastructure and rapid deployment of next-
generation wireline and wireless networks to nearly every part of the
country.\32\ Today, the vast majority of households in the U.S. are
served by broadband ISPs, with most having multiple wireline and
wireless options.\33\ Equally as important, the quality of broadband
service--measured in terms of speed, the range of offerings, and other
factors--has greatly increased,\34\ and prices have fallen.\35\ Figure
3 summarizes some key achievements in the U.S. broadband market.
Figure 3: A Snapshot Of Key Metrics For The U.S. Broadband Market
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Highlighting these accomplishments in the broadband market is
important because the notion of universal service and equal access to
communications technology and media has long been at the core of
minority advocacy in this space.\40\ Many national civil rights
organizations have continually exerted pressure on stakeholders in the
public and private sectors to ensure that historically disadvantaged
groups, along with low-income households and others that have been
pushed to the margins of society, have robust access to these
transformative services.\41\
The juxtaposition of the state of broadband markets against current
rates of adoption therefore should draw attention to the mismatch
between growth and consumer demand, suggesting the need to focus on
increasing broadband adoption.
III. The Impact of Internet Regulation on Broadband Adoption
The current debate centered over whether and how the FCC might
regulate the Internet has largely overshadowed the adoption crisis.\42\
The roots of this debate stretch all the way back to discussions in the
1990s and early 2000s about the appropriateness of imposing common
carrier-style ``open access'' rules on cable broadband service
providers with one of the first early concerns being local franchise
regulation.\43\ Coined in the early 2000s, ``network neutrality''
attempts to both capture an amorphous set of values for Internet
governance and levy an indictment of sub-par competition in the market
for high-speed Internet access.\44\
Over time, the conversation has evolved into a broader examination
of the market for high-speed Internet access in the United States and
the extent to which ISPs could possibly position themselves as
gatekeepers to content on the World Wide Web.\45\ To that end, those
who advocate in favor of more regulation of the Internet have long
punctuated their arguments with ominous ``what ifs'' that might befall
an ``unregulated'' broadband sector.\46\ In their view, the absence of
affirmative rules governing how ISPs can and cannot manage their
networks leaves the market vulnerable to a range of hypothetical
dangers.\47\ On the other hand, those who argue for a minimalist
regulatory framework view other governmental entities such as the
Department of Justice or Federal Trade Commission mitigating genuine
market failures and consumer harms on a case-by-case basis.
Recapping the History of Broadband Policies
While both of these sides have their merits, they do not fully
embrace solutions for addressing the broadband adoption crisis. Despite
the FCC's 2010 National Broadband Plan's\48\ articulation of an
inspiring vision for a more inclusive and robust culture of digital
engagement, the type of rules needed to monitor and preserve the open
Internet have undergone scrutiny from government, industry and advocacy
groups. Historically, a hands-off approach has long been the primary
guiding principle for regulating the Internet in the United States. One
of the clearest interpretive statements of the FCC's mandate in this
space came from FCC Chairman William Kennard, who served as FCC chair
in the late 1990s when the commercial Internet began to reach the
general population and when broadband networks first began to emerge.
At that time, some local franchise authorities had decided to
impose ``open access'' requirements, a form of common carrier
regulation, on cable modem broadband service. Further, many consumer
advocates and cable competitors were calling for the FCC to impose an
open access obligation when approving AT&T's (the long distance
company) acquisition of the largest cable company, TCI. In 1999,
recognizing that this new service and the Internet sector were poised
for exponential growth, Kennard stated:
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. We approved the AT&T-TCI deal without
imposing conditions that they open their network.
The competitive fires are burning. The market has a degree of
certainty and investment dollars have followed. Yet some local
cable franchising authorities want to try a different approach.
Instead of a national policy of de-regulation and competition,
they want a local policy of regulation.
It is in the national interest that we have a national
broadband policy. The FCC--as I've said before--has the
authority to set one, and we have. We have taken a deregulatory
approach, an approach that will let this nascent industry
flourish.\49\
After several court challenges regarding the efficacy of imposing
open access rules on cable broadband ISPs,\50\ the FCC endeavored to
clarify, once and for all, the appropriate regulatory framework for all
broadband platforms.\51\ To that end, between 2002 and 2007 the FCC
classified every type of broadband platform as an ``information
service,'' reflecting the dynamic and interactive nature of information
flowing over these networks.\52\ The practical impact of these
decisions was that broadband would be subjected only to the
Commission's ancillary regulatory authority under Title I of the
Communications Act, which provides for little to no government
oversight. This contrasted greatly with the policy framework that had
been developed for basic telephone service, which is regulated under
Title II as a common carrier.\53\ The FCC concluded that a minimalist
regulatory framework for broadband services was necessary given the
dynamism of the market, and was also essential to ``promot[ing]
widespread deployment of broadband services.''\54\
While these policy imperatives were clearly focused on facilitating
more widespread access to broadband services, a goal shared by
communities of color, the FCC during this period also explored how to
ensure that ``the various capabilities of [broadband] technologies
[were] not used in a way that could stunt the growth of the economy,
innovation and consumer empowerment.''\55\ Addressing these concerns,
FCC Chairman Michael Powell put forth four principles that would
``preserve the freedom of use broadband consumers [had] come to
expect.''\56\ These ``Powell Principles,'' which would be eventually
adopted by the FCC in a non-binding Policy Statement in 2005, entitled
consumers to:
Access the lawful Internet content of their choice;
Run applications and use services of their choice, subject
to the needs of law enforcement;
Connect their choice of legal devices that do not harm the
network; and
Experience competition among network providers, application
and service providers, and content providers.\57\
Each principle was subject to the reasonable network management
needs of the broadband service provider.\58\ While these were not
formal, enforceable rules, the FCC did express an intention to
``incorporate the. . .principles into its ongoing policymaking
activities.''\59\
Despite the rapid build-out of the Nation's broadband
infrastructure, skepticism regarding the ability of organic market
forces to drive the marketplace to positive, consumer-focused outcomes
has lingered. In the mid-and late-2000s, there were repeated calls for
the imposition of common carrier-style rules on broadband ISPs, even
though the FCC had expressly declined to do so for fear that such rules
would choke innovation.\60\ Moreover, calls for formal network
neutrality rules increased as some advocates argued that the
Commission's Policy Statement enshrining the Powell Principles was
insufficient to protect against the potential for content
discrimination, blocking, throttling, and other such activities by
ISPs. However, until 2007 the FCC did not receive a single complaint
claiming unlawful or unreasonable behavior by ISPs.\61\ And even when
it did--in a case involving alleged throttling of the bandwidth-intense
data traffic of BitTorrent by cable broadband provider Comcast \62\--
the debate over the proper scope of Internet regulation and consumer
protection quickly snowballed into what some saw as a proxy battle over
the future of the open Internet.
The subsequent inquiry by the FCC, which began in early 2008, set
in motion a series of interrelated events that, over the next two
years, largely dominated the discussion of removing barriers to
broadband adoption and resulted in the adoption of network neutrality
rules. Having anticipated legal challenges, a year earlier the FCC
launched a rulemaking proceeding to ``provide greater clarity regarding
the Commission's approach to these issues.'' \63\ Specifically, the
Commission wished to codify the four principles included in the 2005
Policy Statement, along with two new rules: a nondiscrimination rule
and a transparency requirement for ISPs.\64\
The FCC's Proposed New Regulatory Framework
In December 2010, the Commission closed its rulemaking proceeding
by adopting a completely new regulatory framework for the Internet, a
framework that went far beyond what the FCC had outlined previously in
its 2005 Policy Statement. The FCC rationalized that such sweeping and
historic action was necessary to preserve the open Internet. These new
rules encompassed:
Blocking. Subject to reasonable network management,
providers of fixed broadband Internet access services were
prohibited from blocking lawful Internet content, applications,
services, or non-harmful devices.\65\ Mobile broadband
providers were afforded more latitude and prevented only from
blocking lawful websites or applications that provide voice or
video telephony services.\66\
Transparency. All ISPs were required to disclose their
network management practices (e.g., congestion management,
attachment rules), performance characteristics (e.g., service
description and impact of specialized services), and commercial
terms (e.g., pricing and privacy policies).\67\ Consumer and
civil rights organizations favored strong transparency
requirements.\68\
Unreasonable discrimination. Recognizing that ``[a] strict
nondiscrimination rule would be in tension with our recognition
that some forms of discrimination, including end-user
controlled discrimination, can be beneficial,'' \69\ the FCC
adopted a rule that prohibited only providers of fixed
broadband service from ``unreasonably discriminat[ing] in
transmitting lawful network traffic over a consumer's broadband
Internet access service.'' \70\
Several carve-outs and exceptions were included in this framework.
In one major carve-out, the FCC, recognizing the unique capacity
constraints and other distinctive qualities of wireless networks,
limited the extent to which the rules applied to mobile broadband ISPs.
In particular, the FCC opted to ``apply certain of the open Internet
rules, requiring compliance with the transparency rule and a basic no-
blocking rule.'' \71\ In a second exception, the FCC created a new
category of services--specialized services--that are to be exempt from
the rules for the foreseeable future.\72\ This class of services
includes VoIP and IP video and might eventually embrace applications
like telemedicine. According to the exception, these specialized
services must also be closely monitored by the FCC in order to ``verify
that [they] promote investment, innovation, competition, and end-user
benefits without undermining or threatening the open Internet.'' \73\
As soon as these rules were finalized and put into effect,\74\ they
were appealed to the Court of Appeals for the District of Columbia
Circuit on the grounds that the FCC had exceeded the regulatory
authority granted to it by Congress.\75\ A decision in the case is
expected by the end of 2013.\76\
The Impact of FCC Regulatory Decisions on Broadband Adoption
While this paper takes no position on which side will prevail in
the court decision on the net neutrality rules, it's worth noting that
an ``open Internet'' and increased broadband adoption should still be
the goals regardless of the decision. As stated earlier, broadband
growth and technology innovation have created the backdrop for greater
digital engagement by all citizens, yet more vulnerable populations are
not immediately adopting. As shown in Figure 2, disparities still exist
despite the fact that the FCC explicitly stated that it ``expect[ed]
that open Internet protections [would] help close the digital divide by
maintaining low barriers to entry for underrepresented groups and
allowing the development of diverse content, applications and
services.'' \77\ Moreover, gaps between African Americans, Hispanics,
and Whites have persisted both before and after the imposition of
Internet regulation.\78\ Given this scenario, what could be the impact
of more or less Internet regulation now narrowing the current digital
divide?
If the rules were to be upheld in this decision, minority consumers
and other newcomers to the Internet might be subjected to cost shifting
by ISPs to shoulder the cost of heavier users that congest the Internet
with heavy video streaming and multimedia downloads. The idea that
minority consumers, who are already disproportionately adopting
broadband and sensitive to any changes in price, should incur the
expense of heavier bandwidth users does not appear to further the goals
of broadband adoption. Previous data points presented in this paper
indicated that e-mail, social media and access to multimedia content
(e.g., photos, music, etc.) were primary activities online for minority
consumers.\79\ These three functions taken together do not require
enormous amounts of bandwidth and justify the need for service and
price differentiation for late adopters and non-Internet users to match
usage expectations and their discretionary income.
Moreover, over-regulating this industry could undermine business
models that have essentially kept, and continue to keep, the cost of
broadband services lower. In a paper on broadband competition, Everett
Ehrlich argues that the Internet's ``two-sided'' market is what drives
down consumer pricing.\80\ Comparing the broadband ecosystem to that of
newspapers, Ehrlich notes that the daily newspaper generates its
revenue through consumer subscriptions and advertising, and concludes
that if newspapers were over-regulated and told to keep ad revenues
marginalized, newspapers--much like the Internet--would find themselves
substantially raising consumer prices and possibly impacting consumer
demand for the product.'' \81\ Today, the cost of broadband services
is, in fact, decreasing due to flexible business models that capitalize
on competition and market-driven revenue opportunities, e.g., online
advertising.\82\
On this same issue, online content and applications that serve the
needs of Internet users and entice those who are offline to adopt,
should take some priority in this content's arrival to the PCs and
smart devices of consumers. In his article on the ``two-sided'' market
of the Internet, Nicholas Economides, a net neutrality proponent,
suggested that prioritization of monetized content over non-paying
firms on an ``open Internet'' is discriminatory.\83\ While his
conclusions have some plausibility due to the diverse interests of
Internet users, safeguards are already in place to monitor industry's
performance in this area. The FCC's annual ``Measuring Broadband
America'' report details the speed and performance of broadband
connections and calls out degrading services among broadband
providers.\84\ In this annual report card, any negative effect on
broadband performance due to content prioritization is designed to show
up, thus making the industry more accountable--and in some cases, more
competitive in touting their service quality. Therefore, there is
little danger that prioritizing some content will cause a degradation
of general Internet traffic. Moreover, some legitimate cases for
content prioritization do exist--one being in the area of telemedicine.
As more minorities, for example, suffer from chronic diseases and
inadequate access to health care, more advanced and consumer-focused
telemedicine and telehealth applications should take priority over
leisurely downloads, especially if the need for data is critical for
patient care and insurance companies are willing to pay for it.\85\ The
ability of high-speed broadband networks to facilitate patient to
doctor connections, especially for low-income or rural communities, is
another step towards assuring first class digital citizenship for all
Americans. Given that most minorities are also using the mobile
Internet to access the web, the combination of spectrum shortages for
commercial wireless and the imposition of overly stringent neutrality
rules might limit the expedited delivery of this type of content,
especially if applications like telemedicine are not exempted from the
rules.
In sum, if the net neutrality rules are ultimately upheld by the
Federal courts, then policymakers, minority advocates and community
stakeholders must consider the potential impacts of regressive cost
structures, stalled competition and innovation on efforts to advance
broadband adoption and use. The Commission should also interpret and
apply its rules and policies in a reasonable, forward-looking manner
commensurate with the minimalist regulatory framework for broadband
that has encouraged investment and innovation throughout the ecosystem
for nearly two decades. Failure to do so could adversely impact users
by undermining business model experimentation (e.g., new ad-supported
services, or non-monopolistic partnerships between content providers
and ISPs that hinge on granting preferred network access) and the
emergence of new services that are being developed in direct response
to consumer demand (e.g., telemedicine tools that require
prioritization; new streaming media services).\86\
If the rules are invalidated, on the other hand, the ``open
Internet'' should still remain an essential policy focus. Policymakers,
minority advocates and community stakeholders should place continued
pressure on industry to invest, innovate and extend its efforts to
bring more underserved populations online, particularly by stabilizing
or reducing consumer costs for broadband services. In the absence of
rules, the FCC should also recognize that broadband service is
different from what has historically been considered a common carrier
service. These fundamental technological differences are also evident
in the ability to enable broadband Internet access via different
platforms--e.g., cable, DSL, BPL, fiber, 3G wireless, 4G wireless, and
satellite. This type of intermodal competition that was impossible in
the context of basic telephone service suggests the maintenance of a
minimalist, Title I-based regulatory framework under which the market
has long thrived. On this basis alone, attempting to reclassify
broadband as a Title II telecommunications service could prove harmful
for consumers and companies alike.\87\
If history is any guide, debates around Internet regulation will
continue to dominate the discussion around the future of the Internet,
but, as suggested in this paper, at a cost to closing the digital
divide. The time, resources and efforts focused on picking ``winners''
and ``losers'' in this debate can detract from solving the enormously
complex and top priority task of connecting and serving the
unconnected.
Going forward, numerous other barriers and issues are ripe for
narrowly tailored interventions that, if properly calibrated, can help
deliver more robust and evenly distributed gains in consumer welfare.
The final section of this paper expounds upon these opportunities and
proposes more pragmatic policy solutions that would advance the cause
of digital inclusion.
IV. Refocusing Broadband Policy to Advance Digital Inclusion for People
of Color
Broadband policy should engage communities of color to leverage
broadband for individual and community empowerment. As such, this paper
offers an alternative approach to broadband policy that shifts the
resources and energy from a protracted and unnecessary battle over
regulation to connection of underserved and under-connected demographic
groups.
With these dynamics in mind, the remainder of this paper
articulates an alternative path forward for the FCC, Congress, ISPs,
advocates, and other stakeholders in the broadband space. The issues
discussed below are of fundamental importance not only to communities
of color, but to every demographic group, sector, and institution in
the United States.
Modernizing the E-rate and Using Broadband to Transform U.S. Education
A critical component of solving the adoption crisis in the United
States is ensuring that children are equipped with the skills needed to
excel in our digital society. While Internet access has diffused across
nearly every school in the nation,\88\ high-speed access is unavailable
in many schools, and the disruptive power of broadband remains largely
untapped in this vital sector. The issues are well known: average
bandwidth per student is low across the entire student population; many
schools lack adequate computing equipment (e.g., laptops and tablets)
to tap into the full power of broadband; too many teachers are
unprepared to apply or teach new technologies in the classroom; and
lack of home access to broadband access profoundly inhibits learning
outside of school.\89\
Addressing these barriers is essential for all children and our
country generally, but especially vital for African American and
Hispanic students, particularly those from low-income, low-wealth
families. As in many other contexts, significant disparities exist in
the educational achievement and performance of communities of color
vis-a-vis other demographic groups. Despite significant gains in recent
years, African American and Hispanic students still lag behind children
in other demographic groups by a number of measures, including high
school graduation rates and reading and math test results.\90\ As a
result, African Americans and Hispanics are less likely to attend and
finish college than White counterparts.\91\
Broadband cannot and will not solve all of these problems on its
own, but ensuring that high-speed Internet access is widely available
in schools and being applied to enhance educational engagement will be
significant steps toward bridging the achievement gap. Broadband
supports an ever-expanding array of tools and services that can provide
students with more individualized learning experiences that can be
accessed regardless of location. Modernizing the E-rate program to
ensure that funding is being used to support these types of outcomes
must be a priority for Federal policymakers. Fortunately, the FCC has
begun the process of updating and streamlining this program to better
reflect the modern educational and technological environment.\92\
To ensure that E-rate 2.0 is aligned with the educational and
technology goals of minority communities, the FCC should engage
directly with stakeholders working in these communities to benefit from
their expertise and explore what works when it comes to designing
programs aimed at enhancing educational outcomes in minority
communities.\93\ The next iteration of the E-Rate program can be
pivotal in upgrading technology-deficient schools and libraries located
in poor and minority communities and initiating the pathway to digital
citizenship for isolated populations. Robust digital learning
environments will also enable the use of 21st century devices, as well
as pedagogies that support science, technology, engineering and
mathematics (STEM) core competencies for disadvantaged schools and
students.
All of these gains, of course, will be for naught if home broadband
adoption rates remain low. In this new world of broadband-enabled
communication and education, learning should not stop once a student
leaves the schoolyard. A growing body of evidence suggests that
children in households that adopt broadband have better educational
outcomes than children in households that remain unconnected.\94\ These
gains, however, also hinge on parents who are themselves digitally
literate and who are engaged in helping their children use broadband to
enhance their education.\95\ Much work remains to be done at the
community level to ensure that parents, grandparents, teachers,
community leaders, and other authority figures agree to use broadband
to create a culture of adoption, a culture of digital learning, and a
culture of digital empowerment and achievement for minority students of
all ages.
Facilitating Telemedicine and Mobile Health Innovation
As previously discussed, advanced broadband technology is rapidly
transforming healthcare in the United States. This real-time, always-on
communications platform allows for dramatic new approaches to
delivering and consuming medical care regardless of location.\96\ A
wide range of broadband-enabled technologies--from wireless sensors to
mobile devices to electronic health records--are already being used by
practitioners to deliver in-home care, to remotely monitor patients'
vital signs, to provide healthcare services in underserved areas, and
to more conveniently connect patients with specialists.\97\ Together,
these new approaches are generating impressive results in the form of
better health outcomes, lower costs, and wider availability.\98\ Yet
the very groups that are poised to benefit most immediately and
profoundly from these more advanced healthcare services--i.e., older
adults, people with disabilities, African Americans, and Hispanics--
have the lowest broadband adoption rates.
For minorities in particular, broadband-enabled telemedicine
provides convenient and affordable ways to address chronic illnesses
and diseases. This is especially critical for African Americans and
Hispanics, who collectively are at a higher risk of developing costly
chronic diseases (e.g., diabetes, heart disease) than other groups.\99\
They are also less likely to have health insurance, which reduces the
likelihood that chronically ill patients will seek out and obtain
preventative care or other services that could lead to early diagnosis
and treatment.\100\ As such, African Americans and Hispanics are poised
to benefit greatly from the full panoply of telemedicine services,
especially those enabled by and accessible on mobile devices. Since
African Americans and Hispanics are already avid users of wireless
broadband services,\101\ there is growing evidence that mobile
telemedicine interventions and solutions are well positioned to deliver
the kind of preventive, real-time medical care that is not readily
accessible to these patients.\102\
Uncertainty regarding the ability to prioritize healthcare data
traffic, and the persistence of numerous legal and regulatory barriers,
could thwart continued progress in telehealth. As the National
Foundation for Women Legislators (NFWL) and the National Organization
of Black Elected Legislative (NOBEL) Women observed in 2010, having
wide latitude to manage networks and prioritize certain types of
critical, time-sensitive data is essential to promoting continued
innovation in this space.\103\ While it could be determined that
telehealth applications could be exempted from neutrality rules,
several other barriers can also impede further progress and innovation
in this space.\104\ These include a range of analog-era rules impacting
physician licensure and credentialing,\105\ as well as antiquated
insurance reimbursement mechanisms and health data privacy rules.\106\
Addressing and potentially resolving these impediments can unleash the
full disruptive power of broadband in the healthcare space. To that
end, it is imperative that policymakers at the Federal and state levels
work to remove barriers and encourage more innovation throughout the
burgeoning telemedicine ecosystem. Ultimately, a windfall of benefits
and opportunity for communities of color and other underserved groups
should be at the top of a new broadband policy agenda.
Expanding Digital Employment and Entrepreneurship for People of Color
An important consequence of addressing the adoption crisis and
removing persistent barriers to broadband adoption in education will be
increased use of advanced communications tools to bolster minority
entrepreneurship, employment, and overall wealth creation and economic
standing.
High-speed Internet access is an increasingly essential tool for
workers of all kinds. Broadband rapidly creates new jobs and new kinds
of jobs\107\ and represents a unique platform that allows anyone with
an idea, ambition, and digital literacy skills to launch a small
business.\108\ This is potentially a boon for people of color in
particular, who have endured decades of stubbornly high unemployment
rates.\109\ Such chronic employment disparities, coupled with the
lingering vestiges of marginalization, have also contributed to a
staggering gap in household wealth between Whites, African Americans,
and Hispanics. A recent analysis by Pew found that the ``median wealth
of white households is 20 times that of [B]lack households and 18 times
that of Hispanic households.''\110\ Together with limited access to
capital,\111\ low rates of broadband adoption, and lagging digital
literacy skills,\112\ these factors combine to put African Americans
and Hispanics at a grave disadvantage in the new digital economy.
Becoming a digital entrepreneur, however, can be difficult. As with
any other business endeavor, using broadband to start a new venture is
fraught with uncertainty. Success often hinges on funding,
relationships, skill, and luck. Unfortunately, the deck has long been
stacked against minorities in the high tech space. A 2011 report by
MMTC found that ``minorities, particularly African Americans,
Hispanics, and women, remain sorely underrepresented across the high
tech sector and in the ranks of some of the sector's biggest
companies.'' \113\ Numerous factors have contributed to this outcome--
low participation rates and achievement in STEM subjects (science,
technology, engineering, and math) by African American and Hispanic
students; a general disregard for Equal Employment Opportunity (EEO)
reporting and compliance by high tech firms; little support for
minority and women business enterprises in the sector; and limited
access to critical resources (e.g., spectrum).\114\ Indeed, despite
lofty rhetoric promising equal access and openness, the high tech
sector still remains largely closed to African Americans and
Hispanics.\115\ Such an inhospitable environment discourages the type
of risk-taking needed to succeed in this highly dynamic and competitive
space.\116\
At a time when many high tech companies are advocating for
immigration law reforms in an effort to import more talent--and thus
fill viable openings with non-citizens--policymakers should work to
bolster the domestic supply of technologically proficient workers.\117\
The urgency around these issues is made even more acute by Federal
sequestration and budget cuts that make it necessary for public
officials to choose how to deploy increasingly scarce resources in a
way that will realize the largest return on investment. In such an
environment, policymakers--while insisting on strict enforcement of EEO
and other civil rights mandates--should tread carefully on relying
entirely on rigid policies dependent upon government oversight.
Instead, a collaborative approach that partners public and private
sectors to advance minority participation in the high tech sector
should be considered. To that end, policymakers should support efforts
to improve minority STEM achievement,\118\ make minority employment
data more transparent, raise awareness of effective minority hiring
practices in the private sector, increase access to capital and other
critical resources needed for minority entrepreneurs to thrive in this
space, and improve broadband adoption rates in minority
communities.\119\
These and other actions must be taken to equip eager minority
candidates with the skills, resources, and confidence needed to compete
for and secure positions in this space.\120\ These efforts will also
undoubtedly encourage and embolden would-be digital entrepreneurs to
enter the fray and attempt to build successful businesses.
Rolling Back the Regressive Taxation of Wireless Services and E-
Commerce that Hinders Broadband Adoption and Use
As previously discussed, African Americans and Hispanics are over-
indexing in their use of the mobile Internet and increasingly becoming
the avid users of smartphones. Yet, despite these positive trends,
wireless services continue to be taxed at disproportionately high
rates.
This preference by minorities for mobile services makes high
wireless taxes a significant burden on low-income users, and
particularly minorities. A 2012 analysis of wireless taxes found that
the average tax burden on wireless consumers was just over 17 percent,
with many states having rates over 20 percent.\121\ State and local
levies and fees comprise the largest share of these taxes (11.36
percent of the overall burden).\122\
The regressive nature of these taxes could discourage continued use
of wireless services, including mobile broadband, in communities of
color and low-income households.\123\ Combined with an array of other
state and local taxes being levied on digital goods, the overall tax
burden associated with using mobile services to purchase goods could
deter more robust use of these tools by the very groups that are
turning to them as their primary means of communication. As the Joint
Center for Political & Economic Studies noted in a 2011 report,
``[s]uch regressive taxation schemes create a broadband
adoption barrier for low-income individuals that have no other
reliable way to go online. The higher total cost of service
created by these taxes may cause many low-income consumers to
either forego purchasing a mobile device and subscribing to a
mobile service plan or cancel their service upon discovering
the true cost of maintaining their service.'' \124\
Similar concerns abound in communities of color, where mobile
broadband has emerged as the primary pathway to first class digital
citizenship.\125\
There are several ways in which policymakers can work together to
reverse these trends. First, local and state policymakers should work
closely with community leaders, advocates for minorities and the poor,
and other stakeholders to appreciate how integral wireless services
have become to everyday life. Acquiring such perspective could help to
begin the process of equalizing the tax treatment of wireless services
with other services. Second, the FCC should work to rein in growth of
the USF portion of the overall wireless tax burden. In particular, the
Commission could accelerate reforms aimed at creating economies in the
operation of the High Cost Fund, and more accurately targeting
subsidies and thus driving down overall costs.\126\ Continued support
of the Lifeline program will ensure that people of color, irrespective
of their ability to pay, will be able to benefit from wireless
services. Third, Congress should pass legislation that would place a
moratorium on new state and local wireless taxes for the foreseeable
future. In the recent past, several bills to this effect have been
introduced, but none has gained momentum towards enactment.\127\
In sum, according to the 2011 report from the Joint Center for
Political and Economic Studies,
``[w]hile regressive state and local wireless taxation
structures may appear to generate revenues to provide needed
services, these taxes also put mobile opportunities farther out
of reach for those consumers who would most benefit from
wireless broadband.'' \128\
As such, there are many opportunities for stakeholders to come
together and develop fairer tax structures for wireless and E-commerce.
V. A Call to Action
This agenda is by no means exhaustive. Numerous other issues must
be addressed before communities of color can be confident in their
inclusion in ongoing broadband debates. Indeed, there is likely to be
disagreement regarding which issues to prioritize. Such debate is
welcomed and encouraged, provided, of course, that collective attention
remains focused on adoption and notions of digital equality. In an
environment where advocates and community leaders are working together
to connect the unconnected, bolster digital literacy, modernize public
policy frameworks, and spread the good news about broadband, more
complex debates focused on Internet regulation seem to redirect
energies and time spent on these aforementioned issues.
As stated throughout the paper, the current focus on the
enforcement of rules that are designed to be prophylactic \129\ towards
hypothetical ``what ifs'' has detracted from this critical conversation
on how the Nation will ensure a more inclusive and beneficial Internet
for all citizens. The critical concern of advancing digital inclusion
should resonate with all stakeholders who want to assure that millions
of Americans are privileged to the social, economic and education
benefits powered by the broadband ecosystem. In particular, the call to
action must include:
Modernizing E-rate and using broadband to transform
education;
Facilitating universal telemedicine and mobile health
innovation;
Expanding digital employment and entrepreneurship
opportunities for people of color; and,
Rolling back the regressive taxation of wireless services
and e-commerce that hinders broadband adoption and use.
These are all actionable policy issues that serve to engage and
remove the deterrents to broadband adoption for more vulnerable
populations.
While priorities will differ on how to reach these goals, agreement
on the core issue of first class, digital citizenship for people of
color, low-income, senior and disabled Americans should resonate,
especially in the achievement of digital equity. Ultimately, this
aspirational state will only be achieved if all interests are aligned
around common goals that are focused on empowering vulnerable
populations to seize the many opportunities afforded by informed
broadband use.
About the Authors
David Honig, Esq.--David Honig is Co-Founder and President of the
Minority Media and Telecommunications Council (MMTC). Since 1986, MMTC
has been the Nation's leading advocate for equal opportunity and civil
rights in the mass media, telecommunications, and broadband industries.
David has practiced communications and civil rights law since 1983,
specializing in electronic redlining and race discrimination cases, and
defining the legal space that is the intersections of civil rights and
telecommunications law. In his role at MMTC, David has represented over
80 national minority, civil rights and religious organizations before
the FCC and has been named by the National Law Journal as one of the 30
most influential communications lawyers. David also serves pro bono as
chief counsel and chair of the Legal Redress Committee of the Florida
State Conference of Branches of the NAACP.
Nicol Turner-Lee, Ph.D.--Dr. Nicol Turner-Lee is Vice President and
Chief Research and Policy Officer for the Minority Media and
Telecommunications Council (MMTC). She is responsible for crafting the
research agenda that aligns with MMTC's longstanding civil rights
history. Prior to joining MMTC, Nicol served as President and CEO of
the National Association for Multi-ethnicity in Communications, the
premier professional association advocating and empowering for
diversity in the media and cable communications industry. She also
served as Vice President and the first Director of the Media and
Technology Institute at the Joint Center for Political and Economic
Studies. In this role, she published the first ``National Minority
Broadband Adoption Study,'' a body of work that was cited in the
congressionally mandated National Broadband Plan and other FCC
publications. Dr. Turner-Lee has received a variety of professional
recognitions for her research in broadband and Internet policy, most
recently being recognized as one of 60 most inspiring women in media by
the Alliance for Women in Media. She also sits on several national
Boards including the Telecommunications Policy Research Conference
(TPRC).
Endnotes
\1\ The literature on this point is vast and growing. For a
representative sampling, see National Minority Broadband Adoption
(identifying minority-specific barriers); Barriers to Broadband
Adoption: A Report to the FCC, New York Law School (Oct. 2009),
available at http://www.nyls.edu/user_files/1/3/4/30/83/
ACLP%20Report%20to%20the%20FCC%20%20Barriers
%20to%20BB%20Adoption.pdf (identifying dozens of barriers impacting
broadband adoptions by seniors, people with disabilities, and
stakeholders throughout the education, energy, and healthcare sectors)
(``Barriers to Broadband Adoption''); Paula Gardner et al., Getting
turned on: Using ICT training to promote active ageing in New York
City, The Journal of Community Informatics, 8(1) (2012), available at
http://ci-journal.net/index.php/ciej/article/view/809 (identifying
barriers and methods for overcoming barriers in the senior citizen
community).
\2\ These barriers are derived from: National Broadband Plan;
National Minority Broadband Adoption; Promoting Broadband Adoption
Among Minorities, Florida Conference of Black State Legislators (Oct.
2011), available at http://communicationsconsumersunited.com/wp-
content/uploads/2011/10/Florida-Conference-of-Black-State-Legislators-
Broadband-Adoption-paper-092010.pdf; Robert Shapiro and Kevin Hassett,
A New Analysis of Broadband Adoptions Rates by Minority Households,
Georgetown Center for Business and Public Policy (June 2010), available
at http://www.sonecon.com/docs/studies/
Report_on_Broadband_Pricing_and_Minor
ities-Shapiro-Hassett-June-21-2010.pdf; Broadband Imperatives for
African Americans: Policy Recommendations to Increase Digital Adoption
for Minorities and Their Communities, Joint Center for Political &
Economic Studies et al. (Sept. 2009), available at http://
www.jointcenter.org/sites/default/files/upload/research/files/
MTI_Broadband_Report_Print.pdf; Nicol Turner-Lee, The New Era of
Broadband and Democracy: Pathways to Digital Inclusiveness, Joint
Center for Political & Economic Studies (Aug. 2009), available at
http://www.jointcenter.org/sites/default/files/upload/research/files/
turnerlee_0.pdf.
\3\ See, e.g., Broadband Adoption Toolkit, National
Telecommunications & Information Administration, U.S. Dept. of Commerce
(April 2013), available at http://www2.ntia.doc.gov/files/
toolkit_042913.pdf (highlighting dozens of successful adoption
programs) (``Broadband Adoption Toolkit'').
\4\ See Press Release, Ad Council & Connect2Compete Launch
Nationwide PSA Campaign to Increase Digital Literacy for 62 Million
Americans, March 21, 2013, Ad Council, available at http://
www.adcouncil.org/News-Events/Press-Releases/Ad-Council-
Connect2Compete-Launch-Nationwide-PSA-Campaign-to-Increase-Digital-
Literacy-for-62-Million-Americans.
\5\ See, e.g., Universal Broadband Adoption.
\6\ See e.g., Jon P. Gant et al., National Minority Broadband
Adoption: Comparative Trends in Adoption, Acceptance and Use, Joint
Center for Political & Economic Studies (March 2010), available at
http://www.jointcenter.org/sites/default/files/upload/research/files/
MTI_BRO
ADBAND_REPORT_WEB.pdf (examining the myriad of barriers impeding more
robust adoption in these communities (``National Minority Broadband
Adoption''). Additoinal data nd analysis can be found in Figure 1 and
accompanying citations.
\7\ These barriers are derived from: National Broadband Plan;
National Minority Broadband Adoption; Promoting Broadband Adoption
Among Minorities, Florida Conference of Black State Legislators (Oct.
2011), available at http://communicationsconsumersunited.com/wp-
content/uploads/2011/10/Florida-Conference-of-Black-State-Legislators-
Broadband-Adoption-paper-092010.pdf; Robert Shapiro and Kevin Hassett,
A New Analysis of Broadband Adoptions Rates by Minority Households,
Georgetown Center for Business and Public Policy (June 2010), available
at http://www.sonecon.com/docs/studies/
Report_on_Broadband_Pricing_and_Minor
ities-Shapiro-Hassett-June-21-2010.pdf; Broadband Imperatives for
African Americans: Policy Recommendations to Increase Digital Adoption
for Minorities and Their Communities, Joint Center for Political &
Economic Studies et al. (Sept. 2009), available at http://
www.jointcenter.org/sites/default/files/upload/research/files/
MTI_Broadband_Report_Print.pdf; Nicol Turner-Lee, The New Era of
Broadband and Democracy: Pathways to Digital Inclusiveness, Joint
Center for Political & Economic Studies (Aug. 2009), available at
http://www.jointcenter.org/sites/default/files/upload/research/files/
turnerlee_0.pdf.
\8\ See John Horrigan, Home Broadband Adoption 2008, Pew Internet &
American Life Project (July 2008), available at http://
www.pewinternet.org/ /media//Files/Reports/2008/PIP_
Broadband_2008.pdf
\9\ Id.
\10\ Id.
\11\ Id.
\12\ See John Horrigan, Broadband Adoption and Use in America, at
p. 3, FCC OBI Working Paper Series No. 1 (Feb. 2010), available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-296442A1.pdf
\13\ See Exploring the Digital Nation: Computer and Internet Use at
Home, National Telecommunications & Information Administration, U.S.
Dept. of Commerce (Nov. 2011), available at http://www.ntia.doc.gov/
files/ntia/publications/exploring_the_digital_nation_computer
_and_internet_use_at_home_11092011.pdf
\14\ See Exploring the Digital Nation: America's Emerging Online
Experience, NTIA, U.S. Dept. of Commerce (June 2013), available at
http://www.ntia.doc.gov/files/ntia/publications/
exploring_the_digital_nation_-_americas_emerging_online_experience.pdf
\15\ See Joanna Brenner & Lee Rainie, Pew Internet: Broadband, Pew
Internet & American Life Project (Dec. 2012), available at http://
pewinternet.org/Commentary/2012/May/Pew-Internet-Broadband.aspx
\16\ See Kathryn Zickuhr & Aaron Smith, Home Broadband 2013, Pew
Internet & American Life Project (Aug. 2013), available at http://
pewinternet.org/ /media//Files/Reports/2013/PIP_Broadband%202013.pdf
\17\ See Maeve Duggan., & Aaron Smith, Cell Internet Use 2013, Pew
Internet & American Life Project (September 16, 2013, available at
http://www.pewinternet.org/Reports/2013/Cell-Internet/Summary-of-
Findings.aspx
\18\ Id.
\19\ Id.
\20\ Supra, note 16
\21\ Id.
\22\ See John Horrigan, Recent Tech Adoption Trends and
Implications for the Digital Divide, Joint Center for Political and
Economic Studies (August 2012), available at http://
www.jointcenter.org/research/recent-tech-adoption-trends-and-
implications-for-the-digital-divide,
\23\ Id.
\24\ Id.
\25\ See Kathryn Zickhur, Who's Not Online and Why?, Pew Internet &
American Life Project (Sept. 25, 2013), available at http://
www.pewinternet.org/Reports/2013/Non-internet-users.aspx
\26\ Id.
\27\ Id.
\28\ Id.
\29\ Id.
\30\ Id.
\31\ Id.
\32\ See, e.g., Patrick Brogan, Updated Capital Spending Data Show
Continued Significant Broadband Investment in Nation's Information
Infrastructure, at p. 2, chart 1, Research Brief, U.S. Telecom (April
2012), available at http://www.ustelecom.org/sites/default/files/
documents/042012_Investment_2011_Research_Brief.pdf (observing tens of
billions of dollars in annual investment in network infrastructure by
ISPs) (``Updated Capital Spending Data'').
\33\For an overview, see National Broadband Map, Summarize:
Nationwide, http://www.broadbandmap.gov/summarize/nationwide.
\34\For recent data, see Measuring Broadband America, FCC (Feb.
2013), available at http://www.fcc.gov/measuring-broadband-america/
2013/february ("Measuring Broadband America--Feb. 2013"); Measuring
Broadband America, FCC (July 2012), available at http://www.fcc.gov/
measuring-broadbandamerica/2012/july (``Measuring Broadband America--
July 2012''); Measuring Broadband America, FCC (Aug. 2011), available
at http://www.fcc.gov/measuring-broadband-america/2011/august. For data
from the mid- to late-2000s, see generally Internet Access Services:
Status as of June 30, 2010, FCC (March 2011), available at http://
hraunfoss.fcc.gov/edocs--public/attachmatch/DOC-305296A1.pdf.
\35\ See, e.g., Shane Greenstein & Ryan C. McDevitt, Evidence of a
Modest Price Decline in U.S. Broadband Services, National Bureau of
Economic Research, NBER Working Paper 16166 (July 2010), available at
http://www.nber.org/papers/w16166.pdf?new_window=1.
\36\ See National Broadband Map, Summarize: Nationwide, http://
www.broadbandmap.gov/summarize/nationwide
\37\ Updated Capital Spending Data.
\38\ Id.
\39\ See, e.g., Measuring Broadband America--Feb. 2013; Measuring
Broadband America--July 2012.
\40\ See generally Beloved Community (``. . . our ``digital Beloved
Community'' envisions a future where everyone has the ability to
participate in our digital ecosystem. It exhibits an economy that
enables innovative individuals from culturally diverse backgrounds to
benefit equally from the technological advancement and innovations they
create. Like Dr. King's dream, the digital Beloved Community gains its
strength from empowering every individual and thereby advancing the
whole.'' Id. at p. 1.)
\41\ See, e.g., In the Matter of Implementation of Section
621(a)(1) of the Cable Communications Policy Act of 1984 as amended by
the Cable Television Consumer Protection and Competition Act of 1992,
Reply Comments of MMTC et al., MB Docket No. 05-311 (March 28, 2006),
available at http://mmtconline.org/lp-pdf/MMTCRedliningReply101A8B.pdf
(MMTC, along with dozens of other national civil rights and minority
advocacy organizations, calling for protections against redlining,
which would have had disproportionately negative impacts on communities
of color).
\42\ The ``historical origins'' of the debate, however, can be
traced to the Computer Inquiries, which were launched in the 1970s and
early 1980s to examine ``the relationship between traditional ``common
carriers''. . . and the emerging data-processing industry.'' See
Jonathan E. Nuechterlein And Philip J. Weiser, Digital Crossroads:
Telecommunications Law and Policy in the Internet Age (2nd ED.) 188
(MIT 2013) (``Digital Crossroads'').
\43\ See, e.g., Mark A. Lemley and Lawrence Lessig, The End of End-
to-End: Preserving the Architecture of the Internet in the Broadband
Era, 48 U.C.L.A. L. Rev. 925 (2001) (arguing in favor of open access
policies in order to preserve the ``end-to-end'' principle, which is at
the core of modern conceptions of ``network neutrality'' and the ``open
Internet'') (``End of End-to-End'').
\44\ See, e.g., Tim Wu, Network Neutrality, Broadband
Discrimination, 2 J. on Telecomm. & High Tec. L. 141 (2003) (``Network
Neutrality, Broadband Discrimination'').
\45\ See, e.g., id.
\46\ See, e.g., SavetheInternet.com, Network Neutrality 101, http:/
/www.savetheinternet.com/net-neutrality-101 (providing a list of
hypothetical outcomes if network neutrality rules are absent from the
marketplace) (``Network Neutrality 101'').
\47\ See, e.g., Tim Burners-Lee, Long Live the Web: A Call for
Continued Open Standards and Neutrality, Nov. 22, 2010, Scientific
American, available at http://www.scientificamerican.com/
article.cfm?id=long-live-the-web&print=yes (``Although the Internet and
Web generally thrive on lack of regulation, some basic values have to
be legally preserved.'') (``Long Live the Web'').
\48\ Id.
\49\ Quotes excerpted from speech given by former FCC Chairman
William Kennard at The Cable Show, 1999, available at http://
transition.fcc.gov/Speeches/Kennard/spwek-921.txt
\50\ AT&T v. City of Portland, 43 F.Supp.2d 1146 (U.S.D.C. Or.
1999), rev'd, 216 F.3d 871 (9th Cir. 2000).
\51\ See Inquiry Concerning High-Speed Access to the Internet Over
Cable and Other Facilities, 17 F.C.C.R 4798 (2002), aff'd, sub nom.
Nat'l Cable & Telecomm. Ass'n v. Brand X Internet Serv., 545 U.S. 967
(2005) (``Brand X'').
\52\ See Appropriate Framework for Broadband Access to the Internet
over Wireline Facilities, 20 FCC Rcd 14,853 (2005); Classification of
Broadband Over Power Line Internet Access Service as an Information
Service, 21 FCC Rcd 13281 (2006); In the Matter of Appropriate
Regulatory Treatment for Broadband Access to the Internet Over Wireless
Networks, 22 FCC Rcd 5901 (2007).
\53\ See, e.g., Digital Crossroads at p. 40-82 (discussing this
regulatory regime and its evolution in detail).
\54\ See Press Release, FCC Classifies Cable Modem Service as an
``Information Service,'' March 14, 2002, FCC, available at http://
transition.fcc.gov/Bureaus/Cable/News_Releases/2002/nrcb0201.html.
\55\ See FCC Chairman Michael Powell, Preserving Internet Freedom:
Guiding Principles for the Industry, at p. 2, Remarks at the Silicon
Flatirons Symposium on ``The Digital Broadband Migration: Toward a
Regulatory Regime for the Internet Age,'' University of Colorado School
of Law, Boulder, Colorado, Feb, 8, 2004, available at http://
hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-243556A1.pdf.
\56\ Id. at p. 5.
\57\ See Appropriate Framework for Broadband Access to the Internet
over Wireline Facilities, Policy Statement, 20 FCC Rcd 14986 (2005).
\58\ Id. at 5, fn. 15.
\59\ Id.
\60\ See, e.g., Barbara A. Cherry, Maintaining Critical Rules to
Enable Sustainable Communications Infrastructures, 24 Georg. St. U. L.
Rev. 947 (2007) (calling for common-carrier regulation); Susan
Crawford, Transporting Communications, 89 Boston U. L.R. 871 (2009)
(same).
\61\ See In the Matter of Broadband Industry Practices, Notice of
Inquiry, at 3, WC Docket No. 07-52 (rel. April 16, 2007). It should
be noted that the FCC in 2005 did mediate a settlement in a case
alleging the blocking of VoIP traffic by a small ISP. See In the Matter
of Madison River Communications LLC and Affiliated Companies, Consent
Decree, 20 FCC Rcd 4295 (2005).
\62\ See In the Matters of Formal Complaint of Free Press and
Public Knowledge Against Comcast Corporation for Secretly Degrading
Peer-to-Peer Applications and Broadband Industry Practices Petition of
Free Press et al., for Declaratory Ruling that Degrading an Internet
Application Violates the FCC's Internet Policy Statement and Does Not
Meet an Exception for ``Reasonable Network Management, Petition for
Declaratory Ruling, FCC, File No. EB-08-IH-1518 (filed Nov. 1, 2007),
available at http://transition.fcc.gov/broadband_network_management/
fp_et_al_nn_declaratory_ruling.pdf. Comcast countered that its network
management practices vis-a-vis BitTorrent were necessary to assure a
reliable and consistent user experience for the vast majority of users
who did not engage in such bandwidth-heavy uses. Indeed, a small
handful of users engaging in such online behavior (e.g., peer-to-peer
swapping of massive data files) have discernible impacts on the overall
online experience for all users. At peak times, such uses can cause
congestion, which degrades the speeds and reliability of online
connections for all users. Over time, ISPs and others have experimented
with a range of business models--including data caps and tiered
pricing--to more accurately price data consumption.
\63\ See In the Matter of Preserving the Open Internet, Notice of
Proposed Rulemaking, at 6, GN Docket No. 09-191 (rel. Oct. 22, 2009).
\64\ See generally id.
\65\ Open Internet Order at 88.
\66\ Id.
\67\ Id. at 54.
\68\ See, e.g., Comments of the National Organizations at p. 14.
\69\ Open Internet Order at 77.
\70\ Id. at 88.
\71\ Id. at 96.
\72\ Id. at 112-114.
\73\ Id. at 113.
\74\ See Preserving the Open Internet; Final Rule, 76 Fed. Reg.
59,191-59,235 (Sept. 23, 2011), available at http://www.gpo.gov/fdsys/
pkg/FR-2011-09-23/html/2011-24259.htm.
\75\ See, e.g., Nate Anderson, Verizon Sues to Halt FCC's Net
Neutrality Rules, Oct. 2, 2011, Ars Technica, available at http://
arstechnica.com/tech-policy/news/2011/10/verizon-sues-to-halt-fccs-net-
neutrality-rules.ars. The case is Verizon v. FCC, No. 11-1355 (D.C.
Cir.).
\76\ See, e.g., John Eggerton, Court Sets Oral Argument Date for
Network Neutrality Challenge, June 25, 2013, Multichannel News,
available at http://www.multichannel.com/news-article/court-sets-oral-
argument-date-network-neutrality-challenge/144114 (reporting that oral
arguments in the case are scheduled for Sept. 9, 2013).
\77\ See Preserving the Open Internet, Report and Order, 25 FCC Rcd
17905, at 18 (2010).
\78\ See data analyzed in Figure 2. See supra note, 7.
\79\ Supra, note 22.
\80\ See Ev Ehrlich, Shaping the Digital Age: A Progressive
Broadband Agenda (p. 24). Washington, DC: Progressive Policy Institute
(July 2013), available at http://www.progressive
policy.org/wp-content/uploads/2013/07/07.2013-Ev-Ehrlich_Shaping-the-
Digital-Age_A-Progressive-Broad-Agenda.pdf.
\81\ Id.
\82\ Supra, note 35.
\83\ See Nicholas Economides and Joacim Tag, Network Neutrality on
the Internet: A Two-Sided Market Analysis, Information Economics and
Policy, Vol. 24, 2012, NET Institute Working Paper No. 07-45; NYU Law
and Economic Research paper 0-70; NYU Working Paper No 2451/26057
(August 2012), available at SSRN: http://ssrn/cp,abstract=101921 or
http://dx.doi.org/10.2139/ssrn.1019121
\84\ Supra, note 34.
\85\ See Nicol Turner-Lee, Brian Smedley and Joseph Miller,
Minorities, Mobile Broadband and the Management of Chronic Diseases,
Joint Center for Political and Economic Studies (April 2012), available
at http://www.jointcenter.org/research/minorities-mobile-broadband-and-
the-management-of-chronic-diseases.
\86\ For a discussion of additional potential harms, see generally
Ev Ehrlich, Shaping the Digital Age: A Progressive Broadband Agenda,
Progressive Policy Institute (July 2013), available at http://
www.progressivepolicy.org/wp-content/uploads/2013/07/07.2013-Ev-
Ehrlich_Shaping-the-Digital-Age_A-Progressive-Broad-Agenda.pdf.
\87\ See, e.g., Austin Schlick, A Third-Way Legal Framework for
Addressing the Comcast Dilemma, FCC (rel. May 6, 2010), available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-297945A1.pdf
(proposing a common carrier-like regulatory framework for broadband).
\88\ See Fact Sheet: Update Of E-Rate For Broadband In Schools And
Libraries, FCC (July 2013), available at http://transition.fcc.gov/
Daily_Releases/Daily_Business/2013/db0719/DOC-322288A1.pdf.
\89\ For additional discussion and analysis of these and other
impediments, see National Broadband Plan; Barriers to Broadband
Adoption. See also Modernizing the E-rate Program for Schools and
Libraries, Notice of Proposed Rulemaking, WC Docket No. 13-184, FCC 13-
100 (rel. July 23, 2013), available at http://transition.fcc.gov/
Daily_Releases/Daily_Business/2013/db0723/FCC-13-100A1.pdf (``E-rate
NPRM 2013'').
\90\ See, e.g., Valerie Strauss, U.S. High School Graduation Rates
See Big Minority Gains--Analysis, June 6, 2013, Wash. Post, available
at http://www.washingtonpost.com/blogs/answer-sheet/wp/2013/06/06/u-s-
high-school-graduation-rate-sees-big-minority-gains-analysis/; NAEP
2012: Trends in Academic Progress, National Center for Education
Statistics, U.S. Dept. of Education (June 2013), available at http://
nces.ed.gov/nationsreportcard/subject/publications/main2012/pdf/
2013456.pdf.
\91\ For an historical overview of these data, see Enrollment rates
of 18-to 24-year-olds in degree-granting institutions, by level of
institution and sex and race/ethnicity of student: 1967 through 2010,
National Center for Education Statistics, U.S. Dept. of Education,
available at http://nces.ed.gov/programs/digest/d11/tables/
dt11_213.asp. See also Anthony P. Carnevale and Jeff Strohl, Separate &
Unequal: How Higher Education Reinforces the Intergenerational
Reproduction of White Racial Privilege, Georgetown University Public
Policy Institute (July 2013), available at http://www9.georgetown.edu/
grad/gppi/hpi/cew/pdfs/Separate%26Unequal.FR.pdf (arguing that ``The
racial and ethnic stratification in educational opportunity entrenched
in the Nation's K-12 education system has faithfully reproduced itself
across the full range of American colleges and universities.'' Id. at
p. 7).
\92\ E-rate NPRM 2013 at 1 (noting that ``there is a growing
chorus of calls to build on the success of the E-rate program by
modernizing the program and adopting clear forward-looking goals aimed
at efficiently and effectively ensuring high-capacity connections to
schools and libraries nationwide.'')
\93\ Leveraging public-private partnerships for these purposes
should be pursued whenever possible. See, e.g., Statement of Acting
Chairwoman Mignon L. Clyburn, Re: Modernizing the E-rate Program for
Schools and Libraries, WC Docket No. 13-184, available at http://
www.fcc.gov/article/doc-322284a2.
\94\ See, e.g., National Broadband Plan at p. 246-247; The Impact
of Broadband on Education, Report to the U.S. Chamber of Commerce (Dec.
2010), available at http://www.uschamber.com/sites/default/files/about/
US_Chamber_Paper_on_Broadband_and_Education.pdf.
\95\ See, e.g., CFY, Impact, http://cfy.org/impact/ (providing
several case studies of how effective this organization's particular
approach to using broadband to bolster learning at home, and engaging
parents in the process, has been over the last few years).
\96\ See, e.g., National Broadband Plan at p. 197-222 (discussing
the impacts of broadband on healthcare).
\97\ For additional examples and discussion, see Policy Framework
for Empowering Women with Broadband at p. 8-14; The Impact of Broadband
on Telemedicine, Report to the U.S. Chamber of Commerce (April 2009),
available at http://www.nyls.edu/user_files/1/3/4/30/83/
BroadbandandTelemedicine.pdf.
\98\ See, e.g., Joseph Conn, Report Finds Telehealth Services are
Cost Effective, Clinically Successful, July 11, 2013,
ModernHealthcare.com, available at http://www.modernhealthcare.com/
article/20130711/NEWS/307119951 (reporting on the results of several
studies demonstrating the many positive impacts of telehealth programs
in the U.S. and abroad).
\99\ See generally CDC Health Disparities ad Inequalities Report--
United States, 2011, Morbidity and Mortality Weekly Report, Vol. 60,
CDC (Jan. 2011), available at http://www.cdc.gov/mmwr/pdf/other/
su6001.pdf (providing a broad array of data regarding minority health
disparities). See also U.S. Dept. of Health & Human Services, Office of
Minority Health: African American Profile, http://
minorityhealth.hhs.gov/templates/browse.aspx?lvl=2&lvlid=51 (providing
recent data regarding incidences of major chronic diseases among
African Americans); U.S. Dept. of Health & Human Services, Office of
Minority Health: Hispanic/Latino Profile, http://
minorityhealth.hhs.gov/templates/browse.aspx?lvl=2&lvlid=54 (providing
recent data regarding incidences of major chronic diseases among
Hispanics/Latinos).
\100\ Id.
\101\ For a review of recent data regarding adoption trends and the
benefits of such robust wireless adoption among communities of color,
see James E. Prieger, The Broadband Digital Divide and the Benefits of
Mobile Broadband for Minorities, Pepperdine University School of Public
Policy Working Paper No. 45 (April 2013), available at http://
digitalcommons.pepperdine.edu/cgi/
viewcontent.cgi?article=1044&context=sppworkingpapers.
\102\ Supra, note 81.
\103\ Policy Framework for Empowering Women with Broadband at p.
13.
\104\ See, e.g., Barriers to Broadband Adoption at p. 36-50
(identifying many of these barriers).
\105\ For additional discussion, see Medical Licensure and Practice
Requirements, American Telemedicine Association (June 2011), available
at http://www.americantelemed.org/docs/default-source/policy/ata-
policy-on-state-medical-licensure-and-practice-requirements.pdf.
\106\ Barriers to Broadband Adoption at p. 36-50.
\107\ The best recent example of this dynamic is the emergence of
the ``app economy,'' which has generated tens of thousands of new jobs
in just a few years. See Michael Mandel, Where the Jobs Are: The App
Economy, TechNet (Feb. 2012), available at http://www.technet.org/wp-
content/uploads/2012/02/TechNet-App-Economy-Jobs-Study.pdf.
\108\ See, e.g., Universal Broadband Adoption at p. 28-38.
\109\ See, e.g., The African American Labor Force in the Recovery,
U.S. Dept. of Labor (Feb. 2012), available at http://www.dol.gov/_sec/
media/reports/BlackLaborForce/BlackLabor
Force.pdf (analyzing employment trends among African Americans and
comparing them to those of Hispanics and Whites).
\110\ See Rakesh Kochhar et al., Wealth Gap Rises to Record Highs
Between Whites, Blacks, Hispanics, at p. 1, Pew Research Center (July
2011), available at http://www.pewsocialtrends.org/files/2011/07/SDT-
Wealth-Report_7-26-11_FINAL.pdf.
\111\ See, e.g., Alicia Robb, Access to Capital Among Young Firms,
Minority-owned Firms, Women-owned Firms, and High-tech Firms, Report to
the Small Business Administration Office of Advocacy (April 2013),
available at http://www.sba.gov/sites/default/files/files/rs403tot%
282%29.pdf.
\112\ See, e.g., David Honig, Digital Literacy Beyond Social Media,
July 10, 2012, Huffington Post, available at http://
www.huffingtonpost.com/david-honig/digital-literacy-beyond-s_b_
1662456.html.
\113\ See Dorrissa Griffin and Kristal Lauren High, Minorities and
High Tech Employment, at p. 3, MMTC (July 2011), available at http://
mmtconline.org/lp-pdf/Jobs%20Report%20%20
Minorities%20&%20High%20Tech%20Employment.pdf (``Minorities and High
Tech Employment'').
\114\ See generally id. (providing a comprehensive analysis of
these various impediments and offering an array of recommendations for
overcoming them).
\115\ See, e.g., Dan Nakaso, Asian Workers Now Dominate Silicon
Valley Tech Jobs, Nov. 30, 2012, San Jose Mercury News, available at
http://www.mercurynews.com/business/ci_22094415/asian-workers-now-
dominate-silicon-valley-tech-jobs (reporting that, between 2000 and
2010, ``African-American and Hispanic tech workers each saw slight
decreases: Positions held by African-American tech workers fell from
2.8 percent to 2.3 percent; those held by Hispanic workers dropped from
4.6 percent to 4.2 percent.'') This dynamic is not confined to Silicon
Valley. Indeed, it is observable across the Nation's high tech
workforce. See Minorities and High Tech Employment at p. 6.
\116\ Minorities and High Tech Employment at p. 22-23 (discussing
how factors like isolation and stereotyping contribute to this
dynamic).
\117\ See, e.g., Eric Lipton and Somini Sengupta, Latest Product
From Tech Firms: An Immigration Bill, May 5, 2013, N.Y. Times,
available at http://www.nytimes.com/2013/05/05/us/politics/tech-firms-
take-lead-in-lobbying-on-immigration.html?ref=todayspaper&_r=1&.
\118\ See, e.g., The White House, Educate to Innovate, http://
www.whitehouse.gov/issues/education/k-12/educate-innovate.
\119\ Minorities and High Tech Employment at p. 27-33 (discussing
these and other recommendations in depth).
\120\ See, e.g., David Honig, STEM Jobs are the Future, But What
Role Will Minorities Play?, Dec. 14, 2011, Broadband & Social Justice
Blog, available at http://broadbandandsocial
justice.org/2011/12/stem-jobs-are-the-future-but-what-role-will-
minorities-play/.
\121\ See Scott Mackey, Wireless Taxes and Fees Continue Growth
Trend, at p. 321, Tax Analysts Special Report, State Tax Notes, Oct.
29, 2012, available at http://www.ksefocus.com/wordpress-content/
uploads/2012/11/mackey-state-tax-notes.pdf. Nebraska has the highest
combined wireless tax burden in the country; Oregon--at 7.67 percent--
has the lowest.
\122\ Id.
\123\ See, e.g., id. at p. 329.
\124\ See Nicol Turner-Lee et al., The Social Cost of Wireless
Taxation: Wireless Taxation and its Consequences for Minorities and the
Poor, at p. 9, Joint Center for Political & Economic Studies (Nov.
2011), available at http://www.jointcenter.org/sites/default/files/
upload/research/files/
The%20Social%20Cost%20of%20Wireless%20Taxation.pdf (``The Social Cost
of Wireless Taxation'').
\125\ See, e.g., Sharon Weston Broome, Press Statement:
Comprehensive Reform of Wireless Taxation Needed Now, National
Organization of Black Elected Legislative Women (2011), available at
http://files.ctia.org/pdf/
NOBEL_Nobel_Women_Press_Statement_on_Wireless_Taxa
tion.pdf.
\126\ The FCC is already engaged in many of these activities as
part of its comprehensive overhaul of the Universal Service Fund and
the intercarrier compensation framework. However, litigation and other
roadblocks are impeding the swift resolution of many of these issues.
\127\ See, e.g., H.R. 2309--Wireless Tax Fairness Act of 2013,
http://beta.congress.gov/bill/113th-congress/house-bill/2309.
\128\ The Social Cost of Wireless Taxation at p. 11.
\129\ See Preserving the Open Internet, Report and Order, 25 FCC
Rcd 17905, at 12 (2010) (describing its open Internet rules as
``prophylactic'') (``Open Internet Order'').
The Chairman. Thank you, Dr. Turner-Lee. We have a lot of
participation here today from Senators, so I am going to
confine us to 5-minute rounds and run a pretty tight gavel on
that. So, if somebody is answering a question we will not
interrupt you, but try if you can to adhere to that.
Mr. Simmons, would subjecting broadband services to Title
II regulations make it more or less costly for Midco to offer
and expand broadband services, and would it make it more or
less costly for Midco's subscribers to purchase broadband
services?
Mr. Simmons. Senator, thank you. I believe it would
increase our cost of operation. If we were to adhere or respond
to all the requirements of Title II, it would place a great
burden on us in just the reporting structures alone. And some
of the unintended consequences perhaps buried within all that
that may not be obvious to some, but our cost of operation for
pole attachments, for instance. We would be now paying a
substantially higher fee than we would under the classification
as an information service.
And for us in our very rural areas, it is very significant.
There are a lot of miles of wide open prairies from small town
to small town that we have to interconnect, so I am going to
guess that our costs would probably be a whole lot higher than
it might be in a more densely populated area. There are some
parts of our country where we cannot even go underground. It
must be all above ground. I am talking specifically of the
Black Hills of South Dakota, for example. Hard for us to tunnel
through granite. So it would increase our costs there, and
those costs ultimately would be passed onto our customers.
The real burden for us other than increasing costs, which
we never want to do unnecessarily to any of our customers, is
that we would have to explain to them how their costs were
going up with no appreciable increase in value to them. We
might get away for a short time by saying it is the government
and we cannot do anything about it, but it tends to reduce the
level of trust that they might have in us. And we are very,
very sensitive to our customers' demands, and we work very hard
to satisfy them, not only in the quality of services that we
are also provide, but also in the price that we expect them to
pay for it. So, Senator, it would have a great impact on our
company.
The Chairman. Thank you. Mr. McDowell, following potential
Title II reclassification, and with Section 706 authority at
its disposal, what would be the limits of the FCC's authority
to regulate broadband Internet service or the entire Internet
for that matter?
Commissioner McDowell. Under Title II?
The Chairman. Under Title II reclassification and Section
706.
Commissioner McDowell. So Section 706, according to the
D.C. Circuit a year ago almost exactly would allow the
Commission to adopt rules that accomplish all the ostensible
goals outlined by Chairman Wheeler and President Obama on
November the 10th.
The Chairman. Mr. Misener, in your testimony, you stated
that Amazon, and I quote, ``certainly does not support allowing
an agency to act beyond its statutory authority.'' Do you agree
with Mr. McDowell, and, if so, do you support Congress
establishing limits on the FCC's authority?
Mr. Misener. Well, certainly it is Congress's prerogative,
Senator, to establish those limits, and we would support
Congress pursuing that avenue. Of course there is an existing
statute under which the FCC may and should operate, and
Chairman Wheeler should be applauded for the work he has done
with his existing statute. But if there were additional
statutory direction given by Congress, we certainly would
welcome that.
The Chairman. As a follow-up to that, the Internet
Association, which lobbies on Amazon's behalf, recently sent a
letter to the FCC stating that just three of Title II's 48
sections appear adequate to meet open Internet goals, namely
Sections 201, 202, and 208. Would you support--as a follow-up
to the previous question, Congress prohibiting the FCC from
applying the 45 unnecessary sections of Title II to the
Internet, including retail rate regulation?
Mr. Misener. Senator, you raise a terrific point. Title II
is not binary. My friend Mr. McDowell has talked about the
harms that Title II could create and I share his view. And so,
we do believe that Title--sorry--Sections 201, 202, and 208
would be adequate to protect net neutrality, which has been our
focus both at Amazon and the Internet Association.
The Chairman. Mr. Kimmelman, if the FCC intends with its
forthcoming rules to forbear from all those parts of Title II
that are ``less relevant to broadband services,'' as the
President has said in his advocating efforts, would you support
Congress statutorily prohibiting the FCC from applying those
parts of Title II to broadband services in the future?
Mr. Kimmelman. Mr. Chairman, I think it depends exactly on
what you are talking about. I think of 48 sections, there are
only a handful that could be relevant as far as I can imagine
looking forward or looking at it today. It is more than Mr.
Misener's three, but not a lot more.
I think the real question is, is it appropriate at this
time in looking at it to just wipe those out completely for the
future? If it is something that is a reporting requirement like
Mr. Simmons is talking about, it may have nothing to do with
what we care about in broadband. But if it matters to promoting
build out, if it matters to making the service affordable, if
it matters to basic privacy protections, if it matters to
promoting more competition so that we get multiple carriers, I
would hope you would want to preserve that authority somewhere
in the expert agency so they could adjust to technology and
market conditions.
The Chairman. My time has expired. Senator Nelson?
Senator Nelson. Thank you, Mr. Chairman. Ms. Baker, I have
a letter from one of your largest member companies, from
Sprint. And, Mr. Chairman, I would ask consent that it be
entered as part of the record.
The Chairman. Without objection.
[The information referred to follows:]
Sprint
January 15, 2015
Hon. Thomas Wheeler,
Chairman,
Federal Communications Commission,
Washington, DC.
Re: In the Matter of Protecting and Promoting the Open Internet,
GN Docket No. 14-28.
Dear Chairman Wheeler:
Over the past several weeks, public interest groups, mobile and
wireline carriers, industry associations, and government entities have
debated heatedly the appropriate legal basis for the authorization of
net neutrality rules. The debate has focused on whether data services
should be governed by Title II or Section 706 of the Communications
Act. Regardless of the legal grounds proposed, Sprint has emphasized
repeatedly that net neutrality rules must give mobile carriers the
flexibility to manage our networks and to differentiate our services in
the market. With that said, Sprint does not believe that a light touch
application of Title II, including appropriate forbearance, would harm
the continued investment in, and deployment of, mobile broadband
services.
When first launched, the mobile market was a licensed duopoly. This
system was a failure, resulting in slow deployment, high prices and
little innovation. In 1993, Congress revised the Telecommunications Act
to allow new carriers, including Sprint, to enter the market. This
competition resulted in tremendous investment in the wireless industry,
broader deployment, greater innovation, and falling prices. It is
absolutely true that this explosion of growth occurred under a light
touch regulatory regime. Some net neutrality debaters appear to have
forgotten, however, that this light touch regulatory regime emanated
from Title II common carriage regulation, including Sections 201, 202
and 208 of the Communications Act.
With the deployment ofiS95 data services in 1999, Sprint was one of
the first wireless carriers in the United States to deploy mobile data
service on a national scale. Sprint went on to upgrade these data
services to IS-2000 lxRTT in 2002, lxEVDO Rev 0 in 2004, and lxEVDO Rev
A in 2006. Sprint made these investments despite the fact that the FCC
had not yet declared mobile broadband to be an information service.
Sprint and other wireless carriers have continued to invest in the
advancement of mobile data services with the deployment of LTE
networks. So long as the FCC continues to allow wireless carriers to
manage our networks and differentiate our products, Sprint will
continue to invest in data networks regardless of whether they are
regulated by Title II, Section 706, or some other light touch
regulatory regime.
Sprint has always believed that competition, not regulation, will
provide consumers the best mobile services at the lowest price. We urge
the FCC and Congress not to be distracted by debates over Title II but
to focus on competition by ensuring that any net neutrality regulations
adopted recognize the unique network management challenges faced by
mobile carriers and the need to allow mobile carriers the flexibility
to design products and services to differentiate ourselves in the
market.
Sincerely,
Stephen Bye,
Chief Technology Officer.
Cc: Commissioner Clyburn
Commissioner Rosenworcel
Commissioner Pai
Commissioner O'Reilly
Senator Nelson. And I quote from the first paragraph,
``Sprint does not believe that a light touch application of
Title II, including appropriate forbearance, would harm the
continued investment in and deployment of mobile broadband
services.'' How does that square, Ms. Baker, with your
testimony?
Commissioner Baker. Thank you, Senator. So what we know is
that the current framework is working. In the past four years,
we have invested $121 billion in infrastructure. We will still
invest. There is no doubt about that, because if you--in this
industry if you miss an innovation cycle, you risk being
obsolete. The question is how much.
Mobile broadband has never been under Title II, so it is an
unknown. I would bring to your attention what happened in
Europe. Europe was the leader in 3G, and then they over
regulated. And between 2011 and 2014, in the United States, we
had 73 percent more investment in CapX. Our networks are 30
times faster than in Europe, and we have three times more
subscribers in LTE, so it is a real world comparison. But it is
clear that if there is more regulation, there is less
investment.
I would call attention to a second filing that Sprint made
last week. The first one received an awful lot of attention.
The second was talking about how mobile is different and needs
to be regulated differently, and it is both not only the
technical components, but also the competitive marketplace of
the mobile ecosystem.
Senator Nelson. You do not disagree with the position taken
by Sprint in the letter.
Commissioner Baker. Investment will happen. The question is
how much.
Senator Nelson. OK. Well, let me ask you about this.
Several senior executives from several of your companies have
told Wall Street that reclassification would have no impact on
network investment. Can you reconcile those statements?
Commissioner Baker. Well, mobile broadband has never been
under Title II. And when Congress deregulated wireless in 1993,
it was very clear in the language that it used. It decided that
mobile voice was a CMRS, and it put it in one bucket, and it
said it was going to use limited Title II requirements. And it
put mobile broadband under PMRS, and it said--Congress
explicitly said that it was exempt from Title II requirements.
So the FCC cannot just disregard what Congress told them what
they had to do and reclassify as a Title II requirement.
Senator Nelson. Mr. Kimmelman, do you want to comment?
Mr. Kimmelman. Thank you, Senator Nelson. I respectfully
disagree with Ms. Baker's legal analysis. I think Congress left
that authority to the FCC, and I think it is within the FCC's
authority to do that. And I would just point out, the logic of
this is real simple. You all have one of these probably.
If you pick it up and make a phone call, it is under
general, non-discrimination requirements as defined by the law.
Now, if you want to go and look for a map, or you are looking
for a restaurant, or you are editing a document, is that
private service as compared to a commercial service? That is
what the FCC is grappling with. We believe they have the
authority to do it under the authority that you had given them.
And logically, it makes no sense to differentiate those at this
point in time.
Commissioner Baker. And can I respond to that?
Commissioner McDowell. And can I respond to that, too,
please?
Commissioner Baker. The way that Congress described it
actually was very specific, and it said if it touched the PSTN,
the public network--the telephone network system, then it
would, in fact, be new future broadband services. So it is very
clear how Congress defined what future mobile services would
be. And just because you can watch a broadcast on your
telephone does not make a broadcast a broadcaster--a telephone
broadcaster just because you can make a payment on a phone.
You do not define it by the services that ride upon it. You
define it by what the service is.
Commissioner McDowell. And the FCC agreed in the data
roaming order in 2011.
Senator Nelson. So what was wildly successful with regard
to the wireless industry, are you saying that that cannot be
applied to broadband, the regulatory approach?
Commissioner Baker. The regulatory wireless----
Senator Nelson. Why could that same model not work for
broadband?
Commissioner Baker. Congress set the regulatory regime. The
FCC cannot decide what they want to do with it. The Congress
has set out what the regulatory regime is for wireless, and I
appreciate that you think it is wildly successful. We do, too,
and we just want to make sure that it stays that way. The
regulatory split is for mobile voice one way and for new
services, such as mobile broadband another way.
Senator Nelson. Mr. Kimmelman?
Mr. Kimmelman. What is wildly successful has been the
wireless industry overall, which includes the portion that Ms.
Baker indicated is subject to broader non-discrimination
requirements. So I believe it is a matter of what is logical
and what does the FCC have the authority to do. We clearly
disagree on the legal issue, but I think as a policy matter, do
you want to treat the broadband portion of your wireless
service than your just plain old phone calling on the wireless?
It does not make sense to me.
Senator Nelson. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Nelson. I have in this
order Senators Blunt, Klobuchar, Moran, and then Markey.
Senator Blunt?
STATEMENT OF HON. ROY BLUNT,
U.S. SENATOR FROM MISSOURI
Senator Blunt. Thank you, Chairman. So on that same line,
Mr. McDowell, a number of times in 2003, 2005, and 2007, the
FCC said that it did not have the authority to regulate this
because it classified broadband as an information service. Is
that correct?
Commissioner McDowell. It did not say it did not have the
authority in certain technologies. For instance, DSL could--
perhaps the Supreme Court said in 2005 in Brand X it could have
at that point. But things have changed. So wireless is
different. Section 332, as my former colleague, Commissioner
Baker, just pointed out, is very clear actually, and it is what
Congress did in 1993, I believe.
So Congress has spoken. The FCC cannot legislate on this
point, only Congress can. And that is why it is very
appropriate for this committee to be considering legislation.
Senator Blunt. And, Ms. Baker, your point was that since
Congress has said broadband is an information service, using it
through wireless technology way does not change the definition
of the service?
Commissioner Baker. Correct.
Senator Blunt. And when Congress said that, was that
specifically intended to define whether Title II----
Commissioner Baker. It was----
Senator Blunt.--would apply or not?
Commissioner Baker. Sorry. I am sorry, Senator. It was with
the emergence of the wireless industry, and I said the voice
looks like voice and has PTSN. And whatever new services, we
want to make sure that they flourish and are successful, which
I think--I think Congress got it right. Mobile broadband has
been extremely successful, and I think we look forward to the
next success in a connected life of mobile health, and
connected cards, and mobile payments.
Senator Blunt. In your testimony, did you mention the
amount of investment?
Commissioner Baker. The wireless industry has invested $121
billion over the last years, so I think the system is clearly
working. We are the leader in the world by any metric basically
almost, and we want--we want to take our leadership in 4G and
make sure that we lead in the next generation of networks, 5G.
Senator Blunt. You served on the FCC. Was there ever a
complaint at the time--a formal complaint filed since the
adoption of the 2010 open rule?
Commissioner Baker. No.
Senator Blunt. And you Mr. McDowell?
Commissioner McDowell. No, there were not. No, ever.
Senator Blunt. So I know that Senator Nelson said that we
should not wear out the idea of a solution in search of a
problem, but if there is no complaint, what are we trying to
solve here?
Commissioner McDowell. I think we are here, Senator,
because the FCC is proposing Title II, and that is so toxic to
the Internet ecosphere, not just network operators like
wireless companies, or cable companies, or phone companies, but
content and application providers that have their own networks,
their own fiber, thousands of miles of fiber and routers,
caching content and intelligence close to end users so
consumers can get that data, that content more quickly.
They, according to the Supreme Court, which I quoted in my
testimony, could be captured by Title II classification. That
is what I think they do not understand. And the proponents of
net neutrality, as my friend Gene pointed out, they want more
than 201 and 202. They want other aspects of Title II in there,
and I think that's what this is all about.
So if the ostensible goals, if the real goals as they have
been promoted for 10 years, and I was at the Commission for
seven of those 10 years, if they really want to protect
consumers, then what this committee could do, what Congress
could do is restate some existing law, like the Federal Trade
Commission Act essentially, and essentially give the FCC some
enforcement powers there. But also classifying broadband
Internet access as a Title II telecom service takes away the
Federal Trade Commission's authority under the common carrier
exemption.
So there are a lot of unintended consequences here, and it
would be bad, I think, for the entire Internet sector, anyone
with fiber, or servers, or wireless connectivity, whether they
think they are a tech company or not, could be captured by
this.
Senator Blunt. And, Mr. Kimmelman, you have appeared before
the Committee many times, a good friend of the Committee, and
always willing to come in and talk to us. But if, as you
suggested, things have changed dramatically in the last few
years, why would the Congress not deal with that specifically
rather than to leave it up to the current FCC, and a future FCC
with different commissioners? I assume whatever this FCC does,
if it survives the legal challenge, and we all believe there
would be one, then the next FCC would have the ability to do
just exactly the opposite. Why would we not want to make that a
more firm-founded future?
Mr. Kimmelman. I think it is an appropriate goal, Senator
Blunt, to aspire to that. I have lived through many FCCs that
have changed course. I lived through much litigation around the
FCC and, in all honesty, around congressional legislation in
this area. And a lot of that litigation is around things on the
margin or things about a definition, things that are within a
range, within a framework. It is not like black or white. And
as you say, because it is so fast moving, because it is so
dynamic, it is very difficult for Congress to pinpoint
precisely not just what needs to happen today, but next year
and the following year.
So I think it is totally appropriate for Congress to look
at this, and I urge you to do so. But one suggestion I would
have is if you want to legislate, maybe we can get away from
this discussion of is it Title II, is it Title I, is it Title
VI, or 706, and think about with your principles what powers--
what goals do you want to establish, what policies do you want
to establish, and then what tools do you want experts at an
agency to be grappling with on a day-to-day basis. I think if
we approached it that way, you would find much less
disagreement than what is apparent on some of these
discussions.
Senator Blunt. Thank you, Mr. Chairman.
The Chairman. Thank you. Senator Klobuchar?
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Thank you very much, Chairman Thune.
Congratulations on your new chairmanship, and congratulations
to Senator Nelson. Thank you all for being here.
The open nature of the Internet has certainly allowed it to
quickly become an essential tool for economic development. We
have certainly seen it in my state, and with more than four
million comments received by the FCC on the proposed net
neutrality rules, it is clear that Americans truly recognize
the impact of these decisions.
As you probably know, I chaired the Judiciary Antitrust
Committee and now will be the Ranking Member with Senator Lee.
And I have a strong interest in ensuring robust competition for
all users of the Internet, so I thought I would start with
that, my other hat with antitrust, Mr. Kimmelman.
And we have heard some claims that antitrust laws can
readily address any effort by Internet providers to use their
market power to put any limitations on the open Internet, and I
do not think the antitrust laws quite fit to take care of
everything. And do you think they are sufficient to address
that, and can you expend on your views of the FCC's role in net
neutrality versus the FTC's role?
Mr. Kimmelman. Thank you, Senator. I think antitrust is
essential, but it is not sufficient to deal with issues in this
area. Remember antitrust is a very targeted statute. The
Sherman Act and the Clayton Acts have you in Congress telling
the agencies to prevent a reduction in competition and to
protect--prevent efforts to monopolize. It is not about
promoting competition. That is what you put in the
Communications Act. It is not about preventing all
discrimination that is unreasonable. It is about getting at it
when it is blocking entry, or when it is cartel type behavior,
or when it is actually allowing for a dominant firm to expand
its dominance. So it can get at a few things, but not
everything, even in the competition realm.
And then beyond competition, as Dr. Turner-Lee says, there
are a lot of other values at stake here. This is about
opportunities and equity across our society. That is something
the antitrust laws only address through trying to promote
consumer welfare. It does not address the other attributes. So
I think the FCC plays a critical role. Title II is a portion of
it, the principles and the rulemaking authority. 706 as a
mandate was offering an ability to extend broadband and
possibly even expand it, as Dr. Turner-Lee said, to low income
customers. I think that could be extremely valuable as we move
forward and make it affordable for everybody. So it is the
combination of the tools I think that is so critical.
Senator Klobuchar. OK. Anyone else want to comment on that?
Commissioner McDowell. If I could.
Senator Klobuchar. Yes?
Commissioner McDowell. So actually Gene outlined a terrific
explanation of antitrust law, but there is also the Federal
Communications Commission and consumer protection law, Section
5, and that is also very useful and applicable here.
Senator Klobuchar. Very good. Thank you. Mr. Simmons, thank
you for being here today and for the services that Midcontinent
provides in Minnesota.
Mr. Simmons. Thank you.
Senator Klobuchar. And could you expand on what you hear
from your customers when it comes to expectations for a free
and open Internet?
Mr. Simmons. Senator, thank you. I think, you know, when
the debate began, especially the call to arms with the request
for information coming from the public, we did, in fact, hear
from a goodly number of our customers who were all in favor of
regulations, keeping the Internet open, even proposing Title
II. When I visited with a number of them, they had actually no
idea what Title II was. In fact, Title II equals open Internet.
Yes, we are for that. Let us send a letter.
When we started describing what Title II really involves,
and, by the way, we could send out a couple hundred pages of
documentation and start understanding all the components of
that, even after reading the text of all those things, which
might, in fact, be imposed upon us, even then unless you have
actually experienced what that really means in practicality, it
is difficult to understand.
You cannot really imagine what it is like putting together
rate and tariff sheets and submissions to the FCC, and never
mind state regulation with all this, until you have had to put
those sheets together and understand how involved it really
was. So after we explained what it was really about and that
there might, in fact, be additional costs that would come down
on our customers, their favoritism toward Title II diminished
rather quickly.
Senator Klobuchar. OK. One last question here. If Congress
decides to create a new broadband-focused statute or title,
what will happen to the Universal Service Fund if Section 254,
which currently governs universal service, is omitted from any
such legislation governing broadband? How do you think that
affects things like the high cost and e-rate that are just now
being re-oriented for broadband?
Mr. Kimmelman. Well, Senator, as drafted, I think it would
be very difficult to expand and continue what the FCC has been
doing to promote investment in broadband in high-cost rural
areas. And it would definitely be impossible to allow just a
broadband low income service for lifeline. Now, that may not be
the intent, but as drafted, that is the way it reads.
Senator Klobuchar. OK. So it is something we have to work
on. I am going to just put these questions on the record so I
can turn it over to my colleague with the vote. But I do have
some questions--I have raised this before--on call completion
problems really plaguing rural areas, and a lot of the ISP-to-
ISP. And I can put it all in writing so we do not have to talk
about it now. Thank you very much, everyone.
The Chairman. Thank you, Senator Klobuchar. Senator Moran?
STATEMENT OF HON. JERRY MORAN,
U.S. SENATOR FROM KANSAS
Senator Moran. Mr. Chairman, thank you. Mr. Simmons, you
probably come as close to a typical carrier in a state like
mine as well in Kansas. And I wanted to hear from you the
difficulties you face in deployment of broadband today and how
either this legislation or the potential consequences of the
FCC decision would affect your ability to deploy broadband,
particularly in rural America.
Mr. Simmons. Senator, it is difficult for us to be able
provide services to all those who really require it or need it.
There are some areas in our service area where it is just
physically economically unfeasible for a private risk company
to answer those particular needs. We are always encouraged with
a new program, whether it be stimulus, or whether it be an RUS
program, that those dollars would be allocated specifically
toward those who are unserved. We have not accomplished that
goal quite yet.
In too many cases our markets are over-built with maybe a
little bit of new service to some areas out there. And I guess
we have come to expect that, which is why even in our small
communities we have open competition from other providers who
are doing pretty much what we do. But there is a concern within
Title II with all of this, and I guess it would raise some
questions on the part of the financial community. You know, I
know that some who have it, it will not impact their plans for
investment, and maybe they are a very large publicly traded
company that has easier access to cash than we do, but we have
to rely on our relationships with private bankers. We need to
go out and borrow money from them. We have borrowed money in
order to expand our networks even today.
Our concern is that their willingness to lend money, to
take on that risk, is substantial today, but with the
uncertainty of all this, it may become even more substantial.
They may, in fact----
Senator Moran. When you say ``the uncertainty of all
this,'' ``all this'' is defined as what?
Mr. Simmons. What Title II really means, the applications
of Title II. And frankly it has not been helpful to have even
the speculation about Title II actually becoming the rules
under which we will be regulated. So it does represent a
concern. And even our banking partners with all this would take
a look at it, and maybe it would cost us more money on the
interest rates that are charged today if, in fact, that degree
of uncertainty continues. So it is of great concern for us.
Senator Moran. Thank you. Mr. McDowell or maybe Mr.
Misener, another area of interest in addition to rural for me
is innovation. How do we make certain that the next
entrepreneur with a great opportunity for success because of
the Internet is not hindered in the regulatory environment? And
it seems to me there are couple of ways you could look at this,
that certainty is certainly important, but additional costs
related to regulation. I want to make certain that that person
who goes to their basement or their garage in the back of their
office and has this idea has a better chance of success. And it
seems to me clearly how we ``regulate the Internet'' has a
consequence. Mr. McDowell?
Commissioner McDowell. So I will be quick so Paul has time
for that, too, because he is a great expert on this and an old
friend. But anyway, so I think it is important for folks to
understand, the Internet as we know it today, the entire
ecosphere, the so-called edge of the core, grew up under
existing law, and it has blossomed beautifully. It is one of
the greatest economic creations by human beings ever. So I
think that is important for folks to understand.
So why? We need to learn from those lessons because it was
relatively unregulated. This came about seven and a half years
ago, the mobile Internet, and that has exploded beautifully
across the globe. So going forward, I think the Title II cloud
creates a lot of questions, as Mr. Simmons pointed out.
But also as Gene Kimmelman has pointed out, there are those
who want to bring other aspects of Title II, other than just
201 and 202 there. So once you plant that seed, once you
classify information services, the Supreme Court has said the
rest of the tech economy is going to come in with it, and that
is going to cause all of the doubts that Mr. Simmons just
eloquently pointed out.
Mr. Misener. That was brief. Thank you, Mr. McDowell, and
thank you, Senator. I think they are answerable in the same
area; that is to say, innovation investment in both cases. I do
not think anybody can credibly argue that they need to block
consumer access to Internet content in order to invest. They do
not need throttle to invest. They do not need to fail to
disclose their practices in order to invest.
And so, the reasonable net neutrality kinds of provisions
adopted in this discussion draft already are kinds of things
that are not going to harm investments. And it is not just
credible to say that, you know, the inability to block customer
or consumer access to information is necessary for investment.
Senator Moran. Thank you. Thank you, Mr. Chairman.
The Chairman. All right. We have got the first vote on, so
we are going to go--we will go Senator Markey, Senator Heller,
probably break, go down and vote, and then we will just have to
play it by ear after that. But we will try and get back as
quickly as possible to give other members that want to ask
questions an opportunity to do so. Senator Markey?
STATEMENT OF HON. EDWARD MARKEY,
U.S. SENATOR FROM MASSACHUSETTS
Senator Markey. Congratulations, Mr. Chairman, Senator
Nelson. The dawn of a new era. It is great. Congratulations.
You know, the fact is that we have a device like this, but
we had to pass laws to make it possible because, believe me,
AT&T, there were two companies, two licenses. It was analog
that cost 50 cents a minute. You did not own one of these
things in 1994, believe me. You had to change the laws to have
the third, fourth, fifth, sixth, seventh company get in. The
government had to say let them in. OK. So we did that, the
government.
So all these things all come from policies that we created.
I was there. I was Chairman over in the House of the
Telecommunications Committee. This stuff did not exist. So we
need policy. We have got to say how much competition do we
want? How much will consumers benefit from it? How much more
investment will go in if more companies can get in? That is
always the test.
And so, let us just go to 2013. 2013 in America, 62 percent
of all venture capital in America in 2013 went to software
companies and Internet companies, the new companies, companies
whose names you do not know. Sixty-two percent of all venture
capital in America. Why? Because they believe that they have
access to an open Internet. They are the Google, eBay, Amazons
of this era because without the laws in the nineties, you do
not have Mr. Misener sitting here. He is not famous.
You have got to open it up. The big companies do not
innovate that way. They innovate in the pipeline, but they do
not innovate in new products and new services. They just do not
do that. So that is our big challenge here, and that is why
companies like Dwolla, Etsy, all the coolest companies of
today, companies that are the Googles and eBays of today, they
want Title II. They want protection. They want to be able to go
to the venture capital market and get the capital because they
can say, we do not have to worry that we are going to have
access to our customers.
That is what this is all about, creating that open,
entrepreneurial, chaotic, paranoia-inducing, Darwinian
marketplace. That is what we have in America. We have to
protect it. We have to protect it, and we have to protect
everyone else as well. So you agree, Mr. Kimmelman, that
Dwolla, Etsy, all those companies, hundreds of them, are in
jeopardy if we do not give them the full Title II protection.
Do you agree with that?
Mr. Kimmelman. I agree completely. I think they are
counting on that, and they are counting on the predictability
of there not being discriminatory practices and a meaningful
enforcement mechanism. And that is what draws capital to them.
That is what makes them invest.
Senator Markey. Let us go to universal service. Will the
draft before us today guarantee a protection of universal
service for all Americans?
Mr. Kimmelman. Senator, only if you are looking at old-
fashioned telephone service. I think if you are looking for
investment in broadband and you are looking for making it more
affordable, as drafted it does not reach that.
Senator Markey. How about senior citizens' protections?
Would that be protected?
Mr. Kimmelman. Not for broadband, Senator.
Senator Markey. How about guaranteeing that rural America
is served? Would that be guaranteed?
Mr. Kimmelman. Not for broadband as I read it, Senator
Markey.
Senator Markey. How about accessibility for the deaf and
the blind? I am the author of almost every telecommunications
law mandating accessibility for the deaf and the blind in
America. And, by the way, all these devices are now accessible
because of that. Would that be protected? Could that be
advanced?
Mr. Kimmelman. No, Senator, only for telephone service, not
broadband.
Senator Markey. OK, thank you. Now, let us go to privacy on
the Internet. Would privacy be protected? Would there be--under
this formulation, would the FCC be able to move in order to
protect the privacy of Americans?
Mr. Kimmelman. Senator, as I read it, the customer
proprietary network information protections are all in Title
II. They are for telecommunication service, so not broadband
unless it is considered a telecommunications service.
Senator Markey. Thank you. And so, we have got all of these
things that are there that right now everyone is used to,
everybody believes is going to be a part of the future. But if
we do not move to Title II, we do not get them, and under the
draft that we have right now, they are not there. And so, this
is a big debate that we have to have in our country, especially
when the chief financial officer of Verizon--Verizon says that
it will not affect their investment strategy at all if Title II
is used. That is Verizon.
But it will affect Dwolla, Etsy, hundreds of smaller
companies who are the innovative companies. They are the ones
that change. They are the ones that are branded ``Made in
America.'' Today we are Google, and Hulu, and YouTube, but
there is a whole new generation coming up 10 years from now
whose names we are going to know only if we keep it open and
they can reach the capital markets, and then reach customers on
a non-discriminatory basis.
And so, that is a huge challenge for us here on the
Committee, to get it right, Mr. Chairman, to make sure that
this free flow of capital that is now going out of the venture
capital firms into the software or Internet companies is not
inhibited; that we do not create uncertainty for these
companies that are really the heartbeat of what it is that
young people all across the country are saying that they want.
``Network neutrality'' is just a fancy word for ``non-
discrimination.'' And in the same way that the Civil Rights Act
says non-discrimination in schools and counters for people to
go and be served, the same thing is true over here. ``Network
neutrality'' is just a fancy word of saying that anybody can
get in, anyone can compete, anyone can innovate. And we have to
protect that in America because that is what has happened over
the last 20 years. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Markey. Senator Heller?
STATEMENT OF HON. DEAN HELLER,
U.S. SENATOR FROM NEVADA
Senator Heller. Mr. Chairman, thank you for holding this
hearing. I appreciate the fact that the first hearing that we
have has to do with protecting the Internet from the FCC, from
bureaucrats, and I certainly appreciate moving forward on this
particular piece of legislation. Hopefully we can come to a
consensus. I want to thank all of you for being here. Your
testimony has been good and very informative, so I certainly do
appreciate all that you are saying.
I want to go back to the previous comments made by my
friend across the aisle, and he talked about this phone. I
guess my question, Mr. McDowell, would this phone exist if the
FCC had regulated the Internet 10 years ago?
Commissioner McDowell. Probably not, but I do want to agree
with something that Senator Markey said, which is this
innovation----
Senator Heller. Feel free to respond. Yes, please feel to
respond.
Commissioner McDowell.--it came about as a result of laws
that were passed years ago, and that the marketplace is
burgeoning because of laws passed years ago. If this committee
wants to restate that in order to give the FCC enforcement
authority there, then that is the will of Congress. But we have
the wonderful Internet we have today because of the existing
legal environment.
Senator Heller. Ms. Baker, do you have any comments?
Commissioner Baker. I agree. I mean, the innovation has
been allowed to explode in the mobile broadband space because
Congress explicitly chose a non-regulatory path for it.
Senator Heller. Now you served on the FCC. Both of you
served on the FCC. And in your comments, Mr. McDowell, you
talked about litigation. What is your expectation of this going
to the courts if the FCC moves forward on their order?
Commissioner McDowell. I think a Title II order will
definitely go to court. I think it will be overturned. And, by
the way, you know, I am on record. I voted against two other
net neutrality orders, in part because I thought nothing was
wrong that needed fixing, but also because the FCC just did not
have the legal authority to do what it did.
So the Section 332 problems, as Commissioner Baker pointed
out, I think are real problems on appeal, but also this trying
to classify and yet massively forbear at the same time is going
to look arbitrary and capricious, more like picking political
friends rather than having any principled regulation.
Senator Heller. With your experience on the FCC, could you
estimate how long it would take for litigation like this to go
through?
Commissioner McDowell. Well, the last order from 2010 took
37 months, and there was a lot of uncertainty in the interim.
Senator Heller. Yes, that is what I was going to ask you,
regulatory uncertainty at this point. What impact would that
have on the industry, Ms. Baker?
Commissioner Baker. We have several rural carriers in
particular who are very insecure and have already pulled back
on some of their investments because they do not know that they
can get--they do not know what advanced services they can do
because they do not know how much money they are going to have
to spend on lawyers, so it is going to have significant
slowing. To what extent we do not know. Mobile broadband has
never been regulated by Title II, so we do not know.
Senator Heller. Have you had an opportunity to take a look
at the legislative text that the Chairman is proposing?
Commissioner Baker. Yes, I think it is a very good start.
We are very pleased with reasonable network management
provision, that it has some technical parameters to it. There
are clearly some issues that we need to have more discussion
about, but we are very pleased with the fact that--the only way
for this industry to have clarity is for Congress to act. The
certainty we need happens in this room.
Senator Heller. So you would argue that it makes more
sense----
Commissioner Baker. Absolutely.
Senator Heller.--for Congress to act as opposed to going
through a regulatory scheme.
Commissioner Baker. Yes.
Senator Heller. This is the reason I make this point, that
if left up to the FCC alone to act, I do believe this will be
challenged in court. Obviously the level of uncertainty that we
would see in the industry, for however many months, whether it
is 37 months or beyond, and I think there is a pretty good
chance the FCC will not win. So what does it do to the
industry? And I would argue that this exercise has been all for
nothing.
We have an opportunity, and, you know, I took a look at
what the Chairman has done in his particular piece of
legislation. Frankly, it is 70 percent of what the other side
of the aisle wants--prohibiting blocking, prohibiting
throttling, prohibiting paid prioritization, requiring
transparency. This is everything the other side wants. And I
guess, Mr. Chairman, what I do not understand is if they get 70
percent of what they want, why would they want to risk it? I
guess being from Nevada, we know a good bet when we see one,
and I think this is a good bet. I really do think this is a
good bet, and I just do not understand.
Mr. Misener. May I, Senator?
Senator Heller. Yes?
Mr. Misener. Thank you. You know, I am a long-time
proponent of net neutrality. I have been doing this for a dozen
years, and I think two things. One is, first of all, we are
willing to work with Congress for sure. I do not think that
this exclusive of the FCC's process. They have an existing
statute that they can work with, and they are working with, and
it should be applauded, but that does not preclude us from
working together. My testimony was very much designed to work
with this committee to develop a strong bill with what you want
to accomplish.
But I think a little bit too much credit is being given to
the forbearance decisions the Commission made a decade ago.
Frankly, the network operators have been working under a period
of detente where they have been on their best behavior. They
have not been doing the bad things that they want to do. They
have not been engaged in the blocking and the paid
prioritization principally because they are concerned about FCC
coming down or Congress coming down on them. So I would not
want to give too much credit to the fact that we have been in
this forbearance position for a dozen years, but I am happy to
work with you on legislation.
Senator Heller. And I appreciate that because that is what
I want. I want the other side to come with us, work with us,
get something done. I just have one more question, Mr.
Chairman, if you will?
Mr. Kimmelman, if this FCC order was not--was not prepared
and moving forward, based on what the Chairman has introduced
with his legislative text, would you vote for it? Would you
support it? If the FCC----
Mr. Kimmelman. Senator, I wish I had a vote. I think--I
think it is commendable. I think by taking away some of the
fundamental powers of enforcement, I would still be extremely
worried even if the FCC were doing nothing, because even if the
FCC is doing nothing, I think, Mr. Misener is absolutely right.
There is an air or sense that somewhere between information
services and Title II, that this industry has to behave, and it
has been doing so. And I think that lack of predictability is
an uncertainty that has driven a huge amount of investment
while litigation is going on, while there is a lot of problems.
I would want to make--and that is with the understanding the
FCC has this residual authority. It is like a hammer that they
could use.
So I would want to preserve some kind of a hammer or some
kind of a flexibility to make sure that you are forward
looking. But I think it is a great start, Mr. Chairman and
Senator Heller. I think we can--we can work on things, but
there are some very big issues that need to be worked out.
Senator Heller. Mr. Chairman, thank you. Thanks for
proposing this legislation. I want to get both sides to work
together so we can solve this problem.
The Chairman. Thank you, Senator Heller. Great panel, great
discussion. When we come back, Senator Booker will be up first,
followed by Senator Daines. I appreciate, again, your patience
and indulgence, and I do have to brag on my home state guy. PC
Magazine said that Midcontinent Cable is the fastest ISP in the
Nation recently.
So we will adjourn, or at least I should not say
``adjourn,'' but recess temporarily, and hopefully we will be
back here in an hour-ish. Thank you.
[Recess.]
The Chairman. All right, we are back. And in typical Senate
fashion, it is a model of efficiency getting through a series
of votes on the floor. We appreciate again so much the patience
of everybody who is here, and particularly our panelists. Thank
you for hanging around.
Is the Senator from Montana ready to ask questions, or
should I----
Senator Daines. Mr. Chairman, we are ready.
The Chairman. All right. I would recognize the Senator from
Montana, Senator Daines.
STATEMENT OF HON. STEVE DAINES,
U.S. SENATOR FROM MONTANA
Senator Daines. Thank you. I am down over here on the
extended part of the table here, but thank you. And thank you,
Mr. Chairman, for holding this most important hearing.
I have a little different background than many who come to
the U.S. Senate. I had the chance to spend 28 years in the
private sector before being elected to Congress a couple of
years ago and then coming over to the Senate. Several years
ago, I left a job at Procter & Gamble to come home to my home
state of Montana and was part of an Internet startup company.
In fact, it was just a small company when I joined, and 12
years later we have grown to a thousand employees, one of the
larger employers in the state of Montana, and it was a great
success story. Here we are in Montana, the land of fly fishing
and A River Runs Through It, and yet growing a world class
Internet company. In fact, it was cloud computing, and back in
those days, we did not know what the cloud was. We thought it
was something to do with maybe something up in the sky, but it
turned into a tremendous success. It capitalized at $1.8
billion. We built a global company that was acquired by Oracle.
So I just share that as background kind of where I am coming
from as we engage in this most important issue.
And I remember when I joined the company, I asked the CEO
before I joined the executive team, I said what is your
competitive differentiator? And he said I can run faster than
anybody else. It was speed, the ability to innovate and create
value faster than anybody else. And we competed globally
against companies and competitors all over the world. I am very
proud to be an American company that was winning in the
technology space.
Well, with that as background and going back to Ms. Baker's
comment earlier, and I know that was a long time ago when we
were last here before the votes. But you said something that
piqued my interest about what happened in Europe with 3G when
they were out in front, and then because of overregulation,
suddenly they no longer are--have global leadership. Could you
maybe expand on that a bit more? And, you know, what bad
regulations caused that do you think, and what are some of the
watch-outs we should be aware of here as a committee as we
think about the right policy moving forward?
Commissioner Baker. Well, welcome, and thank you for the
first question. So I appreciate it, and your background is
perfect to understand this. I really think, you know, what
happened was the United States got the environment right. We
got the de-regulatory climate for wireless. We got the
auctions. Meanwhile in Europe, they were the leaders of 3G, and
they said, you know, we are going to put in wholesale
regulations. We are going to do price regulation. We are going
to do mandate roaming. And they did not put any low-band
auction out there.
And in the course of that time from 2006 to 2010, we
started building a foundation for our 4G networks, which are
now the world's leader. And where we basically have the same
number of subscribers--we have 5 percent of the world's
subscribers--we have almost--we have 50 percent higher CapX and
investment than they do, and it is because we got it right and
they got it wrong.
And after building their house of regulation, we had people
like Nellie Cruz, who, as you recall, was very adamant about
regulation. She is now looking at the United States market, and
she says we want to be like them. They got it right. We will
get it right for 5G. And I think we have places like Japan and
South Korea who are like, wow, the United States beat us so
badly in 4G that maybe--we are just going to skip to 5G. So it
is really about getting the environment right, and, you know,
the rest of the world is at our heels, so we need to make sure
we continue to get it right here.
Senator Daines. And I think that is one of my great
concerns certainly as someone who has been on the other side, I
guess, in the private sector in looking at the famous adage,
``We are from Washington, D.C., and we are here to help'' in
terms of what this could for the--on the upside, but
potentially on the downside as it relates to the regulatory
environment to hinder value creation, and growth, and global
competitiveness.
Dr. Turner-Lee. May I, Senator, if you do not mind?
Senator Daines. Yes, please.
Dr. Turner-Lee. Just from the statistics that I mentioned
about the over-indexing of people of color on wireless, I think
the point that we are actually seeing in Europe is one that we
should take, you know, with some caution because what we are
seeing, particularly with communities of color, is this use of
the 4G and expanding networks because most of those families
are wireless-only households. So I think, again, to your point,
we really have to get this right here because that is actually
going to be, I think, the on-ramp for some of these low income
and more vulnerable consumers that are actually adopting
wireless first before they go into more wire line services.
Senator Daines. Thank you. Mr. McDowell, what do you
think--as you look at regulation, what concerns you in terms of
a regulation that would hinder innovation in terms of our high-
tech sectors here that could harm what we are trying to do here
as a country to maintain global competiveness?
Commissioner McDowell. Well, regulations always have a cost
one way or another, and the most common cost, which is the
hardest to measure, are the unintended consequences or what
innovation did not come to market as a result of that
regulation. That is very hard to measure. So I like to turn it
around to say, well, what has worked in the Internet ecosphere?
A lot of things have worked right, and that is based on the
laws that were put into effect. Not Title II, but other laws
that were put into effect. And where is the innovation
investment going? It is in the least regulated areas.
Senator Daines. Why does the FCC have the sense of urgency
to want to put these regulations in place next month? I am
somewhat new to the Hill and wondering what is the sense of
urgency here to put these regulations in place without some
careful deliberation in the hearings and so forth?
Mr. Misener. Senator, thank you. As someone who has worked
on this issue for 12 years, I do not think there is any urgency
at all. It has been a dozen years of debate and no action. I
agree completely with Commissioner Baker that we need to get it
right with respect to net neutrality, especially as opposed to
Europe, because here you have the Internet content providers
are American companies. The network operators are American
companies. In Europe the network operators are European
companies, and the Internet content providers are American
companies. And so, if we get net neutrality wrong here, you can
bet that we will not have a leg to stand on in Europe.
Senator Daines. Yes, thank you. Mr. Chairman, I think my
time has expired. Thank you.
The Chairman. Thank you, Senator Daines. Senator Booker?
Senator Booker. [Off audio.] So I gave you guys some nice
words, but I will skip them now because that is my time.
[Laughter.]
STATEMENT OF HON. CORY BOOKER,
U.S. SENATOR FROM NEW JERSEY
Senator Booker. This is an issue I am very passionate
about, and I am grateful for the commentary of everyone. And I
think that we all have a lot of similar ambitions in terms of
what the open and free Internet would be. But I would love to
tailor my conversations with you, Dr. Turner-Lee, because in
your testimony I love where you come from, a lot of the same
experience that I do.
And, you know, while government may seem scary to some
people, I would not be sitting here today if it was not for the
Federal Government protecting my rights. The town I grew up in,
it was the Government putting in place certain frameworks to
protect a black family that wanted to move in. And so, when it
comes to the Goliath, whether it is--industry or what-have-
you--the Government is really important.
And I hold here this area of debate, and here in Section 2,
there is a big section here. And Chairman Thune is somebody I
have a deep respect for and think he has done a courageous
thing by putting a bill out, and I appreciate, Chairman, that
you say this is the beginning of a conversation. But it
basically eviscerates a lot of the key elements that are put in
place in Section 202 of Title II that specifically refer to
disadvantaged and minority communities.
Now, I know that mobile may be doing a great job in leading
the globe, but broadband certainly is not. We are behind our
global competitors. And specifically if you look at a map of
minority communities, poor communities, those are the ones
where private enterprise often does not see the urgency to get
there. And so, I was curious, in your testimony when I read it,
your written testimony, that you rely in some ways on Section
706 for protections and others, but yet this legislation does
not give those protections. Let me give you a couple of
examples.
Right now, we are waiting on the FCC to allow two cities
with high poverty, high minority--Wilson, North Carolina, which
has--is a majority/minority city, blacks and Latinos, and
Chattanooga, a city I have long admired, that has a significant
minority population. And what these cities said is that we want
to give better access to broadband, and we want to have our own
municipal broadband. And their states, however, have said--this
is a locality that wants to determine its own destiny, but the
states have said, no, you cannot. We are passing laws
preventing that, which the big Goliaths all support. And so,
this is David versus Goliath.
This legislation takes that ability to fight Goliath out
where they cannot appeal to the Federal Government. So next
month, the FCC is going to get a chance to rule using Section
706 that is specifically eviscerated in the legislation you put
forward to allow these two cities to do something that is
actually pretty incredible--faster broadband than even the big
Goliaths are doing, free open access for minority communities.
And so, these are the kinds of protections that to me are
essential for us as a Nation to activate the genius and
entrepreneurialism of other communities.
The proposed legislation would end the FCC's ability to
remove barriers to small businesses and minority-owned
businesses. In many ways, these communities have traditionally
benefited from the Agency protection in a world where
marketplace is often tipped toward the biggest companies and
``high value customers.'' Well, kids in Newark and Camden to me
are high value customers, and they stand to lose the most if
the Commission's authority is all but stripped by this new law.
So you stated in your testimony that the Committee should
consider ``a legislative proposal to promote an open Internet,
provided it preserves the Commission's ability to protect
consumers.'' And so, I just really want you to be specific
because you seem to be advocating for things that are not yet
in the proposed legislation that I fully support to make sure
that this world is far more equal to those folks that seem to
consistently lose out when it comes to opportunity and equality
in our country.
Dr. Turner-Lee. [Off audio.]
Senator Booker. You have got to push the button, by the
way.
[Laughter.]
Dr. Turner-Lee. Yes, I have got to push the button, right.
I have only been here 2 hours, and I have not figured that one
out. So, first of all, I want to say congratulations. We follow
you on Twitter. We follow you wherever you go. We are so happy
that you are in this seat.
Senator Booker. Thank you. Thank you very much.
Dr. Turner-Lee. I want to put that out as a public
acknowledgement.
Senator Booker. And that is for the record, by the way.
[Laughter.]
Dr. Turner-Lee. It is for the record. And I also want to
say, too, to your point I am glad that we do share the same
goals. I have always known that we have, but just by listening
to things that you say that broadband adoption is the number
one civil rights issue and concern of this time. And I think to
what Senator Markey said earlier, it is a new lunch counter
debate for many of us in our communities. The 30 million people
that are not online, the people that we kind of care about
versus the digital elite in our community. It is really
important to kind of let them know the value and importance of
broadband. So I want to address that.
When the civil rights groups, the ones that we represent,
which are more traditional, came forth when the Chairman put
out his proposal, it was always with the Section 706 provision
with strong protection consumers. So you are correct because
Section 706 has actually enabled communities of color to do a
lot of things, right? Stop digital redlining. It has helped us
with minority media ownership, Universal Service Fund, et
cetera. So with respect to the use of 706, in the testimony I
do talk about, you know, this idea of still keeping that on the
table as some point of legislative debate or discussion as you
try to move toward a bipartisan bill.
I mean, part of this discussion and what I think is so
wonderful about these hearings is the fact that Congress is
talking to one another about this, and those of us that are on
the side wanting to do the very things that you are interested
in and making sure that there is nobody left behind. You know,
we get this chance to say, please do talk to each other because
we want to move onto the business of other areas.
With regards to the statement that we put out there, I
mean, there were a couple of things that we did put into the
written statement as well about digital redlining being a very
important piece, that, again, if you eviscerate 706, you will
not be able to deal with redlining in a very important way, or
universal service reform. And I think that is important to note
for this hearing as well. So we ask the Chairman and the
Ranking Member to consider that in that conversation of how we
actually come together and get past the morass of some of the
division on this bill, which I think, again, for us is a
promising discussion for the primary reasons of getting back to
the business of adoption, the issues that you care about.
On the muni thing, just the last thing, just to respond to
municipal broadband. So we at MMTC really have not taken an
opinion on that. We put out a press statement applauding the
President for his commitment to universal broadband adoption
and deployment, and we see that as part of this broader way to
actually expand that. But one of the things, again, digital
redlining, we have to also be careful that we are not creating
these fiber-hoods and communities where we actually give people
permission to build broadband and deploy it, but yet we pass
over communities within that neighborhood. And sometimes we as
a community have had felt the disproportionate impact of being
passed over as a result of that.
Senator Booker. Right, and I want to put some things in the
record, but just to the last municipal broadband point. Having
been a mayor, the best innovation in America, if you want to
talk about what is going on in this country in terms of
government, it is not going on at the Federal level. It is not
even at the State level.
Dr. Turner-Lee. Muni.
Senator Booker. It is at the municipal level. And to
eviscerate municipalities' ability to innovate, especially
because disproportionately poor minorities live in cities,
would be unconscionable and unacceptable to me. And I hope it
is something that we can consider in discussions for the
legislation that is being considered by the Chairperson.
I want to enter for the record, if the Chairperson will
allow, number one, an op-ed I authored with Senator King
outlining the importance of strong net neutrality rules. Number
two is a letter from the Internet Association expressing
concerns with the proposed legislation. And very importantly,
number three, letters from civil rights and social justice
groups, over a hundred of them, advocating for Title II really
specifically because of a lot of the protections, the bedrock
protections that are statutorily in Title II that allow like
the civil rights legislation, like the voting rights
legislation, around minorities and others, that bedrock defense
of their rights so that Goliath cannot succeed over the noble
Davids out there.
[The information referred to follows:]
Booker, King: Don't destroy the open Internet
By Cory Booker and Angus King
updated 7:53AM EST, Mon December 8, 2014
http://www.cnn.com/2014/12/08/opinion/booker-king-net-neutrality/
Editor's note: Cory Booker, a Democrat, is a United States senator
from New Jersey. Angus King, an independent, is a United States senator
from Maine. The opinions expressed in this commentary are solely those
of the authors.
(CNN)--The Internet is one of the most powerful tools on the
planet. Across the globe, millions of people connect every minute of
every day to harness its wealth of information, exchange ideas in an
open platform and foster the type of innovation and entrepreneurship
that spurs economic growth. And today, it's never been more at risk in
the United States.
Earlier this year, a court decision unlocked the ``pandora's box.''
There are now no enforceable rules to ensure small businesses,
nonprofits and individuals can continue to access online content
without fear of discriminatory practices or content blocking by
Internet service providers who own the information pipelines.
Indeed, without new rules, service providers could create fast
lanes, impose new fees, and even block certain content and promote
other content to bolster their bottom line. This would destroy the open
Internet as we know it.
This is not idle speculation. Executives at cable and phone
companies have expressed a desire to engage in such activities, and in
fact, have already tried to do so. If we permit blocking,
discrimination, and tolls, we will undermine the Internet's low-cost
level playing field that has transformed our society, created an
economic boom, and provided opportunity to so many in the United States
and around the world.
In the last few decades, we have seen first-hand how the open
Internet has led to a robust startup economy where Americans create
content, solve problems and pioneer new technologies that improve the
lives of people across the globe. Businesses like Twitter, YouTube,
Tumblr, Google, Facebook and more have emerged because they were able
to start on an even playing field, where consumers--not Internet
service providers--determined their success. Degrading service or
forcing businesses to pay-to-play would fundamentally undermine the
openness and access on which the Internet has thrived.
To allow the Internet to become a bastion of powerful incumbents
and carriers would be a mistake of historic proportions. Instead, it
must remain a place where all speakers, creators and innovators can
harness its transformative power now and in the future.
Fortunately, we do not need to create new laws or a complex
regulatory structure to preserve the Internet as we know it. Instead,
the Federal Communications Commission can pass rules that prevent toll
booths, content blocking and discrimination by simply reclassifying
broadband as a common carrier service under Title II of the
Communications Act.
All the FCC would be doing is applying the legal framework that
Congress expected it to apply, and that both Supreme Court Justice
Antonin Scalia and President Barack Obama agree is the correct
approach. In other words, the legal tools are there and ready to use.
Some worry that this approach could be overly burdensome on
Internet service providers, but the fact is, the FCC can easily apply
only the necessary parts of Title II regulation through a process known
as forbearance. This flexible approach would allow the FCC to adopt
bright-line rules that provide certainty to the market, and would keep
the Internet as a powerful, open platform that gives everyone--not just
the highest-bidder--the opportunity to freely exchange goods and ideas.
Any approach that stops short of reclassifying broadband under Title II
will not allow the FCC to adopt the rules we need today to protect
customers and businesses, and will result in high social and economic
costs.
All other approaches require case-by-case adjudication, leading to
never-ending litigation (which, in itself, disproportionately harms
small businesses and start-ups), market uncertainty, high costs of
regulation and opportunities for regulatory overreach.
Title II has already worked well to strengthen telecommunications
in the United States. Under Title II regulation, telephone service has
been robust and accessible. Mobile phone service, also a Title II
service, continues to thrive and investment has remained steady and
more and more individuals turn to mobile as their primary voice
service. While many do not realize it, Title II also applies to the
broadband services offered to the Nation's large businesses, known as
enterprise broadband, and to the many services offered to millions of
our rural Americans.
An open Internet is not only essential for the future of America's
economic growth, but it is also a ladder for social and economic
mobility, allowing families in rural or low-income areas to access
educational and social services, participate in our democracy and
contribute to the marketplace of ideas. This is why we have been
working with our colleagues in Congress to encourage the FCC to protect
the open Internet under Title II. Adopting these sensible rules would
give the FCC the power to intervene if broadband providers attempt to
abuse the principles of the open Internet while also creating market
and regulatory certainty.
We are proud to join more than 4 million Americans of all political
beliefs, as well as companies in our home states and across the
country, who have spoken out in favor of strong open Internet rules and
against the creation of fast and slow lanes.
We urge the FCC to act quickly to implement fair rules of the road
that protect businesses and consumers and preserve the power of the
open Internet.
The future of our democracy and economy depend on it.
______
Internet Association
Washington, DC, January 21, 2015
Hon. John Thune,
Chairman,
United States Senate,
Committee on Commerce, Science, and Transportation,
254 Russell Senate Office Building,
Washington, DC.
Hon. Bill Nelson,
Ranking Member,
United States Senate
Committee on Commerce, Science, and Transportation,
254 Russell Senate Office Building,
Washington, DC.
Hon. Roger Wicker,
Chairman,
Subcommittee on Communications, Technology and the Internet,
United States Senate,
Committee on Commerce, Science, and Transportation,
254 Russell Senate Office Building,
Washington, DC.
Hon. Brian Schatz,
Ranking Member,
Subcommittee on Communications, Technology and the Internet,
United States Senate,
Committee on Commerce, Science, and Transportation,
254 Russell Senate Office Building,
Washington, DC.
Dear Chairman Thune, Ranking Member Nelson, Chairman Wicker, and
Ranking Member Schatz:
I write on behalf of the Internet Association to share our views on
today's legislative hearing to discuss the proposed net neutrality
legislation before your Committee. The Internet Association is the
unified voice of the Internet economy, representing the interests of
leading Internet companies \1\ and their global community of users. The
Internet Association is dedicated to advancing public policy solutions
to strengthen and protect Internet freedom, foster innovation and
economic growth, and empower users. As such, we are keenly aware of and
interested in any net neutrality related public policy, regardless of
its origins and legal foundation.
---------------------------------------------------------------------------
\1\ The Internet Association's members include Airbnb, Amazon, AOL,
Auction.com, eBay, Etsy, Expedia, Facebook, Gilt, Google, Groupon, IAC,
LinkedIn, Lyft, Monster Worldwide, Netflix, Practice Fusion, Rackspace,
reddit, Salesforce.com, Sidecar, SurveyMonkey, TripAdvisor, Twitter,
Uber Technologies, Inc., Yelp, Yahoo!, and Zynga.
---------------------------------------------------------------------------
Since last May, when the Federal Communications Commission first
requested public comments on its proposed open Internet rules, the
Internet Association has taken a position that is results oriented. By
this, we mean that our priority is for the adoption of robust and light
touch open Internet rules that protect Internet freedom, foster
innovation and economic growth, and empower users. The rules for which
we specifically advocated are a ban on blocking, discrimination, and
paid prioritization by both wired and wireless broadband Internet
access providers. We also have expressed our concern--outside of the
traditional last mile net neutrality debate -that these providers can
use interconnection as a chokepoint to degrade consumer access and harm
online services.
Many of the principles outlined by Chairman Thune are responsive to
our concerns in key respects, and we are grateful for the leadership
both the House and Senate have shown in crafting them, as well as the
outreach to stakeholders throughout this process. With respect to the
draft legislation, changes need to be made to ensure the outcomes match
these principles so that an open Internet is fully protected. Although
this list is not intended to be exhaustive, we have concerns about
certain key provisions in the discussion draft--namely discrimination,
throttling, specialized services, consumer choice, and reasonable
network management practices.
The bill as currently drafted does not expressly ban
discrimination. Allowing discrimination unconnected to a payment
creates the possibility of discrimination by vertically integrated
Internet access providers. Similarly, the current prohibition on
throttling in the discussion draft is ambiguous since it prohibits
``selective'' throttling only when the throttling is ``based on source,
destination, or content'' of the traffic. This leaves open the
possibility that an access provider could adopt a policy of generally
throttling Internet traffic of a particular ``type,'' such as video
traffic.
We also have concerns about the definitions of specialized
services, consumer choice, and reasonable network management practices
in the discussion draft. These terms as currently drafted could be used
as loopholes to avoid the legislation's obligations, leading to the
unintended consequence of the exception swallowing the rule.
Specialized services are defined expansively and are permitted save
where ``devised or promoted'' to evade the open Internet rules, or
where they impinge on the ``meaningful availability'' of broadband
Internet access. Unfortunately, neither term is specifically defined.
Similarly, we are concerned that the discussion draft's consumer choice
provision could be read to allow broadband Internet access providers to
prioritize a service if consent is given through a provision buried in
a dense and lengthy consumer service contract. Finally, the discussion
draft could allow access providers to hide reasonable network
management practices from transparency requirements, and thus,
potentially hide discrimination under the guise of reasonable network
management.
We look forward to working with the Committee on some key issues of
concern for Internet companies--including the issues outlined above-as
the Committee's process advances. As we review Congressional open
Internet proposals, we will continue to work with stakeholders--
including the FCC--to produce enforceable rules. The path forward is
not binary, and we have a responsibility to protect the free and open
Internet for our members, as well as their community of users, by
working with regulators, legislators, and stakeholders to achieve this
end.
It is encouraging to see that support for net neutrality rules
cross party lines. We must all work together to ensure that the
Internet is free and open for users and innovators.
Respectfully,
Michael Beckerman,
President and CEO,
Internet Association
______
January 20, 2015
Hon. John Thune,
United States Senate SD-511,
Washington, DC.
Hon. Bill Nelson,
716 Senate Hart Office Bldg.,
Washington, DC.
Dear Chairman Thune and Raking Member Nelson:
It has been a year since a Federal court struck down the Federal
Communications Commission's (FCC) Open Internet rules.
And currently, there are no rules preventing Internet Service
Providers (ISPs) like Comcast, AT&T, and Verizon from interfering with,
blocking, censoring, or discriminating against online content and Web
traffic.
This is why our groups oppose any effort that would prevent the FCC
from adopting strong and enforceable Net Neutrality rules at the
agency's upcoming Feb. 26 meeting. We fear that the draft legislation
currently under discussion is designed to do just that, and to stall
the FCC. We believe instead that it is time for the FCC to take sound
action at last to protect our online digital rights.
Over the past year, more than four million commenters have called
on the FCC to adopt strong Net Neutrality protections banning
unreasonable discrimination online. Millions more have petitioned
Congress and the FCC for the same kinds of protections.
Thousands of organizations and businesses have joined that call as
well, including an unprecedented number of racial justice and civil
rights groups.
The vast majority of these commenters have called on the Commission
to reclassify broadband as a Telecommunications Service under Title II
of the Communications Act. This would re-establish the agency's
authority to enforce nondiscrimination rules and other necessary
protections for Internet users.
For our organizations, Net Neutrality is a critical racial justice
issue.
The open Internet has made it possible for communities of color to
tell our own stories online and speak for ourselves without first
seeking permission from corporate gatekeepers. It has ensured that our
voices will always be heard and never silenced.
That is why more than 100 civil rights and racial justice groups,
including the National Hispanic Media Coalition, 18MillionRising.org,
LatinoJustice PRLDEF, the Center for Media Justice, ColorOfChange.org,
Black Lives Matter, and Presente.org, have called on the FCC to re-
establish its legal authority to protect our online rights. A full list
of civil rights and racial justice leaders and organizations that
support the FCC moving forward with Title II reclassification and
Network Neutrality is available in filings with the FCC that are
attached to this correspondence.
ColorOfChange.org, the largest Black online civil rights group in
the country, has filed 75,000 comments with the FCC in support of
reclassification. And Congressional champions such as Reps. John Lewis,
John Conyers, Donna Edwards, Keith Ellison, Raul Grijalva, and Sen.
Cory Booker are among the growing chorus calling for Title II
protections.
Through the years, our groups have had to fight back against the
misleading arguments made by the ISPs that Net Neutrality would widen
the digital divide because of the harm it would cause to investment.
But the untruthfulness of those arguments was exposed last month at a
conference for investors.
At the gathering, the chief executives and chief financial officers
for Verizon, Comcast, Charter Communications, and Time Warner Cable all
told investors the truth: that Title II would not harm investment.\1\
The companies had to tell the truth in this setting since it is against
the law to deceive investors. In addition, Sprint undermined the anti-
Net Neutrality arguments made by other wireless providers by telling
the Commission that Title II rules would not harm investment.\2\
---------------------------------------------------------------------------
\1\ Fung, Brian, ``Comcast, Charter and Time Warner Cable all say
Obama's net neutrality plan shouldn't worry investors,'' The Washington
Post, Dec. 16, 2014. http:/fwww.washingtonpost.com
jblogsjthe-switchfwp/2014/12/16/comcast-charter-and-time-warner-cable-
all-tell-investors-strict-net-neutrality-wouldnt-change-much/.
\2\ Fung, Brian, ``Sprint: Tough net neutrality rules would be fine
by us,'' The Washington Post, January 16, 2015: http:/
fwww.washingtonpost.comfblogs/the- switchfwp/2015/01/16/sprint-tough-
net-neutrality-rules-would-be-fine-by-usf.
---------------------------------------------------------------------------
It is time for the FCC to move forward and vote on Net Neutrality
rules on Feb. 26. We oppose congressional proposals that would restrict
the FCC's legal authority to enforce strong Net Neutrality protections
or strip the Commission of the flexibility it needs to preserve
nondiscrimination rules in a communications landscape that continues to
evolve.
Preserving the FCC's Title II authority is also critical to
addressing other broadband-related issues like universal service,
competition, interconnection, consumer protection, privacy, and public
safety.
For all of these reasons, we oppose any effort to derail the FCC
from taking action to use its existing Title II authority, or to
prevent the FCC from protecting our online digital rights through
strong Net Neutrality rules.
Sincerely,
ColorOfChange.org
Center for Media Justice
Free Press
National Hispanic Media Coalition
Presente.org
______
January 5, 2015
Federal Communications Commission
445 12th Street, SW
20024 Washington, DC
14-28: Protecting and Promoting the Open Internet
10-127:In the Matter of Framework for Broadband Internet Service
Dear Chair Tom Wheeler and Commissioners Clyburn and Rosenworcel,
As a new generation of civil rights organizations and leaders who
represent the rural and urban poor, immigrants, and communities of
color, we urge you to swiftly adopt enforceable network neutrality
rules that prevent discrimination online. Now is the right time to
equally protect the digital voice and rights of the Nation's most
vulnerable communities--whether they access the Internet from a
computer, a phone, or a tablet.
On Monday, November 10, 2014, President Obama urged the Federal
Communications Commission to reclassify broadband as a common carrier
service under Title II of the Communications Act, coupled with strong,
bright-line net neutrality rules. Bright-line rules provide certainty
to the market, keep the costs of regulation low, and limit FCC
overreach.
We are concerned by press reports that the FCC--instead of standing
with the President, policy experts, and almost 4 million people to
support strong network neutrality rules--is instead considering
dangerous ''hybrid'' rules that would destroy the open Internet as we
know it.
Commissioners, we urge you to stand with the President and adopt a
plan to reclassify Internet service providers as common carriers. This
would give the Commission the authority it needs to adopt enforceable
rules that ban ISPs from discriminating against, or blocking, our
content online.
Protecting an open and non-discriminatory Internet is critical for
the health and well being of communities of color and low-income
families. The fight for an open Internet is not just about broadband
access and corporate investment; it is also a fight for real
representation for the most vulnerable constituencies in the United
States.
The open Internet has given our communities the rare opportunity to
ensure our stories are told accurately, in our own voices. From job
applications, healthcare, and entrepreneurship to the management of
Federal benefits, immigration status and online education--communities
of color and low-income families rely on the open Internet to meet our
basic needs.
Commissioners, we respectfully, but passionately, urge you to stand
with the President and the people to propose the strongest network
neutrality rules available. Now is the time to reclassify broadband as
a common carrier under Title II, with equal protections for users of
fixed and mobile broadband. When it comes to preventing online
discrimination and protecting our Internet freedom, there is no room
for compromise or delay.
Respectfully,
18 Million Rising
Access Humbolt
Alliance for a Just Society
Alliance of South Asians Taking Action
Allied Media Projects
Alternate ROOTS
Angry Asian Man
API Equality--Northern California
Appalshop
Arts and Democracy Project
Asamblea de Derechos Civiles
Asian Americans Advancing Justice--Asian Law Caucus
Asian Pacific American Network of Oregon
Black Alliance for Just Immigration
Black Excellence Project
Black Lives Matter
Boulder Community Broadcast Association
Brown & Green: South Asians for Climate Justice
Brown Boi Project
Brown Paper Tickets
Center for Media Justice
Center for Rural Strategies
Center for Social Inclusion
Champaign-Urbana Citizens for Peace and Justice
Chinese for Affirmative Action
Color of Change
Common Cause
Common Frequency
Community Justice Project
Community Technology Network
Concerned Citizens for Justice
Council on American-Islamic Relations
CREDO
Demand Progress
Dignity and Power Now
Ella Baker Center for Human Rights
Empowered Pacific Islander Communities
Esperanza Peace and Justice Center
Families for Freedom
Families Rally for Emancipation and Empowerment
Fight for the Future
Free Press
Future of Music Coalition
Global Action Project
Generation Justice
Greenlining Institute
Hispanic Association of Colleges and Universities
Hyphen Magazine
Illinois Campaign for Prison Phone Justice
Latino Rebels
Linebreak Media
Making Contact
Martinez Street Women's Center
May First/People Link
Media Action Center
Media Action Grassroots Network
Media Alliance
Media Literacy Project
Media Mobilizing Project
Million Hoodies Movement for Justice
Minnesota Center for Neighborhood Organizing
Movement Strategy Center
Nation Inside
National Asian Pacific American Women's Forum
National Association of Hispanic Journalists
National Hispanic Media Coalition
National Korean American Service & Education Consortium
National People's Action
New Sanctuary Coalition of NYC
OpenMedia International
Our Time
People's Press Project
Presente
Progressives United
Prometheus Radio Project
Race Forward
Racial Justice Action Center
Radio Bilingue
Roosevelt Institute
Roosevelt Institute--Campus Network
Run For Us
Seeding Change: A Center for Asian American Movement Building
Share New Mexico
South Asian Americans Leading Together
Southwest Organizing Project
St. Paul Neighborhood Network
The Highlander Research and Education Center
The Utility Reform Network (TURN)
The Visibility Project
Truthout.org
United Church of Christ, OC Inc.
United We Dream
Urbana-Champaign Independent Media Center
Voices for Racial Justice
Vote Mob
We the People
Women, Action & the Media!
Women's Institute for Freedom of the Press
Young People's Project
Young Women United
Youth Justice Coalition
______
City and County of San Francisco
January 26, 2015
Dear Chairman Wicker and Ranking Member Schatz:
The undersigned mayors are writing to support the strongest
possible rules to guarantee Net Neutrality. As you know, the Federal
Communications Commission ("FCC" or "Commission") is currently engaged
in a proceeding to determine the most effective strategies for ensuring
that the Internet remains free and open. It is critical that the FCC
act now to implement regulations that protect consumers and innovation.
The Commission should implement clear, legally defensible rules that:
support transparency so that consumers can evaluate service offerings;
prohibit blocking of lawful content; bar discrimination and ban paid
prioritization.
We believe that the most effective way to truly protect the open
Internet is for the FCC to break with its previous approach and re-
classify broadband Internet as a telecommunications service subject to
regulation as a common carrier, by reclassifying Internet access as a
Title II service. The Commission has, to date, classified broadband
Internet service-whether offered via wireline facilities, wireless
technologies or power lines-as an "information service." By treating
broadband as an information service, the Commission has unclear
authority and must construct a new regulatory regime. The Commission
could remedy this be relying on Title II where the Commission has clear
authority and where it has at its disposal an existing array of tools
to protect consumers and competition, including service quality, rates,
discrimination, disclosure of information requirements. Once Internet
service has been classified as a Title II service, the FCC would have
the ability to forbear from elements of the Title II regime that are
unnecessary or archaic, if they do not serve to protect consumers or
serve the public interest.
This approach would enable the FCC to require sufficient
transparency for consumers to make informed choices and accurately
assess the services they are being provided. Currently, the lack of
clear, accurate information results in confusion with respect to key
service features, like download and upload speeds, pricing and usage
restrictions. This has contributed to widespread consumer
dissatisfaction with broadband providers. These practices also place
considerable burdens on local agencies, which must use their own
resources to help consumers resolve challenges.
The risk that content and content-provider based blocking and other
discriminatory practices pose to Net Neutrality has been a source of
great public concern. Rules prohibiting the blocking of lawful content,
services and applications are particularly important for the public
schools and libraries that serve our residents. These institutions
serve critically important educational functions for young people and
adults. In addition, because they provide Internet access in the
context of meaningful education, training, employment and other
programs, they are essential vehicles for meeting adoption goals.
It is critically important that our residents-among them many
students, parents, educators and others who are only able to connect to
broadband at schools or libraries-are able to freely access lawful
content without being confronted with delays that threaten adoption. In
addition, it is vital that the content our residents, businesses and
others create is freely accessible online. With this in mind, we urge
the Commission, upon re-classifying broadband as a telecommunications
service, to adopt the strongest possible rules against blocking,
prioritization and other discriminatory practices.
We urge you to vigorously promote a free and open Internet by
supporting the reclassification of broadband as a telecommunications
service under Title II, promulgating effective transparency rules and
adopting the strongest possible protections against blocking,
prioritization and other discriminatory practices.
Sincerely,
Edwin Lee,
Mayor,
San Francisco, CA.
Bill De Blasio,
Mayor,
New York, NY.
______
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
December 10, 2014
Senate Majority Leader Harry Reid
Senate Minority Leader Mitch McConnell
Speaker of the House John Boehner
House Minority Leader Nancy Pelosi
United States Congress
The Honorable Tom Wheeler
The Honorable Mignon Clyburn
The Honorable Jessica Rosenworcel
The Honorable Ajit Pai
The Honorable Michael O'Rielly
Federal Communications Commission
445 12th Street, SW
Washington, DC
Dear Majority Leader Reid; Minority Leader McConnell; Speaker Boehner;
Minority Leader Pelosi; Chairman Wheeler; and Commissioners Clyburn,
Rosenworcel, Pai, and O'Rielly:
We write, representing a wide range of technology companies, to
express our strong opposition to proposals to classify broadband as a
``Title II'' service. Based on our experience and business expertise,
we believe that our companies and our employees--like the consumer,
businesses, and public institutions who depend on ever-improving
broadband networks--would be hurt by the reduced capital spend in
broadband networks that would occur if broadband is classified under
Title II. Such a dramatic reversal in policy is unnecessary to ensure
an open Internet.
For almost twenty years, national leadership, on a bipartisan
basis, has nurtured the broadband Internet with a wise, effective, and
restrained policy approach that supported the free flow of data,
services, and ideas online while creating a climate that supported
private investment in broadband networks. The result has been a
technological, economic, and social miracle that has boosted economic
productivity and enriched lives, and created in America a symbiotic
Internet economy that's the envy of the world.
Our companies are proud to have played a role in that miracle, and
we look forward to a long future providing the devices, components, and
services that fuel the modern Internet. But this depends on a continued
national commitment to building and deploying ever more capable and
faster networks--something Title II puts at risk.
While many experts have noted the damage Title II could do to
network investment, the harm would cascade out far beyond the provision
of broadband service because the Internet is now so entwined with our
entire economy. As the White House explained last year, ``[the] build-
out of broadband infrastructure itself is a major driver of American
investment and job creation. . .even more significant are the ways that
connectivity is transforming a range of industries, from education to
entertainment to agriculture to travel.'' \1\
---------------------------------------------------------------------------
\1\ Office of Science and Technology Policy & The National Economic
Council, Four Years of Broadband Growth (June 2013), http://
www.whitehouse.gov/sites/default/files/broadband_
report_final.pdf.
---------------------------------------------------------------------------
Reversing course now by shifting to Title II means that instead of
billions of broadband investment driving other sectors of the economy
forward, any reduction in this spending will stifle growth across the
entire economy.
This is not idle speculation or fear mongering. And as some have
already warned, Title II is going to lead to a slowdown, if not a hold,
in broadband build out, because if you don't know that you can recover
on your investment, you won't make it. One study estimates that capital
investment by certain broadband providers could be between $28.1 and
$45.4 billion lower than expected over the next five years if wireline
broadband reclassification occurs.\2\ If even half of the ISPs decide
to pull back investment to this degree, the impact on the tech
equipment sector will be immediate and severe, and the impact would be
even greater if wireless broadband is reclassified.
---------------------------------------------------------------------------
\2\ USTelecom ex parte, FCC Docket 14-28 (Nov. 19, 2014)
(submitting a study, ``The Impact of Title II Regulation of Internet
Providers on Their Capital Investments by Kevin A. Hassett and Robert
J. Shapiro), http://ustelecom.org/sites/default/files/documents/
ExParte_Title
II_Study_11.19.14_pb.pdf. The companies for which capital investment is
estimated represent approximately half of industry capital spending.
---------------------------------------------------------------------------
The investment shortfall would then flow downstream, landing first
and squarely on technology companies like ours, and then working its
way through the economy overall. Just a few years removed from the
worst recession in memory, that's a risk no policymaker should accept,
let alone promote.
On behalf of all Americans who depend upon the broadband Internet
that has flourished under the current approach, we urge you to reject
backward looking demands for Title II classification, and remain
faithful to the policy approach that has served the Nation well.
Sincerely,
ACS Solutions
Actiontec Electronics, Inc.
ActiveVideo Networks
ADTRAN
Affirmed Networks
Alcatel-Lucent ARRIS
Asurion
Berry Test Sets
BlackArrow
Blonder Tongue
Broadcom
BTECH Inc
Casa-Systems
CBM of America
Ciena
Cisco
Commscope
Compass-EOS
Concurrent Computer
Corning
dLink
Drake
Enhanced Telecommunications, Inc.
Entropic
Ericsson
FiberControl
Finisar Corp
Gainspeed, Inc.
Go! Foton Corp
Harmonic
Humax Digital
IBM
Imagine Communications
Independent Technologies Inc.
Intel
Juniper Networks
KPG
MetroTel Corp.
Minerva Networks, Inc.
Netcracker Technology
Nokia Solutions and Networks
Optical Zonu Corp.
Pace
Panasonic Corporation of North America
Penthera Partners
Preformed Line Products, Inc.
Prysmian Communications Cable & Systems USA
Qualcomm
RGB Communications L.L.C.
Rovi
Sandvine
Sheyenne Dakota, Inc.
SNC Mfg. Co., Inc.
Sumitomo Electric Lightwave
Synacor
This Technology
Vermeer Corp.
Walker and Associates
Wintel
CC: Secretary of Commerce Penny Pritzker
White House Director of the National Economic Council Jeffrey Zients
White House Chairman of the Council of Economic Advisers Jason Furman
______
December 10, 2014
Hon. Harry Reid,
Senate Majority Leader,
Washington, DC.
Hon. John Boehner,
Speaker of the House,
Washington, DC.
Hon. Mitch McConnell,
Senate Republican Leader ,
Washington, DC.
Hon. Nancy Pelosi,
House Minority Leader,
Washington, DC.
Hon. Tom Wheeler,
Federal Communications Commission,
Washington, DC.
Dear Majority Leader Reid; Republican Leader McConnell; Speaker
Boehner; Minority Leader Pelosi; and Chairman Wheeler:
As members of the National Association of Manufacturers, the
largest manufacturing association in the United States, representing
14,000 small, medium and large manufacturers in every industrial sector
and in all 50 states, we have strong concerns with proposals to
regulate the Internet, which could have a negative impact on
manufacturers' ability to innovate and broaden economic growth.
Manufacturers vigorously support an open Internet. The robust
telecommunications infrastructure that has been deployed over the past
20 years has transformed the way our companies operate and has
contributed significantly to the growth of the manufacturing sector in
the United States. Indeed, our shop floors are some of the most highly
sophisticated and connected environments in the world. Leveraging the
open Internet has led to groundbreaking technological innovations in
our products and processes.
While the regulatory environment in place has encouraged this
investment and innovation, current proposals to regulate the Internet
with early 20th Century-era laws severely threaten continued growth.
Our country cannot afford to derail this innovation with a burdensome
regulatory scheme that will cut off incentives to invest in the
networks our companies use.
Therefore, we urge you to oppose any efforts to unnecessarily
regulate the open Internet. Unnecessary regulation will lead to a
slowdown in innovation, chill investment in future technologies and
stall much needed economic growth.
Sincerely,
AAM
ABB Inc.
ACE Clearwater
AGA Marvel
American Architectural Manufacturers Association
American Time & Signal Co., Inc.
Arcadia Chair Company
Associated Industries of Florida
Association for Manufacturing Excellence
Automatic Spring Products Corporation
Baker Boy
Ball Corporation
Belden Brick Company
Bergkamp Inc.
Bernier Cast Metals Inc.
Betts Company
Bison Gear & Engineering Corp.
Blackhawk Molding Co., Inc.
BTE Technologies
Cal Sheets LLC
California Manufacturers & Technology Association
Carolina Color Corporation
Cello-Wrap Printing Co., Inc.
Click Bond, Inc.
Cooper Standard Automotive
Corn Refiners Association
Custom Deco LLC
deVan Sealants, Inc.
DTE, Inc.
Emerson
Fabricators and Manufacturers Association, International
Federal Broach Holdings LLC
Fiberglass Coatings Inc.
French Oll Mill Machinery Co.
Glier's Meats Inc.
Heritage Plastics
Hess Pumice Products, Inc.
Highland Machine Co
Hudson Extrusions, Inc.
INDA, The Association of the Nonwoven Fabrics Industry
International Dairy Foods Association
Irex Corporation
Jackson Area Manufacturers Association
James Machine Works LLC.
Kaivac, Inc.
Kansas Chamber Koller Enterprises, Inc.
Marlin Steel Wire Products
Materion Technical Materials
McGregor Metalworking Companies
Memry Corporation
Metal Treating Institute
Miltec UV Corporation
Mississippi Manufacturers Association
Missouri Association of Manufacturers
Modine Manufacturing Company
Montana Chamber of Commerce
Narragansett Improvement Co
National Association of Manufacturers
National Council for Advanced Manufacturing
National Shooting Sports Foundation
Neenah Enterprises, Inc.
Nevada Manufacturers Association
North Carolina Chamber
Northeast PA Manufacturers and Employers Association
Oceanaire, Inc.
Osmose Holdings, Inc.
Painter Tool Inc.
Pennsylvania Manufacturers' Association
Perlick Corp
Power Technology Inc.
PRAB
Rekluse Motor Sports
Reshoring Institute
Resilient Floor Covering Institute
Rhode Island Manufacturers Association
RoMan Manufacturing Inc.
Sandmeyer Steel Company
SASCO Chemical Group, Inc.
Sioux Corporation
SKF USA Inc. SSAB
Stanley Black & Decker, Inc.
State Chamber of Oklahoma
Staub Manufacturing Solutions
Syncro Corporation
Techmer PM, LLC
Tenneco Inc.
Texas Association of Business
The Manufacturing Consortium
The Ohio Manufacturers' Association
TMP Technologies Inc.
Trippe Manufacturing Company
United Equipment Accessories, Inc.
USG Corporation
Valley Industrial Association
Ventahood, Ltd.
Vermeer Corporation
WEIDMANN Electrical Technology, Inc.
WilliamsRDM, Inc.
Worksman Cycles
Cc: Members of the House Energy and Commerce Committee
Members of the Senate Commerce, Science, and Transportation Committee
The Honorable Mignon Clyburn
The Honorable Jessica Rosenworcel
The Honorable Ajit Pai
The Honorable Michael O'Rielly
The Honorable Penny Pritzker, U.S. Secretary of Commerce
Mr. Jeffrey Zients, Director of the National Economic Council and
Assistant to the President for Economic Policy
Dr. Jason Furman, Chairman of the Council of Economic Advisers
______
January 20, 2015
Senator John Thune,
Chairman,
Senate Commerce Committee,
Washington, DC.
Senator Bill Nelson,
Ranking Member,
Senate Commerce Committee,
Washington, DC.
Congressman Fred Upton,
Chairman,
House Energy and Commerce Committee,
Washington, DC.
Congressman Frank Pallone
Ranking Member,
House Energy and Commerce Committee,
Washington, DC.
Dear Mssrs. Chairmen and Ranking Members:
Congress, not three unelected officials, should decide the future
of the Internet.
The Federal Communications Commission (FCC) has twice tried to
regulate the Internet in the name of ``Net Neutrality''--and twice
failed in court. Lawmakers of both parties have proposed legislation
that would avoid the need for the FCC to try again--yet FCC Chairman
Tom Wheeler seems intent on issuing new rules. Worse, he plans to break
with two decades of bipartisan consensus that the Internet should not
be subject to 1930s public utility regulation.
We worry about the unintended consequences of any form of
regulation--but also recognize that legislation appears to be the only
way to stop the FCC from trying to impose Title II of the
Communications Act on the Internet and thus prevent years of ensuing
litigation. To prevent a slippery slope towards broader regulation of
the Internet, any legislative compromise must tightly constrain the
FCC's authority and discretion. At a minimum, that means three things:
1. Congress must bar the FCC from imposing Title II on the Internet.
Title II was developed for the telephone monopoly of the 1930s;
it is utterly inappropriate for the dynamic Internet ecosystem.
Invoking Title II threatens both to impose billions of dollars
of taxes and fees on consumers, undermine broadband investment,
and drag ``edge'' companies into a regulatory morass.
2. Congress must clarify that it did not intend the 1996 Telecom Act
to give the FCC a blank check to regulate the Internet. In its
Verizon decision, the D.C. Circuit mistakenly upheld the FCC's
2010 re-interpretation of Section 706 of that Act as allowing
it to regulate any form of ``communications'' in any way the
agency claims would promote broadband deployment or adoption--
not just broadband companies or net neutrality.
3. If Congress gives the FCC clear rules and the power to enforce
them, the Commission will not need the power to write
additional rules. Congress, not the FCC, should decide whether
additional rules become necessary. (Case-by-case enforcement is
how the FCC's 2010 Open Internet Order and its 2014 proposed
rules would have worked anyway.)
We urge you to proceed with dispatch, but also with the utmost
caution and through regular order in the normal legislative process.
Only Congress can craft a solution that is appropriately narrow, avoids
endless legal challenges, and puts this divisive issue behind us. Only
then can we move on to many long-overdue reforms--such as opening up
more spectrum for mobile broadband, clearing actual regulatory barriers
to broadband deployment and competition, and updating the
Communications Act for the Digital Age.
Sincerely,
ORGANIZATIONS INDIVIDUALS (Organizations listed here are for
identification only)
TechFreedom
Americans for Tax Reform
Americans for Prosperity
Center for Individual Freedom
Competitive Enterprise Institute
Council for Citizens Against Government Waste
Information Technology and Innovation
Foundation
Institute for Liberty
Institute for Policy Innovation
International Center for Law & Economics
Lincoln Labs
Daniel Berninger, founder, VCXC
Taxpayers Protection Alliance
______
Dear Chairman Wheeler:
Last month, President Obama issued a statement urging the FCC to
reclassify consumer broadband service under Title II of the
Communications Act. We are writing on behalf of Business Roundtable's
membership to express opposition to using Title II of the 1934
Communications Act as the principal basis for FCC action to maintain an
open Internet.
Business Roundtable CEOs believe that government intervention in
the economy is occasionally necessary to achieve societal goals.
However we also believe that such intervention must be done in a way
that promotes economic growth and job creation. For this reason, our
membership strongly advocates for smart regulation and believes in the
following principles:
Regulation must be justified by a compelling public need,
such as demonstrated market failure.
Regulatory decisions should be based on the best available
information, not speculation.
Regulatory choices should maximize certainty and minimize
burdens, so as to promote investment, innovation, and
competitiveness.
Business Roundtable is opposed to applying last century's
regulatory tools to our rapidly-evolving Internet. We believe that it
is also unwarranted given the lack of demonstrated market failure to
maintain an open Internet. You will find in the attachment further
background on Business Roundtable's position on this issue and thoughts
on a reasonable path forward.
Thank you for considering our views, and we look forward to working
with you on a path forward for this issue that meets the principles of
smart regulation.
Sincerely,
John Engler.
______
Business Rountable
January 20, 2015
Business Roundtable Position on Regulation of Consumer Broadband
Service under Title II of the Communications Act
Regulation remains a top concern of America's business leaders.
According to the most recent Business Roundtable (BRT) CEO Economic
Outlook Survey, nearly 40 percent of our members listed regulations as
the greatest cost pressure facing their businesses--making regulation
the top cost pressure for the third year in a row.i
Moreover, nearly half of CEOs cited regulatory issues as a top factor
holding back the pace of U.S. investment spending.ii This is
why BRT is a strong advocate of smart regulation that promotes economic
growth and job creation, while achieving societal goals.
---------------------------------------------------------------------------
\i\ Business Roundtable, CEO Economic Outlook Survey Q4 2014
(December 2014), available at http://businessroundtable.org/resources/
ceo-survey/2014-Q4.
\ii\ Id.
---------------------------------------------------------------------------
This fundamental principle of smart regulation has also long and
widely been recognized, for example in executive orders:
wiii
---------------------------------------------------------------------------
\iii\ See, e.g., E.O. 13563, ``Improving Regulation and Regulatory
Review,'' 76 Fed. Reg. 3821 (Jan. 18, 2011); E.O. 13579, ``Regulation
and Independent Regulatory Agencies,'' 76 Fed. Reg. 41587 (July 14,
2011).
Regulation should be justified by a compelling public need,
---------------------------------------------------------------------------
such as demonstrated market failure.
Regulatory decisions should be based on the best available
information, not speculation.
Regulatory choices should maximize certainty and minimize
burdens, so as to promote investment, innovation and
competitiveness.
Last month, President Obama issued a statement urging the FCC to
reclassify consumer broadband service under Title II of the
Communications Act.iv Doing so would violate the principles
of smart regulation for the reasons outlined below:
---------------------------------------------------------------------------
\iv\ http://www.whitehouse.gov/the-press-office/2014/11/10/
statement-president-net-neutrality.
Private markets have not failed; to the contrary, the basic
elements of an open Internet have evolved and persisted
---------------------------------------------------------------------------
voluntarily within the Internet ecosystem.
Arguments to reclassify consumer broadband service under
Title II are based primarily on speculation, not empirical data
and historical experience.
Title II would substantially burden consumer broadband
service and create profound uncertainty for Internet service
providers (ISPs). Innovation, investment, and consumers would
all suffer.
The last point bears further emphasis. Consumer broadband currently
operates in an environment in which all participants are free to
innovate in response to changes in consumer demand, technology, or
other market features. Under Title II, virtually any action by an ISP
that potentially affects consumer broadband service would require FCC
approval--a time-consuming, costly and unpredictable process.
Reclassification under Title II will result in increased consumer
fees at the federal, state and local levels. According to a recent
analysis conducted by economists Robert Litan and Hal Singer of the
Progressive Policy Institute, reclassification under Title II could
result in $17 billion in new consumer fees, including $15 billion in
state and local fees and $2 billion in fees for the Federal Universal
Service Fund.v This $17 billion in additional fees equates
to approximately $67 per year per wireline broadband connection and $72
per year per wireless broadband connection.vi To put these
figures in context, consider that the average wireline broadband
connection currently costs consumers roughly $537 per year and the
average wireless broadband connection currently costs consumers $585
per year.vii In short, if broadband services are
reclassified and regulated under Title II, the average consumer's
annual Internet bill could increase by more than 12 percent due to new
fees at the federal, state and local levels. In addition to higher
consumer costs, reclassification under Title II would contribute to
heightened market uncertainty. High levels of uncertainty are harmful
to capital spending in any industry, but the long-lived investments
made by telecommunications firms should be especially sensitive to it.
This would greatly hamper ISPs' ability to innovate, and could
potentially reduce innovation throughout the broader economy and place
the United States at a competitive disadvantage vis-a-vis other
countries in the allocation of global capital.
---------------------------------------------------------------------------
\v\ Robert Litan and Hal Singer, Outdated Regulation Will Make
Consumers Pay More for Broadband (December 2014), available at http://
www.progressivepolicy.org/wp-content/uploads/2014/12/2014.12-Litan-
Singer_Outdated-Regulations-Will-Make-Consumers-Pay-More-for-
Broadband.pdf.
\vi\ Id.
\vii\ Id.
---------------------------------------------------------------------------
Finally, reclassification under Title II is also likely to reduce
ISPs' extraordinary level of capital investment in faster and more
widely-available broadband services. For instance, according to Hassett
and Shapiro (2014), applying Title II regulation to ISPs is projected
to reduce total capital investment in the telecommunications industry
by $28-$45 billion over a five-year period--a decline of approximately
13-21 percent compared to the status quo.\1\ Importantly, even if the
FCC can successfully exercise its powers to forebear from applying
certain aspects of Title II in the near term (which is not a foregone
conclusion), the prospect that future administrations or Commissions
will reverse course, could have a chilling effect on industry
investment.
---------------------------------------------------------------------------
\1\ Kevin A. Hassett and Robert Shapiro, The Impact of Title II
Regulation of Internet Providers on Their Capital Investments (November
2014), available at http://www.sonecon.com/docs/studies/
Impact_of_Title_II_Reg_on_Investment-Hassett-Shapiro-Nov-14-2014.pdf.
---------------------------------------------------------------------------
Ironically, in the call to regulate ISPs under Title II is that
there is already broad agreement regarding the principles outlined in
the FCC's current Open Internet proposal:
Transparency on the part of ISPs regarding the policies that
govern their networks;
No blocking of legal content; and
No commercially unreasonable discrimination, including
favoring traffic from affiliated entities.\2\
---------------------------------------------------------------------------
\2\ http://www.fcc.gov/guides/open-internet.
Further, it is not at all clear that Title II would actually
authorize the FCC to impose the kinds of bright-line prohibitions that
the President seeks.
BRT believes that there are smarter ways to implement these
principles, as an example under Section 706 of the Telecommunications
Act of 1996 or with new, more targeted legislation. We remain firmly
opposed to attempting to do so by reclassifying consumer broadband
service under Title II because it will not fuel the American economy
but, rather, burden it.
For further information, please contact Liz Gasster of Business
Roundtable at (202) 496-3274 or [email protected].
About Business Roundtable
Business Roundtable's CEO members lead companies with $7.2 trillion
in annual revenues and nearly 16 million employees. BRT member
companies comprise more than a quarter of the total market
capitalization of U.S. stock markets and invest $190 billion annually
in research and development--equal to 70 percent of U.S. private R&D
spending. Our companies pay more than $230 billion in dividends to
shareholders and generate more than $470 billion in sales for small and
medium-sized businesses annually. BRT companies also make more than $3
billion a year in charitable contributions.
______
January 22, 2015
Senator John Thune,
Chair,
Committee on Commerce, Science, and Transportation,
Washington, DC.
Senator Bill Nelson,
Ranking Member,
Committee on Commerce, Science, and Transportation,
Washington, DC.
Dear Chairman Thune & Ranking Member Nelson:
We appreciate the Committee interest in Net Neutrality and commend
the Committee for holding yesterday's hearing on ``Protecting the
Internet and Consumers Through Congressional Action.'' The undersigned
groups represent the interests of higher education and libraries, which
rely on an open Internet to provide vital educational and research
services to students, the public and the Federal Government itself. We
joined together last year to release a set of Principles for an Open
Internet that we believe could be useful to the Committee.
As the Committee considers legislation on this topic, we urge you
to incorporate the views of the library and higher education
communities. We have attached our initial comments to the Federal
Communications Commission from last July, including our Principles,
which explain in detail how an open Internet is essential to ensuring
that our higher education and library systems and university-based
research remain the finest in the world. The comments also provide a
model for reforms to ensure an open Internet for all.
Please contact us with any questions or concerns. We look forward
to working with the Committee on these important issues.
Sincerely,
Kevin Maher
American Library Association.
Krista Cox,
Association of Research Libraries.
Jarret Cummings,
EDUCAUSE.
______
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, DC 20554
In the Matter of )
)
Protecting and ) GN Docket No. 14-28
Promoting
the Open Internet )
)
Comments of
American Association of State Colleges and Universities
American Council on Education
American Library Association
Association of American Universities
Association of College & Research Libraries
Association of Public and Land-grant Universities
Association of Research Libraries
Chief Officers of State Library Agencies
Council of Independent Colleges
EDUCAUSE
And
Modern Language Association
July 18, 2014
Executive Summary
Libraries and institutions of higher education depend upon an open
Internet to carry out their missions and to serve their communities.
Our organizations are extremely concerned that broadband Internet
access providers that offer services to the general public (i.e.,
public broadband Internet access providers) currently have the
opportunity and financial incentive to block, degrade or discriminate
against certain content, services and applications. We thus support
strong, enforceable policies and rules to protect and promote an open
Internet.
The specific proposals in the Notice of Proposed Rulemaking (NPRM)
fall short of what is necessary to ensure that libraries, institutions
of higher education and the public at large will have access to an open
Internet. It proposes different rules for fixed and mobile broadband
access when there is no technological reason to do so. Furthermore, the
proposed rules appear to endorse individually-negotiated contracts that
could grant some users expedited transmission and prioritized content,
thereby relegating non-prioritized users to a ``slow lane.''
In these comments, we suggest ways to strengthen the proposed rules
and ensure that they preserve an open Internet for libraries, higher
education and the communities we serve. For instance,
the proposed open Internet rules should explicitly apply to
public broadband Internet access service provided to libraries,
institutions of higher education and other public interest
organizations;
the rules should prohibit ``paid prioritization;''
the proposed rules should be technology-neutral and should
apply equally to fixed and mobile services;
the Federal Communications Commission (FCC) should adopt a
re-defined ``no-blocking'' rule that bars public broadband
Internet access providers from interfering with the consumer's
choice of content, applications, or services;
the FCC should strengthen the disclosure rules; and
the proposed ombudsman should be charged with protecting the
interests of libraries and higher education institutions and
other public interest organizations, in addition to consumers
and small businesses.
Regarding the scope of the proposed rules, the FCC should clarify
that its rules only apply to those network providers that offer service
to the general public and do not apply to private networks that do not
serve the general public or to end user Wi-Fi provided by coffee shops,
libraries and colleges and universities.
The FCC has all necessary authority to implement open Internet
rules sufficient to protect and promote the openness of the Internet.
Title II reclassification would provide valuable certainty to the
marketplace and place public broadband Internet access service on an
equal regulatory footing with other communications services. In the
alternative, we agree with the FCC that enforceable rules could be
created under its Section 706 authority. We have serious reservations,
however, about the viability of the proposed ``commercially
reasonable'' standard. If the FCC chooses to implement open Internet
rules under Section 706, it should craft a different standard that
reflects the unique character of the Internet as an open platform for
innovation, freedom of speech, research and learning, which we suggest
could be called an ``Internet reasonable'' standard.
______
Table of Contents
I. Introduction
II. The FCC Should Specifically Recognize the Importance of an Open
Internet for Research, Education, the Free Flow of Information,
and Other Public Interest Benefits Provided by Institutions of
Higher
Education and Libraries
A. From Its Inception in University Laboratories, the Internet Was
Created In a Higher Education Culture that Values Openness,
Research, Learning and Freedom of Expression, and the FCC
Should Seek to Preserve These Foundational Characteristics
of the Internet
B. Libraries and Higher Education Bring the Benefits of the
Internet to Segments of the Population that May Not Be
Served by the Commercial Sector
C. Higher Education and Libraries Are at the Forefront of Internet
Innovation
D. The Final Order in this Proceeding Should Recognize the Value
of the Internet for Research, Learning, Education and
Freedom of Speech
III. The FCC Should Design Strong Open Internet Rules to Preserve the
Unique and Vitally Important Character of the Internet to
Promote
Research, Learning, Education and the Free Flow of Information
A. The Scope of the Rules Should Cover All Institutions that Serve
the Public Interest, Including Higher Education and
Libraries
B. The Commission Should Prohibit Paid Prioritization
C. The Scope of the Rules Should Clearly State that the Open
Internet Rules Do Not Apply to Private Networks or End
Users
D. The Rules Should Be Technology-Neutral
E. The FCC Should Clarify the Disclosure Rules to Ensure that
Information about Data Caps and Bandwidth Speeds are
Displayed Prominently and Clearly to Consumers and Edge
Providers
F. The FCC Must Establish a Firm ``No Blocking'' Policy for Both
Mobile and Fixed Broadband Providers, and the Policy Should
Focus on the End User Perspective
G. The Commission's Enforcement Ombudsperson Should Be Authorized
to Act as a Watchdog for Libraries and Higher Education
IV. The Commission Has All Necessary Authority to Implement Open
Internet Rules Sufficient to Preserve the Character of the
Internet as an Open Platform for Education, Research and Free
Speech
A. Classifying Public Broadband Internet Access Service as a Title
II Common Carriage Service Offers a Strong, Certain Path to
Preserving an Open Internet
B. Section 706 Offers an Effective Path to Preserving an Open
Internet If Based on an ``Internet Reasonable'' Standard
V. Conclusion
Appendix A: Net Neutrality Principles
Appensix B: About the Organizations
______
I. Introduction
The American Association of State Colleges and Universities
(AASCU), the American Council on Education (ACE), American Library
Association (ALA), the Association of American Universities (AAU), the
Association of College & Research Libraries (ACRL), the Association of
Public and Land-grant Universities (APLU), the Association of Research
Libraries (ARL), the Chief Officers of State Library Agencies (COSLA),
Council of Independent Colleges (CIC), EDUCAUSE and the Modern Language
Association (MLA) \1\ welcome the opportunity to submit these comments
in response to the Notice of Proposed Rulemaking (NPRM) in this
proceeding \2\ to protect and promote the open Internet.\3\
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\1\ Brief descriptions of each of these organizations are contained
at the end of the Appendix.
\2\ FCC 14-61, released May 15, 2014.
\3\ Many of the signatories to these comments representing
institutions of higher education and libraries published our key Net
Neutrality Principles for protecting and promoting the open Internet on
July 10, 2014 (attached as Appendix A). We recommend these Principles
as a framework for resolving many of the issues in this proceeding.
These comments offer more detailed suggestions regarding some of the
specific questions raised in the NPRM.
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Our nation's libraries and institutions of higher education are
leaders in creating, fostering, using, extending and maximizing the
potential of the Internet for research, education and the public good.
Libraries and institutions of higher education \4\ depend upon an open
Internet to fulfill their missions and serve their communities.
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\4\ While our comments reflect the views of the libraries and
higher education organizations, we note that governmental
organizations, K-12 education, community-based organizations and other
similar organizations whose missions are to serve the public interest
benefit from an open Internet as well.
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Our organizations are thus extremely concerned with the current
void in policies to protect the openness of the Internet. As a result
of the D.C. Circuit Court of Appeals decision in Verizon v. FCC, \5\
there are currently no rules or policies in effect to guard against
blocking or discriminatory behavior by broadband Internet access
providers. Broadband providers that serve the general public (which we
refer to herein as ``public broadband Internet access providers'')
currently have the financial incentive and the opportunity to sell
higher priority access to certain content providers and discriminate
against other providers who do not have the resources to pay for
enhanced access. Allowing public broadband providers to degrade or
discriminate against library or higher education content jeopardizes
our institutions' ability to fulfill our public interest missions and
educational goals.
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\5\ Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014)(``Verizon'').
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Our organizations strongly urge the FCC to adopt enforceable rules
that ensure an open Internet. We believe that the FCC has all necessary
authority to establish such rules. Title II provides valuable certainty
to the marketplace and places public broadband Internet access service
on an equal regulatory footing with other communications services. If
Title II reclassification is not feasible, however, the FCC should
craft enforceable rules using its authority under Section 706. We have
serious reservations, however, about the viability of the
``commercially reasonable'' standard proposed by the Commission. As we
explain in more detail below, the FCC should adopt a standard that
reflects the unique character of the Internet as a platform for
innovation, free speech, research and education, which we suggest could
be called the ``Internet reasonable'' standard.
Our comments proceed as follows:
First, these comments will explain why protecting and
promoting an open Internet is so vitally important to the
missions of institutions of higher education and libraries and
to the students, teachers, researchers, library patrons and the
communities that these institutions serve.
Second, these comments will discuss some of the specific
proposals raised in the NPRM and will suggest alternate
approaches to some of the key issues that are necessary to
protect and promote an open Internet for entities that serve
the public interest, such as libraries and institutions of
higher education.
Third, these comments will discuss the legal basis for the
FCC's actions to protect and promote the open Internet in the
wake of the Court of Appeals decision. In particular, we will
discuss the merits of Title II reclassification, as well as an
``Internet reasonable'' standard under Section 706.
II. The FCC Should Specifically Recognize the Importance of an Open
Internet for Research, Education, the Free Flow of Information,
and Other Public Interest Benefits Provided by Institutions of
Higher
Education and Libraries
High-capacity broadband is the key infrastructure that libraries,
community colleges, public and private colleges and universities, and
many other institutions need to carry out their public interest
missions. These institutions rely on open Internet access both to
retrieve and contribute content on the World Wide Web. In fact, the
public interest missions of libraries and institutions of higher
education are highly intertwined with the Internet. The democratic
nature of the Internet as a neutral platform for carrying information
and research to the general public is strongly aligned with the public
interest missions of libraries and higher education.
Unfortunately, the NPRM does not give sufficient recognition to the
value of the Internet for education, learning, research and other
public services. While the NPRM properly describes the importance of
the Internet for innovation and commerce, the educational and public
interest benefits of an open Internet are just as important.
This section of these comments provides an overview of the
Internet-based services and content that libraries and institutions of
higher education provide to their communities and explains why the FCC
should incorporate our institutions' perspective into its open Internet
rules.
A. From Its Inception in University Laboratories, the Internet Was
Created In a Higher Education Culture that Values Openness,
Research, Learning and
Freedom of Expression, and the FCC Should Seek to Preserve
These
Foundational Characteristics of the Internet
The initial protocols for the Internet were developed by
institutions of higher education, and universities were the first to
deploy private high-speed data networks that formed the test-bed for
what later became the public Internet.\6\ The Internet arose out of the
same university mindset that promotes the open exchange of information,
intellectual discourse, research, free speech, technological
creativity, innovation and learning. This essential character of the
Internet as an open platform should be preserved by the FCC.
Incorporating these principles into treatment of Internet access is
especially important in today's age when Internet access is provided by
commercial companies. Internet openness is an essential driver of the
``virtuous circle'' that both the FCC and the Federal court have
recognized as the engine for Internet development. The unimpeded flow
of knowledge, information, and interaction across the Internet enables
the circle of innovation, user demand, and subsequent broadband
expansion that have generated the dramatic social, cultural, and
economic benefits acknowledged by the Commission, the courts, and the
Nation as a whole.
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\6\ There are several papers that document the role of university
professionals in creating the protocols that developed into what we
know as the Internet today. One brief summary of these efforts is
available at http://www.internetsociety.org/internet/what-internet/
history-internet/brief-history-internet.
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B. Libraries and Higher Education Bring the Benefits of the Internet to
Segments of the Population that May Not Be Served by the
Commercial Sector
An open Internet is especially important for libraries to serve the
needs of the most vulnerable segments of our population, including
those in rural areas, unemployed and low-income consumers, and elderly
and disabled persons. Public libraries specialize in providing Internet
access to all people, especially the roughly one-third of people who do
not have broadband access at home. Local public libraries offer the
only no-fee public Internet access in over 60 percent of all
communities.\7\ The general public depends upon the availability of
open, affordable Internet access from their local libraries to complete
school homework assignments, locate e-government services, research
family histories, find health information, learn from job-training
videos and apply for jobs, download streaming media, upload and share
their own digital content, and more. The nation as a whole benefits
when libraries and their patrons have access to open, high-speed,
online information and services. Two-thirds of public libraries report
they would like to increase their broadband speeds, largely driven by
community demand for high-speed wired and Wi-Fi Internet access and the
services enabled by this library broadband infrastructure.\8\
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\7\ See, http://www.plinternetsurvey.org/analysis/public-libraries-
and-community-access.
\8\ Institute of Museum and Library Services Public Hearing:
``Libraries and Broadband: Urgency and Impact''. See transcript at
http://www.imls.gov/about/broadband_hearing.aspx.
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Similarly, colleges and universities make Internet access available
to their entire student bodies, faculty, researchers and
administrators. Higher education institutions make the Internet
accessible and plentiful so that it provides a foundation for Internet-
based learning and experimentation. College students who may not have
broadband at home are able to develop a familiarity with the Internet
on campus that they can take with them to their jobs, their families
and their lives after college. Furthermore, the majority of college
students live off-campus, which means that students rely on the
availability of the public Internet for access to (increasingly media-
rich) courses and learning resources, academic and student support,
faculty and peer collaboration, and more.
This is particularly the case for the rapidly growing population of
students in distance learning or hybrid \9\ courses, where all or a
significant portion of the learning process takes place away from
campus. Distance learning and hybrid courses increase higher education
access, making it possible for adult learners and other students to
pursue their academic goals when a traditional, campus-based academic
experience might make that infeasible. However, such courses and
programs also make those students' learning experience highly dependent
on high-bandwidth Internet access. Online courses rely more and more on
multi-media resources, adaptive learning applications, and dynamic
simulations for interactivity, engagement, and subsequent learning
success. Just as degradation of Internet transmission speed can make an
online video or video game for personal entertainment unwatchable or
unplayable, such degradation could easily frustrate a learning
experience utilizing online video, simulations, and so forth, with dire
implications for the student, family, community, and our country, writ
large.
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\9\ In ``hybrid courses,'' students learn in the classroom for part
of the course time while learning online for other portions of the
course time. For example, a hybrid course might have students attending
class on campus once a week while learning via online modalities for
the remainder of the course time that week.
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C. Higher Education and Libraries Are at the Forefront of Internet
Innovation
Libraries and higher education institutions have been leaders in
developing innovative uses of Internet bandwidth and new learning
methodologies from the Internet's inception. Today, higher education
institutions use the public Internet to advance learning (both in class
and at a distance, including innovations such as massive open online
courses, or MOOCs), research (especially around ``big data''), Digital
Humanities \10\ and scholarly collaboration. Higher education
specializes in developing innovative online learning services, such as
multimedia instructional resources, dynamic simulations, and cloud
computing capabilities.
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\10\ For a brief introduction into the new field of Digital
Humanities, please see ``A Guide to Digital Humanities'' provided by
Northwestern University, available at http://sites.lib
rary.northwestern.edu/dh/.
---------------------------------------------------------------------------
Libraries have been among the most innovative Internet users and
generators of online content. Virtually every library across the
country now provides broadband services to its patrons at no charge,
and 98 percent of public libraries provide wireless (Wi-Fi) access as
well. Library patrons are constantly using the Internet to take
advantage of educational services, remote medical services, job-
training courses, distance learning classes, access to e-government
services, computer and technology training, and more. Furthermore,
librarians specialize in collecting and hosting robust databases of
information, digitizing unique community artifacts and records,
engaging community conversations through social media, developing
innovative media, and preserving the free flow of information and
research over the public Internet for all people.
Below are some specific examples of projects and services that
highlight our institutions' value in providing access to information
and the importance of the open Internet in disseminating such
information.\11\
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\11\ Additional examples of library and higher education uses of
the open Internet are available here: http://www.arl.org/storage/
documents/publications/lt-pubint-nn13dec10.pdf.
The National Library of Medicine (NLM), the world's largest
medical library, provides a vast amount of information-based
services, ranging from video tutorials to downloads of large
genomic datasets. NLM provides valuable information and data to
the public amounting to trillions of bytes each day
disseminated to millions of users. Without rules to protect the
open Internet, NLM's ability to provide access to this
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important information would be jeopardized.
Columbia University created the 9/11 Oral History Project,
focusing on the aftermath of the destruction of the World Trade
Center. The Project includes over 900 recorded hours on digital
media. More than half of the Columbia collection is open and
available to the public, and the entire archive will eventually
be available for study and research. This content is currently
used in New York K-12 public schools.
After receiving over 2,500 boxes of records and documents
and 12,000 promotional photographs from the New York World's
Fair of 1939 and 1940, the New York Public Library (NYPL)
digitized the content and makes it available online. It
provided the material in a free app that was later named one of
Apple's ``Top Education Apps'' of 2011 and is used in New York
K-12 public schools.
The Ann Arbor Public Library has produced and shared close
to 150 podcasts featuring interviews from a local historian
discussing the Underground Railroad, to a fifth-grader talking
about library programs for kids her age, to Top Chef Steph. The
library also hosts the Ann Arbor Film Festival Archive, among
dozens of local history digital collections.
The Iowa City Public Library encourages interest and
awareness of local musicians with a digital collection of more
than 100 albums by artists playing everything from electronica
to children's music. The collection includes out-of-print music
and live shows.
The North American Network of Science Labs Online (NANSLO)
is an alliance of cutting-edge science laboratories that
provide students enrolled in higher education science courses
with opportunities to conduct their lab experiments on state-
of-the-art science equipment over the Internet. From any
computer, students can log into one of the labs' web interfaces
and manipulate the controls on a microscope or other scientific
equipment, participate in conversations with lab partners, ask
for assistance from a knowledgeable lab technician in real
time, and collect data and images for their science
assignments. NANSLO makes it possible for students who cannot
go to campus for a lab course because of their rural location
or family and work obligations to still pursue a science
degree.
Scholars in the digital humanities from around the country
are integrating historical documents and data sources with
audio, video, and interactive simulations to provide students
and the general public with online access to immersive learning
experiences. For example, the University of Richmond's Digital
Scholarship Lab has developed ``Hidden Patterns of the Civil
War,'' a collection of interrelated projects that use digital
tools and digital media to provide interactive representations
of Civil War era social, cultural, political, and economic
developments. As another example, the University of California,
Los Angeles Center for Digital Humanities maintains the Digital
Karnak Project, which provides students, faculty, and the
public with an online, interactive, three-dimensional virtual
reality model of the ancient Egyptian temple site of Karnak
accompanied by original videos, maps, and essays.
nanoHUB serves as an online platform for nanotechnology
research, education, and collaboration. The site hosts hundreds
of online simulation programs for nanoscale phenomena. It also
provides online presentations, courses, learning modules,
podcasts, animations, teaching materials, and more. In
addition, the site offers researchers a venue to explore,
collaborate, and publish content, as well. Through nanoHUB-U,
undergraduate and graduate students in engineering and applied
sciences can access both instructor-led and self-paced courses
incorporating online video and simulations, allowing them to
obtain an essential grounding in the field.
D. The Final Order in this Proceeding Should Recognize the Value of the
Internet for Research, Learning, Education and Freedom of
Speech
In principle, the higher education and library communities strongly
value and support the open Internet as a fundamental cornerstone for
preserving our democracy and enhancing freedom of speech in the
information age. In practice, the education and library communities
need an open, accessible Internet for ``nuts and bolts'' services--
distance learning, telemedicine, access to e-government services, and
many other essential community services. Educators and librarians are
continuously developing new digital content, e-learning services and
other teaching tools that depend on unfettered access to the Internet.
As mentioned earlier, the NPRM does not give sufficient attention
to the Internet's importance to education, research and free speech. We
urge the FCC to incorporate the needs of libraries and institutions of
higher education into its rationale justifying its open Internet
policies. In addition, we also provide some specific policy suggestions
below.
III. The FCC Should Design Strong Open Internet Rules to Preserve the
Unique and Vitally Important Character of the Internet to
Promote
Research, Learning, Education and the Free Flow of Information
Our organizations suggest that the FCC make the following changes
to its proposed rules to reflect the needs and interests of higher
education and libraries.
A. The Scope of the Rules Should Cover Broadband Providers that Serve
the Public and Institutions that Serve the Public Interest,
Including Higher Education and Libraries
The NPRM proposes to retain the same definitions and scope of the
FCC's rules as were adopted in the 2010 Open Internet Order.\12\ The
definitions in the FCC's 2010 Open Internet Order, however, do not
clearly include all the entities that should be included. The
definitions should include all libraries, higher education and other
public interest organizations explicitly.\13\
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\12\ Preserving the Open Internet, GN Docket No. 09-191, WC Docket
No. 07-52, Report and Order, 25 FCC Rcd 17905 (Open Internet Order).
\13\ In the proceedings leading up to the FCC's 2010 Open Internet
Order, ALA, ARL and EDUCAUSE filed multiple comments to ensure that the
needs of libraries, higher education and other public interest
institutions were included in the FCC's policies. (See, e.g., Ex parte
letter from ALA, ARL and EDUCAUSE in General Docket No. 09-191 and WC
Docket No. 07-52, December 13, 2010.) While we were gratified that the
FCC changed the definition of ``end user'' to include ``schools and
libraries'', this language does not reflect the needs of all libraries,
higher education and other public interest institutions in an open
Internet, as we discuss in more detail below.
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The 2010 Open Internet Order applied the agency's open Internet
rules only to ``mass market'' services, which it defined as:
a service marketed and sold on a standardized basis to
residential customers, small businesses, and other end-user
customers such as schools and libraries, including services
purchased with support of the E-rate program.\14\
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\14\ NPRM, para. 54.
This definition needs to be clarified to ensure that the term
``other end-user customers'' clearly includes institutions of higher
education and other institutions that purchase standardized broadband
Internet access service.\15\ Certainly, institutions of higher
education are not ``residential customers'' or ``small businesses.''
There is some uncertainty about whether institutions of higher
education (and their libraries) are included in the term ``schools''
because the term is sometimes interpreted as applying only to K-12
schools. The FCC should explicitly state that all libraries, colleges,
universities and other public interest institutions that purchase
standardized broadband Internet access service from public broadband
providers \16\ are included in the term ``other end-user customers,
such as schools and libraries.''
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\15\ Note that the Online Competition and Consumer Choice Act
introduced by Sen. Leahy (S. 2476) and Rep. Matsui (H.R. 4880) on June
17, 2014 both include the word ``institution'' in the definition of
both ``end user'' and ``edge provider,'' which recognizes libraries and
higher education institutions' dual role as consumers and content
providers.
\16\ As we explain further below, the proposed rules should only
apply to those broadband providers that serve the general public, which
we describe as ``public broadband Internet access services providers''
or ``public broadband providers.'' The word ``public'' is in this
context is intended to have a meaning similar to the definition of
``telecommunications service,'' which is defined as ``the offering of
telecommunications for a fee directly to the public, or to such classes
of users as to be effectively available directly to the public,
regardless of the facilities used.'')
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B. The Commission Should Prohibit Paid Prioritization
We are especially concerned that public broadband Internet access
providers now have the opportunity and financial incentive to provide
favorable Internet service to certain edge providers or customers,
thereby disadvantaging non-profit or public interest entities such as
colleges, universities and libraries. For instance, public broadband
providers could sell faster or prioritized transmission to certain
entities (``paid prioritization''). Many institutions that serve the
public interest, such as libraries, colleges and universities, may not
be able to afford to pay extra fees simply for the transmission of
their content and could find their Internet traffic relegated to
chokepoints (the ``slow lane'') while prioritized traffic zips through
to its destination. Paid prioritization inevitably favors those who
have the resources to pay for expedited transmission and disadvantages
those entities--such as libraries and higher education--whose missions
and resource constraints preclude them from paying these additional
fees.
Further, it is likely that those who are able to pay for
preferential treatment will pass along their costs to their consumers
and/or subscribers. In some cases, libraries and other public
institutions may be among these subscribers who would then be forced to
pay more for services they may broker on behalf of their patrons.
Public libraries, for instance, subscribe to digital media services
such as Hoopla, OverDrive, and Zinio, to provide access to video,
audiobooks, e-books, and e-magazine titles.
Finally, prioritizing some traffic over others would undermine one
of the Internet's fundamental underlying principles--network operators
are expected to use ``best efforts'' to deliver information to the end
user. And from a broader perspective, traffic prioritization creates
artificial motivations and constraints on the use of the Internet,
damaging the web of relationships and interactions that define the
value of the Internet for both end users and edge providers.
C. The Scope of the Rules Should Clearly State that the Open Internet
Rules Apply to Public Broadband Providers and Not to Private
Networks or End Users
The FCC should also clarify the scope of the rules to ensure that
they are not applied to private networks or end users. The 2010 Open
Internet Order correctly found that the open Internet rules should not
apply to premise operators, such as individual consumers' home Wi-Fi
connections or bookstores or coffee shops that provide wireless
services to their patrons. (This provision is sometimes misleadingly
called the ``coffee shop exception.'') While the Commission was correct
to find that these end user activities should not be subject to open
Internet rules, this list of services is not exhaustive. For instance,
almost all libraries offer Wi-Fi connections to their patrons, and
these end user Wi-Fi services should not be regulated as if they were
public broadband providers. Also, many colleges and universities have
their own private end-user networks (both on-campus and off-campus
\17\) that are not available to the general public. The FCC should
clarify that all private, end-user networks fall within the ``coffee
shop'' exception and should not be subject to open Internet regulation.
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\17\ Some colleges maintain several different campuses and maintain
private networks connecting these campuses. These networks are
analogous to intra-corporate networks that connect branch offices of a
multi-location business. Such networks serve the internal
communications and broadband needs of their owners and should not be
subject to these rules.
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There is no precedent or expectation that private networks or end
users, whether large or small, should be subject to regulation; doing
so in this proceeding would burden consumers such as libraries and
institutions of higher education and discourage the purchase and use of
broadband Internet access services. There is substantial precedent in
the law for treating private networks differently from networks
available to the public.\18\
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\18\ See, e.g., Section 103 of the Communications Assistance for
Law Enforcement Act (CALEA), which specifically excludes ``equipment,
facilities, or services that support the transport or switching of
communications for private networks or for the sole purpose of
interconnecting telecommunications carriers.'' 47 U.S.C.
Sec. 1002(b)(2)(B). See also, ``Common Carrier Regulation of
Telecommunications Contracts and the Private Carrier Alternative,'' by
Pitsch and Bresnahan, Federal Communications Law Journal, Vol. 48,
Issue Three, June 1, 1996 (which reviews the FCC's history of treating
several activities as ``private,'' including satellite transponders,
private land mobile radio services, and enhanced services, in part
because they are not offered to the general public.)
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We believe that the NPRM intends to exclude private networks and
end user activities from regulation, but we urge the FCC in its final
rules to expand the list of end users as set forth above and to be
absolutely clear that such private networks and end users (such as
households, coffee shops, higher education institutions, or libraries)
should be free to decide how they use the broadband services they
obtain from public broadband Internet access service providers.
D. The Rules Should Be Technology-Neutral
The 2010 Open Internet Order created separate rules for fixed and
mobile services. The arguments for distinguishing between fixed and
mobile service were not well founded in 2010 and are even less
defensible today. Consumers and edge providers use fixed and mobile
services interchangeably, often switching from one device to another to
surf the web, send and receive e-mail, post to Twitter accounts, use
applications, download e-books, view lectures and listen to podcasts.
The proliferation of 4G mobile networks makes it increasingly easy to
upload and download data using mobile devices. Students, library
patrons, faculty and researchers are increasingly dependent on using
mobile devices. Mobile services will become even more prevalent in the
future with the advent of 5G technologies \19\ and as more spectrum is
made available for commercial mobile services through the upcoming
incentive auctions. We urge the FCC to think ahead to the enormous
growth of mobile technologies and craft policies that anticipate the
future. Broadband Internet policies should be independent of the
connection technology (wired, wireless, satellite, fiber-optic, etc.)
and open Internet rules should apply no matter which technology is used
to access the Internet.
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\19\ ``EU and South Korea to Develop 5G Mobile Network'', Financial
Times, June 16, 2014, available at http://tinyurl.com/mhmgkkt. (``For
consumers, the EU suggests 5G mobile device users will be able to
download a one-hour high-definition film in six seconds.'')
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E. The FCC Should Clarify the Disclosure Rules to Ensure that
Information about Data Caps and Bandwidth Speeds are Displayed
Prominently and Clearly to Consumers and Edge Providers
The NPRM proposes to enhance the transparency rules to give
consumers, edge providers, the Internet community and policy-makers
greater information about broadband Internet access providers' services
and network management practices. Our organizations support these
proposals. Consumers have a right to know the scope and quality of the
services that they are purchasing, especially in light of the hundreds
of complaints received by the Commission that the advertised bandwidth
offerings may exceed the actual amount of provided bandwidth.
Furthermore, public broadband providers are continually changing their
network equipment, routing tables, and management practices, so any
disclosures should be updated regularly. Requiring public broadband
providers to make available the information about the actual scope and
quality of the broadband services will allow regulators to hold
providers accountable for their services and make sure that their
actual services align with how providers describe them to end users of
all types, including colleges, universities, and libraries.
Furthermore, the Commission should make sure that public broadband
providers display this information in a standardized format so that
consumers can compare different providers' services. While the NPRM
cites examples of disclosure requirements from the food, drug, credit
card, appliance and mortgage industries, another useful analogy may be
the disclosures required when purchasing an automobile. Just as car
dealers must display basic information regarding the automobile
(including miles per gallon, warranties, financing terms, and other
features and functions), a public broadband Internet service provider
should be required to disclose the bandwidth, latency, data caps,
warranties, payment terms, termination penalties, and so forth.\20\
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\20\ The disclosure requirements should track the performance
measurements in the FCC's ``Measuring Broadband America'' reports. See,
http://www.fcc.gov/measuring-broadband-america.
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F. The FCC Must Establish a Firm ``No Blocking'' Policy for Both Mobile
and Fixed Broadband Providers, and the Policy Should Focus on
the End User Perspective
The NPRM proposes
to adopt the text of the no-blocking rule that the Commission
adopted in 2010, with a clarification that it does not preclude
broadband providers from negotiating individualized,
differentiated arrangements with similarly situated edge
providers (subject to the separate commercial reasonableness
rule or its equivalent). So long as broadband providers do not
degrade lawful content or service to below a minimum level of
access, they would not run afoul of the proposed rule. We also
seek comment below on how to define that minimum level of
service. Alternatively, we seek comment on whether we should
adopt a no-blocking rule that does not allow for priority
agreements with edge providers and how we would do so
consistent with sources of legal authority other than section
706, including Title II. [footnotes omitted]
In our view, the FCC must establish a no-blocking rule that is
clear to public broadband Internet access providers, consumers and edge
providers and that has a firm basis in legal authority. It is a bedrock
principle of Internet openness that broadband providers should not be
permitted to block consumers' access to lawful websites, applications
or services. We support the FCC's effort to re-instate the no-blocking
rule (though without tying it to the ``commercially reasonable''
standard, as we explain in more detail below).\21\
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\21\ A rule that requires public broadband Internet access
providers not to block access to lawful websites, applications and
services does not on its own treat the provider as a common carrier.
Broadband providers may still have the opportunity to negotiate
individual arrangements or provide additional services to certain edge
providers. A no-blocking policy simply directs the provider to allow
access to the websites, applications or services requested by the
consumer.
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While we are pleased that the FCC proposes to re-instate the no-
blocking rule vacated on appeal, we suggest that the FCC may need to
redefine the nature of the service being offered in order to be
consistent with the Verizon decision. The NPRM proposes to include a
definition of a ``minimum level of access'' or a ``minimum level of
service'', but doing so may be the exact opposite of the Verizon
court's recommendation. \22\ Rather than defining a minimum level of
service, our reading of the court's decision is that FCC should take a
broader view of the definition of the service that is being provided
(``access to their subscribers generally'')--a definition that would
encompass both individually negotiated levels of service and a lower
level ``boundary'' (not a mandated minimum).
---------------------------------------------------------------------------
\22\ The key sentence from the Verizon decision is as follows:
``Thus, if the relevant service that broadband providers furnish is
access to their subscribers generally, as opposed to access to their
subscribers at the specific minimum speed necessary to satisfy the
anti-blocking rules, then these rules, while perhaps establishing a
lower limit on the forms that broadband providers' arrangements with
edge providers could take, might nonetheless leave sufficient `room for
individualized bargaining and discrimination in terms' so as not to run
afoul of the statutory prohibitions on common carrier treatment.''
Cellco, 700 F.3d at 548.
---------------------------------------------------------------------------
Admittedly, there is ambiguity in the court's language, and it is
not entirely clear in the Verizon court's discussion of this topic
whether the relevant ``service'' is service to the end user/subscriber
or to the edge provider. The FCC's proposed definition of ``mass
market'' suggests that the relevant service is the service provided to
the end user/subscriber, but the court's language implies that the
relevant service is provided to the edge providers. In the context of
the ``no-blocking'' rule, we suggest that the most relevant service is
the service provided to the end user/subscriber. The service being
provided is to connect the end user/subscriber to the Internet
``cloud.'' For this purpose, there is no need to define a ``minimum
level of access or service'' being ``provided'' to the edge provider.
It is sufficient to say that a broadband provider may not block access
to any lawful website, application or service chosen by the end user/
subscriber, subject to reasonable network management.\23\
---------------------------------------------------------------------------
\23\ Defining the no-blocking rule in this manner, as a service
provided to the end user/subscriber, also helps to justify the ``no-
blocking'' rule separately from the rule concerning the treatment of
edge providers, discussed below.
---------------------------------------------------------------------------
The no-blocking rule, as defined by the choice of the end user/
subscriber, does not run afoul of the statutory provision that bars
broadband providers from being regulated as common carriers. Defined in
that way, this type of ``no-blocking rule'' does not run the risk that
a court would find it to be similar to a common carrier-like obligation
to serve the public indiscriminately. Rather, a no-blocking rule
defined as carrying out the will of the consumer simply says that, once
a public broadband Internet access provider connects an end user/
subscriber to the Internet ``cloud'', it cannot take affirmative steps
to block a certain lawful website, application or service that the
consumer chooses to access from that ``cloud''. Rather than directing
each public broadband provider to serve each individual website,
application or service, such a no-blocking rule would simply say that
the provider cannot block those edge providers connected to the
Internet cloud from serving the requests the providers' subscribers
have made of them.
To clarify the ``no-blocking'' rule and to avoid the risk of being
overturned on appeal, the Commission should insert the end user's
perspective into the ``no-blocking rule'', so that it would read as
follows:
A person engaged in the provision of broadband Internet access
service, insofar as such person is so engaged, shall not block
an end user from accessing lawful content, applications,
services, or non-harmful devices, subject to reasonable network
management.
Note that, unlike the 2010 Open Internet Order, the ``no-blocking''
rules should be applied equally to both fixed and mobile services.\24\
The 2010 ``no-blocking'' rule for mobile devices was far weaker than
the no-blocking rule for fixed services. The rule for fixed service
prohibited blocking of ``lawful content, applications, services, or
non-harmful devices''. The rule for mobile devices only applied to
lawful websites and applications that compete with the providers' voice
or video offerings. In other words, mobile providers were allowed to
block services, non-harmful devices, and some applications as well
(those that do not compete with their voice and video offerings).
---------------------------------------------------------------------------
\24\ As the NPRM notes, the 2010 Open Internet Order rule barred
fixed providers from blocking ``lawful content, applications, services,
or non-harmful devices subject to reasonable network management. It
prohibited mobile providers from blocking ``consumers from accessing
lawful websites,'' as well as ``applications that compete with the
provider's voice or video telephony services,'' subject to ``reasonable
network management.''[footnotes omitted]. See NPRM, para. 21.
---------------------------------------------------------------------------
The policy of differentiating between fixed and mobile technologies
cannot stand up to scrutiny. As mentioned above, the technologies for
mobile services are developing rapidly, and speeds of 4G mobile devices
are already faster than the lowest level of fixed broadband service
when the FCC first adopted its open Internet policies in 2005. Mobile
services are expected to carry ten and hundred megabit levels in the
near future. Furthermore, even if one were to accept the theory that
mobile networks have greater technical constraints than fixed (with
which we disagree), the no-blocking rule should be reasonably related
to these technical differences. Instead, the no-blocking rule for
mobile devices arbitrarily allows blocking of non-competing
applications or services but not websites, with no showing that
applications or services are more data-intensive or more difficult to
manage than websites.\25\ This directly inhibits consumer choice and
competition, and undermines the FCC's stated policies that led it to
require number portability from one device to another.
---------------------------------------------------------------------------
\25\ In fact, the 2010 Open Internet Order found that the accessing
lawful websites generated much more traffic than services or
applications, which indicates that applications and services create
less congestion and there is no need for mobile broadband providers to
be able to block these services. See 2010 Open Internet Order, paras.
97-106.
---------------------------------------------------------------------------
G. The Commission's Enforcement Ombudsperson Should Be Authorized to
Act as a Watchdog for Libraries and Higher Education
The NPRM proposes ``the creation of an ombudsperson to act as a
watchdog to represent the interests of consumers, start-ups and small
businesses.'' \26\ We agree that creating an ombudsperson could help
enforce the open Internet policies. We simply request that the
ombudsperson be vested with the responsibility to advocate for the
interests of libraries, colleges and universities in addition to
consumers, start-ups and small businesses. Because libraries, colleges
and universities have limited budgets with which to serve collectively
millions of people, they are in an especially vulnerable position if
public broadband providers block or degrade their traffic. Including
libraries and higher education in the charter of the ombudsperson's
responsibilities will help to send a message to these providers to take
our institutions' concerns seriously.
---------------------------------------------------------------------------
\26\ NPRM, paras. 8 and 10. We also note that our institutions are
not mentioned in Chairman Wheeler's statement when discussing the role
of the ombudsperson.
---------------------------------------------------------------------------
IV. The Commission Has All Necessary Authority to Implement Open
Internet Rules Sufficient to Preserve the Character of the
Internet as an Open Platform for Education, Research and Free
Speech
A. Re-Classifying Public Broadband Internet Access Service as a Title
II Common Carriage Service Offers a Strong, Certain Path to
Preserving an Open Internet
Re-classification of public broadband Internet access service \27\
as a Title II ``common carrier'' service would allow the FCC to craft a
set of policies and procedures that effectively ensures the broader
public interest goals of an open Internet are met, while providing the
FCC with the flexibility to adapt and tailor its regulations to fit the
market. Treating providers of broadband services offered to the general
public as Title II common carriers will provide valuable certainty to
the marketplace and will place public broadband Internet access service
on an equal regulatory footing with other communications services. Re-
classifying public broadband Internet access service is a legally
sustainable approach \28\ that would ensure that relevant providers
will not be able to engage in ``unreasonable discrimination'' against
or in favor of any particular content, application or service.
---------------------------------------------------------------------------
\27\ See Footnote 16 for an explanation of ``public'' in this
context.
\28\ National Cable & Telecommunications Association et al., v.
Brand X Internet Services et al., 545 U.S. 967 (2005).
---------------------------------------------------------------------------
B. Section 706 Offers an Effective Path to Preserving an Open Internet
If Based on an ``Internet Reasonable'' Standard
While Title II re-classification has the benefits noted above, in
the alternative, we urge the FCC to craft legally-sustainable rules to
protect and promote Internet openness using the Section 706 authority
that was upheld by the U.S. Court of Appeals in the Verizon decision.
The court of appeals provided some specific guidance as to how to
structure open Internet rules under section 706 that could be legally
sustainable, and the NPRM indicates that the FCC intends to follow this
path. But the NPRM then proposes to adopt a ``commercially reasonable''
standard that is not required by section 706 or the Verizon court. The
``commercially reasonable'' standard could undermine the open Internet
policies that the FCC seeks to establish.
To replace the ``non-discrimination'' rule that was invalidated by
the Verizon court, the NPRM ``tentatively conclude[s] that the
Commission should adopt a revised rule that, consistent with the
court's decision, may permit broadband providers to engage in
individualized practices, while prohibiting those broadband provider
practices that threaten to harm Internet openness.'' To explain this
standard, the NPRM goes further to suggest that it should include a)
``an enforceable legal standard of conduct barring broadband provider
practices that threaten to undermine Internet openness,'' b) clearly
established factors to give guidance about what would undermine
Internet openness, and c) ``encouragement of individualized
negotiation.'' \29\ The NPRM recognizes that ``[s]ound public policy
requires that Internet openness be the touchstone of a new legal
standard.'' \30\
---------------------------------------------------------------------------
\29\ NPRM, para. 111.
\30\ NPRM, para. 116.
---------------------------------------------------------------------------
The NPRM then proposes a rule to require broadband providers to
offer service that is ``commercially reasonable,'' which raises many
concerns. The NPRM states that the FCC:
would prohibit as commercially unreasonable those broadband
providers' practices that, based on the totality of the
circumstances, threaten to harm Internet openness and all that
it protects. At the same time, it could permit broadband
providers to serve customers and carry traffic on an
individually negotiated basis.
While we understand that any standard under Section 706 must allow
some degree of individual negotiation to avoid treating broadband
providers as ``common carriers'', we have strong concerns that a
generic ``commercially reasonable'' standard would give too much leeway
to such providers to undermine the open Internet goal. For instance, a
``commercially reasonable'' approach could be interpreted to allow any
broadband and edge provider to reach a contract to provide ``paid
prioritization''. If the two companies reach an agreement that they
mutually believe to be in their commercial interests, it might be found
``commercially reasonable'' even if it has the effect of degrading the
Internet service used by other parties (such as higher education
institutions and libraries) sharing the same network.\31\ Furthermore,
a ``commercially reasonable'' standard may not provide assurance that
the Internet will remain open for non-profit (non-commercial) entities
who serve a public interest mission, such as colleges, universities,
and libraries.
---------------------------------------------------------------------------
\31\ Stated differently, a broadband provider and an edge provider
voluntarily agree to enter a contract that prioritizes the edge
provider's traffic, it will be difficult for the FCC to find such an
arrangement ``commercially unreasonable'' if it is in the commercial
best interests of both parties.
---------------------------------------------------------------------------
We believe that the Commission should craft a different standard
under section 706 that is more directly related to the unique and open
character of the Internet. Such a standard should provide a baseline
level of openness protections, while permitting but setting boundaries
around the scope of individual negotiation. This new standard should be
derived from the culture and character of the Internet itself so that
the essential operating principles which created and sustain the
``virtuous circle'' of Internet growth and development are preserved
into the future. Rather than borrow an existing standard from another
area of law or activity (as suggested in paragraph 119), it would be
far better for the Commission to craft a flexible standard that
reflects how the Internet was initially designed and inherently
functions. Rather than a generic ``commercially reasonable'' standard,
the proper standard should be grounded in what is ``Internet
reasonable.''
The proposed ``Internet reasonable'' standard would recognize that
the Internet itself is fundamentally an ecosystem that supports a
myriad of personal, institutional, community, and commercial
relationships and interests. As with any other ecosystem, if the
conditions that foster those relationships and interests are negatively
impacted, the system as a whole is subject to collapse. The virtuous
circle the FCC identified and the court endorsed is a function of a
healthy ecosystem--preserving the system's capacity for healthy growth
and evolution means preserving the essential conditions that catalyzed
its development in the first place.
There are several key features of the Internet that can be
incorporated into an ``Internet reasonable'' standard. In evaluating
whether an action by a public broadband Internet access provider is
``Internet reasonable'', the FCC could assess whether or not the action
violates these rebuttable presumptions:
1. ``Innovation without Permission'': This phrase (often articulated
by one of the ``fathers'' of the Internet, Vint Cerf) captures
the notion that end users and edge providers should not have to
obtain the permission of a public broadband provider to use the
Internet. Any action taken by a public broadband provider to
require its ``approval'' to carry certain lawful content,
applications or services should be presumed to be in violation
of what is ``Internet reasonable.''
2. ``Paid Prioritization'': The Internet is built on a democratic
model that allows any individual, library, college, start-up
business, or huge commercial conglomerate to obtain access to
each other's content, services or applications without actions
by the public broadband provider to prioritize some traffic
over others. Any action by a public broadband provider to sell
or provide enhanced transmission to some content or service
providers over others should be presumed to violate what is
``Internet reasonable.'' \32\ Prioritizing some traffic over
others would fundamentally alter the Internet as a whole by
creating artificial motivations and constraints on its use,
damaging the web of relationships and interactions that define
the value of the Internet for both end users and edge
providers.
---------------------------------------------------------------------------
\32\ Of course, broadband providers may continue to charge
consumers and content, application and service providers for their
broadband connections to the Internet, and may receive greater
compensation for greater bandwidth capacity chosen by the consumer or
content, application or service provider. This principle limits the
broadband provider's ability to prioritize certain traffic over other
traffic after the initial connection is purchased.
3. ``Open Platform'': The Internet is unique because it uses a
decentralized, open architecture that has few barriers to
entry. Any action by a public broadband provider to undermine
the open architecture of the Internet should be presumed to
violate what is ``Internet reasonable,'' due to its inevitable
adverse impact on the capacity of the Internet to maintain and
advance the virtuous circle of innovation. \33\
---------------------------------------------------------------------------
\33\ This concept is also similar to the ``broad form'' of the
``end-to-end'' design of the Internet, as articulated in Internet
Architecture and Innovation, by Barbara van Schewick, MIT Press, 2010,
available at https://netarchitecture.org.
4. ``Degradation'': It should be presumed that public broadband
providers should refrain from taking any action to favor one
party if it would degrade the level of service provided to
other parties. But this is not all. The networks that carry
Internet traffic are undergoing continual change. Internet
demand is following an exponential growth curve. If the
Internet transmission speed available to a given user or edge
provider does not keep pace with this growth, then the user or
edge provider may effectively experience a degraded level of
service as compared to those whose transmission speeds maintain
or exceed that pace. Any action by a public broadband provider
that would discourage it from investing in greater bandwidth to
the non-prioritized party should also be presumed to violate
---------------------------------------------------------------------------
the ``Internet reasonable'' standard.
The factors above are not hard and fast barriers--they establish
rebuttable presumptions that the broadband providers could overcome if
they can demonstrate a public interest benefit. If a public broadband
provider's action violates these presumptions, it would have the burden
of proving that its action was nevertheless in the public interest. For
instance, a public broadband provider might be able to justify an
individually negotiated agreement for prioritized transmission of
telemedicine services, of emergency or public safety communications, or
other services that are particularly necessary in the public interest.
The provider might be able to explain that it uses ``Quality of
Service'' (QOS) to enhance some traffic in a manner that does not
degrade the traffic of other users. The provider may also have the
opportunity to justify its action if the network is congested,
particularly if the adjudicatory body finds that the congestion is not
due to the provider's own failure to invest.
By articulating these and perhaps other factors ahead of time, the
FCC could fashion an approach using an ``Internet reasonable'' standard
that would incorporate the flexibility that the Verizon court found
wanting in the prior rules,\34\ while also providing as much guidance
as possible to consumers, edge providers, libraries, colleges and
universities, and the Internet ecosystem as a whole.
---------------------------------------------------------------------------
\34\ ``Moreover, unlike the data roaming rule in Cellco--which
spelled out `sixteen different factors plus a catchall. . .that the
Commission must take into account in evaluating whether a proffered
roaming agreement is commercially reasonable,' thus building into the
standard `considerable flexibility,' Cellco, 700 F.3d at 548--the Open
Internet Order makes no attempt to ensure that this reasonableness
standard remains flexible.'' Verizon slip op. p. 59.
---------------------------------------------------------------------------
V. Conclusion
In conclusion, libraries and institutions of higher education are
greatly concerned that public broadband Internet access providers
currently have the financial incentive and the opportunity to block,
degrade or prioritize the Internet transmission of some at the expense
of others. These practices, if permitted, could have severe adverse
impacts on online education, research, learning and free speech. We
urge the FCC to incorporate the needs of higher education and libraries
into its open Internet rules, including by making the following
changes:
a. The FCC should clarify that the proposed open Internet rules
apply to public broadband Internet access providers that serve
libraries, institutions of higher education and other public
interest organizations;
b. ``paid prioritization'' should be prohibited;
c. the proposed rules should be technology-neutral and should apply
equally to fixed and mobile services;
d. the FCC should adopt a re-defined ``no-blocking'' rule that bars
public broadband Internet access providers from interfering
with the consumer's choice of content, applications, or
services;
e. the FCC should strengthen the disclosure rules;
f. the proposed ombudsman should be charged with protecting the
interests of libraries and higher education institutions and
other public interest organizations, in addition to consumers
and small businesses;
g. the FCC should continue to recognize that libraries and
institutions of higher education operate private networks or
engage in end user activities that are not subject to open
Internet rules; and
h. the FCC should preserve the unique capacities of the Internet as
an open platform by exercising its well-established sources of
authority to implement open Internet rules, based on Title II
reclassification or an ``Internet reasonable'' standard under
Section 706.
Respectfully Submitted,
Muriel A. Howard,
President,
American Association of State Colleges
and Universities (AASCU).
Terry Hartle,
Senior Vice President,
American Council on Education (ACE).
Emily Sheketoff,
Executive Director, Washington Office,
American Library Association (ALA).
John C. Vaughn,
Senior Fellow,
Association of American Universities (AAU).
Mary Ellen K. Davis,
Executive Director
Association of College & Research Libraries (ACRL).
Peter McPherson,
President,
Association of Public and Land-grant Universities (APLU).
Krista L. Cox,
Director, Public Policy Initiatives,
Association of Research Libraries (ARL).
Ann Joslin,
President,
Chief Officers of State Library Agencies (COSLA)
and Idaho Commission for Libraries.
Richard Ekman,
President,
Council of Independent Colleges (CIC).
Diana Oblinger,
President and CEO,
EDUCAUSE.
Rosemary Feal,
Executive Director,
Modern Language Association
______
Appendix A
The following Net Neutrality Principles were previously filed in
this docket on Thursday, July 10, 2014
Net Neutrality Principles
Provided by
American Association of Community Colleges, American Association of
State Colleges and Universities, American Council on Education,
American Library Association, Association of American Universities,
Association of Public and Land-grant Universities, Association of
Research Libraries, Chief Officers of State Library Agencies, EDUCAUSE,
Modern Language Association, National Association of Independent
Colleges and Universities
The above organizations firmly believe that preserving an open
Internet is essential to our Nation's freedom of speech, educational
achievement, and economic growth. The Internet now serves as a primary,
open platform for information exchange, intellectual discourse, civic
engagement, creativity, research, innovation, teaching, and learning.
We are deeply concerned that public broadband providers have financial
incentives to interfere with the openness of the Internet and may act
on these incentives in ways that could be harmful to the Internet
content and services provided by libraries and educational
institutions. Preserving the unimpeded flow of information over the
public Internet and ensuring equitable access for all people is
critical to our Nation's social, cultural, educational, and economic
well-being.
Our organizations have joined together to provide the following
background information and to set forth the key principles (below) that
we believe the Federal Communications Commission (FCC) should adopt as
it reconsiders its ``net neutrality'' policies in response to the
recent court decision. We invite others to join us.
Background: The FCC opened a new proceeding on ``net neutrality''
in May 2014 (Docket No. 14-28). This proceeding is in response to a
January 2014 ruling by the U.S. Court of Appeals--D.C. Circuit that
overturned two of the FCC's key ``net neutrality'' rules but affirmed
the FCC's authority under Section 706 of the Telecommunications Act to
regulate broadband access to the Internet. The new FCC proceeding will
explore what ``net neutrality'' policies it can and should adopt in the
wake of the court's ruling.
The above organizations support the FCC's adoption of ``net
neutrality'' policies to ensure that the Internet remains open to free
speech, research, education and innovation. We believe that Internet
Service Providers (ISPs) should operate their networks in a neutral
manner without interfering with the transmission, services,
applications, or content of Internet communications. Internet users
often assume (and may take for granted) that the Internet is inherently
an open and unbiased platform, but there is no law or regulation in
effect today that requires ISPs to be neutral. ISPs can act as
gatekeepers--they can give enhanced or favorable transmission to some
Internet traffic, block access to certain websites or applications, or
otherwise discriminate against certain Internet services for their own
commercial reasons, or for any reason at all.
The above organizations are especially concerned that ISPs have
financial incentives to provide favorable Internet service to certain
commercial Internet companies or customers, thereby disadvantaging
nonprofit or public entities such as colleges, universities and
libraries. For instance, ISPs could sell faster or prioritized
transmission to certain entities (``paid prioritization''), or they
could degrade Internet applications that compete with the ISPs' own
services. Libraries and higher education institutions that cannot
afford to pay extra fees could be relegated to the ``slow lane'' on the
Internet.
To be clear, the above organizations do not object to paying for
higher-capacity connections to the Internet; once connected, however,
users should not have to pay additional fees to receive prioritized
transmission and their Internet messages or services should not be
blocked or degraded. Such discrimination or degradation could
jeopardize education, research, learning, and the unimpeded flow of
information.
For these reasons, the above organizations believe that the FCC
should adopt enforceable policies based on the following principles to
protect the openness of the Internet:
Net Neutrality Principles
Ensure Neutrality on All Public Networks: Neutrality is an
essential characteristic of public broadband Internet access. The
principles that follow must apply to all broadband providers and
Internet Service Providers (ISPs) who provide service to the general
public, regardless of underlying transmission technology (e.g.,
wireline or wireless) and regardless of local market conditions.
Prohibit Blocking: ISPs and public broadband providers
should not be permitted to block access to legal websites, resources,
applications, or Internet-based services.
Protect Against Unreasonable Discrimination: Every person
in the United States should be able to access legal content,
applications, and services over the Internet, without ``unreasonable
discrimination'' by the owners and operators of public broadband
networks and ISPs. This will ensure that ISPs do not give favorable
transmission to their affiliated content providers or discriminate
against particular Internet services based on the identity of the user,
the content of the information, or the type of service being provided.
``Unreasonable discrimination'' is the standard in Title II of the
Communications Act; the FCC has generally applied this standard to
instances in which providers treat similar customers in significantly
different ways.
Prohibit Paid Prioritization: Public broadband providers
and ISPs should not be permitted to sell prioritized transmission to
certain content, applications, and service providers over other
Internet traffic sharing the same network facilities. Prioritizing
certain Internet traffic inherently disadvantages other content,
applications, and service providers--including those from higher
education and libraries that serve vital public interests.
Prevent Degradation: Public broadband providers and ISPs
should not be permitted to degrade the transmission of Internet
content, applications, or service providers, either intentionally or by
failing to invest in adequate broadband capacity to accommodate
reasonable traffic growth.
Enable Reasonable Network Management: Public broadband
network operators and ISPs should be able to engage in reasonable
network management to address issues such as congestion, viruses, and
spam as long as such actions are consistent with these principles.
Policies and procedures should ensure that legal network traffic is
managed in a content-neutral manner.
Provide Transparency: Public broadband network operators
and ISPs should disclose network management practices publicly and in a
manner that 1) allows users as well as content, application, and
service providers to make informed choices; and 2) allows policy-makers
to determine whether the practices are consistent with these network
neutrality principles. This rule does not require disclosure of
essential proprietary information or information that jeopardizes
network security.
Continue Capacity-Based Pricing of Broadband Internet
Access Connections: Public broadband providers and ISPs may continue to
charge consumers and content, application, and service providers for
their broadband connections to the Internet, and may receive greater
compensation for greater capacity chosen by the consumer or content,
application, and service provider.
Adopt Enforceable Policies: Policies and rules to enforce
these principles should be clearly stated and transparent. Any public
broadband provider or ISP that is found to have violated these policies
or rules should be subject to penalties, after being adjudicated on a
case-by-case basis.
Accommodate Public Safety: Reasonable accommodations to
these principles can be made based on evidence that such accommodations
are necessary for public safety, health, law enforcement, national
security, or emergency situations.
Maintain the Status Quo on Private Networks: Owners and
operators of private networks that are not openly available to the
general public should continue to operate according to the long-
standing principle and practice that private networks are not subject
to regulation. End users (such as households, companies, coffee shops,
schools, or libraries) should be free to decide how they use the
broadband services they obtain from network operators and ISPs.
Appendix B
About the American Association of Community Colleges (AACC)
The American Association of Community Colleges (AACC) is the
primary advocacy organization for the Nation's community colleges. The
association represents more than 1,100 two-year, associate degree-
granting institutions and more than 13 million students. AACC promotes
community colleges through five strategic action areas: recognition and
advocacy for community colleges; student access, learning, and success;
community college leadership development; economic and workforce
development; and global and intercultural education.
About the American Association of State Colleges and Universities
(AASCU)
AASCU is a Washington, DC-based higher education association of
more than 400 public colleges, universities, and systems whose members
share a learning-and teaching-centered culture, a historic commitment
to underserved student populations, and a dedication to research and
creativity that advances their regions' economic progress and cultural
development.
About the American Council on Education (ACE)
Founded in 1918, ACE is the major coordinating body for all the
Nation's higher education institutions, representing more than 1,600
college and university presidents, and more than 200 related
associations, nationwide. It provides leadership on key higher
education issues and influences public policy through advocacy. For
more information, please visit www.acenet.edu or follow ACE on Twitter
@ACEducation.
About the American Library Association (ALA)
The American Library Association is the oldest and largest library
association in the world, with approximately 57,000 members in
academic, public, school, government, and special libraries. The
mission of the American Library Association is to provide leadership
for the development, promotion, and improvement of library and
information services and the profession of librarianship in order to
enhance learning and ensure access to information for all.
About the Association of American Universities (AAU)
The Association of American Universities is an association of 60
U.S. and two Canadian research universities organized to develop and
implement effective national and institutional policies supporting
research and scholarship, graduate and professional education,
undergraduate education, and public service in research universities.
About the Association of College and Research Libraries (ACRL)
The Association of College and Research Libraries (ACRL), a
division of the American Library Association, is a professional
association of academic librarians and other interested individuals. It
is dedicated to enhancing the ability of academic library and
information professionals to serve the information needs of the higher
education community and to improve learning, teaching, and research.
About the Association of Public and Land-grant Universities (APLU)
The Association of Public and Land-grant Universities (APLU) is a
research, policy, and advocacy organization representing 234 public
research universities, land-grant institutions, state university
systems, and affiliated organizations. Founded in 1887, APLU is North
America's oldest higher education association with member institutions
in all 50 U.S. states, the District of Columbia, four U.S. territories,
Canada, and Mexico. Annually, APLU member campuses enroll 4.7 million
undergraduates and 1.3 million graduate students, award 1.1 million
degrees, employ 1.3 million faculty and staff, and conduct $41 billion
in university-based research.
About the Association of Research Libraries (ARL)
The Association of Research Libraries (ARL) is a nonprofit
organization of 125 research libraries in the U.S. and Canada. ARL's
mission is to influence the changing environment of scholarly
communication and the public policies that affect research libraries
and the diverse communities they serve. ARL pursues this mission by
advancing the goals of its member research libraries, providing
leadership in public and information policy to the scholarly and higher
education communities, fostering the exchange of ideas and expertise,
facilitating the emergence of new roles for research libraries, and
shaping a future environment that leverages its interests with those of
allied organizations. ARL is on the web at http://www.arl.org/.
About the Chief Officers of State Library Agencies (COSLA)
COSLA is an independent organization of the chief officers of state
and territorial agencies designated as the state library administrative
agency and responsible for statewide library development. Its purpose
is to provide leadership on issues of common concern and national
interest; to further state library agency relationships with Federal
Government and national organizations; and to initiate cooperative
action for the improvement of library services to the people of the
United States. For more information, visit www.cosla.org.
About the Council of Independent Colleges (CIC)
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Dr. Turner-Lee. And, Senator, we are not on that letter
because we actually are against Title II, but we do believe in
the same things.
Senator Booker. Right. Well, I hope whatever we do does not
trample----
Dr. Turner-Lee. That is right.
Senator Booker.--over the rights of minorities, poor,
rural, and others that are so important to the success of
America.
The Chairman. And we think you are very discerning, Dr.
Turner-Lee, in that respect. Thank you, Senator Booker. Senator
Blumenthal?
STATEMENT OF HON. RICHARD BLUMENTHAL,
U.S. SENATOR FROM CONNECTICUT
Senator Blumenthal. Thank you, Mr. Chairman, and thank you
for having this hearing and for your legislative proposal,
which I think is certainly an effort to bring us together on
this issue. And I know we may have differences within this
room, but I think all of us share the goal of protecting
consumers, which are your customers. And we may differ about
the best way to do it.
For me as a former Attorney General, as a law enforcer,
this hearing has a certain ``Alice in Wonderland'' quality
because normally the folks in favor of flexibility are saying
do not legislate, and the folks in favor of bright line rules
are saying put it in the statute. And here we have the claim
that legislation will somehow lead to more flexibility and
discretion, which I think may be not only counterintuitive, but
counter factual.
And my concern is that we are removing potentially
authority that would prevent the FCC from confronting
disparities in access among consumers of different incomes or
in different geographic areas, stopping anti-competitive
behavior in an increasingly consolidating market, and
protecting consumer privacy. And precisely the types of
disparities and problems that the Communications Act sought to
prevent. So as technology hurtles forward, I hope that we can
go back to the principles of the act, the six foundational
principles of the Communications Act, and make sure that we
preserve the discretion and authority of the FCC to protect
consumers.
With that in mind, in a way, Mr. Misener and Mr. Kimmelman,
I note a number of similarities between your respective
testimonies, and particularly you both note the importance of
preserving interpretive rulemaking authority for the FCC, and I
would like to ask both of you to expand on this. Mr. Misener,
this proposal seems to provide a fair amount of certainty for
the major broadband companies, but not all that many others.
Without granting the FCC the ability to define the key terms
and respond to a quickly evolving marketplace, do businesses
that rely on the Internet not face a fair amount of
uncertainty?
Mr. Misener. Thank you, Senator. When American companies
are choosing whether to invest in a particular country around
the world, one of the very first things they examine is the
legal regime. They want the certainty of the transparency, the
reliability, the stability of that legal regime. We seek the
same thing here. We want that certainty to know whether and to
what extent we may be offering services to our customers
without interference from broadband Internet access providers
in between. And if we get that certainty, then we will be able
to deploy more investment.
There is a tension that came up earlier in the hearing
today, Senator. The tension was between the level of authority
and the fear of overreach, OK? That has to do with existing
statute. We come in squarely in between saying we believe the
Commission has sufficient authority and does not need to
overreach. But in the context of this legislation, the
brilliance of it is to establish really strong, what I have
called, excellent principles, but with a cap, a ceiling on top.
And if we are able to work within this framework of deciding
what principles are there, but also tell the agency not to
overreach, that seems like the best way to balance this and
provide the certainty to companies like mine that need it.
Senator Blumenthal. Mr. Kimmelman, it seems like the lack
of clarity surrounding some key aspects of this proposal would
likely provide incentives for litigation, and the lack of
certainty will lead the parties to court. Just as an example, I
am not sure I understand exactly what falls inside or outside
the definition of a ``specialized service.'' So let me ask you,
what hope does an individual consumer have against the legal
and lobbying sway and, in fact, overwhelming power of some of
the bigger players here if there is that lack of clarity?
Mr. Kimmelman. Thank you, Senator. I think you are
absolutely right. I think it is very hard for consumers after
the fact. I think Mr. Misener said this well before. If
something is happening to their service, they have no idea
where in the network the problem is. They have no idea who to
blame or who is responsible, and so it is very hard to come in
after the fact and file a complaint when you are not even sure
who is responsible, and the other side has massive resources.
I actually agree with Mr. Misener's approach. I would say,
though, that from my perception of what is going on at the FCC,
that it would be best to sit back and wait and see the details
because I believe they will within their responsibility, as Mr.
Misener indicated, move forward prudently and appropriately to
address all of the principles that the Chairman has put out in
this draft. I do not think it will be an overreach. I would be
stunned if it were.
And I think at that point it would be appropriate for the
Committee to look at that and see is there something that is
left that needs to be adjusted. I think the FCC has gotten the
message loud and clear to be careful and prudent in how it
applies its current authority.
Senator Blumenthal. So you are saying, in effect, that
legislation at this point may be a solution in search of a
problem before we know whether there is overreach.
Mr. Kimmelman. Senator, I would not want to go that far. I
think it is always appropriate for the Senate to consider what
the appropriate policies are. But I, again, just urge caution
and prudence here to wait and see what some of the details are
before moving too far.
Senator Blumenthal. And let me draw a different analogy
then. What you are suggesting is a yellow blinking light
instead of a red or a green.
Mr. Kimmelman. Yes, thank you.
Senator Blumenthal. Thank you. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Blumenthal. And just as a
point here, the special services definition in the draft is
drawn from the FCC's 2010 rules, former Chairman Waxman's 2010
legislative proposal, and the President's recent statements,
which all recognize development of specialized services as a
pro-innovation policy.
The Senator from West Virginia, Senator Manchin.
STATEMENT OF HON. JOE MANCHIN,
U.S. SENATOR FROM WEST VIRGINIA
Senator Manchin. Thank you very much, Mr. Chairman. Thank
you for this hearing. Sorry we have been running to all
different committees today, but I want to thank all of you.
I come from the rural state of West Virginia, which is a
small rural state, like a lot of rural states in America. On
Saturdays during football season, West Virginia University
football stadium is our largest city. It holds about 66,000
people, and that is our largest city, so that gives you an idea
of what we are dealing with.
And a small rural state like mine, pure deregulation does
not have really a good track record. It did not work with the
phone companies. It did not work with the utility companies. It
did not work with the airlines. And we do not--if you tell a
person do not worry, we are going to give you better service,
we have had past experience where we do not believe that. So I
guess we are a little bit like Missouri, the ``Show Me State.''
What has worked in West Virginia is the public/private
partnership model like the Universal Service Fund where private
companies get a little help, a little incentive, to make
investments and expand into our rural areas where you normally
would not normally go because of markets. We understand that.
This year we had over 90,000 West Virginians who will get
broadband service because of USF programs.
What concerns me, and tell me--somebody tell me if it is
real--Mr. Kimmelman, maybe you know--that the FCC has told me
that the bill will undercut the ability to continue these
programs if we pass this bill. And if you could explain that in
your opinion, I would appreciate it, sir.
Mr. Kimmelman. Thank you, Senator Manchin. I do believe it
is a program because that program originally started for
telecommunication service. And to subsidize rural America to
make sure in high-cost areas that we all had connectivity.
Senator Manchin. Right.
Mr. Kimmelman. So it is related to the definition of
telecommunication service.
The FCC has now tried to use its powers under 706 to extend
broadband and offer incentives for investment in broadband in
rural America. It is U Section 254 in conjunction with 706. Way
too much in the weeds, Senator, but the point is that those are
powers that in the draft as it currently exists could be
eviscerated.
And so, while that--it would still be there for telephone
service. For extending broadband, it is a big question mark.
Commissioner McDowell. If I could just comment on that, I
was a Commissioner at the FCC when we reformed the
Interpersonal Service Distribution Program in the fall of
2011--October 2011. And actually we reformed it to support
broadband, and it was actually--now it is a broadband subsidy
rather than an old-fashioned phone subsidy.
This bill, in my legal opinion, does not undermine. I know
that probably Chairman Thune from South Dakota, a net
recipient, would not support or draft a bill if it undermined
universal service. What it will perhaps do is cabin off the
ability of the FCC to tax broadband Internet access and raise
consumers' rates therefore.
But in terms of the distribution side, that order should
stand. And I do not see any language in this bill that would
harm the distribution of universal service.
Senator Manchin. Would we be able to have the FCC here so
we can find out who is telling the truth?
The Chairman. Well, that is----
Senator Manchin. Or whose opinion is accurate, let us put
that--I am sorry.
The Chairman. You can grab six of them over there, Joe.
Senator Manchin. OK, very quickly because my time is
running out and I need to ask Mr. Misener something.
Dr. Turner-Lee. [Off audio.] I agree with Mr. McDowell as
well as Gene in terms of being just really careful that the
authority is not granted to protect universal service, but
there is also the creative way that a provision could be put
into the legislation that could actually enforce it as well. So
I think that is another way to actually look at it.
So without throwing the baby out with the bathwater, I
think we could also look at a provision that goes into the
draft legislation that could actually protect the Universal
Service Fund.
Senator Manchin. Ms. Misener, in 1996 you were a startup
company, right--Amazon?
Mr. Misener. Yes, sir.
Senator Manchin. OK. If you--you know, we are trying to
strike the balance between the free market and consumer
protections, and I think it has been said can we not create a
regulatory regime with innovation stifled because the Federal
Government cannot keep up with the speed of the business.
However, as you know, regulators need to have oversight to
ensure a level playing field, right, and fair competition among
entrepreneurs big and small.
What changes, if any, would be needed in the bill to ensure
that today's startups are able to compete on a level playing
field? How would this have affected you?
Mr. Misener. Thank you, Senator. We always think in terms
of our customers, and their access to us, and the kinds of
services that we want to be able to provide to them. And so, it
is the choice of consumers that matters most. Startups will do
fine so long as consumers can reach them. If somehow consumers,
however, are cut off from them, the startups will not succeed,
but the consumer will be denied the choice.
If we have net neutrality provisions, the reasonable, not
overreaching, ones that actually protect that consumer choice,
the startups will be fine. The innovators will be able to
provide their services without permission from broadband
network operators to the consumers who have the choice.
Senator Manchin. Mr. Chairman, if I could submit the rest
of my questions to the Committee.
The Chairman. I thank the Senator from West Virginia.
Senator Schatz?
STATEMENT OF HON. BRIAN SCHATZ,
U.S. SENATOR FROM HAWAII
Senator Schatz. Thank you, Mr. Chairman. I am looking
forward to working with you and Ranking Member Nelson and my
Subcommittee Chair, Senator Wicker. We all agree that an open
Internet has to function in today's society, and that is why I
think it is important for us to work together to consider the
best path forward to protect net neutrality.
As we consider our options, we have got to aim and
accomplish and balance three objectives, in my opinion: to
provide maximum protection to consumers, to provide maximum
flexibility to promote innovation and the Internet economy,
while also enabling continued investment in the state-of-the-
art broadband infrastructure. Congress always has the
prerogative to legislate, but we also have to recognize the
advantages of an expert agency. And especially in the area of
the Internet, the FCC needs to have flexible forward-looking
authority to protect consumers and an innovative Internet.
I am afraid the draft legislative proposal would make it
nearly impossible for the FCC to deal with future problems or
opportunities as they come up. The point here is that when it
comes to telecommunications and the Internet, Congress is best
suited to establish broad policies, but the particulars ought
to be left to the expert agencies. So while I intend to keep an
open mind on possible legislation, I do have deep reservations
about intervening in the FCC's ongoing rulemaking.
I believe this flexibility is really critical, and I have a
question perhaps for all the panel depending on time, but I
will start with Mr. Kimmelman. I am concerned this draft
legislation does not preserve the authority in the FCC that it
needs. My question is simply, is there a way to modify this
legislation that holds net neutrality harmless, but also allows
the FCC to evolve and promulgate rules and respond to
circumstances that are going to be very difficult to anticipate
from this committee?
Mr. Kimmelman. Yes, thank you, Senator Schatz. There
certainly is. I mean, it is up to Congress how to draft it. I
think this is a matter of getting past all the titles and the
characterizations and getting at the functions. Flexibility
requires giving the FCC tools, giving them, as you say,
principles, guidance, direction, and parameters for action, and
then giving them the flexibility to work with it. That has
traditionally been rulemaking authority. Congress can obviously
call it whatever it wants, but the attributes need to be there
in order for that flexibility to exist.
Senator Schatz. Thank you. Mr. Misener?
Mr. Misener. Thank you, Senator. You know, some of the
arguments against the FCC's actions actually are sort of
arguments against having an FCC in the first place. And if
there were not an agency there now, part of the discussion
might be should we create a specialized agency? That is
obviously counter factual. Yes, the agency is 80 years old, but
that is also a good thing. It has been around for a long time.
It works on a lot of things. It is a big, large agency. It does
some good things.
I cannot imagine net neutrality being lower than number,
say, three or four on the list of things that the FCC is
working on. So if we have got a regulatory agency specialized
in telecommunications, they ought to be working on net
neutrality above so many other things that they already work
on.
Senator Schatz. Go ahead, Mr. McDowell.
Commissioner McDowell. Senator, I just--very quickly, which
is the Federal Trade Commission has jurisdiction here. Section
5 of the Federal Trade Commission Act protects consumers in all
sorts of complex tech industries. It could be Internet search.
It could be computer software, disk operating systems, things
of that nature. And actually what Title II would do would be
take away the authority from the FTC under something called
``the common carrier exemption,'' which is in the statute, and
put it only in the hands of the FCC.
And so, actually I think your own logic shows that you
probably do not want Title II legislation. You want to have
perhaps similar type consumer protection and enforcement only
type protections. The FTC has worked quite well as an
enforcement-only non-rulemaking body for over a hundred years,
not just 80 years. So if the length of time of an agency is the
measure of its success, then I guess the FTC is more successful
than the FCC.
Senator Schatz. Ms. Baker?
Commissioner Baker. I agree with Rob. I think that people
understand regulators regulate. The last example that we could
see was when the FCC thinks that what they are going to do and
what the consumers actually think that they are doing is the
apps community. When the FCC enacted text 9-1-1, it affected
the apps community.
I think bringing everybody under Title II is not the way to
go. I think the legislation is the first option so that we can
have great security as to what the future brings, and the FCC--
the much more legal path forward for all consumers is 706.
Senator Schatz. Right. I will just wrap up. My time has
expired. But it seems to me that the arguments you are making
against the FCC's actions are really particular to the FCC
proposed rules, but it is not as though it is necessary in
order to legislate to take away all future authority and
flexibility from the FCC. So that is the balance that, you
know, I am trying to explore here. It is possible that we will
not be able to achieve that balance. It is possible that the
FCC moves forward with its rules and we cannot come to a
consensus. But I want to allow for the possibility that there
is a space for legislation and allowing the FCC to continue to
do its work. Thank you, Mr. Chairman.
[The prepared statement of Senator Schatz follows:]
Prepared Statement of Hon. Brian Schatz, U.S. Senator from Hawaii
Mr. Chairman. I am looking forward to working with you, Ranking
Member Nelson, and my Subcommittee Chair, Senator Wicker. We all agree
that an open Internet has become crucial for everyone to function in
today's society. That is why it is important for us to work together to
consider the best path forward to protect net neutrality.
As we consider our options, we must aim to accomplish and balance
three objectives:
provide maximum protection to consumers,
provide maximum flexibility to promote innovation and the
Internet economy while also
enabling continued investment in a state of the art
broadband infrastructure.
Most importantly, net neutrality protections must ensure that the
FCC has the ongoing authority to protect consumers. To be effective,
these rules must contain at least four essential elements:
they must prohibit fast lanes,
they must not block lawful content,
they must prohibit throttling while allowing for reasonable
network management, and
they must increase transparency.
So, I look forward to hearing from our witnesses on the Chairman's
draft legislation and on the FCC's ongoing rulemaking and the best way
to achieve each of these objectives.
Congress always has the prerogative to legislate, but we also must
recognize the advantages of an empowered expert agency. Particularly in
an area as dynamic as the Internet, the FCC should have flexible,
forward-looking authority. I fear that the draft legislative proposal
would make it nearly impossible for the FCC to deal with future
problems or opportunities as they come up.
The point here is that when it comes to telecommunications and the
Internet, Congress is best suited to establish broad policies but the
particulars ought to be left to the expert agency.
So, while I intend to keep an open mind on possible legislation, I
have deep reservations about intervening in the FCC's ongoing
rulemaking.
I look forward to working with Chairman Thune, Ranking Member
Nelson and Subcommittee Chairman Wicker to ensure that net neutrality
protections first and foremost protect consumers while enabling our
companies to continue to invest, innovate and succeed.
The Chairman. Thank you, Senator Schatz. Senator Peters,
you are up.
STATEMENT OF HON. GARY PETERS,
U.S. SENATOR FROM MICHIGAN
Senator Peters. Thank you. Thank you, Mr. Chairman. And I
would certainly like to thank you, Chairman Thune, and Ranking
Member Nelson, for convening this hearing and for your work.
And certainly appreciate your work, Senator Thune, as well as
my home state colleague or former colleague, Congressman Upton,
for your work on this bill as we go forward. I certainly am a
believer that, as everybody, I think, on this committee, that
affordable high-speed Internet is an issue that we are all
hearing about back in our districts, and understand it is
extremely important that it is open, it is available.
And I certainly appreciated Senator Markey's earlier
comments talking about if you are looking at trying to develop
business and small business in particular, that is what I hear
when I am home. I was in an incubator in Detroit just a few
weeks ago, and all of those companies are coming up with
incredible ideas. And I might say, if I may put a little plug
in for Detroit here when people kind of have a view of Detroit.
If you go into this incubator and close your eyes and open your
eyes up when you walk, you think you are in Silicon Valley, not
in Detroit, Michigan. But you are in Detroit, Michigan, so
there is a lot of exciting things happening, and it is a result
of the Internet and the open architecture that is there that we
want to make sure is there going forward.
Now, whether that means using Title II, whether it means
legislation, whether it means doing a combination of the two, I
am certainly open to that as well, and look forward to a
further discussion of these issues. But I have a couple of
things that I just wanted to ask the panel broadly about the
future because I think every one of you said at various time
that this is a constantly evolving area, that we have got to
stay on top of it. So we want to make sure that we have a
framework that is flexible.
So my first question is, as you know the Communications Act
was last overhauled back in 1996, and I would be curious to
hear all of your opinions. Do you see the draft legislation
that we are discussing here today as a stop gap measure meant
to endure for just a year or two while we are working on this
new act, or do you think this could be a long-term framework
for broadband regulation for years to come? If we could just
maybe with Ms. Baker.
Commissioner Baker. I support the--I support this as
something that if we have an issue of net neutrality that needs
to be addressed, and I think this is a great start to
addressing net neutrality. I think that there could be a Com
Act rewrite that would also occur to address greater issue. I
think when Senator Markey was talking about the digital issues
with disabilities, he did a great job on CCBA, enacting
targeted legislation for disabilities going forward in the IP
world, and it is has made a world of difference. I think that
this is a great foundation. I think it will endure, but I think
that there could be part of the Com Act that could also be
reexamined since 1996 was a long time ago.
Mr. Kimmelman. Senator Peters, it is a great question. I
think that from watching this industry for more than 30 years
and participating here, this is your one shot at the apple. I
do not see Congress coming back to this over and over again. It
never has. I cannot imagine it ever will. And in this
environment it is quite difficult. So I would say if you are
going to legislate, set policy and think about everything you
need to do, and think about doing no harm as well.
And I think that in trying to address a direct issue
related to net neutrality and a lot of principles that all of
us agree on, there are a number of things that are left out.
There are a number of things that may do harm. And I think you
ought to be really careful about that because this will endure.
I cannot imagine that we are doing multiple bills through
Congress this year.
Commissioner McDowell. So I have known Gene a long time,
and surprisingly we agree on more things than people realize.
So we believe that, I think, any future legislation should
focus on consumer protection, and I also agree with do no harm.
I think to answer the question directly, the answer is yes.
Actually you can have this bill and you can have a
comprehensive rewrite, but you do not have to do it all at the
same time. You could do this bill first, and then later it gets
incorporated into a comprehensive rewrite. And I think a
comprehensive rewrite is needed to tear down those siloes that
are technology-centric. They were created in 1934.
And then let us look at it through the lens of consumers,
and consumers do not really care how they get their information
so long as they are getting it and they are able to generate
it.
Mr. Misener. Senator, I think it is most important to get
it right because we do not know whether it is going to endure
or not. We do not know whether it is going to be subsumed into
a new act or overtaken by a new act, but we have to get it
right.
Mr. Simmons. Senator, from our standpoint, we think this is
a reasonable framework. At least it is something that is not an
attempt to reconfigure something old into something required
new. I had an acquaintance who offered some prairie logic, and
he told me that it makes absolutely no sense to try to figure
out how--what part of the crescent wrench we need to use in
order to pound a nail. What we really need to do is to provide
somebody with a hammer.
And I think in this situation we need to provide the right
tools to the FCC for them to do their job. I do not believe
they have the right tools now. Our debate is about trying to
configure the tools that might be available into something that
could be useful when, in fact, we need to be able to develop
the right tools, and I believe this legislation is a reasonable
framework to do just that.
Dr. Turner-Lee. So I agree with most of what was said on
the panel, and I will offer some other thoughts, Senator, and
it is a great question with the Com Act. So I think this
juncture that we are in is to address this net neutrality
debate and the legal gymnastics that we have been in for a long
time. We need to give the FCC something that can withstand in
the courts, and I think we should take that seriously, and stop
putting all these issues into the bucket, and do a
comprehensive Telecom Act rewrite.
I think the modernization of that act is so critical to so
many other parts of the ecosystem that we would be fooling
ourselves if we think that we cannot go back to that and
revisit what that 1934 act looks like. Even the last update on
spectrum policy in 1996--the ecosystem has changed
dramatically.
So I would just suggest that if this process can go forward
with the draft legislation, that this is seen as a provision in
that larger bill that we cannot take back. And so, I think the
seriousness of getting past this is important, but I do not
think we need to come back for this again because that is what
we are trying to stop by having this conversation.
Senator Peters. All right, thank you.
The Chairman. Thank you, and I would echo what has been
said. We would love to do an update. It's time to do an update.
It's time to modernize the Act, but that is a debate for
another day. Right now, we are focused specifically on this
issue, and it is an issue that I think needs to be dealt with
and addressed and provided some certainty.
My understanding is Senator Booker has one more question,
is that correct?
Senator Booker. Yes.
The Chairman. I think Senator Nelson has one more question,
and Senator Cantwell has been willing to defer to Senator
Booker. So if you would like to proceed.
Senator Booker. I just want to, Dr. Turner--I just want
to--Dr. Turner-Lee, excuse me. I just want to ask one more
question because I actually think, again, we agree that these
issues urgently need to be addressed, but I just do not
understand your cure for them. And the reason why over a
hundred civil rights organizations have signed onto that letter
is because the Court specifically said that the only way you
could regulate the bad behavior is by making them common
carriers under Title II.
And I just want to ask from you, you rely on Section 706.
You say in your testimony that one approach would be to use the
consumer friendly complaint process modeled on the probable
cause paradigm in Title 7 of the Civil Rights Act of 1964. Now,
having dealt with the world of EEOC complaints, having had one
parent that was dealing with that professionally, a lot of
people find that process wholly inadequate to deal with bias,
racism, and other types of discrimination.
In fact, when you are asking in terms of this world of
technology poor communities, communities of color to have the
sophistication with which to file complaints when they are not
engineers and they are not the like, they often do not have
them. I bring your attention to even some of my colleagues last
year who put forth a minority paper criticizing this very
process by which to stop discrimination. Their report was
entitled ``EEOC''--using the process you say, putting the onus
on the consumer to make the complaint. Their paper was
entitled, ``EEOC an Agency on the Wrong Track: Litigation
Failures, Misfoucused Priorities, and Lack of Transparency
Raise Concerns About an Important Anti-Discrimination Agency.''
So I would just ask you to respond that if we really are
about the goal of making sure that minorities, poor
communities, disadvantaged communities, marginalized
communities who right now are not even being served by the
juggernauts and the behemoths in this area, why do you think
this is an adequate cure when it is not in the civil rights
world. And that is why, again, over a hundred civil rights
organizations have stepped forward and said Title II is the way
to go because the Court has specifically said that is the only
way that the FCC has the authority with which to stop
discriminatory practices.
Dr. Turner-Lee. So this is an interesting one. I would love
to follow this up after this, too, and keep talking to you
about it because I think it is a healthy dialogue.
So one of the reasons, and people have asked us why we
actually chose not to go with an imposition of Title II
framework is primarily, again, because if you look at modern
1934 monopolistic practices and why the Com Act was designed to
sort of break up the bill, that had a lot to do with the fact
that telephone service was more ubiquitous in our communities.
I mean, your grandmother, my grandmother, we all had phones, we
all had had phone numbers. It was easy to talk and hear. Now,
we are seeing broadband as so transformative that it is beyond
just a static communications protocols, but it is things for
our communities that matter the most, like telemedicine,
distance learning, and all those other things.
The fear of a Title II regime that allows that innovation
to stop in our communities when we have such a broadband
adoption gap is something that we should take very seriously.
Yes, we want to put in protections. I totally agree with you,
Senator--humbly agree with you--that we need to find ways to
level the playing field so that more people can participate.
But if we put in a regulatory regime against the regime that
has actually allowed our folks to get more engaged in this
ecosystem, to solve community problems, I think we are making a
big mistake.
And we need to really--as a researcher we need to look at
that. Those places that have not built out may never get built
out. They may get passed over because it is no longer going to
be companies making money in other places to invest. It may be
something else. So I think we need to look at those kinds of
issues.
Senator Booker. And just to interrupt. I am smiling because
there is a regulatory regime in place to enforce the law right
now to make sure that there is more broadband penetration, to
make sure that localities, like Wilson, North Carolina, do
their job. And what you are recommending here is to strip the
Federal Government of that authority and shift the onus and the
burden on the very disadvantaged poor populations, to put the
burden on them to try to fight for their rights through a
process that has proven anemic even in the civil rights
community.
Dr. Turner-Lee. Well, on the case of the EEO--so I will
tell you why we actually chose that, outside of my boss being a
fan of the EEOC. And those that know David Honick know that
this is something that he has done as a civil rights lawyer for
years. We tried to figure out a process where you just could
not put 706 by itself. We felt as civil rights groups on this
side of the argument that if we were going to propose 706, we
could not do it without a way of enforcing and showing that
there should be stronger consumer protections.
EEO for all of its flaws has still been the go-to place for
anybody to actually bring forth any kind of complaint or
litigation without fear of reprisal or having somebody, you
know, losing their job. It has been a place we have been able
to carefully archive what those injustices have been so that
other people can come and actually take advantage of the
lessons that are learned without having to get an attorney. It
also has been a place where we were actually able to help
consumers not have to wait for a very long time to figure out
if their resolution is going to resolve.
We have talked to the Commission about this proposal. We
have talked to enforcement. We have done our due diligence,
Senator, in all honesty about this because we think if you are
going to go a 706 route, you have to have a strong consumer
protection. What our fear is if we say that we are going to
take Title II and we decide to forbear all of those things,
what is the risk of a new commission coming in and reversing
that decision? What is the risk of going into litigation on
that that takes the attention away from universal service
reform, broadband deployment adoption, all the things you care
about just because we are back in a quagmire with the FCC where
we are not talking about our issues.
I think those are serious concerns, and I respect many of
the groups that are on that letter because we work with them on
issues related to voting rights and other things. But we really
have to think carefully and be cautious about the steps that we
make because we have a $30 million person adoption problem in
this country that is not narrowing even among----
Senator Booker. And my time has expired. I want to be
respectful of my colleagues. I will just finish by saying that
the beautiful statements in the beginning of your statement to
me do not hold with your cure. And in a Nation where there is a
tragic digital divide and where the Internet is essential for
poor children, for kids in rural neighborhoods, essential for
families, and the situation as it is not acceptable to you or
me. To take the teeth away from the only mechanism to enforce
some vision in this country that we can catch up with
competitors in the globe and have broadband penetration, have
equal access, equal opportunity.
The only hope often marginalized, disadvantaged communities
have to stand up to the big Goliaths in the industry is often,
as we have seen in civil rights and voting rights, the Federal
Government. Thank you.
Dr. Turner-Lee. Hopefully we can get together, Senator, and
keep talking.
Senator Booker. OK.
The Chairman. I fully encourage that.
[Laughter.]
The Chairman. It is a fascinating discussion, and I am very
hopeful that you win that argument.
[Laughter.]
The Chairman. But I do think this points out that there are
a lot of questions, and I think the point that Dr. Turner-Lee
is getting to is the legal uncertainty and the potential for a
future commission. You create these rules, and you will be in
court all the time on all ranges of them. Congress ought to be
heard on this. Let us set some rules that apply to the modern
age, not to the age that existed in 1934. Thank you, Senator
Booker. Senator Cantwell?
STATEMENT OF HON. MARIA CANTWELL,
U.S. SENATOR FROM WASHINGTON
Senator Cantwell. Well, thank you, Mr. Chairman, and sorry
I have been on the floor for most of the day and helping to
manage for our side of the aisle the legislation on the
Keystone pipeline. But this is an issue of great concern to me
and to my constituents in the state of Washington. So I wish I
was able to be here in person, but the great thing about the
Internet is that I will be able to watch this hearing, and see
what everybody said, and review it.
And that is exactly the point. I am here to fight for an
open Internet and to make sure that I have that right, and that
I am not going to be artificially slowed down, or throttled, or
pay extra because somebody, like an ISP--a Verizon or an AT&T
or a Comcast--has decided to now bundle C-SPAN service with
something else and make me pay more, or just simply think that
what we do in Congress is pretty dull and boring, and so it is
OK to slow it down anyway, and maybe not give us as quick
access.
So I have heard loud and clear from my constituents about
this issue, and the innovation economy in the Pacific Northwest
is not going to be quiet about this issue, I can guarantee you.
It is the lifeblood of our economy, and they are going to be
concerned about anything that does not set about the right
rules for transparency and openness to the Internet.
I learned recently this week that Starbucks has 15 million
active users in its iPhone app, is doing more than five million
transactions weekly, OK? So take one company who prides itself
on how fast it can process coffee every morning, and they know
you do not really want to have a long line because as soon as
you start having a long line, then customers are going to go
out the door.
But now just think, a transaction that is slowed down even
5 seconds on that little app because people are coming in and
just taking the product, and thinking, and saying, OK, I am
getting my coffee. Now, all of a sudden you slow that down by
just 5 seconds or you say you are going to make those people
pay more, you are artificially increasing the price of product.
So my constituents wanted us--while I know we debate a lot
about movies and, you know, certain types of content, my
constituents wanted me to bring the message that this affects
all of commerce. And they also believe that it has a chilling
effect on investment because if you do not get a rate of return
on the investment, if you are basically saying I am going to
maybe you give you slower service in the future, then are you
going to invest in your customers, or are you going to try to,
you know, fight this challenge of having slower access.
So I know you, Mr. Chairman, are earnest in trying to move
this forward and to try to have this discussion. But I would
ask the American public, you know, if you really are confident
about the bundled services that you are getting now and you
think that is really clear and transparent, then, you know,
yes, you might like this. But otherwise, I would say to you
that everything from data plans to exactly the prohibition on
the FCC here would be problematic for the very principles that
you are trying to protect in the bill.
And while it is good to say on the one hand, you know, we
do not want throttling, we want transparency, you know, we want
all of these things, to me there are three concerns. First, it
does not fix the fast lane problem because there is a big
exemption big enough to drive a truck through, and that is
right from my constituents, and I am happy to provide names and
people. So, yes, the bill calls for transparency--no blocking,
no throttling--but hidden in the middle of the bill are
provisions that permit cable companies and telcos to create
fast lanes for vaguely defined specialized services. So this
leaves the innovators without the kind of guarantee to harness
the full power of the Internet.
Second, has to do with the fact that it fails to address
the middle mile Internet interconnection issue and strips the
FCC of any power to address it in the future. And finally, it
jettisons the FCC's existing authority under 706 and takes all
the flexibility and discretion away from the FCC which has to
be the policeman on the beat. We do not want this bill to pass
and be frozen in time. This is exactly the way the rules are.
We need somebody that is going to continue to make sure that
innovation happens and that we move forward.
So I guess my question is because I see my time is almost
up is, Mr. Kimmelman, do you have a concern--I see in your
comments here about the protections--a long list of protections
you are saying should be there for consumers. Do you have
concerns that these--I just see these commercials all the time
on TV, the telcos arguing about this data plan and that data
plan, and do not be fooled by this data plan because it does
not include this. Do you think that without transparency here
we are going to be in the same debate on data plans only as it
relates to now this broadband service?
Mr. Kimmelman. Yes, Senator Cantwell. I agree with all your
points. I think that the draft bill addresses a number of the
important issues that need to be addressed, but it does strip
the FCC of forward-looking flexibility or interpretive
flexibility as to how to understand these going forward.
So a fast lane of speed may be illegal under this, but I do
worry about a data cap for certain usage, dropped bits, which
is really your example, the Starbucks example. It may not be a
faster lane, a faster speed, but some people's bits get
dropped, others do not. Why? Does an affiliate of an Internet
service provider get preferred treatment, faster treatment,
better treatment, better quality of service? Those are all
issues that need to be addressed.
I do believe just to--on the specialized service I do want
to come back because the Chairman pointed out something very
important. This is not new language. This is language that has
appeared elsewhere. I think the tricky part for you if you are
legislating is to understand, well, the FCC might do something
with a specialized service definition, and a number of us might
dispute exactly what the words are. Under the current regime,
we would then have the flexibility to come back and fight that
out next week, next month, six months from now as applied and
interpreted.
So if Congress steps in and wants to make a definition like
this, I would just urge you to be very careful about exactly
what words you pick and what flexibility you give the FCC to
move forward and understand how that is being used. Mr. Misener
had some examples before of how it could be used anti-
competitively. That would be a legitimate concern. We want an
agency to have the authority to look at that.
Senator Cantwell. Mr. Chairman, I know you are trying to
move legislation, and I respect that. To me, these are very
tricky things, and while you can say you have a 65-mile an hour
speed limit on a highway, but if no one is there enforcing it,
pretty soon people are going to drive a lot faster. And the
question is who is going to call the rules of the road here
once we pass this legislation?
If you just think about it, who would have thought that
many consumers would be, you know, buying with an app, and yet
that is a very short period of time. So it is hard to say what
is going to come next. It is very important that we--to me, I
want to see what the FCC does, and I hope they will protect--
truly protect net neutrality and protect an open Internet. I
thank the Chair.
The Chairman. I thank the Senator from Washington. And the
one thing I can assure you they will do is use a 1934 law to do
it. There has got to be a better way, guys. Senator Nelson, you
had one more question I think.
Senator Nelson. And, Senator Cantwell, congratulations on
your Seahawks. That was one of the more exciting times.
Mr. Chairman, I would like to have consent to put into the
record a letter to you and to me from the National Association
of Realtors asking that our discussions not hold up the FCC's
deliberations.
The Chairman. Without objection.
[The information referred to follows:]
National Association of Realtors
Washington, DC, January 20, 2015
Hon. John Thune,
Chairman,
Senate Commerce, Science, and Transportation Committee,
Washington, DC.
Hon. Bill Nelson,
Ranking Member,
Senate Commerce, Science, and Transportation Committee,
Washington, DC.
Dear Chairman Thune and Ranking Member Nelson:
On behalf of 1.1 million members of the NATIONAL ASSOCIATION OF
REALTORS (NAR), I write in advance of your hearing entitled:
``Protecting the Internet and Consumers through Congressional Action''
to express NAR's belief that open Internet rules are necessary to
protect our members, who are primarily independent contractors and
small businesses, as well as their clients. NAR is encouraged to see
lawmakers acknowledge the need for action to protect the open Internet.
NAR, together with other Main Street businesses, has been making this
case for many years. However, the legislative process should not hold
up the rulemaking currently underway at the FCC.
Recent statements from FCC Chairman Wheeler indicating that the FCC
is moving toward strong, legally sustainable open Internet rules are
encouraging. NAR supports open Internet rules that will protect
American businesses and consumers by preventing Internet Service
Providers (ISPs) from blocking, throttling, or discriminating against
Internet traffic and prohibit paid prioritization arrangements. As you
know, the FCC has a complete public record on this issue and should
continue its work to vote on an Open Internet Order at its February
meeting as planned.
The Internet has been a driving force for innovation for decades,
and our members, their customers, and local communities are benefiting
from this innovation every day. The economic growth and job creation
fueled by the open Internet is unprecedented in American economic
history. This growth has been fostered by the Federal Communications
Commission (FCC) under both Republican and Democrat administrations for
over a decade.
Our members, who identify themselves as REALTORS, represent a wide
variety of real estate industry professionals. REALTORS have been
early adopters of technology, and are industry innovators who
understand that consumers today are seeking real estate information and
services that are fast, convenient and comprehensive. Increasingly,
technology innovations are driving the delivery of real estate services
and the future of the real estate sales businesses.
Streaming video, Voice over Internet Protocol, and mobile
applications are commonly used in our businesses today. In the future,
new technologies, like virtual reality and telepresence among others,
will be available that will no doubt require open Internet access
unencumbered by technical or financial discrimination.
The benefits of broadband Internet for innovation and economic
development are unparalleled. But the Nation will lose those tremendous
benefits if the Internet does not remain an open platform, where
Americans can innovate without permission and with low barriers to
launching small businesses and creating jobs. Given this reality, it is
important that this Committee work with the FCC to enact and preserve
open Internet policies that promote competition between Internet
application and service providers. NAR is ready to work with you on
this important issue.
Sincerely,
Chris Polychron,
2015 President,
National Association of REALTORS
cc: Members of the Senate Commerce, Science & Transportation Committee
Senator Nelson. Mr. Kimmelman, the bill that is under
discussion does not contain a general non-discrimination
provision, nor does it provide regulatory discretion to the FCC
to make such determinations. What do you think about that?
Mr. Kimmelman. Senator Nelson, that is a major concern to
us because, again, it may look very small, but this has been
the overarching principle to get at fundamental concerns about
unreasonable discrimination on networks as they evolve,
services as they change. And so, I would hope that is not too
big an ask to reconsider that issue as the legislation goes
forward.
Senator Nelson. Thank you.
The Chairman. Thank you, Senator Nelson. I will just ask a
couple of quick questions here, too. Mr. Misener, in your
prepared testimony, you suggested that ``The Internet is
fundamentally different both in technical design and practical
operation from other major media, including newspapers, radio
broadcasting, satellite TV, and cable.'' That is a quote from
your statement. Is the Internet also different in technical
design and practical operation from the copper wire public
switch telephone network that Title II was written specifically
to address?
Mr. Misener. Of course.
The Chairman. And so, why would we not want to come up with
a new regime? Why would we take something that was designed in
the era of copper wire public switch telephone networks and try
and apply it to the Internet age?
Mr. Misener. Because that's all the agency has to work with
right now.
The Chairman. And is that not an argument for why Congress
ought to give them some direction?
Mr. Misener. I am not arguing against that, Senator. Mr.
Chairman, I support exploring this. I also--I have a very
results-oriented perspective for this, and this is coming from
our customers. They want their net neutrality. They know about
the issue very strongly. They feel passionately about it. They
deserve to have these net neutrality protections. And I am a
lot less concerned, and I know they are not concerned at all
about how those protections are given to them.
If somehow they lose their net neutrality, they will know
that they lost it, and they will look to us, the people
involved in this policy discussion, and say we have failed. But
if instead they keep it, we will have succeeded no matter what
avenue we take. And so, I am looking forward to working with
you and your committee on your very common sense approach.
The Chairman. Let me just ask a quick question because
there were some concerns raised before and concerns raised
today that the draft would threaten the FCC's ability to
enforce rules on issues like universal service, accessibility,
9-1-1, and rural call completion. Our view is that the draft
bill does not affect the ability of the FCC to address these
issues because it has ample ancillary authority to deal with
them.
So that said, are the concerns that Amazon has with the
discussion draft related to the FCC's ability to address issues
like rural call completion or universal service?
Mr. Misener. No, Mr. Chairman. With respect to getting
consumers and businesses the certainty that they need to invest
in purchase----
The Chairman. So what Amazon is not, you aren't saying,
that you believe that the FCC needs to reclassify until Title
II to deal with 9-1-1 or accessibility issues.
Mr. Misener. We do not have an opinion on that, Mr.
Chairman. We have not studied this as well as others have. We
have been laser-focused on net neutrality and ensuring that the
choice that inherent in the Internet is maintained for the
future. And we are largely ambivalent on how that choice is
maintained.
The Chairman. Mr. McDowell?
Commissioner McDowell. Mr. Chairman, the FCC has looked at
Voice over Internet Protocol and applied a lot of these types
of requirements on voice over and international protocol even
though it is an information service that does not fall under
Title II. That has been upheld by the appellate courts. In
addition, with universal service, as I said earlier, in October
2011, we re-purposed the subsidy program to support, by the
way, all of the things that Senator Booker so eloquently
pointed out as well as support for rural services. But
broadband information services, we did that. That was
challenged before the 10th Circuit very vehemently in one of
the most aggressive, complex pieces of litigation I have ever
seen in my career, and we won.
And keep in mind, this was the first bipartisan entitlement
reform since 1996. There were Democrats and myself on the FCC,
and we all agreed that that was the way to go. And that was
upheld by the courts. So, no, the bill as drafted in front of
me today does not threaten those things. There is terrific
appellate history here and precedent at the FCC to support all
of those things you mentioned.
Mr. Kimmelman. Mr. Chairman, may I just offer that I
generally agree with my friend, Mr. McDowell. He has agreed
with me at times, and I agree with him on this, except for his
conclusion there for the following reason. Every time--the
courts have looked askance at the FCC's use of ancillary
authority, scrutinized it very carefully. And there is some
inconsistency in how they have applied that. If Congress
legislates, the question will be how are you thinking about
that ancillary authority. How do you want it applied, because
it is a new law. So if you intend for it to apply as it has in
telecom in the past, I would very much suggest that you write
that into the proposed language.
The Chairman. All right. Senator Nelson, anything else for
the good of the order? Senator Blumenthal?
Senator Blumenthal. Thank you, Mr. Chairman. Just a couple
of questions. Again, I welcome your--all of your willingness to
work with the Committee on the proposal before, which, as you
have said, raises questions, but may offer some potential--a
lot of potential. And I think there are questions that need to
be answered, and in my own mind the best approach may be to
wait until we see what the FCC does. And I have taken a
position on what I think it should do. Others may agree or
disagree, but the likelihood of our acting before the FCC I
think is small anyway.
But let me ask you, Mr. Misener, if, and I'm picking his
company simply without any aspersion or disparagement. It is a
great company. If Comcast decided to cap the amount of data a
consumer is allowed to use each month, and it exempted any
streaming video of its own affiliated NBC content from that
tap, could the FCC under this proposal stop that practice?
Mr. Misener. Under the discussion draft, I am afraid not,
and largely because the things underneath that ceiling which
are terrific ideas to protect net neutrality--I keep saying it
is a good list--the Commission has largely taken out of
ensuring that those are actually implemented. And I think
businesses like ours really are looking for the kind of
certainty that only an agency which is into the details can
provide it. It is great for Congress to have high-level
instruction to the agency as the appropriate role, but
companies like mine and many others are going to be looking to
the agency for the detail and certainty of regulation that is
designed to implement Congress' goals.
Senator Blumenthal. I certainly would welcome other
responses.
Commissioner McDowell. Thank you.
Senator Blumenthal. But I do not want to take too much
time.
Commissioner McDowell. I will be as quick as I possibly
can, which is hard. But anyway----
Senator Blumenthal. I would be happy to stay, but, you
know, I do not want----
Commissioner McDowell. Your specific example, Comcast is
living under merger conditions that would prohibit that. But
second of all, even if they were not, there is Section 5 of the
Federal Trade Commission Act. There is also common law at the
State and Federal level. I think there would be an avalanche of
plaintiffs--you know, class action lawsuits to prevent that
from happening.
Senator Blumenthal. But that really begs the question----
Commissioner McDowell. If it was anti-competitive.
Senator Blumenthal.--the FCC is supposed to protect
consumers so they do not have to----
Commissioner McDowell. Right, but there is the Federal
Trade Commission to protect them. There are State consumer
advocates to protect them. There are State Attorneys General,
of which you were one, there to protect them. There is lots of
overlapping law here. The notion that there is no law here
protecting consumers is a myth. It is an absolute myth.
Senator Blumenthal. And I hate----
Mr. Misener. But so much of what Mr. McDowell talks about
is----
Senator Blumenthal. I am sorry. Could you repeat your
point, Mr. Misener?
Mr. Misener. I am sorry, Senator. What Mr. McDowell keeps
going back to is FTC involvement in this, and if the FTC were a
rulemaking authority that actually promulgated rules that
companies like mine could look at, and examine, and get the
certainty from, that is one thing. But ex-post regulation is
not helpful in developing certainty.
Commissioner McDowell. It has worked thus far.
Senator Blumenthal. Did you have a comment, Mr. Kimmelman?
Mr. Kimmelman. I was effectively going to say the same
thing as Mr. Misener. The after the fact competition analysis
at the FTC, whether it is antitrust or looking at unfair
practices is extremely lengthy, subject to a lot of the same
litigation he is criticizing with the FCC, has very seldom been
practiced. And it has survived as a sleepy little agency
because it has not done a whole lot in this space, and it does
not have rulemaking authority.
So I agree with Mr. Misener. I do not believe most of the
companies represented at this table, and maybe many of the
senators would want to give them rulemaking authority, but that
is just a guess.
Senator Blumenthal. And I would just say, you know, since
you have alluded to my own experience, and I know you know an
immense amount about this area, to say, well, the Attorneys
General can do it sounds good, but the attorneys general are so
limited in resources. And as with any law and any rule, it is
dead letter unless there is effective enforcement. And the
burdens of enforcement are much more substantial in reality--in
practical reality than they may seem on theory or on paper, a
fact that I know you well understand from your own experience.
Let me just conclude with this quick question to Mr.
Kimmelman. The broadband companies--or any of you who want to
address it. The broadband companies seem to receive a lot of
assistance, a lot of public assistance--spectrum, public
rights-of-way, billions of dollars in universal service funds,
large open-ended liability protection, sometimes to my great
chagrin from litigation in the Communications Decency Act.
So the question on my mind is, why should the public--us,
all of us--provide all of these very substantive benefits, but
insist on only very limited consumer protections?
Mr. Kimmelman. Well, Senator, I don't think you should. I
think that those are wonderful benefits. They also raise a lot
of capital on the market, and I fully respect that. I think it
is very critical for our market economy. But they do get
government benefits, and there should be obligations. I think
the question is what is the right amount. What is the right
balance there?
And I think there is a lot in the Communications Act that
can basically oblige them to do things that you think are
reasonable in return for those public benefits. I would hope we
would preserve those.
Senator Blumenthal. And I would certainly welcome other
comments as long--I thank the Chairman for his indulgence.
Dr. Turner-Lee. And I will be quick, Senator. I think that
is why, going back to the earlier question about the
Communications Act rewrite or the Modernization Communications
Act, I think re-looking at the public interest standard right
now, which has been very Morpheus in terms of what is
acceptable, what is not acceptable, what are the give and takes
that we have today is a serious discussion to have. And, again,
I think that is why we cannot take that off the table as
something that is very important to this country to actually go
back and update that. But we have to get past this quagmire
right now. But your point is well taken, and I think it is one
that should be taken up at that time.
Commissioner Baker. And I would just like to say that just
start where--end where I started, which is wireless is
different, and we are differently technically. When you talk
about data caps, when you talk about spectrum constraint, when
you talk about throttling, I would say we have to optimize the
networks for our users' experience so that everyone can have
the best experience. And when you talk about spectrum, we have
paid billions of dollars for it to the Federal Government, and
continue to pay billions of dollars to the Federal Government,
a $45 billion auction going on right now.
So as we move forward in these discussions, I just want to
put the asterisk in your mind that wireless is different from a
technical competitive legal way. We need to make sure that we
can differentiate it in the rules.
Mr. Simmons. Senator----
Senator Blumenthal. Well, I--go ahead.
Mr. Simmons. I am sorry. Senator, if I could, as a cable
operator, broadband operator, we do not get free right-of-way
with all that. We pay for the right-of-way in our franchise
fees. We also do not receive any subsidies, unlike a number of
our competitors. We are not eligible for stimulus activity in
all of that. Our networks are built purely with private risk
capital, and we rely on the satisfaction of customers, frankly,
for our only means of survival. So I just wanted to share that
point for the question.
Senator Blumenthal. I appreciate it. That is a very good
point, and I really do appreciate your coming all the way from
South Dakota to be with us today.
Mr. Simmons. Oh, thank you.
Senator Blumenthal. I hear it is a long ways away.
The Chairman. That is another issue for this committee.
[Laughter.]
Senator Blumenthal. But I want to, again, thank the
Chairman and especially all of you. I apologize for the wait
that you had, but this hearing has been very, very valuable,
and you have been very helpful. Thank you.
The Chairman. Yes. And I would just say, too, and just the
final question, I guess, have any of you seen what the FCC is
going to do?
Commissioner Baker. No.
The Chairman. OK.
Commissioner McDowell. Absolutely not. I am still under my
ethics ban, just for the record.
[Laughter.]
The Chairman. All right. Anybody expect to?
Commissioner Baker. No, nothing.
The Chairman. All right. And I just say that because I
think this process is so much more open. I mean, I put out a
draft, you are all shooting at it. That is fine.
[Laughter.]
The Chairman. That is the way the process works, but that
is why I think there is so much in terms of getting public
involvement. And this has been a great hearing, and you have
been a great panel. Thank you for your great answers to the
questions. It has been very informative. And a lot of good
questions from our Senators on both sides. It is an important
issue, and it is really important that we get it right. So
thank you for your patience, and with that, this hearing is
adjourned. And I thank my Ranking Member for his patience.
[Whereupon, at 6:20 p.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Hon. Tom Udall, U.S. Senator from New Mexico
I want to thank Chairman Thune for calling this hearing today. It
is great to be back here with you in the Commerce Committee.
I am ready to work with the Chairman, Ranking Member Nelson, and my
colleagues here on the many issues under this committee's jurisdiction.
Internet and innovation policies are at the top of that list.
Tackling the digital divide is critical for promoting economic
opportunity, healthcare access, and education. Yet the Nation that
invented the Internet lags behind other countries when it comes to
broadband speeds. Unfortunately, my home state of New Mexico ranks 47th
among states when it comes to the availability of download speeds
greater than 3 megabits per second. According to 2013 data from the
National Broadband Map, one out of four New Mexicans does not even have
access to faster Internet speeds of 25 megabits per second. So I want
to work to encourage investment in broadband networks where it is
needed the most, and that is often in rural areas and on Tribal lands.
But coming from a state where many are people are already stuck in
the Internet slow lane illustrates for me what net neutrality is all
about: no one should be a second-class citizen online. I've heard from
hundreds of New Mexicans who want to ensure the Internet remains an
open and fair forum for all. One constituent wrote to me about his
opposition to Internet ``toll lanes'':
``[It is] essential to my job as a [film] location scout to
have quick access to information about local businesses,
schools, neighborhoods, and city governments within New Mexico.
. . . I need to access an always-changing variety of websites.
Slowing access to the majority of the web, while giving
preferential treatment to certain selected sites would affect
my ability to work in a competitive field.''
Here is another reaction. Jared Tarbell co-founded the e-commerce
site Etsy, and then he returned home to Albuquerque to start a new
venture called Levitated. During a recent visit to this cutting edge
workspace, he explained to me how important it is for entrepreneurs
like him to keep the Internet fair and open.
As I travel throughout New Mexico, I want to see Internet-based
companies--such as a data center located on the Navajo Nation--have the
same access to customers as Amazon and Netflix enjoy. That is how we
can truly help bring the benefits of broadband to all.
So I am encouraged by the Chairman Thune's draft legislation to
protect the Open Internet. This is a positive step in the right
direction. I do not think this draft bill should delay the FCC from
taking action. Yet I am very encouraged that after, years of partisan
debate, we appear to be closer than ever to consensus on the issue of
net neutrality.
Again, I look forward to today's hearing and working with my
colleagues here on this and other important issues before the
Committee.
Thank you.
______
Response to Written Questions Submitted by Hon. Marco Rubio to
Hon. Meredith Attwell Baker
Question 1. The use of wireless broadband and Internet connected
devices has provided a firestorm of economic growth and innovation that
was previously unimagined, and wireless traffic is projected to grow
exponentially in the years ahead. Because of this, last year I unveiled
a wireless innovation agenda and introduced legislation to free up
additional spectrum for commercial use, both licensed and unlicensed. I
strongly believe that Congress should enact policies that ensure that
the U.S. continues to lead the world in wireless innovation and
technology.
Ms. Baker, can you tell me how this legislative effort, to preserve
an open Internet, would affect the wireless industry's ability to grow
our economy and provide innovative wireless technology to consumers
versus the effect of the efforts being led by the FCC and the President
to reclassify broadband service under Title II?
Answer. We appreciate and fully support your wireless innovation
agenda. The wireless industry currently faces significant regulatory
uncertainty and the risk of future litigation and further uncertainty
is very high. If the FCC chose to reclassify mobile broadband from
Title I to the arcane Title II utility rules, it would treat our world-
leading mobile broadband networks the same as our roads, our electrical
grids, and our water supply. The mobile industry changed more in the
last six months than those industries in the last 60 years, and none of
these industries have anywhere near the innovation or competition that
is in the U.S. wireless industry. Legislation is the best path forward
to preserve an open Internet and provide the certainty necessary for
mobile broadband providers to continue investing billions, creating
jobs, and bringing innovative products to consumers.
Question 2. It seems competition on the basis of network strength,
made possible by efficient network management and investment, is a key
differentiator in the U.S. market, with carriers constantly offering
new and innovative data plans and technologies to attract consumers.
Are you concerned that an unintended consequence of new rules out
of the FCC could prevent carriers from being able to differentiate
themselves and make the wireless industry less competitive, ultimately
harming the very consumers that rules are supposed to protect?
Answer. Yes. As I highlighted in my testimony, wireless is
different. Mobile broadband providers face many unique technical
challenges and as your question indicates carriers compete based on
their network strength, among other things. These challenges include
limited spectrum resources, varying numbers of users at any one time,
differing handsets with differing capabilities, differing spectrum
bands and differing technology platforms, and each user's constantly
changing channel conditions, to name a few. These challenges demand far
more complex network management than fixed broadband requires and
mobile providers must retain flexibility to develop innovative services
plans and offerings in order to attract consumers. If these differences
are not recognized, it actually puts wireless at a competitive
disadvantage, not only with each other but with fixed broadband
services. There is more bandwidth in a single strand of fiber than in
all of the spectrum allocated for commercial mobile services and mobile
broadband providers cannot simply ``build their way out'' of capacity
constraints. The significant amount of competition for mobile broadband
services leads today to over 700 different service plans and
competitive options. We agree that the risk of a ``one-size-fits-all''
mobile Internet under Title II would harm consumers that benefit from
significant competitive differentiation and innovation today. To see
the impact of monopoly-style regulation on wireless, we can look to
Europe, which is far behind 4G LTE deployment compared the U.S. Under a
more heavy-handed regulatory regime, EU capital investment has
unsurprisingly tracked far lower compared to U.S. investment levels,
with U.S. wireless capex running 73 percent higher than that in five EU
countries with similar population from 2011-14. The positive results of
that U.S. investment: mobile networks with speeds 30 percent faster
than Europe, while serving three times more LTE subscribers.
Question 3. We have heard industry suggest that should the FCC
follow through with a ruling on Net Neutrality it would create a
significant burden for making continued investment in your networks.
Yet, critics of that claim point to the recent AWS-3 auction, which
surpassed $40 billion, as an indication that the wireless industry is
well suited to continue making investments in infrastructure. Can you
respond to those critics?
Answer. In the last ten years, the wireless industry has invested
over $260 billion in next generation networks. That degree of
investment will be put at risk if the FCC reclassifies mobile broadband
under Title II. While a number of factors affect investment decisions,
the AWS-3 auction result demonstrates a few basic facts: six years is
too long to wait between spectrum auctions and mobile broadband
providers need more spectrum and fast. Furthermore, the AWS-3 auction
demonstrates what happens when the FCC makes available spectrum on an
exclusive and substantially cleared basis. Investment flows to such
lightly-regulated environments, and consumers are the ultimate
beneficiary. Further, if the Commission proceeds down the Title II
path, the wireless industry would look to the Court of Appeals and
Congress for a remedy, and given the clarity of Section 332, and years
of FCC and judicial precedent, we have every confidence we would
prevail in such an effort and the ultimate regulatory framework will
encourage future innovation and investment.
Question 4. It has become clear that the United States is seen
around the world as a leader in wireless. When other countries'
regulators are looking to the U.S. to try and emulate our success, what
is the most important thing we should or shouldn't do in order to
maintain our position of global leadership in wireless?
Answer. As you correctly observe, when the U.S. is leading, the
wrong thing to do is radically change the regulatory regime for
wireless services. The U.S. leads the world in wireless investment and
cutting-edge LTE networks and subscribers because of the light
regulatory touch that has been applied to the wireless industry by
Congress and the FCC. To maintain the U.S. position as the global
leader in wireless innovation and deployment, the United States should
continue to apply a mobile-specific regulatory touch to wireless
services and providers. The reclassification of mobile broadband
services as telecommunications services and the application of Title II
to wireless broadband services would risk our abdication of leadership
and enable other countries to surpass the U.S. in wireless investment
and innovation. We urge the government to focus on allocating more
spectrum for commercial use and modernizing the Communications Act.
Question 5. Can you briefly describe the litigation vulnerabilities
that would come from Title II reclassification?
Answer. The litigation risks are significant and would result in
substantial regulatory uncertainty for multiple years, which would
ultimately harm U.S. consumers. The greatest vulnerability from Title
II reclassification emanates from the fact that Congress under Section
332 prohibits the FCC from imposing common carrier obligations on
mobile broadband services because such services are neither commercial
mobile radio services nor the functional equivalent thereof. In
addition, mobile broadband services, just like all broadband services,
are integrated information services that do include a separate
telecommunications service component. The FCC properly classified
mobile broadband services as information services in 2007, and any
attempt to reclassify mobile broadband services as telecommunications
services would have to survive the heightened scrutiny required by the
Supreme Court in FCC v. Fox Television Stations, Inc. 556 U.S. 502
(2009) because reclassification would have to rest upon factual
findings that contradict those reached in 2007, and the information
service classification decision in 2007 engendered reliance interests,
namely that the wireless industry has invested tens of billions of
dollars in reliance on the FCC's 2007 decision.
______
Response to Written Questions Submitted by Hon. Deb Fischer to
Hon. Meredith Attwell Baker
Question 1. Ms. Baker--In 2010, the FCC chose a light-touch mobile-
specific approach to Open Internet rules. This allowed Americans to
benefit with record-setting investment and innovation throughout the
entire mobile ecosystem. Since then, applications have increased by 347
percent, data traffic has increased 732 percent, and video traffic has
increased 733 percent. Do you think Chairman Thune's draft legislation
sufficiently takes the differences of wireless technologies into
account so as not to disrupt the incredible growth we are seeing in
your industry and that consumers have come to expect and demand? What
might be the consequences on consumers if we don't give flexibility to
wireless operators to manage their networks?
Answer. Congressional action is the best path to preserve an open
Internet and enable mobile broadband providers to continue investing
billions, creating jobs, and bringing innovative products to consumers.
The draft legislation is an excellent start, and we look forward to
working with Chairman Thune and other members of the Committee to
ensure that the legislation reflects the unique technical and
operational challenges that mobile broadband providers face in
dynamically managing their networks in real time. These challenges
include reliance on a finite amount of spectrum, consumer mobility
(which means a constantly fluctuating number of users in each cell
site), hundreds of different handsets with different capabilities, a
variety of technology platforms across multiple spectrum bands, and
each user's constantly changing channel conditions, to name a few.
These challenges demand complex and dynamic network management. To
continue providing Americans with increasingly faster speeds and mobile
Internet access anytime and anywhere, wireless providers must have the
flexibility to manage their networks so that all users enjoy the
highest quality service experience. Legislation should also reflect the
highly competitive and innovative wireless marketplace.
Question 2. To All Witnesses--While the FCC is in the process of
ensuring net neutrality, some want the FCC to impose all of these
obligations under the guise of ensuring consumer protection. Some argue
that common carrier requirements on broadband providers should include
almost most all of Title II, in addition to Sections 201, 202, and 208.
Specifically, some activists have suggested the following parts of
Title II must be applied to the broadband industry:
UNIVERSAL SERVICE
Sec. 214. [47 U.S.C. 214] Extension Of Lines
Sec. 225. [47 U.S.C. 225] Telecommunications Services for
Hearing-Impaired and Speech-Impaired Individuals.
Sec. 254. [47 U.S.C. 254] Universal Service.
Sec. 255. [47 U.S.C. 255] Access by Persons With Disabilities.
CONSUMER PROTECTION
Sec. 217. [47 U.S.C. 217] Liability of Carrier for Acts and
Omissions of Agents.
Sec. 222. [47 U.S.C. 222] Privacy Of Customer Information.
Sec. 230. [47 U.S.C. 230] Protection for Private Blocking and
Screening of Offensive Material.
Sec. 258. [47 U.S.C. 258] Illegal Changes in Subscriber Carrier
Selections.
COMPETITION
Sec. 224. [47 U.S.C. 224] Regulation of Pole Attachments.
Sec. 253. [47 U.S.C. 253] Removal of Barriers to Entry.
Sec. 251. [47 U.S.C. 251] Interconnection
Sec. 256. [47 U.S.C. 256] Coordination for Interconnectivity.
Sec. 257. [47 U.S.C. 257] Market Entry Barriers Proceeding.
Do you agree or disagree that these sections of Title II common
carrier regulation are needed? If you agree, please explain why.
Answer. CTIA does not support the reclassification of broadband
services as telecommunications services subject to Title II, or the
application of Title II to the broadband industry.
______
Response to Written Questions Submitted by Hon. Ron Johnson to
Hon. Meredith Attwell Baker
Question 1. According to your testimony, since 2010, wireless
carriers have invested over $121 billion in capital expenditures, not
including the cost of spectrum. If Chairman Wheeler and the FCC subject
the wireless industry to rules that were designed for a monopoly
telephone system and public utilities, I am concerned that it will
chill this investment and impede future innovations. How can we ensure
that any legislation we might enact to preserve an open Internet
doesn't have a negative effect on capital investment?
Answer. We share your concern. The U.S. wireless industry has a
significant impact on our Nation's economy under the current regulatory
framework. In the last ten years, the wireless industry has invested
over $260 billion. In 2013, U.S. carriers invested a one year record
high of more than $33 billion. This was four times as much in network
infrastructure per subscriber than the rest of the world in 2013. In
addition, U.S. carriers have paid $53 billion for spectrum and just bid
over $40 billion in the AWS-3 auction over the last two months. In
addition to these staggering figures, there are significant downstream
effects through jobs, GDP and productivity. The wireless industry
directly or indirectly supports 3.8 million jobs, or 2.6 percent of all
U.S. employment. The wireless industry pays wages that are 65 percent
higher than the national average and contributes $195.5 billion to the
U.S. GDP. Our industry is now larger than the publishing, agriculture,
hotels and lodging, air transportation, motion picture and recording,
and motor vehicle manufacturing industry segments.
CTIA believes an attempt to reclassify wireless broadband under
Title II would be based upon dubious legal authority and would likely
lead to years of litigation and uncertainty. The application of Title
II, in any form, to wireless broadband would harm consumers and our
economy, chill investment and impede future innovations. Clear
Congressional legislation, in contrast, would provide legally
sustainable requirements that protect Internet openness and recognize
the unique technical and operational challenges that mobile networks
face.
Question 2. According to statistics, 92 percent of consumers have
access to three or more mobile broadband providers, and 82 percent are
served by four or more. In this highly competitive marketplace, isn't
Internet openness essential for a mobile provider to win and retain
customers?
Answer. Yes. The wireless industry is fiercely competitive. They
compete on price, speeds, service plans and offerings, quality of
service or network management, and more. The result is a thriving,
competitive mobile marketplace, with more choices, innovative options,
and tremendous value. Internet openness is essential to attract and
retain customers in today's wireless market. Not surprisingly, there
has not been a single formal complaint filed since the adoption of the
FCC's 2010 Open Internet rules.
______
Response to Written Question Submitted by Hon. Brian Schatz to
Hon. Meredith Attwell Baker
Question. I believe that the FCC needs to have ongoing, flexible
authority over broadband. I am concerned that the draft legislation
does not preserve that type of authority. What changes can--or should--
be made to the draft that would address this concern?
Answer. Currently, the FCC has no clear and explicit authority to
address net neutrality or other broadband-related concerns.
Congressional action remains the best path for ensuring the FCC has
sufficient and legally sustainable authority going forward.
Section 13 of the draft legislation provides the FCC with case-by-
case adjudicatory authority, which gives the FCC flexibility to
interpret companies' responsibilities under the law. As new issues
involving the broadband market arise, the FCC will be able to evaluate
how best to resolve disputes.
______
Response to Written Questions Submitted by Hon. Cory Booker to
Hon. Meredith Atwell Baker
Question 1. One aspect largely absent from the debate on Chairman
Thune's proposed neutrality legislation is the issue of
interconnection. Interconnection is not covered under current
legislation. Do you believe that interconnection points can be choke
points to the Internet highway?
Answer. Internet companies have exchanged traffic subject to
privately negotiated arrangements since the commercialization of the
Internet. This system has worked effectively and not resulted in choke
points on the Internet highway.
Question 1a. Under the proposed legislation, how would
interconnection issues be addressed?
Answer. The proposed legislation does not address interconnection,
and is focused on end-user Internet access issues.
Question 2. Students, health care providers, and entrepreneurs have
benefited greatly from innovative online platforms and the free flow of
information. I fear that, without strong net neutrality rules, a
``tiered Internet'' could emerge, creating barriers for innovators and
small businesses.
In the absence of strong anti-discrimination protections provided
under Title II, and without Section 706 authority, what tools does the
FCC have to prevent discriminatory practices and differential treatment
we all agree should be prohibited?
Answer. The draft legislation provides the FCC with legally
sustainable authority to enforce prohibitions on paid prioritization,
except if a consumer affirmatively chose such an arrangement, as well
as specialized services that would ``threaten the meaningful
availability of broadband Internet access service'' or are designed to
circumvent the legislation's requirements. Further, differentiation and
robust competition in the wireless sector continues to deliver great
value and new services to consumers, and we hope any new approach
preserves the ability of highly competitive mobile broadband providers
to compete and innovate with unique and targeted offerings, such as the
education and health-based services you reference.
Question 3. As currently drafted, what protections does the
legislation provide that broadband reclassification would not?
Answer. For the reasons detailed in the appendix to my written
testimony, CTIA believes an attempt to reclassify wireless broadband
under Title II would be based upon dubious legal authority and would
likely lead to years of litigation and uncertainty. The legislation, in
contrast, would provide legally sustainable requirements that protect
Internet openness and could provide the same sort of statutory support
for growth that enactment of Section 332 did for wireless voice in
1993.
Question 4. Do you believe, as the draft legislation suggests, the
FCC should not be able to claim any authority under Section 706 of the
Telecommunications Act of 1996?
Answer. The strongest basis for the FCC's authority to ensure
Internet openness would emanate from new, clear statutory authority
provided by Congress. If such new authority was enacted, the FCC would
not need to cite to other provisions.
______
Response to Written Questions Submitted by Hon. Tom Udall to
Hon. Meredith Atwell Baker
Question 1. Ms. Baker, in your testimony, you argue that ``mobile
is different'' than other communications technologies. Yet you indicate
that CTIA would support net neutrality rules provided that such rules
reflect the unique needs for wireless.
Could you please clarify CTIA's position on what net neutrality
principles or rules your member companies would support? For example,
do you agree that if consumers want to go online to Amazon, they should
be able to get there without artificial barriers, whether they are
using an iPhone or a desktop computer?
Answer. Yes, and that has always been the practice of the
competitive wireless industry. Consumers should be able to access the
legal content of their choosing using legal devices without artificial
barriers as long as mobile broadband providers are able to manage their
networks to address the unique congestion, interference, and other
traffic management challenges faced by broadband providers that utilize
spectrum and wireless networks to provide service to consumers. The
proposed legislation would ensure such an outcome.
Question 1a. Would CTIA support FCC enforcement authority for those
types of clear ``rules of the road'' for net neutrality that CTIA
endorses?
Answer. CTIA supports the grant of adjudicatory authority for the
FCC to resolve net neutrality-related disputes based upon clear
statutory requirements.
______
Response to Written Questions Submitted by Hon. Joe Manchin to
Hon. Meredith Atwell Baker
Question 1. During the hearing, I received conflicting information
about how the Chairman's proposed legislation would impact Universal
Service Fund (USF) broadband programs like the Connect America Fund
(CAF) that help private companies make investments and expand their
network into rural, underserved areas. Due to the importance of these
programs to my state and the communities I represent, I am requesting a
written explanation of the anticipated impacts this bill would have on
USF programs from each of the witnesses, specifically:
What authority or authorities does the Federal Communications
Commission currently rely on to operate and execute USF programs like
the Connect America Fund?
Answer. Section 254 of the Communications Act is the primary
jurisdictional basis to support Connect American Fund. The FCC has
explained: ``Section 254 grants the Commission clear authority to
support telecommunications services and to condition the receipt of
universal service support on the deployment of broadband networks, both
fixed and mobile, to consumers.'' The Commission has further concluded:
``We also have independent authority under section 706 of the
Telecommunications Act of 1996 to fund the deployment of broadband
networks.'' Thus, the FCC's current classification of broadband as a
Title I information service poses no obstacle to USF programs like the
Connect America Fund that support broadband deployment in West Virginia
today.
Question 1a. Without either Section 706 of the Telecommunications
Act of 1996 authority or Title II of the Communications Act of 1934
authority, as proposed in the draft legislation, under what authority,
if any, could the FCC incentivize broadband deployment?
Answer. As explained above, the FCC has already concluded that
Section 254 provides support for broadband services to high-cost areas,
schools, libraries and hospitals, even though the relationship between
broadband providers and consumers is classified as an information
service under Title I. The FCC will therefore be able to continue to
provide those subsidies and support going forward regardless of the
classification of broadband services. Nothing in the draft legislation
limits FCC ability to continue to support these important universal
service priorities.
Moreover, given the substantial investment that has flowed into
broadband facilities over the last decade outside of Title II, we are
concerned that the application of Title II and its regulatory weight
could disincent this sort of investment that has lead to over $121
billion over the last four years alone. We believe that the draft
legislation and the clear statutory authority for ensuring Internet
openness could be a spur to continued investment.
Question 1b. What would happen to the Connect America Fund and
similar programs should this legislation pass in its current form?
Answer. The programs would continue to be administered by the FCC
pursuant to its authority under Section 254 of the Communications Act.
Question 2. One of the primary concerns I have about the proposal
we are discussing today is the removal of all rulemaking authority.
Businesses need certainty, and rulemaking allows businesses to
understand how the general goals and standards Congress establishes in
law--such as affordable and accessible Internet--will be specifically
applied before they make investment decisions. The proposed bill
removes all the transparency requirements included in rulemaking and
replaces them with a new, retroactive, case-by-case rulemaking process
that could be very difficult for small start-up businesses to
understand. Without rulemaking, how would entrepreneurs understand how
the FCC would apply the mandates of this bill to particular
circumstances?
Answer. Today, the wireless industry--from carriers to app
developers--faces significant regulatory uncertainty and ongoing legal
debate over the FCC's authority. Clear, Congressional action, like the
draft legislation, is the best way to avoid years more of uncertainty
for all affected stakeholders. Indeed, the legislation itself
establishes rules without the delay and appellate review that accompany
FCC rulemakings.
Further, Section 13 of the draft legislation provides the FCC with
case-by-case adjudicatory authority, which gives the FCC flexibility to
interpret companies' responsibilities under the law. As new issues
involving the broadband market arise, the FCC will be able to evaluate
how best to resolve disputes.
Question 2a. What opportunities would businesses and consumer
groups have to weigh-in on the FCC's application of these rules going
forward?
Answer. Businesses and consumer groups would have the opportunity
to participate in the FCC's complaint process. Indeed, the FCC recently
launched a new consumer help center ``designed to empower consumers''
and ``streamline [the] complaint system'' with a new web-based
interface that ``replaces 18 outdate complaint forms with one web
portal'' and that will ``promptly serve complaints on providers,
enabling them to respond more quickly to consumers.''
Question 2b. How could any changes, however small, even be made to
reflect the specific concerns of entrepreneurs or small businesses with
the explicit prohibition on expanding Internet openness obligations
included in Subsection (b) the draft bill?
Answer. We believe that congressional action is the best path
forward for entrepreneurs and small business to have explicit and clear
statutory protections. Further, as noted above, Section 13 of the draft
legislation provides the FCC with case-by-case adjudicatory authority,
which gives the FCC flexibility to interpret companies'
responsibilities under the law. As new issues involving the broadband
market arise, the FCC will be able to evaluate how best to resolve
disputes.
Question 3. Do wireless network providers have different network
management demands than wireline networks? Please explain.
Answer. Yes. Mobile services are technically different, completely
dependent upon limited spectrum resources requiring nimble and dynamic
network management to deliver service to consumers on the go. There is
more bandwidth in a single strand of fiber than in all of the spectrum
allocated for commercial mobile services. And the use of spectrum to
provide broadband services involves unique congestion, interference,
and other traffic management challenges that do not apply to wireline
network management. More detail on the significant technical
differences facing mobile broadband providers can be found at http://
www.ctia.org/docs/default-source/default-document-library/net-
neutrality-and-technical-challenges-of-mobile-broadband-networks-9.pdf.
Question 3a. If so, how would wireless service providers be
impacted by a universal ``reasonable network management'' practice that
treats all providers the same?
Answer. We are encouraged that the draft legislation explicitly
states that '' a network management practice is reasonable if it is
appropriate and tailored to achieving a legitimate network management
purpose, taking into account the particular network architecture and
any technology and operational limitations of the broadband Internet
access service provider.'' Wireless networks face unique congestion,
interference and other traffic management challenges. Applying the same
``reasonable network management'' standard to all providers would
deprive wireless broadband providers of the ability to manage their
networks in a manner that satisfies consumer expectations and
recognizes the unique challenges faced when delivering an ever-
increasing amount of voice, video, and data traffic in a spectral
environment.
______
Response to Written Question Submitted by Hon. Deb Fischer to
Gene Kimmelman
Question. To All Witnesses--While the FCC is in the process of
ensuring net neutrality, some want the FCC to impose all of these
obligations under the guise of ensuring consumer protection. Some argue
that common carrier requirements on broadband providers should include
almost most all of Title II, in addition to Sections 201, 202, and 208.
Specifically, some activists have suggested the following parts of
Title II must be applied to the broadband industry:
UNIVERSAL SERVICE
Sec. 214. [47 U.S.C. 214] Extension Of Lines
Sec. 225. [47 U.S.C. 225] Telecommunications Services for
Hearing-Impaired and Speech-Impaired Individuals.
Sec. 254. [47 U.S.C. 254] Universal Service.
Sec. 255. [47 U.S.C. 255] Access by Persons With Disabilities.
CONSUMER PROTECTION
Sec. 217. [47 U.S.C. 217] Liability of Carrier for Acts and
Omissions of Agents.
Sec. 222. [47 U.S.C. 222] Privacy Of Customer Information.
Sec. 230. [47 U.S.C. 230] Protection for Private Blocking and
Screening of Offensive Material.
Sec. 258. [47 U.S.C. 258] Illegal Changes in Subscriber Carrier
Selections.
COMPETITION
Sec. 224. [47 U.S.C. 224] Regulation of Pole Attachments.
Sec. 253. [47 U.S.C. 253] Removal of Barriers to Entry.
Sec. 251. [47 U.S.C. 251] Interconnection
Sec. 256. [47 U.S.C. 256] Coordination for Interconnectivity.
Sec. 257. [47 U.S.C. 257] Market Entry Barriers Proceeding.
Do you agree or disagree that these sections of Title II common
carrier regulation are needed? If you agree, please explain why.
Answer. Public Knowledge has consistently supported the idea that
there are basic, fundamental values of communications networks that
must be preserved under Internet protocol (IP) networks \1\, including
protecting Universal Service, competition and interconnection of
providers, and basic consumer protections such as privacy and truth-in-
billing practices. Whatever the classification status that the FCC
currently or subsequently applies to broadband and IP networks, these
values remain as the baseline expectations of the public under the
Communications Act.
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\1\ https://www.publicknowledge.org/news-blog/blogs/five-
fundamentals-for-the-phone-network
-transition
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I agree that the listed sections of the Communications Act continue
to be needed for traditional voice services and potentially for
broadband services as well. All of them have been important statutory
manifestations of the fundamental values of communications networks and
the rules crafted from them have been applied to traditional voice
telephone services. However, it is possible that the FCC might find
that some of these sections need not apply to broadband in order to
preserve the fundamental values when broadband is reclassified under
Title II.
In my testimony I highlighted concerns that the Thune draft bill
may prevent the FCC ensuring that fundamental values (such as privacy,
accessibility for the disabled, universal service, and others) could be
protected because the draft bill limits the sort of further proceeding
described above. Allowing the FCC such power can reduce regulatory
burdens in the future through a transparent, APA-compliant process.
The ongoing FCC proceeding around the transition of the phone
network to an all IP network is an appropriate place for the FCC and
stakeholders to wrestle with the length of time that such statutes are
necessary for voice services. Should the Congress continue with a
process to update the Communications Act, Congress will be forced to
show how it will maintain the fundamental values of communications
networks under an updated or new statutory regime, including
maintaining the power of the FCC to enforce such protections.
______
Response to Written Question Submitted by Hon. Amy Klobuchar to
Gene Kimmelman
Question. I have some concerns about transparency and rules
governing the points of network interconnections, an area that we
should explore more. My concern about a lack of rules or enforcement is
not a prediction or hypothetical--it's already happening in the voice
networks. For the last five years, we've seen rural communities
suffering from persistent call completion problems which arise because
we don't have enough visibility or enforcement capability with respect
to how calls are flowing across networks. This is just an example of
what not understanding or having transparency on a part of a network
can mean.
Mr. Kimmelman, without some basic transparency at least at the
interconnection between underlying networks, how do we protect
consumers and achieve other important policy objectives?
Answer. I agree that rules governing points of interconnection
continue to be important to ensure that networks function properly for
all Americans, no matter where they may live or work. Public Knowledge
continues to support the bipartisan resolution led by Senators
Klobuchar, Fischer, Thune, and others acknowledge the central role of
the FCC in resolving rural call completion problems and encouraging the
FCC to use its broad authority to address these concerns. Similarly, as
networks transition to newer, all-IP networks, the power of the FCC to
resolve such issues must be maintained regardless of technological
upgrades made to our national communications networks. It does not help
consumers to see net neutrality rules applied at the point of the
network connecting last mile providers to consumers if the problem
simply moves upstream to these interconnection points. I am encouraged
that Chairman Wheeler has signaled that he intends to preserve to the
FCC's ability to address interconnection concerns beyond the narrower
proceeding around net neutrality rules. We believe he has the power to
address these concerns under his current statutory authority. If the
Congress moves forward with legislation around net neutrality or a
Communications Act update, it should preserve the power of FCC to
investigate and conduct the necessary rule makings to preserve the end-
to-end connectivity of the network for all Americans.
______
Response to Written Question Submitted by Hon. Brian Schatz to
Gene Kimmelman
Question. I believe that the FCC needs to have ongoing, flexible
authority over broadband. I am concerned that the draft legislation
does not preserve that type of authority. What changes can--or should--
be made to the draft that would address this concern?
Answer. The simplest way to preserve flexible authority at the FCC
would be to alter three parts of the draft bill. First, change Section
1 of the draft bill to place the language in Title II of the
Communications Act. Second, delete subsection b(1)--labeled
``Commission Authority''--in the new section inserted to the
Communications Act by Section 1 of the draft bill. Removing this takes
away the limitations on FCC rulemaking authority beyond the rules
prescribed in the draft bill, giving the FCC flexibility to investigate
related topics as technology, business practices, and the market
changes. Third, elimination Section 2 of the draft bill which limits
the FCC authority under 706 that was upheld by the DC Circuit Court in
the Verizon case. These changes will give the FCC the flexibility it
needs to fully address open Internet concerns, while not preventing the
FCC from protecting other basic consumer protections that I highlighted
in my testimony may be in danger from such a narrowly tailored bill.
______
Response to Written Questions Submitted by Hon. Cory Booker to
Gene Kimmelman
Question 1. One aspect largely absent from the debate on Chairman
Thune's proposed neutrality legislation is the issue of
interconnection. Interconnection is not covered under current
legislation. Do you believe that interconnection points can be choke
points to the Internet highway? Under the proposed legislation, how
would interconnection issues be addressed?
Answer. Yes, interconnection points can be choke points on the
Internet if disputes over interconnection and peering agreements slow
or limit traffic across different parts of the network. Consumers lose
in this situation, through no fault of their own.
The draft bill does not seem to address interconnection issues
since it narrowly creates new rules to protect consumers, but limits
the authority of the FCC to go beyond those consumer focused rules. I
believe the agency already has the authority to address interconnection
under Title II of the Communications Act, but Congress could reaffirm
this by placing these rules under Title II and then removing the
restrictions against other regulatory action in the draft bill.
Question 2. Students, health care providers, and entrepreneurs have
benefited greatly from innovative online platforms and the free flow of
information. I fear that, without strong net neutrality rules, a
``tiered Internet'' could emerge, creating barriers for innovators and
small businesses.
In the absence of strong anti-discrimination protections provided
under Title II, and without Section 706 authority, what tools does the
FCC have to prevent discriminatory practices and differential treatment
we all agree should be prohibited?
Answer. A tiered Internet is not just a real fear in a world
without strong net neutrality rules, it is a likely outcome. Some
Internet service providers have been clear that without net neutrality
rules they would like to create business practices that would section
off the internet, charging extra fees for the delivery of content and
services.\1\ We have already seen some instances of discrimination by
Internet service providers against potential competitive services. One
example is the concern that Public Knowledge and others raised in
connection to AT&T's treatment of Facetime in 2013.\2\ Fortunately,
Public Knowledge was able to threaten a complaint under the FCC's 2010
open Internet rules, which were still in effect at the time, and AT&T
changed its practices.
---------------------------------------------------------------------------
\1\ https://www.publicknowledge.org/news-blog/blogs/these-rules
\2\ https://www.publicknowledge.org/news-blog/blogs/att-hangout
---------------------------------------------------------------------------
In the absence of Title II and Section 706 authority the FCC does
not have any tools to prevent discriminatory practices and would
require Congress to act in order to restore its authority.
Question 3. As currently drafted, what protections does the
legislation provide that broadband reclassification would not?
Answer. The draft bill, as currently drafted, does not provide any
protections beyond what rules crafted under a reclassification to Title
II would provide.
Question 4. Do you believe, as the draft legislation suggests, the
FCC should not be able to claim any authority under Section 706 of the
Telecommunications Act of 1996?
Answer. The FCC has used Section 706 for a number of rulemakings
and reforms over the years including its ongoing reform of the
Universal Service Program (USF). I would caution against removing the
FCC's authority under 706 without addressing possible unintended
consequences such as harming these reforms of USF.
Question 5. Recent data shows 96 percent of the population has at
most, two Internet Service Provider options. How do you respond to
concerns that the current legislative proposal would hamstring the
FCC's ability to promote competition in broadband?
Answer. All stakeholders agree that deploying high-speed broadband
services is a capital intensive undertaking. Combined with the
increasing consumer expectations and FCC standards for what constitutes
broadband \3\, many Americans would say that they do not have true
competition for broadband services. The FCC has several tools to
promote broadband deployment and competition in the marketplace. One is
the Universal Service Program which subsidizes deployment in high cost
areas, as well as to schools and libraries which anchor communities.
The FCC is currently looking at another tool; if its authority under
Section 706 of the Communications Act can allow it to promote broadband
deployment and competition by overturning state prohibitions on
community broadband deployment projects in Chattanooga, TN and Wilson,
NC. The draft bill as currently constructed could eliminate the power
of the FCC to act in these cases and extend the competition that the
Chattanooga and Wilson projects are already successfully providing to
surrounding communities. Given the enormous cost and risk involved in
deploying high-speed broadband, we should not limit the ways in which
communities can choose to ensure their residents are connected to the
market. These projects are critical economic development opportunities
for many communities when carefully planned and created with community
support and input.
---------------------------------------------------------------------------
\3\ http://www.fcc.gov/document/fcc-finds-us-broadband-deployment-
not-keeping-pace
---------------------------------------------------------------------------
______
Response to Written Questions Submitted by Hon. Tom Udall to
Gene Kimmelman
Question 1. Mr. Kimmelman, debate over the FCC's authority to issue
net neutrality rules also raise the broader question of what the role
of the FCC should be in the new broadband era. Last year, for example,
the FCC adopted a set of governing principles for the phone-to-
broadband transition. Those core values include Public Safety,
Universal Service, Competition, and Consumer Protection. Can you share
your thoughts about how legislation limiting the FCC's authority over
broadband matters could potentially undermine the agency's ability to
ensure those core values for our communications systems in the future?
Answer. The FCC is currently undergoing a process of managing the
transition of the traditional phone networks to 21st Century, all
Internet protocol networks through its open proceeding on the tech
transition. This transition is happening right now in the market and is
good for consumers, but the FCC's involvement is critical to make sure
that vulnerable consumers are not left behind and these network changes
are upgrades for everyone. We agree that the core ``network compact''
values you cited are an important check list of values that must be
maintained in the Communications Act and at the FCC to protect the
public interest. The draft bill, as written, would strip the ability
for the FCC to manage the tech transition and continue to preserve
these core values since many of them reside in Title II or have been
justified using Section 706. Reclassification of broadband under Title
II simplifies the FCC's work in managing the transition, but it has
been able to do so under its current authority in Section 706 as well.
Question 2. Mr. Kimmelman, I would like to ask you to respond to
some of the issues raised around crafting rules that reflect the
realities for a wireless company managing its network. Last year, FCC
Chairman Tom Wheeler wrote to Verizon about his concerns that some
features of wireless data plans seem to go beyond reasonable network
management practices. Given the draft Thune bill's lack of FCC
enforcement authority, does the legislation go far enough to protect
Internet openness for wireless users?
Answer. While the draft bill does include net neutrality rules that
cover both wireline and wireless services, there are two weaknesses in
the bill around wireless services. First, as we've mentioned before,
the bill limits the FCC's rule making authority to the specific net
neutrality rules prescribed in the bill. It would not allow the FCC to
investigate harms from future business practices as new technology and
business practices change. It freezes the abilities of the agency in
time, while technology continues to develop. Second, the draft bill
does not prohibit broader discrimination beyond throttling and paid
prioritization. Nondiscrimination has always been a core value of
network neutrality rules that both throttling and paid prioritization
fall under. A broader nondiscrimination rule would allow the FCC to
deal with harmful practices that we already concerned about but that
don't fall into basic throttling or paid prioritization. These harmful
practices include anticompetitive uses of data caps and exemption of a
network providers services from such caps.
______
Response to Written Questions Submitted by Hon. Joe Manchin to
Gene Kimmelman
Question 1. During the hearing, I received conflicting information
about how the Chairman's proposed legislation would impact Universal
Service Fund (USF) broadband programs like the Connect America Fund
(CAF) that help private companies make investments and expand their
network into rural, underserved areas. Due to the importance of these
programs to my state and the communities I represent, I am requesting a
written explanation of the anticipated impacts this bill would have on
USF programs from each of the witnesses, specifically:
Question 1a. What authority or authorities does the Federal
Communications Commission currently rely on to operate and execute USF
programs like the Connect America Fund?
Answer. In order to include broadband in the services funded
through the Universal Service Fund programs, the Commission relied upon
Sections 254(e) and 706(b) as independent sources of authority to
require carriers to offer broadband in addition to telephony service as
a condition for receiving USF support. Support for broadband is
currently implemented as a condition on carriers that are also offering
Title II telephony service. The Commission's reasoning was upheld by
the 10th Circuit but U.S. Cellular has asked the Supreme Court to
reverse that holding.
Question 1b. Without either Section 706 of the Telecommunications
Act of 1996 authority or Title II of the Communications Act of 1934
authority, as proposed in the draft legislation, under what authority,
if any, could the FCC incentivize broadband deployment?
Answer. Without Section 706, the Commission would be stripped of
one of the sources of authority it used to support broadband deployment
through the USF. The Commission may still be able to appeal to its
Section 254(e) authority to specify what USF recipients may or may not
do with USF funds, but that question is still not settled in the
courts. Lacking both Title II authority for broadband and Section 706
authority would create serious questions about how the Commission can
move forward in administering USF programs. Moreover, if the Commission
lacks both Section 706 and Title II authority for broadband, any
conversations about adjusting the fund to better support broadband
deployment would be stopped in their tracks, and the Commission would
lose the ability to be more forward-thinking as a steward of the USF.
Question 1c. What would happen to the Connect America Fund and
similar programs should this legislation pass in its current form?
Answer. The draft bill in its current form would create uncertainty
for the Commission's ability to continue administering and improving
the ways in which Universal Service programs fund broadband. The draft
would strip the FCC of its Section 706 authority, which was an
independent source of authority upheld by the 10th Circuit for the
Commission's decision to require recipients to deploy broadband.
Moreover, if the Commission lost its Section 706 authority and could
not classify broadband Internet access services as telecommunications
services, it is not clear how the Commission could at some point
reshape USF programs to fund broadband services independently. Losing
that option as a legal matter stops the policy conversation about the
future of universal broadband service in its tracks.
Question 2. One of the primary concerns I have about the proposal
we are discussing today is the removal of all rulemaking authority.
Businesses need certainty, and rulemaking allows businesses to
understand how the general goals and standards Congress establishes in
law--such as affordable and accessible Internet--will be specifically
applied before they make investment decisions. The proposed bill
removes all the transparency requirements included in rulemaking and
replaces them with a new, retroactive, case-by-case rulemaking process
that could be very difficult for small start-up businesses to
understand. Without rulemaking, how would entrepreneurs understand how
the FCC would apply the mandates of this bill to particular
circumstances?
Answer. A rulemaking would absolutely provide more certainty than a
case-by-case review process. Rulemakings by design provide an agency
the flexibility to adapt policy and law to changing circumstances much
more quickly and agilely than Congress can. An agency only requires 3
votes to alter a rule that may no longer be working. It is also unclear
how an individual case would apply to subsequent cases brought--whether
it would have binding precedent, and to what extent.
Question 2a. What opportunities would businesses and consumer
groups have to weigh-in on the FCC's application of these rules going
forward?
Answer. There are number of problems with relying on a complaint
process alone. First, it is not preventive--you have to wait for the
harm to happen--and the party filing the complaint naturally has to be
aware that the harm is happening. This is not always clear to consumers
who are often poorly positioned to recognize potential violations. It
is also not always clear who has standing to bring a complaint.
Finally, even when standing is clear, bringing a complaint is time-
consuming and expensive, which most disadvantages the consumers or
small businesses the process ostensibly exists to protect most.
Question 2b. How could any changes, however small, even be made to
reflect the specific concerns of entrepreneurs or small businesses with
the explicit prohibition on expanding Internet openness obligations
included in Subsection (b) the draft bill?
Answer. There is no simple fix--the legislation is fundamentally
problematic because it would eliminate the Commission's rulemaking
authority. The complaint process is a valuable one but to be effective
it really must be connected to an actual rulemaking, not supplant
rulemaking. It is also counterproductive to foreclose the expert agency
from applying policies to new technologies as the Internet access
environment continues to evolve.
Question 3. Do wireless network providers have different network
management demands than wireline networks? Please explain.
Answer. All communications technologies have unique technical
qualities that would require unique network management considerations--
DSL has network management demands distinct from cable, which is also
distinct from satellite, which is distinct from wireless, and so forth.
But each of these provides the same fundamental on-ramp to the
Internet, and so any public policy considerations on openness and
reliable access applies equally to any connectivity technology.
This means that a reasonable network management standard must serve
the same underlying policy equally. The best approach for a universal
``reasonable network management'' practice considers the technical
qualities of types of access as well as the fundamental principles it
exists to preserve. A clear rule based on fundamental principles can be
applied flexibly to any particular access technology. This best
addresses reasonable network management for existing technologies as
well as any yet unimagined future technologies.
Question 3a. If so, how would wireless service providers be
impacted by a universal ``reasonable network management'' practice that
treats all providers the same?
Answer. All communications technologies have technical qualities
that will make them inherently different from any others and that will
therefore require their own unique network management considerations--
DSL has network management demands distinct from cable, which is also
distinct from satellite, which is distinct from wireless, and so forth.
But each of these provides the same fundamental on-ramp to the
Internet, and so any public policy considerations on openness and
reliable access applies equally to any connectivity technology.
______
Response to Written Questions Submitted by Hon. Marco Rubio to
Hon. Robert M. McDowell
Question 1. What would provide greater certainty for the
marketplace--the FCC's adoption of rules that reclassify broadband
services as telecommunications services subject to Title II, or
enactment of legislation by Congress?
Answer. Thank you, Senator, for the opportunity to comment on this
issue. Enactment of legislation by Congress would provide far more
certainty to the Internet marketplace than FCC regulation of last-mile
broadband networks and the entire Internet backbone under Title II.\1\
In fact, an FCC decision to impose Title II on broadband providers will
increase uncertainty for many businesses, with harmful implications for
continued investment and innovation in the Internet economy.
---------------------------------------------------------------------------
\1\ Steve Lohr, In Net Neutrality Push, F.C.C. Is Expected to
Propose Regulating Internet Service as a Utility, N.Y. Times, Feb. 2,
2015, available at http://nyti.ms/1wXgOoe (noting that Chairman Wheeler
may suggest imposing regulations on ``companies that manage the
backbone of the Internet'').
---------------------------------------------------------------------------
For instance, American technology companies that derive a
competitive advantage from our country's historic commitment to
innovation without permission and the ability adjust rapidly to changes
in consumer demand may soon find themselves waiting for Washington's
approval as their global competitors take advantage of our newly-
regulated, and therefore slower, ``mother-may-I-innovate'' regulatory
regime. America's tech sector will not be immune from Title II common
carrier regulation if the FCC attempts to regulate broadband Internet
access services under Title II. Over my career as an FCC Commissioner
and as an attorney, I have had extensive experience interpreting and
enforcing Title II, and I can confidently say that ``tech'' companies
are likely to be swept up into Title II's regulatory vortex along with
the targeted network operators. As innovation and consumer demand
continue to blur the lines between what used to be clearly delineated
legal and regulatory silos between network operators (such as phone,
cable and wireless companies) and ``tech'' companies that offer
``information services''--such as computer processing and data storage
processing, as well as content and application providers--it will
become increasingly difficult for bureaucrats to parse with surgical
precision the differences between transmission and information
services.\2\
---------------------------------------------------------------------------
\2\ See, e.g., Inquiry Concerning High-Speed Access to the Internet
Over Cable and Other Facilities, Docket No. FCC-02-77, 17 FCC Rcd 4798,
40 (2002) (noting the increasing difficulty in distinguishing between
``transmission'' and ``information'' services).
---------------------------------------------------------------------------
As a group of entrepreneurs, including Mark Cuban, recently
explained, Title II classification of the Internet will fundamentally
blur the lines between regulated and unregulated networks and
services--making it ``impossible for entrepreneurs to know whether
their IP-based offering will be subject to Title II regulation. .
.[thus] undermin[ing] the very innovation and investment that the
Commission purportedly seeks to protect.'' \3\ Furthermore, ``[t]his
concern is particularly acute in an era where all new consumer
electronics and information technologies include a component the
Commission could conceivably view as a `telecommunications service.' ''
\4\
---------------------------------------------------------------------------
\3\ VCXC Ex Parte, Protecting and Promoting the Open Internet, GN
Docket No. 14-28 (Jan. 23, 2015), available at http://apps.fcc.gov/
ecfs/comment/view?id=60001010900.
\4\ Id.
---------------------------------------------------------------------------
One thing we know for sure is that, if the FCC proceeds down the
Title II path, years of litigation--and resulting uncertainty--will
result. When all is said and done, a court of appeals may strike down
the FCC's decision to regulate broadband under Title II, as they have
done twice before. Such an outcome would be a setback for those who
seek enforceable net neutrality rules. Worse yet, the courts may uphold
the FCC's decision to impose Title II on broadband providers but
overturn its decision to forbear from the vast majority of Title II's
requirements. Such a determination could have devastating consequences
as the full brunt of Title II is thrust upon the entire Internet
marketplace.
On the other hand, Congressional action--such as the proposed
legislation--has the ability to provide the protections net neutrality
proponents ostensibly seek, while shielding the Internet from harmful
regulatory overreach. The proposed legislation would provide far more
certainty for businesses and consumers because it would allow the
Internet to flourish without the risk of being overturned in court.
Question 2. Chairman Wheeler has suggested that he is planning to
go forward with an open Internet rule in February even knowing that
members of Congress are working to try to provide the agency with the
appropriate tools to prevent blocking, throttling, and paid
prioritization.
Can you tell me why you think the Chairman plans to move forward?
And if there is such urgency, wouldn't legislative action not only
provide the Commission with better tools but also a foundation that
wouldn't require the exhaustive process of forbearance?
Answer. I cannot speak to Chairman Wheeler's state of mind. I am
taking the liberty of including a link to a recent Washington Post
article which sheds some light on this question.\5\
---------------------------------------------------------------------------
\5\ Brian Fung, FCC Chairman Warns: The GOP's Net Neutrality Bill
Could Jeopardize Broadband's Vast Future, Wash. Post, Jan. 29, 2015,
available at http://www.washing
tonpost.com/blogs/the-switch/wp/2015/01/29/fcc-chairman-warns-that-
republican-bill-could-je
opardize-broadbands-vast-future/.
Question 3. In in 2012, I led an effort to pass S. Con. Res. 50., a
quote, ``Sense of Congress that the Secretary of State in consultation
with the Secretary of Commerce, should continue to implement the
position of the United States on Internet governance that clearly
articulates the consistent and unequivocal policy of the United States
to promote a global Internet free from government control and preserve
and advance the successful multi-stakeholder model that governs the
Internet today.'' I realize there are distinctions to be made between
this bill and the efforts being pursued at the FCC but S. Con. Res. 50
passed unanimously by Congress and sent a strong message to
international stakeholders of the Internet.
With your efforts being involved in Internet governance issues, can
you give us a sense of how an FCC ruling on Net Neutrality would be
perceived by our international allies who look to the United States for
leadership on these issues? Should the tech community and consumers
here in the U.S. be concerned about what it means for them around the
world, as less democratic regimes take notice of the FCC's heavy-handed
rules?
Answer. Having been part of official U.S. diplomatic delegations to
negotiate treaties in the communications space, as well as recently
being a member of a blue ribbon panel on Internet governance,\6\ I can
personally attest to the influence of the American net neutrality
debate on international efforts to regulate all corners of the
Internet. Vladimir Putin has stated plainly his goal to have
``international control of the Internet'' through the International
Telecommunication Union.\7\ In light of Russia's recent expansion into
the Crimea and Ukraine, not to mention crackdowns on Internet freedoms,
it is now obvious that Putin's threats should be taken seriously. And
so should the explicit proposed treaty language of China, Saudi Arabia,
Iran and their client states, some of which call for massive
multilateral regulation of the Internet including networks, content and
applications.\8\
---------------------------------------------------------------------------
\6\ See Panel On Global Internet Cooperation and Governance
Mechanisms, available at www.internetgovernancepanel.org.
\7\ Vladimir Putin, Prime Minister of the Russian Federation,
Working Day, Prime Minister Vladimir Putin Meets with Secretary General
of the International Telecommunications Union Hamadoun Toure, Gov't Of
The Russian Fed'n (June 15, 2011), http://premier.gov.ru/eng/events/
news/15601/.
\8\ See, e.g., Proposals for the Work of the Conference, Algeria,
Saudi Arabia, Bahrain, China, United Arab Emirates, Russian Federation,
Iraq, Sudan, Contribution 47, at Art. 2 (Dec. 11, 2012), http://
www.itu.int/md/S12-WCIT12-C-0047/en (advocating changes to basic
definitions contained in treaty text so the ITU would have unrestricted
jurisdiction over the Internet); Contribution from Iran, The Islamic
Republic of Iran, CWG-WCIT12 Contribution 48, Attachment 2 (2011),
http://www.itu.int/md/T09-CWG.WCIT12-C-0048/en (arguing that the ITU's
rules define ``telecommunications'' to include ``processing'' or
computer functions).
---------------------------------------------------------------------------
Furthermore, I have been told in official bilateral negotiations
with foreign governments, as well as by global ministers of
communications, regulators and international business executives in
more informal settings, that the FCC's efforts to regulate Internet
network management have generated thinking throughout the world that
more regulation of the Internet ecosystem should be the norm. Recent
initiatives in Europe underscore this point.\9\ Ironically, the
Snowden/NSA matter has also fueled international efforts in this
regard--as if the problem of government involvement in this area can be
cured by even more government involvement.
---------------------------------------------------------------------------
\9\ See, e.g., Case C-131/12, Google Inc. v. Agencia Espanola de
Proteccion de Datos (E.C.R. 2014) (European High Court's ruling on the
``right to be forgotten''); European Single Market for Electronic
Communications, COM (2013) 0627--C7-0267/2013--2013/0309(COD) A7-0190/
2014 (European Union's Net Neutrality proposal).
---------------------------------------------------------------------------
In short, the imposition of Title II regulation on broadband
providers will provide cover to less freedom friendly international
regimes that wish to subvert the private sector, non-profit and
nongovernmental multi-stakeholder model of Internet governance. Regimes
seeking to impose extensive economic and social regulations--from
regulations on rates and payment flows, to restrictions on speech over
the Internet--will find themselves more insulated than ever from
criticism. The negative consequences of dramatically increased
regulations on a global level would hit American tech companies, which
operate in numerous countries around the world, particularly hard as
the door opens to a new ``sending party pays'' construct where American
content and application companies subsidize state-owned phone companies
across the globe.\10\ Any decision to regulate broadband like
traditional telephone services would, without question, damage the
global Internet economy--to the detriment of consumers and American
tech companies worldwide.
---------------------------------------------------------------------------
\10\ See, e.g., Revisions of the International Telecommunications
Regulations--Proposals for High Level Principles to be Introduced in
the ITRs, ETNO, CWG-WCIT12 Contribution 109, at 2 (2012), http://
www.itu.int/md/T09-CWG.WCIT12-C-0109/en. (advocating application of a
sending party pays principle).
---------------------------------------------------------------------------
______
Response to Written Questions Submitted by Hon. Deb Fischer to
Hon. Robert M. McDowell
Question 1. Mr. McDowell--Please explain how Title II regulations
would inhibit American dominance and global competitiveness in
``Internet of Things?''
Answer. Thank you, Senator, for the opportunity to offer my views
on this important topic. Over the past few years, the world has
witnessed an explosion in the development of the ``Internet of
Everything'' fueled by America's tech sector. From innovations with
dramatic implications for the health and automotive sectors, to
developments that improve the everyday lives of ordinary people, the
Internet of Everything is transforming the global economy. In fact,
Cisco estimates that, over the next decade, the Internet of Everything
will result in more than $14 trillion in global economic growth as the
number of Internet-connected devices rises to around 50 billion.\1\
---------------------------------------------------------------------------
\1\ Joseph Bradley, et al., Embracing the Internet of Everything to
Capture Your Share of $14.4 Trillion, Cisco Internet Bus. Solutions
Grp. (2013), available at http://www.cisco.com/web/about/ac79/docs/
innov/IoE_Economy.pdf; see also Federal Trade Commission, Internet of
Everything: Privacy and Security in a Connected World, at i (Jan.
2015), available at http://www.ftc.gov/system/files/documents/reports/
federal-trade-commission-staff-report-november-2013-workshop-entitled-
internet-things-privacy/150127iotrpt.pdf (noting that ``[s]ix years
ago, for the first time, the number of `things' connected to the
Internet surpassed the number of people'').
---------------------------------------------------------------------------
To ensure our tech sector remains the envy of the world, we must
continue to follow the open and permission-less approaches to
innovation that have worked so well thus far. For example, America is,
and always has been, the global leader in wireless technology and
services by avoiding burdensome regulations.\2\ In the absence of
harmful Title II regulations, America's wireless broadband market has
become fiercely competitive--driving massive investment and innovation
that has contributed to, and will continue to contribute to, vital
economic growth.\3\ In light of the unprecedented success we've seen as
the Internet economy has continued to develop, it is difficult to
imagine why some advocate turning away from tried-and-true policies in
favor of a stifling regulatory regime designed for an era of vacuum
tubes and rotary-dial telephones. Indeed, black rotary-dial telephones
were ``state-of-the-art'' for 40 years, even though technology and
innovation allowed better consumer experiences. Imposing this
antiquated regime on the vibrant Internet economy will threaten
American innovation and future economic growth.
---------------------------------------------------------------------------
\2\ See Ovum's Informa Telecoms & Media World Cellular Information
Service (WCIS+) (as of Sept. 2014) (noting that U.S. consumers, who
make up less than 5 percent of the world's population, account for more
than 37 percent of the world's LTE subscribers).
\3\ See Alan Pearce, J. Richard Carlson & Michael Pagano, Wireless
Broadband Infrastructure: A Catalyst for GDP and Job Growth 2013-2017
(2013), available at http://www.pcia.com/images/
IAE_Infrastructure_and_Economy_Fall_2013.PDF (estimating that, from
2013 to 2017, wireless investments will generate as much as $1.2
trillion to the economy and add up to 1.2 million new jobs).
---------------------------------------------------------------------------
The speed at which the Internet has been able to develop and
flourish was a direct result of the Clinton Administration's policy of
keeping the government's hands off of the Internet sector. As former
FCC Chairman William Kennard stated, ``[i]t just doesn't make sense to
apply hundred-year-old regulations meant for copper wires and giant
switching stations to the IP networks of today.'' \4\ The Clinton-era
view has enjoyed strong bipartisan support, until recently. While the
proposed legislation honors this hands-off tradition, as Chairman
Kennard warned, Title II classification of broadband would represent a
dramatic departure from the policies that have allowed the Internet to
become the fastest growing disruptive technology in human history.
---------------------------------------------------------------------------
\4\ Remarks of the Hon. William E. Kennard, Chairman, FCC, Voice
Over Net Conference: Internet Telephony: America Is Waiting (Sept. 12,
2000) (``We know that decisions once made by governments can be made
better and faster by consumers, and we know that markets can move
faster than laws.'').
---------------------------------------------------------------------------
America's tech sector will not be immune from Title II common
carrier regulation if the FCC attempts to regulate broadband Internet
access services under Title II. Over my career as an FCC Commissioner
and as an attorney, I have had extensive experience interpreting and
enforcing Title II, and I can confidently say that ``tech'' companies
are likely to be swept up into Title II's regulatory vortex along with
the targeted network operators. As innovation and consumer demand
continue to blur the lines between what used to be clearly delineated
legal and regulatory silos between network operators (such as phone,
cable and wireless companies) and ``tech'' companies that offer
``information services''--such as computer processing and data storage
processing, as well as content and application providers--it will
become increasingly difficult for bureaucrats to parse with surgical
precision the differences between transmission and information
services.\5\
---------------------------------------------------------------------------
\5\ See, e.g., Inquiry Concerning High-Speed Access to the Internet
Over Cable and Other Facilities, Docket No. FCC-02-77, 17 FCC Rcd 4798,
40 (2002) (noting the increasing difficulty in distinguishing between
``transmission'' and ``information'' services).
---------------------------------------------------------------------------
For example, many application and content providers, content
delivery networks, and providers of services offered through connected
devices provide transmission services as a component of their
information services, such as the CDNs that give us Netflix movies or
YouTube videos. The same is true for search engines that connect an
advertising network to a search request and for e-mail providers and
social networks that enable chat or messaging sessions. Some tech
companies sell other services, such as e-reader services, but buy
wireless access on a wholesale basis to deliver their content. Such
synergistic deals would be complicated--at best--under Title II because
the e-reader service provider would be considered a reseller of
telecommunications services under Commission precedent. In a Title II
world, tech companies offering these and similar services will be
forced to make vital decisions on long-term investments and business
strategies affecting the Internet of Everything, while facing the
prospect that they may one day be subjected to increasingly costly and
stifling regulations.
As a group of entrepreneurs, including Mark Cuban, recently
explained, Title II classification of the Internet will fundamentally
blur the lines between regulated and unregulated networks and
services--making it ``impossible for entrepreneurs to know whether
their IP-based offering will be subject to Title II regulation . . .
[thus] undermin[ing] the very innovation and investment that the
Commission purportedly seeks to protect.'' \6\ Furthermore, ``[t]his
concern is particularly acute in an era where all new consumer
electronics and information technologies include a component the
Commission could conceivably view as a `telecommunications service.' ''
\7\
---------------------------------------------------------------------------
\6\ VCXC Ex Parte, Protecting and Promoting the Open Internet, GN
Docket No. 14-28 (Jan. 23, 2015), available at http://apps.fcc.gov/
ecfs/comment/view?id=60001010900.
\7\ Id.
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As legal scholars have observed, regulation tends to grow.\8\ For
example, recent actions by regulators and courts in Europe, which view
``Internet companies'' as a single category, have led to regulations
that grow heavier by the day. As a result, particularly in the wireless
broadband sector, America has gained a substantial advantage over
Europe in terms of investment, connection speeds, and innovation.
European broadband providers have invested considerably less ($244 per
household) in their networks than their American counterparts ($562 per
household).\9\ Recent data show that 82 percent of all Americans have
access to 25 Mbps speeds using wired broadband, while only 54 percent
of Europeans have access to comparable broadband service.\10\ European
regulators lament that broadband providers are ``reluctant to invest
large sums in new high-speed networks'' in Europe, that ``Europe is
losing the global race to build fast fixed broadband connections,'' and
that ``frustrated consumers are stuck in the Internet slow lane.'' \11\
---------------------------------------------------------------------------
\8\ Berin Szoka & Adam Thierer, Net Neutrality, Slippery Slopes &
High-Tech Mutually Assured Destruction, Tech. Liberation Front (Oct.
23, 2009), http://techliberation.com/2009/10/23/netneutrality-slippery-
slopes-high-tech-mutually-assured-destruction/ (``The reality is that
regulation always spreads. The march of regulation can sometimes be
glacial, but it is, sadly, almost inevitable: Regulatory regimes grow
but almost never contract.'').
\9\ Christopher S. Yoo, U.S. vs. European Broadband Deployment:
What Do the Data Say?, at i (June 2014), available at https://
www.law.upenn.edu/live/files/3352-us-vs-europeanbroad
band-deployment; see also Erik Bohlin, Kevin W. Caves, and Jeffrey A.
Eisenach, ``Mobile Wireless Performance in the EU & the US'' (May
2013), available at http://www.gsmamobile
wirelessperformance.com/.
\10\ Yoo Report, supra, at i.
\11\ European Commission Memo 13/756, Regulatory mess hurting
broadband investment: consumers and businesses stuck in slow lane (Aug.
30, 2013), available at http://europa.eu/rapid/press-release_MEMO-13-
756_en.htm.
---------------------------------------------------------------------------
Subjecting the flourishing Internet of Everything to the risk of
Title II regulation will undoubtedly hamstring America in its ability
to compete with the rest of the world. American technology companies
that derive a competitive advantage from our country's historic
commitment to innovation without permission and the ability to adjust
rapidly to changes in consumer demand may soon find themselves
sidelined, waiting for Washington's approval, as their competitors take
advantage of waning American influence. Tech companies that assume they
would be insulated from the burdens of Title II could turn out to be
sorely mistaken.
Question 2. Mr. Simmons and Mr. McDowell--can you please describe
the impacts on a small cable operator in the state of Nebraska of
having the FCC force heavy-handed Title II utility regulations. My
understanding is the FCC currently has 1,000 active rules based on
Title II, occupying nearly 700 pages in the Code of Federal Regulations
and that the Progressive Policy Institute recently issued a report
highlighting how Title II reclassification of the Internet would add
about $15 billion in user fees to our economy, increasing annual levies
on middle class families by $67 for wireline service and $72 for
wireless broadband.
Answer. You are correct, Senator, that the requirements of Title II
are voluminous with extensive, complex, and burdensome provisions that
will hit small cable operators and other small broadband providers
particularly hard. Like all other broadband providers, small cable
operators will likely face increased taxes, costs, restricted access to
financing, and reduced opportunities to innovate.
The regulatory burdens resulting from Title II classification are
substantial and include, in part: the regulation of rates, terms, and
conditions; non-discrimination requirements (which in fact allow
reasonable pricing discrimination); entry and exit regulations;
confidentiality requirements, audits, and privacy restrictions.
Additionally, if the FCC follows through with classifying broadband as
a telecommunications service under Title II, broadband providers will
be required to contribute to Federal and state universal service funds.
These taxes and fees will be passed on to consumers, and every
broadband customer in America will see a jump in their Internet bills.
While large providers will no doubt feel the effect of costs associated
with Title II, small providers with fewer resources will be hit
particularly hard.
As I mentioned in my testimony before the Committee, there is one
industry that stands to benefit greatly from Title II classification--
lawyers. Cable operators generally have not had experience complying
with Title II. Without having navigated the morass of Title II's
requirements, small cable operators in particular are likely to see
their compliance costs surge. They will need to hire regulatory
personnel and retain telecom attorneys to advise them on which forms to
file and how they can offer their services to the public without
running afoul of Title II requirements. That's great for Washington,
D.C. lawyers, but a terrible thing for small businesses and American
innovation.
Question 3. To All Witnesses--While the FCC is in the process of
ensuring net neutrality, some want the FCC to impose all of these
obligations under the guise of ensuring consumer protection. Some argue
that common carrier requirements on broadband providers should include
almost most all of Title II, in addition to Sections 201, 202, and 208.
Specifically, some activists have suggested the following parts of
Title II must be applied to the broadband industry:
UNIVERSAL SERVICE
Sec. 214. [47 U.S.C. 214] Extension Of Lines
Sec. 225. [47 U.S.C. 225] Telecommunications Services for
Hearing-Impaired and Speech-Impaired Individuals.
Sec. 254. [47 U.S.C. 254] Universal Service.
Sec. 255. [47 U.S.C. 255] Access by Persons With Disabilities.
CONSUMER PROTECTION
Sec. 217. [47 U.S.C. 217] Liability of Carrier for Acts and
Omissions of Agents.
Sec. 222. [47 U.S.C. 222] Privacy Of Customer Information.
Sec. 230. [47 U.S.C. 230] Protection for Private Blocking and
Screening of Offensive Material.
Sec. 258. [47 U.S.C. 258] Illegal Changes in Subscriber Carrier
Selections.
COMPETITION
Sec. 224. [47 U.S.C. 224] Regulation of Pole Attachments.
Sec. 253. [47 U.S.C. 253] Removal of Barriers to Entry.
Sec. 251. [47 U.S.C. 251] Interconnection
Sec. 256. [47 U.S.C. 256] Coordination for Interconnectivity.
Sec. 257. [47 U.S.C. 257] Market Entry Barriers Proceeding.
Do you agree or disagree that these sections of Title II common
carrier regulation are needed? If you agree, please explain why.
Answer. Senator, you raise a terrific point about the slippery
slope of Title II, which has over 1,000 separate requirements. The FCC
is essentially legislating as it decides which of those requirements
should apply to last-mile broadband networks and the entire Internet
backbone in order to benefit politically favored constituencies.\12\
Importantly, none of these Title II provisions are needed to protect
consumers. Other laws are already in place to help consumers, and the
Federal Trade Commission (FTC),\13\ state attorneys general, consumer
advocates, and trial lawyers are poised to act if broadband service
providers were to act in an anticompetitive manner.
---------------------------------------------------------------------------
\12\ Steve Lohr, In Net Neutrality Push, F.C.C. is Expected to
Propose Regulating Internet Service as a Utility, N.Y. Times, Feb. 2,
2015, available at http://nyti.ms/1wXgOoe (noting that Chairman Wheeler
may suggest imposing regulations on ``companies that manage the
backbone of the Internet'').
\13\ Importantly, Title II classification would effectively strip
the FTC of its ability to protect Internet consumers under Section 5 of
the Federal Trade Commission Act, because Section 5 includes a common
carrier exemption. 15 U.S.C. Sec. 45(a)(2).
---------------------------------------------------------------------------
In fact, the FCC sought comment on proposals to impose many of
these Title II provisions on broadband providers ten years ago--
proposals that the FCC did not adopt.\14\ In the intervening decade,
the Internet has flourished as an engine for innovation and economic
growth under a light-touch regulatory approach--under both Republican
and Democratic FCC Chairmen--without the need for any of these Title II
provisions. As the influential thought-leader of the net neutrality
movement, the man who coined the term ``net neutrality,'' Columbia law
professor Timothy Wu, recently told Congress, ``[o]ne way or another,
the light-handed protection of open Internet norms over the last twenty
years has served to protect the Internet as an innovation platform.''
\15\
---------------------------------------------------------------------------
\14\ Appropriate Framework for Broadband Access to the Internet
Over Wireline Facilities, Report and Order and Notice of Proposed
Rulemaking, 20 FCC Rcd 14853, 146-57 (2005).
\15\ House Judiciary Subcommittee on Regulatory Reform, Commercial
and Antitrust Law, Net Neutrality: Is Antitrust Law More Effective than
Regulation in Protecting Consumers and Innovation?, 113th Congress, 2nd
sess., 2014 (testimony of Timothy Wu), available at http://
judiciary.house.gov/_cache/files/bcecca84-4169-4a47-a202-5e90c83ae876/
wu-testimony.pdf.
---------------------------------------------------------------------------
The sections of Title II that net neutrality proponents are
advocating be thrust upon the Internet ecosphere would actually harm
consumers by stifling innovation with ``mother-may-I'' mandates.\16\
The core provisions of Title II--Sections 201, 202, and 208--derive
from the common carrier regime that Congress imposed on the railroads
in the 1880s. These provisions allow the FCC to regulate nearly every
aspect of a common carrier's business--including their prices and
practices. If the FCC follows through with classifying broadband under
Title II, the FCC will delegate to itself the power to impose pervasive
rate regulation over the Internet economy.
---------------------------------------------------------------------------
\16\ Comments of Public Knowledge et al., at 88-89, GN Docket No.
14-28 (July 14, 2014) (arguing that ``the Commission should not simply
forbear from . . . Commission authority over interconnection and shut
down of service (Sections 251(a), 256, and portions of 214(c)),
discretionary authority to compel production of information (Sections
211, 213, 215, and 218-20), provisions which provide explicit power for
the Commission to hold parties accountable and prescribe adequate
remedies (Sections 205-07, 209, 212, and 216), provisions designed to
protect consumers (Sections 203 and 222), or provisions designed to
ensure affordable deployment and the benefits of broadband access to
all Americans (Sections 214(e), 225, 254, 255, and 257). These statutes
are in addition to the bare minimum recognized in Section 332(c) as the
minimum needed to protect consumers--Sections 201, 202, and 208.'');
see also Senate Committee on Commerce, Science, and Transportation,
Protecting the Internet and Consumers Through Congressional Action,
114th Congress, 1st sess., 2015 (testimony of Gene Kimmelman).
---------------------------------------------------------------------------
Moreover, if the FCC were to impose Section 214 on Internet access
services, broadband providers could not build new broadband lines or
extend existing lines without first obtaining permission from the FCC.
Broadband providers, even those operating in communities that enjoy
multiple providers, would also be prohibited from discontinuing service
to a community or part of a community without first obtaining
permission from the FCC. Title II's requirement that providers obtain
regulatory permission before introducing or discontinuing services
stands in stark contrast to the ``permission-less'' innovation that has
been the hallmark of the Internet. Yet fast-paced innovation has been
essential to market success in the Internet ecosystem. If a provider
develops a better way to serve its customers, it races to roll out new
features or updates quickly in order to stay ahead of the competition.
Similarly, if a new service fails to attract customers, a provider must
be able to quickly modify or even abandon the service and move on to
the next idea. Imagine if something as innovative as the e-reader
required FCC oversight at every stage of its development.
Section 222 is the provision of Title II that requires common
carriers to protect customer proprietary network information. While it
is unclear how the requirements of Section 222 would even operate when
applied to the Internet--given that the statute is designed to protect
details about customers' telephone calls--some net neutrality advocates
may attempt to use this ill-fitting set of FCC regulations to impose
heightened privacy restrictions throughout the entire Internet
ecosystem. Importantly, the FTC already has jurisdiction to protect
consumer privacy on the Internet, but Title II classification would
strip the FTC of its authority under Section 5's common carrier
exemption.\17\ Moreover, the restrictions of Section 222 are largely
inconsistent with the existing privacy policies of many Internet
companies--from search engines and advertising networks, to social
network and e-mail providers. Imposing these inconsistent requirements
could discourage such companies from pursuing innovative new ways to
provide broadband services.
---------------------------------------------------------------------------
\17\ 15 U.S.C. Sec. 45(a)(2).
---------------------------------------------------------------------------
Section 251 is the provision of Title II that requires
interconnection and sharing of networks. If the FCC classifies
broadband under Title II, interconnection between broadband providers
would be subject to government regulation. At the same time, some
parties would inevitably seek to use Section 251 to try to require
broadband providers to share or ``unbundle'' their networks at
government mandated prices, which would create strong disincentives to
invest in new networks. Indeed, Tim Wu recently said that ``Title II
actually could be used in very bold ways to try and increase
competition should a future FCC want to. It creates the option, if the
future FCC wanted to, of saying alright . . . we're glad you built that
out now we're going to let competitors all use the underlying
infrastructure and try and sell services separately.'' \18\ As both the
D.C. Circuit and the Commission have explained, however, such
``unbundling requirements tend to undermine the incentives . . . to
invest in new facilities and deploy new technology.'' \19\
---------------------------------------------------------------------------
\18\ C-SPAN, Communicators with Tim Wu, Title II & Local Loop
Unbundling: Tim Wu discusses how Title II could be used to foster
competition through local loop unbundling (Nov. 12, 2014), available at
http://www.c-span.org/video/?c4520676/title-ii-local-loop-unbundling.
\19\ Review of the Section 251 Unbundling Obligations of Incumbent
Local Exchange Carriers, Report and Order and Order on Remand and
Further Notice of Proposed Rulemaking, 18 FCC Rcd 16978, 3 (2003);
United States Telecom Ass'n v. FCC, 359 F.3d 554, 584-85 (D.C. Cir.
2004) (explaining that unbundling requirements are ``likely to delay
infrastructure investment, with CLECs tempted to wait for ILECs to
deploy [broadband-capable loops] and ILECs fearful that CLEC access
would undermine the investments' potential return'').
---------------------------------------------------------------------------
Section 254 is the provision of Title II that charges the FCC with
ensuring all Americans have access to telecommunications and
information services. The FCC does not need to regulate broadband under
Title II to encourage broadband deployment because the FCC has already
exercised--and the courts have upheld--the Commission's Section 254
authority to use the Universal Service Fund (USF) to support broadband
deployment. However, if the FCC follows through with classifying
broadband as a telecommunications service under Title II, broadband
providers will be required to contribute to Federal and state universal
service funds. These taxes and fees--amounting to as much as $11
billion by some estimates--will be passed on to consumers, and every
broadband customer in America will see an increase in their bills.
______
Response to Written Questions Submitted by Hon. Ron Johnson to
Hon. Robert M. McDowell
Question 1. What will be the tax implications of applying Title II
to broadband providers? What new costs will consumers see on their
monthly bills if the FCC moves forward with its proposed Title II
approach?
Answer. Thank you, Senator, for raising this important concern.
Title II classification will undoubtedly result in increased costs for
broadband providers and end-users and run the risk of increased taxes
for other Internet service offerings as well. The regulatory burdens
resulting from Title II classification are substantial and include, in
part: the regulation of rates, terms, and conditions; non-
discrimination requirements (which, in fact allow reasonable pricing
discrimination); entry and exit regulations; confidentiality
requirements, audits, and privacy restrictions.
As I noted in my testimony, the Progressive Policy Institute has
estimated that Title II regulation of broadband could lead to
substantial state and local regulations, taxes, and fees costing
consumers $11 billion a year.\1\ These costs, of course, would come
``on top of the adverse impact on consumers of less investment and
slower innovation that would result'' from Title II.\2\
---------------------------------------------------------------------------
\1\ Robert Litan and Hal Singer, Outdated Regulations Will Make
Consumers Pay More for Broadband, Progressive Policy Institute, at 1
(Dec. 1, 2014). Note that the Progressive Policy Institute issued a
correction on its initial assessments--revising its estimate for costs
and fees down from $15 billion to $11 billion. Hal Singer and Robert
Litan, No Guarantees When it Comes to Telecom Fees, The Progressive
Policy Institute (Dec. 16, 2014), available at http://
www.progressivepolicy.org/issues/economy/no-guarantees-when-it-comes-
to-telecom-fees/.
\2\ Id.
---------------------------------------------------------------------------
Additionally, if the FCC follows through with classifying broadband
as a telecommunications service under Title II, broadband providers
will be required to contribute to Federal and state universal service
funds. These taxes and fees will be passed on to consumers, and every
broadband customer in America will see an increase in their bills.
While large providers will no doubt feel the impact of increased costs
associated with Title II, small providers with fewer resources will be
hit particularly hard. In short, Title II will result in an Internet
``tax.''
Resulting legal fees incurred to comply with and combat the new
regime will also raise costs for providers--and thus consumers. As I
mentioned in my testimony, the only group that stands to benefit from
Title II classification are lawyers. Because Title II compliance is
complicated, most broadband providers will need to hire experienced
attorneys to help them navigate the Title II regulatory maze. That's
great for Washington, D.C. lawyers, but a needless drag on American
innovation.
It would be naive to assume higher taxes, fees, and legal costs
will not find their way to consumers' monthly bills. Thus, at the end
of the day, it is the end-user consumer that will suffer due to the
FCC's experiment with Title II.
Question 2. For comparison, would the bill Senator Thune has
circulated result in any new taxes on consumers?
Answer. No.
Question 3. How easy will it be for the FCC to forbear from onerous
provisions of Title II? I have heard many say that the FCC could apply
Title II but forbear from all of the outdated provisions. On the other
hand, Consumer Watchdog recently told the FCC that Sections 214, 225,
254, 255, 217, 222, 230, 258, 224, 253, 251, 256, and 257 should be
applied to broadband providers to ``ensure vital consumer protections
are in place as [the FCC] strive[s] to ensure `net neutrality' ''. It
appears that there isn't a whole lot of agreement on what we should
forbear from. Is there a concern that either the FCC will not
adequately forbear or that any forbearance will be challenged in court
(by groups like Consumer Watchdog)?
Answer. Thank you for your question, Senator.
It will not be easy, as many claim, for the FCC to forbear from the
onerous provisions of Title II because the FCC has turned the Section
10 forbearance process into a lengthy, burdensome, and data-intensive
ordeal in recent years. Under Section 10 of the Communications Act, the
FCC is required to forbear if: ``(1) enforcement of such regulation or
provision is not necessary to ensure that the charges, practices,
classifications, or regulations by, for, or in connection with that
telecommunications carrier or telecommunications service are just and
reasonable and are not unjustly or unreasonably discriminatory; (2)
enforcement of such regulation or provision is not necessary for the
protection of consumers; and (3) forbearance from applying such
provision or regulation is consistent with the public interest.'' \3\
Historically, forbearance proceedings have involved narrow questions of
law. They operate much like an adjudicatory proceeding and require
large amounts of evidence for every regulation question. The FCC puts
the ``burden'' of persuasion and production on the proponent of
forbearance;\4\ if the proponent fails to carry one of its burdens, the
FCC can simply deny forbearance. Any similar approach here would
increase the risk of large parts of Title II potentially applying.
Because of the fact-and data-intensive nature of the inquiry,
forbearance proceedings often take 15 months, notwithstanding
Congress's direction that the FCC act on forbearance petitions within
12 months.\5\ Furthermore, recently the trend at the FCC is for even
the most obvious of forbearance petitions to be denied.
---------------------------------------------------------------------------
\3\ 47 U.S.C. 160(a).
\4\ Petition to Establish Procedural Requirements to Govern
Proceedings for Forbearance Under Section 10 of the Communications Act
of 1934, as Amended, 24 FCC Rcd 9543, 21 (2009).
\5\ 47 U.S.C. Sec. 160(c).
---------------------------------------------------------------------------
For example, it took the FCC fifteen months to deny forbearance
from antiquated accounting rules developed in the 1930s for monopoly-
era telephone companies--the Part 32 Uniform System of Accounts.\6\
Instead of demonstrating a continuing need for its Part 32 rules, the
FCC denied forbearance because the petitioner had ``not demonstrated
that Part 32 is not necessary to ensure that charges and practices are
just and reasonable, that Part 32 is not necessary for the protection
of consumers, and that forbearance from Part 32 would be consistent
with the public interest.'' \7\ It took another 17 months of
uncertainty to conclude the litigation over the FCC's denial of
forbearance.
---------------------------------------------------------------------------
\6\ Petition of USTelecom for Forbearance Under 47 U.S.C.
Sec. 160(c) from Enforcement of Certain Legacy Telecommunications
Regulations, Memorandum Opinion and Order and Report and Order and
Further Notice of Proposed Rulemaking and Second Further Notice of
Proposed Rulemaking, 28 FCC Rcd 7627, 56-77 (2013), aff'd, Verizon &
AT&T v. FCC, 770 F.3d 961 (D.C. Cir. 2014).
\7\ Id. 59.
---------------------------------------------------------------------------
A more fundamental problem is that the logic of forbearance is
incompatible with the FCC's desire to impose Title II on broadband
providers to the extent it tries to ground such a decision on the
purported market power they enjoy. By contrast, to justify forbearance
under Section 10 of the Act, the Commission would have to find that
enforcing certain provisions of Title II is not necessary to ensure
just and reasonable rates or to protect consumers. There is obvious
tension between finding (i) that broadband providers have market power
to justify Title II regulation but (ii) that certain Title II
requirements are unnecessary to constrain such market power. As I said
in my testimony, trying to forbear from applying most of Title II's
approximately 1,000 heavy-handed requirements while selecting only a
few, as some have proposed, including Chairman Wheeler, involves
picking and choosing between who gets regulated and who does not, which
will look arbitrary and politically-driven to an appellate court.
The assumption that forbearance can mitigate the draconian impact
of Title II is also mistaken. As the Commission previously told
Congress, classifying broadband under Title II ``would effectively
impose a presumption in favor of Title II regulation of such providers.
Such a presumption would be inconsistent with the deregulatory and
procompetitive goals of the 1996 Act. In addition, uncertainty about
whether the Commission would forbear from applying specific provisions
could chill innovation.'' \8\
---------------------------------------------------------------------------
\8\ Federal-State Joint Board on Universal Service, Report to
Congress, 13 FCC Rcd 11830, 47 (1998).
---------------------------------------------------------------------------
You are correct that there is not agreement--even among net
neutrality proponents--on which Title II provisions should be subject
to forbearance. Some of the most restrictive provisions of Title II are
those embraced by the proponents of Title II classification as
essential to their cause.\9\ FCC decisions granting forbearance are
often challenged in court, and net neutrality proponents will
inevitably sue to stop the FCC from forbearing from any provisions of
Title II that they deem essential to maintaining an open Internet. For
example, net neutrality proponents challenged the FCC's 2010 Open
Internet Order because they believed the FCC did not go far enough in
regulating wireless broadband.\10\ Any decision by the FCC to forbear
from Title II will be challenged in court, and, as the Commission
previously told the Supreme Court, ``[f]orbearance proceedings would be
time-consuming and hotly contested and would assuredly lead to new
rounds of litigation, and there is no way to predict in advance the
ultimate outcome of such proceedings.'' \11\
---------------------------------------------------------------------------
\9\ Comments of Public Knowledge et al., at 88-89, GN Docket No.
14-28 (July 14, 2014) (arguing that ``the Commission should not simply
forbear from . . . Commission authority over interconnection and shut
down of service (Sections 251(a), 256, and portions of 214(c)),
discretionary authority to compel production of information (Sections
211, 213, 215, and 218-20), provisions which provide explicit power for
the Commission to hold parties accountable and prescribe adequate
remedies (Sections 205-07, 209, 212, and 216), provisions designed to
protect consumers (Sections 203 and 222), or provisions designed to
ensure affordable deployment and the benefits of broadband access to
all Americans (Sections 214(e), 225, 254, 255, and 257). These statutes
are in addition to the bare minimum recognized in Section 332(c) as the
minimum needed to protect consumers--Sections 201, 202, and 208.'').
\10\ See Free Press v. FCC, No. 11-1411 (D.C. Cir. filed Oct. 25,
2011).
\11\ Petition for Writ of Certiorari, U.S. Dept. of Justice and
FCC, FCC v. Brand X Internet Servs., No. 04-277, at 25, 2004 WL 1943678
(Aug. 27, 2004) (internal citations omitted).
---------------------------------------------------------------------------
______
Response to Written Question Submitted by Hon. Brian Schatz to
Hon. Robert M. McDowell
Question. I believe that the FCC needs to have ongoing, flexible
authority over broadband. I am concerned that the draft legislation
does not preserve that type of authority. What changes can--or should--
be made to the draft that would address this concern?
Answer. Thank you, Senator, for the opportunity to comment on this
issue. The draft legislation, as written, provides the FCC with an
appropriate level of flexibility to enforce prohibitions on blocking,
throttling, and paid prioritization that net neutrality proponents have
long sought. Unlike the Title II approach proposed by the FCC, the
draft legislation will finally provide a level of certainty in the
Internet ecosystem that will benefit consumers and businesses alike.
While Congressional action would serve to provide a stable path
forward, an FCC decision to impose Title II on not just last-mile
broadband networks, but the entire Internet backbone as well, will
create harmful uncertainty.\1\ Furthermore, America's tech sector will
not be immune from Title II common carrier regulation if the FCC
attempts to regulate broadband Internet access services under Title II,
however, there is substantial uncertainty as to how exactly Title II
will be imposed on tech companies. Over my career as an FCC
Commissioner and as an attorney, I have had extensive experience
interpreting and enforcing Title II, and I can confidently say that
``tech'' companies are likely to be swept up into Title II's regulatory
vortex along with the targeted network operators. As innovation and
consumer demand continue to blur the lines between what used to be
clearly delineated legal and regulatory silos between network operators
(such as phone, cable and wireless companies) and ``tech'' companies
that offer ``information services''--such as computer processing and
data storage processing, as well as content and application providers--
it will become increasingly difficult for bureaucrats to parse with
surgical precision the differences between transmission and information
services.\2\ In this Title II world, tech companies will be forced to
make vital decisions on long-term investments and business strategies,
while facing the prospect that they may one day be subjected to
increasingly costly and stifling regulations.
---------------------------------------------------------------------------
\1\ Steve Lohr, In Net Neutrality Push, F.C.C. is Expected to
Propose Regulating Internet Service as a Utility, N.Y. Times, Feb. 2,
2015, available at http://nyti.ms/1wXgOoe (noting that Chairman Wheeler
may suggest imposing regulations on ``companies that manage the
backbone of the Internet'').
\2\ See, e.g., Inquiry Concerning High-Speed Access to the Internet
Over Cable and Other Facilities, Docket No. FCC-02-77, 17 FCC Rcd 4798,
40 (2002) (noting the increasing difficulty in distinguishing between
``transmission'' and ``information'' services).
---------------------------------------------------------------------------
As a group of entrepreneurs, including Mark Cuban, recently
explained, Title II classification of the Internet will fundamentally
blur the lines between regulated and unregulated networks and
services--making it ``impossible for entrepreneurs to know whether
their IP-based offering will be subject to Title II regulation . . .
[thus] undermin[ing] the very innovation and investment that the
Commission purportedly seeks to protect.'' \3\ Furthermore, ``[t]his
concern is particularly acute in an era where all new consumer
electronics and information technologies include a component the
Commission could conceivably view as a `telecommunications service.' ''
\4\
---------------------------------------------------------------------------
\3\ VCXC Ex Parte, Protecting and Promoting the Open Internet, GN
Docket No. 14-28 (Jan. 23, 2015), available at http://apps.fcc.gov/
ecfs/comment/view?id=60001010900.
\4\ Id.
---------------------------------------------------------------------------
One thing we know for sure is that, if the FCC proceeds down the
Title II path, years of litigation--and resulting uncertainty--will
result. When all is said and done, a court of appeals may strike down
the FCC's decision to regulate broadband under Title II, as the courts
did on two prior occasions in sustaining challenges to the FCC's net
neutrality rules. Such an outcome would be a setback for those who seek
enforceable net neutrality rules.
On the other hand, Congressional action--such as the proposed
legislation--has the ability to provide the protections net neutrality
proponents want, while shielding the Internet from harmful regulatory
overreach or prolonged regulatory uncertainty during the inevitable
legal challenges. This approach would provide far more certainty for
businesses and consumers because it would allow the Internet to
flourish without the risk of being overturned in court.
Finally, to the extent that concerns over the FCC's authority to
regulate broadband stem from a desire to protect consumers--as net
neutrality advocates claim--both the Department of Justice and the
Federal Trade Commission are well equipped to cure any market ills that
may negatively affect consumers.\5\ Many other complex sectors of the
American economy operate under government supervision afforded by
antitrust and consumer protection laws without new extra layers of
untested regulations and bureaucracies. Additionally, there are the
protections of state and Federal common law such as breach of contract,
tortious interference with contract, deceptive trade practices, fraud
and more. For instance, if ISPs were to breach their terms of service
with their customers, the plaintiff's bar would have a field day
launching an uncountable number of class action lawsuits.
---------------------------------------------------------------------------
\5\ Section 2 of the Sherman Act, 15 U.S.C. Sec. 2, prohibits
conduct that would lead to monopolization. In the event of abuse of
market power, this is the main statute that enforcers would use. In the
context of potential abuses by broadband Internet access service
providers, this statute would forbid: (1) Exclusive dealing--for
example, the only way a consumer could obtain streaming video is from a
broadband provider's preferred partner site; (2) Refusals to deal (the
other side of the exclusive dealing coin)--i.e., if a cable company
were to assert that the only way a content delivery network could
interconnect with it to stream unaffiliated video content to its
customers would be to pay $1 million/port/month, such action could
constitute a ``constructive'' refusal to deal if any other content
delivery network could deliver any other traffic for a $1,000/port/
month price; and (3) Raising rivals' costs--achieving essentially the
same results using different techniques.
Section 5 of the Federal Trade Commission Act, 15 U.S.C. Sec. 45,
essentially accomplishes the same curative result, only through the
FTC. It generally forbids ``unfair competition.'' This is an effective
statute to empower FTC enforcement as long as Internet access service
is considered an ``information service.'' The FTC Act explicitly does
not apply to ``common carriers.''
---------------------------------------------------------------------------
The argument that antitrust or consumer protection actions take too
long and would produce results only after it was ``too late'' is
specious. Antitrust and consumer protection agencies, such as the
Federal Trade Commission, can act at the same speed as, if not more
quickly than, the Federal Communications Commission.
______
Response to Written Questions Submitted by Hon. Cory Booker to
Hon. Robert M. McDowell
Question 1. One aspect largely absent from the debate on Chairman
Thune's proposed neutrality legislation is the issue of
interconnection. Interconnection is not covered under current
legislation. Do you believe that interconnection points can be choke
points to the Internet highway?
Answer. Thank you, Senator, for the opportunity to respond to your
questions. With respect to your first question, no, I do not believe
that interconnection points can be choke points to the Internet. Since
the inception of the commercial Internet, interconnection agreements--
i.e., peering arrangements and transit arrangements--have been
privately negotiated without government oversight--an approach that,
since the Clinton-Gore Administration, the Commission has found
benefits consumers. The FCC has explained that ``interconnection
between Internet backbone providers has never been subject to direct
government regulation, and settlement-free peering and degradation-free
transit arrangements have thrived.'' \6\ The FCC has also concluded
that ``the Internet backbone market is sufficiently competitive and
will remain so'' and that ``the prices and terms of interconnection in
the market will also be competitive.'' \7\
---------------------------------------------------------------------------
\6\ Verizon Communications Inc. and MCI, Inc. Applications for
Approval of Transfer of Control, Memorandum Opinion and Order, 20 FCC
Rcd 18433, 133 (2005).
\7\ SBC Communications Inc. and AT&T Corp. Applications for
Approval of Transfer of Control, Memorandum Opinion and Order, 20 FCC
Rcd 18290, 132 (2005)
---------------------------------------------------------------------------
In fact, the FCC agreed that Internet interconnection should not be
regulated in the 2010 Open Internet Order \8\ and again as recently as
the 2014 Open Internet Notice of Proposed Rulemaking.\9\ The 2010 net
neutrality rules ``applied to a broadband provider's use of its own
network but did not apply the no-blocking or unreasonable
discrimination rules to the exchange of traffic between networks,
whether peering, paid peering, content delivery network (CDN)
connection, or any other form of inter-network transmission of data, as
well as provider-owned facilities that are dedicated solely to such
interconnection.'' \10\ The FCC proposed to ``maintain this approach''
in the 2014 Open Internet Notice of Proposed Rulemaking.\11\
---------------------------------------------------------------------------
\8\ Preserving the Open Internet, Report and Order, 25 FCC Rcd
17905, 67 n.209 (2010) (``Open Internet Order'').
\9\ Protecting & Promoting the Open Internet, Notice of Proposed
Rulemaking, 29 FCC Rcd 5561, 59 (2014) (``Open Internet Notice of
Proposed Rulemaking'').
\10\ Open Internet Notice of Proposed Rulemaking 59; see also
Open Internet Order 67 n.209 (``Open Internet Order'') (explaining
that rules did not ``affect existing arrangements for network
interconnection, including existing paid peering arrangements''); see
also id. 47 (``Nor does broadband Internet access service include
virtual private network services, content delivery network services,
multichannel video programming services, hosting or data storage
services, or Internet backbone services (if those services are separate
from broadband Internet access service). These services typically are
not mass market services and/or do not provide the capability to
transmit data to and receive data from all or substantially all
Internet endpoints.'').
\11\ Open Internet Notice of Proposed Rulemaking 59.
---------------------------------------------------------------------------
Nothing has changed in the Internet's backbone that could possibly
justify now regulating Internet interconnection under Title II. Even as
the business models of some large content providers have consumed an
increasingly large share of Internet traffic, the market has responded
just as it always has--with individualized agreements that take into
account the myriad of unique circumstances that exist between any two
particular networks considering how to interconnect with each other.
This approach has a proven track record of accommodating new business
models such as content delivery networks (CDNs), encouraging more
efficient interconnection arrangements, creating incentives for the
deployment and upgrade of broadband networks, and ultimately enhancing
and improving end users' experience.
Interconnection points have never been viewed as ``choke points''
to the Internet because no current backbone provider has market power
that would be required to prevent interconnection.\12\ Indeed, content
providers have numerous choices for delivering their Internet traffic
to consumers. In addition to relying on CDNs to aggregate and deliver
traffic to ISPs, a content provider can choose from among numerous
providers of ``transit'' services whose business models revolve around
the delivery of traffic to ISPs, or can interconnect directly with the
ISP itself. As proof of how competitive these markets are, transit
rates have plummeted with year-over-year price reductions of 25 percent
to 44 percent over the past 6 years, as transit prices fell from $9 per
Mbps in 2009 to $0.94 per Mbps in 2014--and are expected to fall
further, to $0.63 per Mbps in 2015.\13\ At the same time, however, the
volume of Internet traffic flowing over peering and transit
arrangements has been growing at a remarkable pace due, in part, to the
increase of Internet traffic generated by the popularity of Netflix and
YouTube.\14\ This combination of falling prices and increased output
belies the suggestion that interconnection points are or could be used
as choke points to the Internet.
---------------------------------------------------------------------------
\12\ See AT&T Inc. & BellSouth Corp. Application for Transfer of
Control, Memorandum Opinion and Order, 22 FCC Rcd 5662, 127, 143
(2007) (finding that the ``Tier 1'' backbone market--which includes the
largest backbone providers, as measured by their size, geographic
scope, and interconnections--is ``both competitive and dynamic,'' and
noting that providers ``compete vigorously'' with regard to price,
quality, and geographic reach); see also Applications Filed by Global
Crossing Ltd. & Level 3 Commc'ns, Inc. for Consent to Transfer Control,
26 FCC Rcd 14056, 14069 (2011) (noting that the number of ``Tier I''
Internet backbone providers has increased, from eight providers in
2005, to twelve in 2011).
\13\ Dr. Peering, What are the Historical Transit Pricing Trends?,
available at http://drpeering.net/FAQ/What-are-the-historical-transit-
pricing-trends.php.
\14\ See, e.g., Cisco, Cisco Visual Networking Index: Forecast and
Methodology, 2013-2018 at 1 (June 10, 2014); see also Global Internet
Phenomena Report: 2H 2014, Sandvine (Nov. 11, 2014) (noting that
Netflix accounts for 34.9 percent of all download traffic at peak
times--with YouTube accounting for 14 percent).
---------------------------------------------------------------------------
Question 1a. Under the proposed legislation, how would
interconnection issues be addressed?
Answer. As explained in my answer to Question 1a, interconnection
would and should remain unregulated. Private companies would continue
to negotiate interconnection arrangements without the need for
government regulation as they have done successfully since the
inception of the commercial Internet.
Question 2. Students, health care providers, and entrepreneurs have
benefited greatly from innovative online platforms and the free flow of
information. I fear that, without strong net neutrality rules, a
``tiered Internet'' could emerge, creating barriers for innovators and
small businesses.
In the absence of strong anti-discrimination protections provided
under Title II, and without Section 706 authority, what tools does the
FCC have to prevent discriminatory practices and differential treatment
we all agree should be prohibited?
Answer. A key fact that has been lost in this debate is that a
``tiered Internet'' already exists--and always has--because many
content and application providers have entered into peering
arrangements with ISPs, which enable their content and data to be
delivered directly to customers quickly and efficiently rather than
relying upon multiple providers. Furthermore, companies like Netflix
and Google have created content delivery networks by placing their own
servers inside the networks of ISPs to provide faster delivery of their
content. While these practices clearly create a ``tiered Internet,''
they are necessary when considering the sheer volume of data sent by
content providers like Netflix and ultimately benefit consumers.
Without reasonable differentiation, users simply would not be able to
access the same quality of services they enjoy today.
Also, while it may come as a surprise to some net neutrality
proponents who have viewed Title II as the holy grail of Internet
regulation, Title II does not prohibit all discrimination. What Title
II prohibits is ``unjust or unreasonable discrimination,'' \15\ meaning
that discrimination among content owners and users is not prohibited so
long as similarly situated parties are treated the same. This means
that paid prioritization, tiered pricing, sending party pays
arrangements, and two-sided markets are all permissible under Title II.
In fact, allowing these types of ``discriminatory'' business
relationships lies at the heart of Title II.
---------------------------------------------------------------------------
\15\ 47 U.S.C. Sec. 202(a).
---------------------------------------------------------------------------
Furthermore, to the extent that concerns over the FCC's authority
to regulate broadband stem from a desire to protect consumers--as net
neutrality advocates claim--both the Department of Justice and the
Federal Trade Commission are well equipped to cure any market ills that
may negatively impact consumers.\16\ Other complex sectors of the
American economy operate under government supervision through the rules
afforded by antitrust and consumer protection laws without new extra
layers of untested regulations and bureaucracies. Additionally, there
are the protections of state and Federal common law such as breach of
contract, tortious interference with contract, deceptive trade
practices, fraud and more.
---------------------------------------------------------------------------
\16\ Section 2 of the Sherman Act, 15 U.S.C. Sec. 2, prohibits
conduct that would lead to monopolization. In the event of abuse of
market power, this is the main statute that enforcers would use. In the
context of potential abuses by broadband Internet access service
providers, this statute would forbid: (1) Exclusive dealing--for
example, the only way a consumer could obtain streaming video is from a
broadband provider's preferred partner site; (2) Refusals to deal (the
other side of the exclusive dealing coin)--i.e., if a cable company
were to assert that the only way a content delivery network could
interconnect with it to stream unaffiliated video content to its
customers would be to pay $1 million/port/month, such action could
constitute a ``constructive'' refusal to deal if any other content
delivery network could deliver any other traffic for a $1,000/port/
month price; and (3) Raising rivals' costs--achieving essentially the
same results using different techniques.
Section 5 of the Federal Trade Commission Act, 15 U.S.C. Sec. 45,
essentially accomplishes the same curative result, only through the
FTC. It generally forbids ``unfair competition.'' This is an effective
statute to empower FTC enforcement as long as Internet access service
is considered an ``information service.'' The FTC Act explicitly does
not apply to ``common carriers.''
Question 3. As currently drafted, what protections does the
legislation provide that broadband reclassification would not?
Answer. The proposed legislation has a number of advantages over
the FCC's proposal to regulate last-mile broadband networks and the
entire Internet backbone under Title II.\17\ The legislation would
provide certainty to businesses, thus promoting continued investment
and innovation by companies throughout the entire Internet ecosystem.
It would also prevent the inevitable litigation that will result if the
FCC classifies broadband Internet access services under Title II.
---------------------------------------------------------------------------
\17\ Steve Lohr, In Net Neutrality Push, F.C.C. Is Expected to
Propose Regulating Internet Service as a Utility, N.Y. Times, Feb. 2,
2015, available at http://nyti.ms/1wXgOoe (noting that Chairman Wheeler
may suggest imposing regulations on ``companies that manage the
backbone of the Internet'').
---------------------------------------------------------------------------
Most importantly, the proposed legislation would protect businesses
from the burdensome and harmful regulations of Title II. Title II
classification will undoubtedly result in increased costs for broadband
providers and end-users and run the risk of increased taxes for other
Internet service offerings as well. The regulatory burdens resulting
from Title II classification are substantial and include, in part: the
regulation of rates, terms, and conditions; non-discrimination
requirements (which, in fact allow reasonable pricing discrimination);
entry and exit regulations; confidentiality requirements, audits, and
privacy restrictions.
As I noted in my testimony, the Progressive Policy Institute has
estimated that Title II regulation of the Internet could lead to
substantial state and local regulations, taxes, and fees costing
consumers $11 billion a year.\18\ These costs, of course, would come
``on top of the adverse impact on consumers of less investment and
slower innovation that would result'' from Title II.\19\ Additionally,
if the FCC follows through with classifying broadband as a
telecommunications service under Title II, broadband providers will be
required to contribute to Federal and state universal service funds.
---------------------------------------------------------------------------
\18\ Robert Litan and Hal Singer, Outdated Regulations Will Make
Consumers Pay More for Broadband, Progressive Policy Institute, at 1
(Dec. 1, 2014). The Progressive Policy Institute issued a correction on
its initial assessments--revising its estimate for costs and fees down
from $15 billion to $11 billion. Hal Singer and Robert Litan, No
Guarantees When it Comes to Telecom Fees, The Progressive Policy
Institute (Dec. 16, 2014), available at http://
www.progressivepolicy.org/issues/economy/no-guarantees-when-it-comes-
to-telecom-fees/.
\19\ Id.
---------------------------------------------------------------------------
In addition to the regulatory burdens of Title II, imposing Title
II on broadband Internet and backbone service providers will create
harmful uncertainty. For instance, America's tech sector will not be
immune from common carrier regulation if the FCC attempts to regulate
broadband Internet access services under Title II, however, there is
substantial uncertainty as to how exactly Title II will be imposed on
tech companies. As innovation and consumer demand continue to blur the
lines between what used to be clearly defined legal and regulatory
silos between network operators (such as phone, cable and wireless
companies) and ``tech'' companies that offer ``information services''--
such as computer processing and storage processing--it will become
increasingly difficult for bureaucrats to parse with surgical precision
the differences between transmission and information services.\20\ In
this Title II world, tech companies will be forced to make vital
decisions on long-term investments and business strategies, while
facing the prospect that they may one day be subjected to increasingly
costly and stifling regulations.
---------------------------------------------------------------------------
\20\ See, e.g., Inquiry Concerning High-Speed Access to the
Internet Over Cable and Other Facilities, Docket No. FCC-02-77, 17 FCC
Rcd 4798, 40 (2002) (noting the increasing difficulty in
distinguishing between ``transmission'' and ``information'' services).
---------------------------------------------------------------------------
Many net neutrality supporters, emboldened by the prospect of Title
II classification, have increasingly expressed an ultimate policy goal
of comprehensive industrial policy for the entire Internet space. The
influential thought leader who coined the term ``net neutrality,'' Tim
Wu, has stated that state manipulation of the Internet could be used to
shape ``not merely economic policy, not merely competition policy, but
also media policy, social policy'' and ``oversight of the political
process.'' \21\ Also, as the President and CEO of Public Knowledge,
Gene Kimmelman, noted in his testimony, supporters of Title II
classification seek expansive control over the Internet.\22\
---------------------------------------------------------------------------
\21\ House Judiciary Subcommittee on Regulatory Reform, Commercial
and Antitrust Law, Net Neutrality: Is Antitrust Law More Effective than
Regulation in Protecting Consumers and Innovation?, 113th Congress, 2nd
sess., 2014 (testimony of Timothy Wu), available at http://
judiciary.house.gov/_cache/files/bcecca84-4169-4a47-a202-5e90c83ae876/
wu-testimony.pdf.
\22\ Senate Committee on Commerce, Science, and Transportation,
Protecting the Internet and Consumers Through Congressional Action,
114th Congress, 1st sess., 2015 (testimony of Gene Kimmelman),
available at http://www.commerce.senate.gov/public/
index.cfm?p=Hearings&Con
tentRecord_id=7ba9cc4e-3cd8-44dd-bb84-
fed5f6309ab2&ContentType_id=14f995b9-dfa5-407a-9
d35-56cc7152a7ed&Group_id=b06c39af-e033-4cba-9221-
de668ca1978a&MonthDisplay=1&Year
Display=2015.
Question 4. Do you believe, as the draft legislation suggests, the
FCC should not be able to claim any authority under Section 706 of the
Telecommunications Act of 1996?
Answer. Yes, I do. As I wrote in my dissent to the FCC's 2010 Open
Internet Order, Congress never designed Section 706 to contain an
affirmative grant of authority.\23\ Indeed, the FCC historically had
not viewed Section 706 as a source of regulatory authority. The FCC's
decision in 2010 to abandon its own precedent and find direct authority
to regulate the Internet in Section 706, a clearly de-regulatory
provision, was improper. The proposed legislation would restore what I
believe to be to the original Congressional intent of Section 706 and
overturn the D.C. Circuit's contrary determination.\24\ The remarkable
development of the Internet occurred without the need for the FCC to
take any regulatory action grounded solely in Section 706, and there is
no reason to believe the Internet will not continue to flourish under
the proposed legislation.
---------------------------------------------------------------------------
\23\ Dissenting Statement of Commissioner Robert M. McDowell,
Preserving the Open Internet, Report and Order, 25 FCC Rcd 17905, 18049
(2010) (``Open Internet Order'').
\24\ Verizon v. FCC, 740 F.3d 623, 630 (D.C. Cir. 2014).
---------------------------------------------------------------------------
At the same time, the FCC would claim new authority from Congress
under the proposed legislation that would provide clarity, appellate
certainty and protections for consumers and entrepreneurs.
______
Response to Written Questions Submitted by Hon. Joe Manchin to
Hon. Robert M. McDowell
Question 1. During the hearing, I received conflicting information
about how the Chairman's proposed legislation would impact Universal
Service Fund (USF) broadband programs like the Connect America Fund
(CAF) that help private companies make investments and expand their
network into rural, underserved areas. Due to the importance of these
programs to my state and the communities I represent, I am requesting a
written explanation of the anticipated impacts this bill would have on
USF programs from each of the witnesses, specifically:
Question 1a. What authority or authorities does the Federal
Communications Commission currently rely on to operate and execute USF
programs like the Connect America Fund?
Answer. The FCC relied upon Section 254 and Section 706 in creating
the Connect America Fund. Section 254 provides authority for the
Commission to ensure consumers have ``[a]ccess to advanced
telecommunications and information services . . . in all regions of the
Nation.'' \25\ Section 706 directs the Commission to encourage
broadband deployment to all Americans.\26\ In 2011, the Commission
concluded that both of these provisions independently authorize the
Commission to provide support for broadband networks.\27\ The U.S.
Court of Appeals for the Tenth Circuit upheld the Commission's
authority under Sections 254 and 706 to use the USF to support the
deployment of broadband networks.\28\
---------------------------------------------------------------------------
\25\ 47 U.S.C. Sec. 254(b)(2).
\26\ 47 U.S.C. Sec. 1302(a).
\27\ Connect America Fund, Report and Order and Further Notice of
Proposed Rulemaking, 26 FCC Rcd 17663, 60[-730 (2011) (``Section 254
grants the Commission clear authority to support telecommunications
services and to condition the receipt of universal service support on
the deployment of broadband networks, both fixed and mobile, to
consumers. Section 706 provides the Commission with independent
authority to support broadband networks in order to `accelerate the
deployment of broadband capabilities' to all Americans.'').
\28\ In re FCC 11-161, 753 F.3d 1015, 1054 (10th Cir. 2014).
Question 1b. Without either Section 706 of the Telecommunications
Act of 1996 authority or Title II of the Communications Act of 1934
authority, as proposed in the draft legislation, under what authority,
if any, could the FCC incentivize broadband deployment?
Answer. Even without Section 706, the FCC could still rely upon its
authority under Section 254 to incentivize broadband deployment. As the
FCC has explained, ``Section 254 grants the Commission clear authority
to support telecommunications services and to condition the receipt of
universal service support on the deployment of broadband networks, both
fixed and mobile, to consumers.'' \29\ The Tenth Circuit upheld the
FCC's authority under Section 254 to condition ``USF funding on
recipients' agreement to provide broadband Internet access services.''
\30\
---------------------------------------------------------------------------
\29\ Connect America Fund 60.
\30\ In re FCC 11-161, 753 F.3d at 1047-48.
Question 1c. What would happen to the Connect America Fund and
similar programs should this legislation pass in its current form?
Answer. Nothing would happen to the Connect America Fund or similar
USF programs because the FCC would retain its existing authority under
Section 254.
Question 2. One of the primary concerns I have about the proposal
we are discussing today is the removal of all rulemaking authority.
Businesses need certainty, and rulemaking allows businesses to
understand how the general goals and standards Congress establishes in
law--such as affordable and accessible Internet--will be specifically
applied before they make investment decisions. The proposed bill
removes all the transparency requirements included in rulemaking and
replaces them with a new, retroactive, case-by-case rulemaking process
that could be very difficult for small start-up businesses to
understand. Without rulemaking, how would entrepreneurs understand how
the FCC would apply the mandates of this bill to particular
circumstances?
Answer. Thank you for your question, Senator. As a threshold
matter, it is important to note that the remarkable development of the
Internet occurred in the absence of FCC rulemaking authority in this
area. Prior to the Commission's 2010 Open Internet Order, the FCC
adhered to long-standing precedent that it did not have regulatory
authority over the Internet, particularly when Congress concluded it
was the policy of the United States ``to preserve the vibrant and
competitive free market that presently exists for the Internet and
other interactive computer services, unfettered by Federal or state
regulation.'' \31\ Congress wrote those words at the same time it wrote
Section 706. There is no reason to believe the Internet will not
continue to flourish under the proposed legislation.
---------------------------------------------------------------------------
\31\ 47 U.S.C. Sec. 230(b)(2).
---------------------------------------------------------------------------
The draft legislation provides the FCC with an appropriate level of
flexibility to enforce prohibitions on blocking, discrimination, and
paid prioritization that net neutrality proponents have long sought.
Unlike the Title II approach proposed by the FCC, the draft legislation
will finally provide a level of certainty in the Internet marketplace
that will benefit consumers and businesses alike.
While Congressional action would serve to provide a stable path
forward, an FCC decision to regulate last-mile broadband networks and
the entire Internet backbone under Title II will create harmful
uncertainty.\32\ For instance, America's tech sector will not be immune
from Title II common carrier regulation if the FCC attempts to regulate
broadband Internet access services under Title II, however, there is
substantial uncertainty as to how exactly Title II will be imposed on
tech companies. Over my career as an FCC Commissioner and a private
practitioner, I've had ample experience interpreting and enforcing
Title II, and I can confidently say that we are unlikely to see the
type of precise application of Title II needed to protect tech
companies from being swept up with network operators. As innovation and
consumer demand continue to blur the lines between what used to be
clearly defined legal and regulatory silos between network operators
(such as phone, cable and wireless companies) and ``tech'' companies
that offer ``information services''--such as computer processing and
storage processing--it will become increasingly difficult for
bureaucrats to parse with surgical precision the differences between
transmission and information services.\33\ In this Title II world, tech
companies will be forced to make vital decisions on long-term
investments and business strategies, while facing the prospect that
they may one day be subjected to increasingly costly and stifling
regulations.
---------------------------------------------------------------------------
\32\ Steve Lohr, In Net Neutrality Push, F.C.C. Is Expected to
Propose Regulating Internet Service as a Utility, N.Y. Times, Feb. 2,
2015, available at http://nyti.ms/1wXgOoe (noting that Chairman Wheeler
may suggest imposing regulations on ``companies that manage the
backbone of the Internet'').
\33\ See, e.g., Inquiry Concerning High-Speed Access to the
Internet Over Cable and Other Facilities, Docket No. FCC-02-77, 17 FCC
Rcd 4798, 40 (2002) (noting the increasing difficulty in
distinguishing between ``transmission'' and ``information'' services).
---------------------------------------------------------------------------
As a group of entrepreneurs, including Mark Cuban, recently
explained, Title II classification of the Internet will fundamentally
blur the lines between regulated and unregulated networks and
services--making it ``impossible for entrepreneurs to know whether
their IP-based offering will be subject to Title II regulation. .
.[thus] undermin[ing] the very innovation and investment that the
Commission purportedly seeks to protect.'' \34\ Furthermore, ``[t]his
concern is particularly acute in an era where all new consumer
electronics and information technologies include a component the
Commission could conceivably view as a `telecommunications service.' ''
\35\
---------------------------------------------------------------------------
\34\ VCXC Ex Parte, Protecting and Promoting the Open Internet, GN
Docket No. 14-28 (Jan. 23, 2015), available at http://apps.fcc.gov/
ecfs/comment/view?id=60001010900.
\35\ Id.
---------------------------------------------------------------------------
It will be very difficult for the tech community to understand how
to comply with Title II. The regulatory burdens resulting from Title II
classification are substantial and include, in part: the regulation of
rates, terms, and conditions; non-discrimination requirements (which,
in fact allow reasonable pricing discrimination); entry and exit
regulations; confidentiality requirements, audits, and privacy
restrictions. Complicating matters further, if the FCC follows through
with classifying broadband as a telecommunications service under Title
II, broadband providers will be required to contribute to Federal and
state universal service funds. Understanding and complying with this
onslaught of new regulations will require expensive legal advice, which
is why Title II classification will be great for Washington, D.C.
lawyers, but a terrible thing for businesses and American innovation.
One thing we know for sure is that, if the FCC proceeds down the
Title II path, years of litigation--and resulting uncertainty--will
result. When all is said and done, a court of appeals may strike down
the FCC's decision to regulate broadband under Title II, as the courts
did on two prior occasions in sustaining challenges to the FCC's net
neutrality rules. Such an outcome would be a setback for those who seek
enforceable net neutrality rules.
Worse yet, the courts may uphold the FCC's decision to impose Title
II on broadband providers but overturn its decision to forbear from the
vast majority of Title II's requirements. Such a determination could
have devastating consequences as the full brunt of Title II is thrust
upon the Internet marketplace.
On the other hand, Congressional action--such as the proposed
legislation--has the ability to provide the protections net neutrality
proponents want, while shielding the Internet from harmful regulatory
overreach or prolonged regulatory uncertainty during the inevitable
legal challenges. This approach would provide far more certainty for
businesses and consumers because it would allow the Internet to
flourish without the risk of being overturned in court.
Finally, the proposed legislation would not eliminate the FCC's
ability to interpret and enforce the law in adjudications involving
particular circumstances. Courts have upheld the FCC's ability to adopt
new interpretations in adjudicatory proceedings,\36\ and the FCC
presumably could similarly enforce the proposed legislation through
adjudication if necessary.
---------------------------------------------------------------------------
\36\ Cassell v. FCC, 154 F.3d 478, 486 (D.C. Cir. 1998) (``It is
well settled that an agency `is not precluded from announcing new
principles in an adjudicative proceeding.'' (quotation omitted)).
Question 2a. What opportunities would businesses and consumer
groups have to weigh-in on the FCC's application of these rules going
forward?
Answer. Because the legislation allows for complaints to be filed
with the FCC, any enforcement or adjudicatory proceedings at the
Commission would provide an opportunity for public input on how to
interpret and apply the rules going forward.
Question 2b. How could any changes, however small, even be made to
reflect the specific concerns of entrepreneurs or small businesses with
the explicit prohibition on expanding Internet openness obligations
included in Subsection (b) the draft bill?
Answer. No changes are necessary because the draft legislation will
provide businesses and entrepreneurs the certainty they need to
innovate and invest.
______
Response to Written Questions Submitted by Hon. Deb Fischer to
Paul Misener
Question 1. Mr. Misener--Would the FCC or FTC be a more appropriate
regulator of Amazon's privacy, data security, and data breach
notification practices?
Answer. Amazon's guiding concern in navigating privacy issues is
customer trust. We use our customer data to innovate and improve the
customer experience. We strive to focus on privacy throughout our
business, and uphold our promise to our customers through our publicly
available Privacy Policy. The FTC already has enforcement authority
over that promise to our customers through Section 5 of the Federal
Trade Commission Act.
Question 2. To All Witnesses--While the FCC is in the process of
ensuring net neutrality, some want the FCC to impose all of these
obligations under the guise of ensuring consumer protection. Some argue
that common carrier requirements on broadband providers should include
almost most all of Title II, in addition to Sections 201, 202, and 208.
Specifically, some activists have suggested the following parts of
Title II must be applied to the broadband industry:
UNIVERSAL SERVICE
Sec. 214. [47 U.S.C. 214] Extension Of Lines
Sec. 225. [47 U.S.C. 225] Telecommunications Services for
Hearing-Impaired and Speech-Impaired Individuals.
Sec. 254. [47 U.S.C. 254] Universal Service.
Sec. 255. [47 U.S.C. 255] Access by Persons With Disabilities.
CONSUMER PROTECTION
Sec. 217. [47 U.S.C. 217] Liability of Carrier for Acts and
Omissions of Agents.
Sec. 222. [47 U.S.C. 222] Privacy Of Customer Information.
Sec. 230. [47 U.S.C. 230] Protection for Private Blocking and
Screening of Offensive Material.
Sec. 258. [47 U.S.C. 258] Illegal Changes in Subscriber Carrier
Selections.
COMPETITION
Sec. 224. [47 U.S.C. 224] Regulation of Pole Attachments.
Sec. 253. [47 U.S.C. 253] Removal of Barriers to Entry.
Sec. 251. [47 U.S.C. 251] Interconnection
Sec. 256. [47 U.S.C. 256] Coordination for Interconnectivity.
Sec. 257. [47 U.S.C. 257] Market Entry Barriers Proceeding.
Do you agree or disagree that these sections of Title II common
carrier regulation are needed? If you agree, please explain why.
Answer. At Amazon, we are focused on ensuring implementation of
strong net neutrality rules for our customers. If full net neutrality
protections--including a ban on paid prioritization, discrimination,
and throttling, applied to fixed and wireless broadband, and at every
point in the network--are pursued under Title II, only Sections 201,
202, and 208 are necessary. Congress may of course, create a new
statute, or update existing statute to achieve these full net
neutrality protections, as well.
______
Response to Written Question Submitted by Hon. Brian Schatz to
Paul Misener
Question. I believe that the FCC needs to have ongoing, flexible
authority over broadband. I am concerned that the draft legislation
does not preserve that type of authority. What changes can--or should--
be made to the draft that would address this concern?
Answer. Amazon believes the FCC should be empowered to create
adequate legal certainty and detail through effective enforcement tools
and notice and comment rulemaking. As I outline in my testimony,
statutes are necessarily less detailed than agency-written rules. Such
details--including the factors that would be considered during formal
complaint procedures--are essential for businesses and consumers to
have the confidence to make informed choices about investments and
purchases, and the FCC's ability to define these details should be
preserved.
If the intent of the draft legislation is to create a statutory
ceiling for obligations on Broadband Internet Service providers (BIAS),
this can be accomplished without rescinding the FCC's authority to
regulate below the ceiling. We believe that the FCC's Title II
authority should be maintained to ensure the effectiveness of Internet
openness, subject to any reasonable substantive ceiling on Internet
openness obligations.
The draft legislation, at a minimum, should be amended (Subsection
e) to ensure that the FCC retains its Title II tools, subject to a
substantive ceiling on Internet openness obligations, such as included
in Subsection (b)(1), which itself should be clarified to allow the FCC
to provide, through notice and comment rulemaking, adequate legal
detail and certainty to consumers and businesses.
______
Response to Written Questions Submitted by Hon. Cory Booker to
Paul Misener
Question 1. One aspect largely absent from the debate on Chairman
Thune's proposed neutrality legislation is the issue of
interconnection. Interconnection is not covered under current
legislation. Do you believe that interconnection points can be choke
points to the Internet highway?
Answer. A consumer will not care where in her service provider's
network any interference with net neutrality occurs, only whether it
occurs. Providers should not be allowed to accomplish blocking,
throttling, or paid prioritization further upstream in the network
either, as the Discussion Draft bill appears to address only the
network facilities closer to consumers, such as the ``last mile.''
Question 1a. Under the proposed legislation, how would
interconnection issues be addressed?
Answer. The Discussion Draft bill is lacks any clarity on
interconnection. The proposed legislation should be modified to ensure
that the Internet openness of net neutrality is maintained and
effective at every point in the network.
Question 2. Students, health care providers, and entrepreneurs have
benefited greatly from innovative online platforms and the free flow of
information. I fear that, without strong net neutrality rules, a
``tiered Internet'' could emerge, creating barriers for innovators and
small businesses.
In the absence of strong anti-discrimination protections provided
under Title II, and without Section 706 authority, what tools does the
FCC have to prevent discriminatory practices and differential treatment
we all agree should be prohibited?
Answer. If the FCC's authority under Title II and Section 706 to
prevent discriminatory practices and differential treatment by
Broadband Internet Access Service Providers (BIASP) is eliminated, new
statutory obligations will have to be codified that ensure strong
protections against paid prioritization, discrimination, and
differential treatment by BIASP.
Question 3. As currently drafted, what protections does the
legislation provide that broadband reclassification would not?
Answer. As currently drafted, the proposed legislation embodies
several of the same principles that would be enforced through broadband
reclassification; however, some of the exemptions included in the
Discussion Draft could undermine the effectiveness of those principles.
For example, the ``specialized services'' exemption could create a
loophole that would allow the prioritization of content and services
from a BIASP's affiliate.
Question 4. Do you believe, as the draft legislation suggests, the
FCC should not be able to claim any authority under Section 706 of the
Telecommunications Act of 1996?
Answer. Amazon is focused on strong, enforceable net neutrality
protections, and we have concluded that reinstating three provisions of
Title II -all or parts of Sections 201, 202, and 208--plus relying on
other existing statute, including Section 706, would be adequate to
maintain net neutrality without creating unintended consequences.
The draft legislation creates a statutory ceiling on BIAS
obligations, and it is not necessary to rescind the FCC's authority
under Title II of the Communications Act, as in Subsection (e).
Summarily blocking the FCC's use of existing statutory enforcement
authority could leave the agency helpless to address improper behaviors
well within its authority under the ceiling created in Subsection (b),
and would leave consumers and businesses in the Internet ecosystem
without adequate certainty about the FCC's enforcement powers. With so
much at stake for consumers and businesses, this very real possibility
should not be left to chance.
Question 5. I am proud to have a leading company like Amazon
provide more than 3,000 jobs in my home state. Indeed, Internet
companies like Amazon that benefit from a free and open Internet drive
innovation and strengthen local economies in states across the country.
Can you describe how net neutrality has allowed your business to thrive
and what that means for growth and future employment?
Answer. At Amazon, our consistent business practice is to start
with customers and work backwards. That is, we begin projects by
determining what customers want and how we can innovate for them. Here,
in the context of net neutrality public policy, we have done the same:
we take our position from our customers'--consumers'--point of view.
Net neutrality is core to the customer's experience, and the
customer will know if their net neutrality has been taken from them.
The customer experience drives what we call at Amazon the ``Flywheel''.
By creating a great customer experience, we drive more traffic to our
properties. This allows us to increase the number of sellers and
selection while bringing down prices, which creates a better customer
experience, and enables the Flywheel to expand. It is a virtuous cycle
that enables Amazon to invest in great products and services for our
customers in businesses that we have such as Audible.
Question 6. Amazon has a long-standing history in support of net
neutrality principles. Can you describe what principles your company
believes need to be in place to achieve true net neutrality?
Answer. At Amazon, we are customer obsessed, and focused on results
that will preserve the customer experience. We have long supported
strong, enforceable rules to protect an open Internet; and, would like
to see a path forward that achieves this. True net neutrality includes
a ban on paid prioritization, blocking, and discrimination, applied to
both mobile and fixed broadband, and to every point in the network,
including at interconnection.
Question 6a. Does the Chairman's draft legislation cover those
principles?
Answer. The Chairman's draft covers the principles of a ban on paid
prioritization, blocking, and discrimination, and applies to both fixed
and wireless broadband. The draft lacks clarity on the application of
the principles to interconnection, and contains exemptions that may
undermine the strength of these principles.
Question 6b. What changes would you recommend to the draft
legislation?
Answer. First, in Subsection (d), while requiring ``Consumer
Choice,'' the bill would explicitly exempt ``specialized services''
from that requirement. This could create a huge loophole if, for
example, specialized services involved the prioritization of some
content and services, just like proscribed ``paid prioritization,'' the
only difference being that the content or service prioritized came from
the broadband Internet access service provider itself, instead of a
third party.
Furthermore, if the purpose of Subsection (d) is to ensure that
consumers are allowed to choose among various, non-discriminatory plans
based on bit rates or monthly data volumes, then there are ways to say
that more clearly: Something along the lines of, ``Nothing in this
section should be construed to limit the ability of consumers to choose
to pay for higher or lower data rates or volumes of broadband Internet
access service based on their individual needs.'' We agree that it
makes no sense to require an infrequent e-mail user to pay the same for
Internet access as a 24/7 gamer and, if such a clarification is needed,
we would support it. But the current language of Subsection (d) does
not accomplish this goal and introduces the other shortcomings that we
have noted.
Second, in Subsection (f), the Discussion Draft bill would permit
broadband Internet access providers to engage in ``reasonable network
management.'' This is a standard caveat to net neutrality, and we
support it, at least in theory. But particularly with the inclusion of
wireless broadband in the ambit of net neutrality protections, any
claim of reasonable network management should be viewed very
suspiciously if, in practice, it undermines prohibitions of blocking,
throttling, paid prioritization, etc., or if it tends to favor content
or services offered by the broadband provider itself.
Third, the Discussion Draft bill is unclear or silent on an
important point of clarification: Which parts of a broadband Internet
access service provider's network are covered by the net neutrality
protections? Providers should not be allowed to accomplish blocking,
throttling, paid prioritization, etc., further upstream in the network,
just because the bill could be construed to address only the network
facilities closer to consumers, such as the ``last mile.'' If, by this
possible omission and limitation of FCC powers, net neutrality were
made ineffective by allowing the otherwise prohibited behaviors to
occur further upstream, consumers would rightly judge their net
neutrality to have been taken away.
In addition, the Discussion Draft should be modified to provide
adequate legal detail and certainty to consumers and businesses in the
Internet ecosystem. Although the Discussion Draft would require, in
Subsection (a)(5), broadband Internet providers to disclose their
practices, these disclosures would merely reflect what providers
currently are doing, not what they would be legally permitted to do.
We believe that the FCC should be empowered to create adequate
legal certainty and detail through effective enforcement tools and
notice and comment rulemaking. But the Discussion Draft bill would
limit the FCC in several ways. Subsection (b) says that the FCC ``may
not expand . . . Internet openness obligations . . . beyond the
obligations established'' in the bill ``whether by rulemaking or
otherwise.'' The word ``expand'' is vague, but if the intention here is
to establish a ceiling for these obligations, i.e., a cap on the FCC's
authority respecting the substantive provisions of the bill, this is
Congress's prerogative and reasonable expectation. However, with such a
ceiling in place, it is not necessary to rescind the FCC's authority
under Title II of the Communications Act, as in Subsection (e).
Summarily blocking the FCC's use of existing statutory enforcement
authority could leave the agency helpless to address improper behaviors
well within its authority under the ceiling created in Subsection (b),
and would leave consumers and businesses in the Internet ecosystem
without adequate certainty about the FCC's enforcement powers. We
believe that the FCC's Title II authority should be maintained to
ensure the effectiveness of Internet openness, subject to any
reasonable substantive ceiling on Internet openness obligations.
Also, in part because Subsection (b) directs the FCC to establish
``formal complaint procedures'' and ``enforce the obligations [of the
bill] though adjudication of complaints,'' this provision could be
interpreted to bar the FCC from notice and comment rulemaking in this
area. We believe it would be a mistake to prohibit the Commission from
providing, through notice and comment rulemaking, adequate legal detail
and certainty to consumers and businesses. Outlining the parameters
around permissible forms of ``reasonable network management'' is but
one example of where the FCC could provide important detail to
consumers and businesses through notice and comment rulemaking.
Thus, at a minimum, Subsection (e) should be amended to ensure that
the FCC retains its Title II tools, subject to a substantive ceiling on
Internet openness obligations, such as included in Subsection (b)(1),
which itself should be clarified to allow the FCC to provide, through
notice and comment rulemaking, adequate legal detail and certainty to
consumers and businesses.
Question 7. Amazon has proven to be a successful and innovative
company. It has most recently found great success in providing over-
the-top online video service. As consumers increase their use of online
video, do you agree that the interconnection point is a choke point
between an ISP and a consumer?
Answer. Without strong enforceable rules, interconnection can
certainly become a choke point, regardless of what traffic is being
routed through the network. A bit is a bit, and consumers should not
have their net neutrality thwarted at any point in the network whether
they are streaming video or browsing a retail site.
Question 7a. Does it concern you that the proposed legislation
would not provide Amazon or others with interconnection protections,
and could prevent the FCC from regulating in those areas?
Answer. Without strong enforceable rules that apply to every point
in the network, true net neutrality cannot be achieved. The draft
legislation should be modified to clarify this point.
______
Response to Written Question Submitted by Hon. Tom Udall to
Paul Misener
Question. Mr. Misener, I think everyone agrees that any potential
regulation touching the Internet should use a light approach. What then
do you see as the best way for Congress to help ensure that there is
meaningful competition, continued investment, and consumer choice
across the Internet ecosystem?
Answer. Consumers certainly will be results-oriented in their
assessment of what particular legal authority the United States
Government uses to ensure that net neutrality is maintained: The
authority will either work, or it won't. We believe that the FCC has
ample existing statutory authority to maintain net neutrality, and we
welcome Chairman Wheeler's attention to this issue and his efforts to
use his statutorily-granted authority in a measured, focused way. We
would not want discussions of new statutory authority to derail or
delay Chairman Wheeler's work, but just as Mr. Wheeler recently noted
that he would welcome additional statutory direction from Congress, we
are also open to such legislation.
We have concluded that reinstating only a few provisions of Title
II--particularly all or parts of Sections 201, 202, and 208--plus
relying on other existing statute, including Section 706, would be
adequate to maintain net neutrality without creating unintended
consequences. But, of course, these approaches are within the confines
of existing statutory authority. Congress has the power to set new
policies for net neutrality, either entirely through a new statute, or
through a mix of new and existing statutory authority.
______
Response to Written Questions Submitted by Hon. Joe Manchin to
Paul Misener
Question 1. During the hearing, I received conflicting information
about how the Chairman's proposed legislation would impact Universal
Service Fund (USF) broadband programs like the Connect America Fund
(CAF) that help private companies make investments and expand their
network into rural, underserved areas. Due to the importance of these
programs to my state and the communities I represent, I am requesting a
written explanation of the anticipated impacts this bill would have on
USF programs from each of the witnesses, specifically:
Question 1a. What authority or authorities does the Federal
Communications Commission currently rely on to operate and execute USF
programs like the Connect America Fund?
Question 1b. Without either Section 706 of the Telecommunications
Act of 1996 authority or Title II of the Communications Act of 1934
authority, as proposed in the draft legislation, under what authority,
if any, could the FCC incentivize broadband deployment?
Question 1c. What would happen to the Connect America Fund and
similar programs should this legislation pass in its current form?
Answer. Amazon does not have any expertise with the operation or
execution of USF programs.
Question 2. One of the primary concerns I have about the proposal
we are discussing today is the removal of all rulemaking authority.
Businesses need certainty, and rulemaking allows businesses to
understand how the general goals and standards Congress establishes in
law--such as affordable and accessible Internet--will be specifically
applied before they make investment decisions. The proposed bill
removes all the transparency requirements included in rulemaking and
replaces them with a new, retroactive, case-by-case rulemaking process
that could be very difficult for small start-up businesses to
understand. Without rulemaking, how would entrepreneurs understand how
the FCC would apply the mandates of this bill to particular
circumstances?
Answer. The Discussion Draft should be modified to provide adequate
legal detail and certainty to consumers and businesses in the Internet
ecosystem. Although the Discussion Draft would require, in Subsection
(a)(5), broadband Internet providers to disclose their practices, these
disclosures would merely reflect what providers currently are doing,
not what they would be legally permitted to do.
Like all businesses, Internet companies need confidence in the
state of law and regulation in order to innovate and invest in products
and services on behalf of their customers. They need to know, with a
reasonable degree of certainty, whether a new product or service could
be deployed without interference by broadband Internet access service
providers. Certainty does not require legal certitude, but it does
require confidence-inspiring transparency, predictability, stability,
and fairness. Yet statutes are necessarily less detailed than agency-
written rules. And such details--including the factors that would be
considered during formal complaint procedures--are essential for
businesses and consumers to have the confidence to make informed
choices about investments and purchases.
We believe that the FCC should be empowered to create adequate
legal certainty and detail through effective enforcement tools and
notice and comment rulemaking.
Question 2a. What opportunities would businesses and consumer
groups have to weigh-in on the FCC's application of these rules going
forward?
Answer. As currently drafted, the Discussion Draft does not provide
for notice and comment rulemaking or public comment. Businesses and
consumer groups would have to rely on a case-by-case basis complaint
system.
Question 2b. How could any changes, however small, even be made to
reflect the specific concerns of entrepreneurs or small businesses with
the explicit prohibition on expanding Internet openness obligations
included in Subsection (b) the draft bill?
Answer. Subsection (b) says that the FCC ``may not expand . . .
Internet openness obligations . . . beyond the obligations
established'' in the bill ``whether by rulemaking or otherwise.'' The
word ``expand'' is vague, but if the intention here is to establish a
ceiling for these obligations, i.e., a cap on the FCC's authority
respecting the substantive provisions of the bill, this is Congress's
prerogative and reasonable expectation; we certainly don't support
allowing an agency to act beyond its statutory authority, and would
support a provision like this, if the bill went only so far.
However, with such a ceiling in place, it is not necessary to
rescind the FCC's authority under Title II of the Communications Act,
as in Subsection (e). Summarily blocking the FCC's use of existing
statutory enforcement authority could leave the agency helpless to
address improper behaviors well within its authority under the ceiling
created in Subsection (b), and would leave consumers and businesses in
the Internet ecosystem without adequate certainty about the FCC's
enforcement powers. With so much at stake for consumers and businesses,
this very real possibility should not be left to chance. We believe
that the FCC's Title II authority should be maintained to ensure the
effectiveness of Internet openness, subject to any reasonable
substantive ceiling on Internet openness obligations.
At a minimum, Subsection (e) should be amended to ensure that the
FCC retains its Title II tools, subject to a substantive ceiling on
Internet openness obligations, such as included in Subsection (b)(1),
which itself should be clarified to allow the FCC to provide, through
notice and comment rulemaking, adequate legal detail and certainty to
consumers and businesses.
______
Response to Written Questions Submitted by Hon. Deb Fischer to
W. Tom Simmons
Question 1. Mr. Simmons and Mr. McDowell--can you please describe
the impacts on a small cable operator in the state of Nebraska of
having the FCC force heavy-handed Title II utility regulations. My
understanding is the FCC currently has 1,000 active rules based on
Title II, occupying nearly 700 pages in the Code of Federal Regulations
and that the Progressive Policy Institute recently issued a report
highlighting how Title II reclassification of the Internet would add
about $15 billion in user fees to our economy, increasing annual levies
on middle class families by $67 for wireline service and $72 for
wireless broadband.
Answer. The regulatory burdens and costs associated with a Title II
approach would have a significant and disproportionate impact on small-
and medium-sized providers' ability to invest further in our broadband
networks. The Federal Communications Commission's decision a decade ago
to lightly regulate Internet service encouraged Midcontinent and other
small providers to invest hundreds of millions of dollars in our
networks to make those networks increasingly faster and more robust. In
rural areas, those investments were risky, but we made them driven by
the knowledge that we would not be limited in our ability to use that
investment to create and develop the most compelling broadband service
offerings possible, the type of service we believe all our customers
deserve. Title II reclassification would harm providers' ability to
obtain the capital needed to invest and make obtaining that capital
significantly more expensive. It could also open broadband service up
to a number of Federal and state fees applied to telecommunications
services, driving up the cost of broadband and making it more difficult
for our subscribers to afford.
Question 2. To All Witnesses--While the FCC is in the process of
ensuring net neutrality, some want the FCC to impose all of these
obligations under the guise of ensuring consumer protection. Some argue
that common carrier requirements on broadband providers should include
almost most all of Title II, in addition to Sections 201, 202, and 208.
Specifically, some activists have suggested the following parts of
Title II must be applied to the broadband industry:
UNIVERSAL SERVICE
Sec. 214. [47 U.S.C. 214] Extension Of Lines
Sec. 225. [47 U.S.C. 225] Telecommunications Services for
Hearing-Impaired and Speech-Impaired Individuals.
Sec. 254. [47 U.S.C. 254] Universal Service.
Sec. 255. [47 U.S.C. 255] Access by Persons With Disabilities.
CONSUMER PROTECTION
Sec. 217. [47 U.S.C. 217] Liability of Carrier for Acts and
Omissions of Agents.
Sec. 222. [47 U.S.C. 222] Privacy Of Customer Information.
Sec. 230. [47 U.S.C. 230] Protection for Private Blocking and
Screening of Offensive Material.
Sec. 258. [47 U.S.C. 258] Illegal Changes in Subscriber Carrier
Selections.
COMPETITION
Sec. 224. [47 U.S.C. 224] Regulation of Pole Attachments.
Sec. 253. [47 U.S.C. 253] Removal of Barriers to Entry.
Sec. 251. [47 U.S.C. 251] Interconnection
Sec. 256. [47 U.S.C. 256] Coordination for Interconnectivity.
Sec. 257. [47 U.S.C. 257] Market Entry Barriers Proceeding.
Do you agree or disagree that these sections of Title II common
carrier regulation are needed? If you agree, please explain why.
Answer. Generally, we disagree that these provisions should be
applied to broadband service, although they should continue to apply to
existing telecommunications carriers. Title II of the Communications
Act was designed for the 1930s telephone monopoly era, and applying
Title II regulations to today's broadband service would be highly
disruptive and work against the government's policy goals of increasing
broadband deployment and adoption. Importantly, however, while these
considerations would support refraining from imposing the unnecessary
and burdensome obligations and restrictions contained in Title II,
there are a small number of provisions that happen to be codified in
Title II and, far from imposing unnecessary restrictions or
obligations, actually facilitate broadband investment and deployment
goals. Section 224, which establishes a series of rights among
different classes of carriers and non-carriers with respect to access
to poles, conduits, and rights-of-way, and Section 230, which provides
immunity from publisher-related liability for various classes of
Internet intermediaries, including ISPs, would fall into this category.
______
Response to Written Question Submitted by Hon. Brian Schatz to
W. Tom Simmons
Question. I believe that the FCC needs to have ongoing, flexible
authority over broadband. I am concerned that the draft legislation
does not preserve that type of authority. What changes can--or should--
be made to the draft that would address this concern?
Answer. Under the draft legislation, the FCC retains significant
authority to interpret and enforce the net neutrality rules, and the
draft does not deprive the FCC of any basis of authority it has relied
upon to regulate broadband.
With regard to net neutrality, the draft legislation specifically
targets impermissible discriminatory behaviors that have been
identified as threats to the open Internet, and the FCC would have
authority to interpret those rules, as well as to pursue violations of
those rules based on its interpretation of the law.
With regard to future broadband regulations, the draft does not
remove the basis for any authority the FCC has relied upon to regulate
broadband. Where the FCC has extended regulations to apply to broadband
service--for example, by extending universal service support to
broadband, it has explicitly stated that such authority exists in
provisions of the Communications Act, and has not relied on Section 706
as a primary basis of authority.
______
Response to Written Questions Submitted by Hon. Cory Booker to
W. Tom Simmons
Question 1. One aspect largely absent from the debate on Chairman
Thune's proposed neutrality legislation is the issue of
interconnection. Interconnection is not covered under current
legislation. Do you believe that interconnection points can be choke
points to the Internet highway?
Question 1a. Under the proposed legislation, how would
interconnection issues be addressed?
Answer. Interconnection arrangements have never been covered by
open Internet regulations, and are not covered by the proposed net
neutrality legislation, because they are not part of broadband Internet
access service. However, the draft legislation would not alter the
FCC's authority over interconnection agreements; it simply prevents the
FCC from creating a new regulatory scheme of its own design.
I do not believe that the very few high-profile complaints of
interconnection abuse are representative of the actual interconnection
marketplace, which has developed organically over the years in the
absence of regulation. The interconnection market is healthy and
thriving, and will continue to evolve along with the rest of the
Internet ecosystem.
Question 2. Students, health care providers, and entrepreneurs have
benefited greatly from innovative online platforms and the free flow of
information. I fear that, without strong net neutrality rules, a
``tiered Internet'' could emerge, creating barriers for innovators and
small businesses.
In the absence of strong anti-discrimination protections provided
under Title II, and without Section 706 authority, what tools does the
FCC have to prevent discriminatory practices and differential treatment
we all agree should be prohibited?
Answer. By prohibiting blocking, paid prioritization and
throttling, the draft specifically and strongly targets and prohibits
impermissible discriminatory behaviors that have been identified as
threats to the open Internet. Rather than relying on a nebulous non-
discrimination standard, the draft provides clear rules that the FCC
may interpret through case-by-case adjudication.
Question 3. As currently drafted, what protections does the
legislation provide that broadband reclassification would not?
Answer. The draft legislation provides the substantial protection
of legal and regulatory certainty for all parties involved. In the
absence of legislation, it is clear that regardless of how the FCC
rules, that decision will be challenged in court. While this third
challenge to the FCC's net neutrality authority proceeds in the courts,
broadband providers seeking to formulate business strategy, edge and
content providers developing their business plans for new product and
services, and consumers will be faced with several years of regulatory
uncertainty, with no real prediction of, or ability to rely on, the
outcome of the litigation.
Enacting legislation would avoid the need for yet another
protracted litigation, set clear standards for ISP behavior, and
establish unassailable authority for the FCC to prevent any
anticompetitive behavior by ISPs that violates the rules--all without
imposing monopoly telephone regulations on broadband Internet access
service.
Question 4. Do you believe, as the draft legislation suggests, the
FCC should not be able to claim any authority under Section 706 of the
Telecommunications Act of 1996?
Answer. No. The D.C. Circuit upheld the FCC's use of Section 706 as
a basis of authority for implementing net neutrality rules that it
believed would spur broadband deployment, and I believe that the FCC
could rely on Section 706 to formulate net neutrality rules.
______
Response to Written Questions Submitted by Hon. Joe Manchin to
W. Tom Simmons
Question 1. During the hearing, I received conflicting information
about how the Chairman's proposed legislation would impact Universal
Service Fund (USF) broadband programs like the Connect America Fund
(CAF) that help private companies make investments and expand their
network into rural, underserved areas. Due to the importance of these
programs to my state and the communities I represent, I am requesting a
written explanation of the anticipated impacts this bill would have on
USF programs from each of the witnesses, specifically:
Question 1a. What authority or authorities does the Federal
Communications Commission currently rely on to operate and execute USF
programs like the Connect America Fund?
Answer. The FCC relies on section 254 of the Communications Act to
operate and execute its USF programs, including in its 2011 decision to
extend universal service support to broadband service. The Commission
mentioned Section 706 as a secondary source of authority for extending
USF support to broadband, but made clear that it believed that section
254 was sufficient and that it was only ``relying on section 706(b) as
an alternative basis to section 254 to the extent necessary.''
Question 1b. Without either Section 706 of the Telecommunications
Act of 1996 authority or Title II of the Communications Act of 1934
authority, as proposed in the draft legislation, under what authority,
if any, could the FCC incentivize broadband deployment?
Answer. The draft legislation provides only that broadband service
may not be classified as a Title II service; it does not deprive the
FCC of all Title II authority. The Commission could continue to
exercise all existing authority under Title II as it always has,
authority it has exercised in the name of incentivizing broadband
deployment.
Question 1c. What would happen to the Connect America Fund and
similar programs should this legislation pass in its current form?
Answer. The draft legislation would have no effect on those
programs.
Question 2. One of the primary concerns I have about the proposal
we are discussing today is the removal of all rulemaking authority.
Businesses need certainty, and rulemaking allows businesses to
understand how the general goals and standards Congress establishes in
law--such as affordable and accessible Internet--will be specifically
applied before they make investment decisions. The proposed bill
removes all the transparency requirements included in rulemaking and
replaces them with a new, retroactive, case-by-case rulemaking process
that could be very difficult for small start-up businesses to
understand. Without rulemaking, how would entrepreneurs understand how
the FCC would apply the mandates of this bill to particular
circumstances?
Question 2a. What opportunities would businesses and consumer
groups have to weigh-in on the FCC's application of these rules going
forward?
Answer. The FCC itself has endorsed a case-by-case approach to
adjudicating violations of open Internet rules as the best way to
provide more detailed rulings, explaining that ``the novelty of
Internet access and traffic management questions, the complex nature of
the Internet, and a general policy of restraint in setting policy for
Internet access service providers weigh in favor of a case-by-case
approach.'' In 2010, when it adopted a case-by-case approach to
enforcement, the FCC noted that the proposal had met with almost
universal support among commenters. And unlike in the Comcast-
BitTorrent matter, the draft legislation does not raise any concerns of
vagueness, because it provides generally applicable bright-line ex ante
rules that will facilitate the swift adjudication of allegations and
enable those making investment decisions to understand easily what
types of ISP behavior is permissible. To the extent that private
entities did not agree with the FCC's interpretation of the rules, they
could meet with the Commission to discuss their concerns or seek a
declaratory ruling on the permissibility of certain practices under the
rules.
Question 2b. How could any changes, however small, even be made to
reflect the specific concerns of entrepreneurs or small businesses with
the explicit prohibition on expanding Internet openness obligations
included in Subsection (b) the draft bill?
Answer. The draft legislation sets forth Congress's expectations of
how ISPs should behave and bans behavior that Congress believes would
threaten an open Internet, while still allowing ISPs to innovate. The
FCC would have full power to regulate ISPs that are violating the
prohibitions Congress has established. It appropriately would not allow
the FCC to substitute its own judgment--or that of any private entity--
for that of Congress. As noted above, to the extent that private
entities did not agree with the FCC's interpretation of the rules, they
could meet with the Commission to discuss their concerns or seek a
declaratory ruling on the permissibility of certain practices under the
rules.
______
Response to Written Questions Submitted by Hon. Deb Fischer to
Nicol E. Turner-Lee, Ph.D.
Question 1. To All Witnesses--While the FCC is in the process of
ensuring net neutrality, some want the FCC to impose all of these
obligations under the guise of ensuring consumer protection. Some argue
that common carrier requirements on broadband providers should include
almost most all of Title II, in addition to Sections 201, 202, and 208.
Specifically, some activists have suggested the following parts of
Title II must be applied to the broadband industry:
UNIVERSAL SERVICE
Sec. 214. [47 U.S.C. 214] Extension Of Lines
Sec. 225. [47 U.S.C. 225] Telecommunications Services for
Hearing-Impaired and Speech-Impaired Individuals.
Sec. 254. [47 U.S.C. 254] Universal Service.
Sec. 255. [47 U.S.C. 255] Access by Persons With Disabilities.
CONSUMER PROTECTION
Sec. 217. [47 U.S.C. 217] Liability of Carrier for Acts and
Omissions of Agents.
Sec. 222. [47 U.S.C. 222] Privacy Of Customer Information.
Sec. 230. [47 U.S.C. 230] Protection for Private Blocking and
Screening of Offensive Material.
Sec. 258. [47 U.S.C. 258] Illegal Changes in Subscriber Carrier
Selections.
COMPETITION
Sec. 224. [47 U.S.C. 224] Regulation of Pole Attachments.
Sec. 253. [47 U.S.C. 253] Removal of Barriers to Entry.
Sec. 251. [47 U.S.C. 251] Interconnection
Sec. 256. [47 U.S.C. 256] Coordination for Interconnectivity.
Sec. 257. [47 U.S.C. 257] Market Entry Barriers Proceeding.
Do you agree or disagree that these sections of Title II common
carrier regulation are needed? If you agree, please explain why.
Answer. I disagree that Title II is needed. The Internet has
developed into the transformative medium it is today without the
application of any of these provisions to broadband Internet access.
Indeed, MMTC believes that the Internet's astounding rise over the past
two decades is directly attributable to the light-touch regulatory
approach taken by the FCC to broadband.\1\
---------------------------------------------------------------------------
\1\ See David Honig, Esq. & Nicol Turner-Lee, Ph.D., MMTC,
Refocusing Broadband Policy: The New Opportunity Agenda for People of
Color 7-8 (Nov. 21, 2013) (``MMTC White Paper''); Comments of the
National Minority Organizations, GN Docket Nos. 14-28 and 10-127 (July
18, 2014).
---------------------------------------------------------------------------
Access to the Internet has provided so many great opportunities for
Americans across the board. The Internet in America has become the
marvel of the world as consumers benefit from telehealth, educational
endeavors, civic engagement, and free speech opportunities that have
empowered their lives and provided myriad opportunities to achieve and
grow. Today's competitive broadband marketplace works well and has
helped ensure those opportunities continue to be available to those who
need it most.
The reason the Internet has become so dynamic and powerful in our
lives is due to the decades-old bipartisan approach begun under
President Clinton in which the government made the wise decision to
allow the Internet to proliferate, innovators to create and consumers
to benefit. It is this consumer-oriented and investment-focused
approach that has brought us today's Internet.
A high quality broadband connection provides essential resources
and tools for more vulnerable populations that include the poor, people
of color, people with disabilities, those without a high school
education and seniors. The Internet and Internet-enabled technologies,
applications and services make it possible for these groups to leverage
data, voice, video and social media to solve chronic and persistent
problems. We need the Internet to be the aspiration for these
communities, and avoid a collision course that is mired by years of
legal and political disputes.
As technology advances and brings various new apps and online
services that improve quality of life for so many people, it's
important that regulators do their best to make these services
available to as many people as people. I do not believe that Title II
is the best regulation to ensure this happens.
MMTC, and our partnership of leading civil rights organizations,
support the values of the open Internet, particularly those expressed
by the Administration. The focus as we see it should be on how to close
the digital divide and how to bring advanced, high-speed broadband to
all Americans. We believe that the enactment of Title II regulations
will exacerbate the problem that we all should be attempting to solve.
______
Response to Written Question Submitted by Hon. Brian Schatz to
Nicol E. Turner-Lee, Ph.D.
Question. I believe that the FCC needs to have ongoing, flexible
authority over broadband. I am concerned that the draft legislation
does not preserve that type of authority. What changes can--or should--
be made to the draft that would address this concern?
Answer. The Multicultural Media, Telecom and Internet Council
(``MMTC'') urges Congress to preserve the Federal Communications
Commission's Section 706 authority to regulate advanced communications
capabilities, including broadband. The FCC is the expert agency; as
such, the Commission regularly examines the state of the industry and
creates benchmarks for our current and future success. The Commission
should retain the authority to set standards to regulate the broadband
industry in a flexible and responsive manner, and institute the
appropriate consumer enforcement. Specifically, the legislation should
set forth the appropriate statutes that support open Internet rules
that can be enforced through Section 706 authority. This authority to
regulate broadband will impact the Commission's ability to prohibit
redlining, protect universal service reform, and ensure a robust public
safety network.
______
Response to Written Questions Submitted by Hon. Cory Booker to
Nicol E. Turner-Lee, Ph.D.
Question 1. One aspect largely absent from the debate on Chairman
Thune's proposed net neutrality legislation is the issue of
interconnection. Interconnection is not covered under current
legislation.
Answer. The fact that the bill does not specifically mention
interconnection is not surprising or troubling. Policymakers have long
viewed interconnection issues as fundamentally distinct from regulatory
initiatives aimed at promoting Internet openness--which have always
focused on the mass-market, retail broadband service offered to end
users, not on the longstanding, commercial traffic-exchange
relationships among network providers upstream. The 2010 Open Internet
Order expressly excluded interconnection from the scope of its rules,
and the NPRM proposes to maintain that approach going forward. FCC
Chairman Wheeler likewise has expressed the view on numerous occasions
that interconnection is not the same issue as net neutrality and should
be considered separately. President Obama's statement also signaled a
preference for addressing interconnection by requiring additional
disclosures and network transparency, and I believe that the draft bill
appears to follow this same approach.
Question 1a. Do you believe that interconnection points can be
choke points to the Internet highway?
Answer. Yes, there can be congestion at interconnection points, but
it is highly unlikely that they could be used as choke points to the
Internet highway. It is my understanding that network congestion can be
caused by either the ISP or the edge content provider that decides how
and when it sends traffic to the interconnection points. The FCC record
establishes that those who want to put content online have more ways to
get that content to end users than ever before. There are multiple
routes onto the major ISPs' networks, so anyone can get their content
delivered to an ISP's customers without any direct commercial
relationship with that ISP. And larger Internet content providers that
do want direct connectivity now appear to be arranging for such
connections.\1\ In addition, Internet interconnection points have
always occurred through non-regulated, commercial arrangements. This
approach has allowed the Internet to grow rapidly and support
increasing access speeds. The competitive marketplace for
interconnection--whether via backbone transit providers, content
delivery networks and direct peering arrangements--has resulted in the
rapid decline in the cost of Internet transit which has, in turn,
enabled high-bit-rate applications, such as streaming video.
---------------------------------------------------------------------------
\1\ See e.g., Edward Wyatt and Noam Cohen, Comcast and Netflix
Reach Deal on Service, The New York Times (Feb. 23, 2014), available at
http://www.nytimes.com/2014/02/24/business/media/comcast-and-netflix-
reach-a-streaming-agreement.html?_r=0 (last visited Feb. 4, 2015).
Question 1b. Under the proposed legislation, how would
interconnection issues be addressed?
Answer. As explained above, I read the bill as correctly declining
to impose affirmative restrictions on interconnection. The FCC could
also adopt disclosure requirements relating to interconnection from
both ISPs and content providers.
Question 2. Students, health care providers, and entrepreneurs have
benefited greatly from innovative online platforms and the free flow of
information. I fear that, without strong net neutrality rules, a
``tiered Internet'' could emerge, creating barriers for innovators and
small businesses.
Answer. All of these segments mentioned, and many more, have
exponentially benefitted from broadband and the platforms that private
investment and build out have enabled. It is apparent that clear rules
on open Internet are required, but they also need to be flexible enough
to accommodate new businesses models that may help low-income
communities realize the relevance of broadband services and increase
adoption. For example, MMTC, along with a host of other civil rights
organizations, have advocated against ``paid prioritization'' if it
results in a ``tiered Internet.'' However, MMTC has also worked with
companies, like T-Mobile, to increase service offerings for low-income
consumers that might make it more attractive--and less expensive--for
their low-income customers to adopt the technology.\2\ Further, it is
unclear how Title II rules will impact small businesses, as the
Commission has not undertaken sufficient small business economic impact
studies. For example, the Wireless Internet Service Providers
Association (WISPA) recently reiterated its concern over deficiencies
in the FCC's handling of its Regulatory Flexibility Act requirements
and the resulting lack of economic impact analysis for open Internet
regulations on small businesses, stating, ``the significant economic
impact of any new open Internet regulations has not been given full,
fair and appropriate consideration by the Commission.''\3\
---------------------------------------------------------------------------
\2\ See e.g., Statement of David Honig, President and CEO, Minority
Media and Telecommunications Council, RE: T-Mobile's Music Freedom
Program (Aug. 27, 2014), available at http://mmtconline.org/wp-content/
uploads/2014/08/MMTC-Statement-TMobile-Music-Freedom-0827
14.pdf (last visited Feb. 4, 2015).
\3\ See Wireless Internet Service Providers Association, Ex Parte
Presentation, GN Docket No. 14-28 (Feb. 3, 2015).
Question 2a. In the absence of strong anti-discrimination
protections provided under Title II, and without Section 706 authority,
what tools does the FCC have to prevent discriminatory practices and
differential treatment we all agree should be prohibited?
Answer. MMTC has strongly advocated for the use of Section 706
authority with a Title VII enforcement mechanism, modeled after the
Civil Rights Act, to ensure an open Internet. MMTC has argued that
these policy tools, coupled with a presumption against paid
prioritization, and a strong enforcement program, will facilitate the
Commission's adoption of smart net neutrality rules that meet the goals
of transparency and equity, while fostering broadband adoption and
informed use. In our July filing with the FCC, MMTC, in partnership
with 45 national civil rights organizations (``collectively, National
Minority Organizations''), proposed a straightforward approach
exercising Section 706 authority that included: \4\
---------------------------------------------------------------------------
\4\ See Comments of the National Minority Organizations, GN Docket
Nos. 14-28 and 10-127 (July 18, 2014).
The immediate reinstatement of no-blocking rules to protect
---------------------------------------------------------------------------
consumers.
The creation of a new rule barring commercially unreasonable
actions, while affording participants in the broadband economy,
particularly minority entrepreneurs, the opportunity to enter
into new types of reasonable commercial arrangements and,
through monitoring by the FCC's Office of Communications
Business Opportunities (OCBO), ensuring that minority
entrepreneurs are never overlooked by carriers seeking to
develop these new commercial arrangements.
The establishment of a rebuttable presumption against paid
prioritization that protects against ``fast lanes'' and any
corresponding degradation of other content, while ensuring that
such presumption can be overcome by business models that
sufficiently protect consumers and have the potential to
benefit consumer welfare (e.g., telemedicine applications). Any
prioritized service that overcomes the presumption would remain
subject to enforcement, and consumers would be able to obtain
rapid relief by working with the Ombudsperson and/or through
the complaint process based on Title VII of the 1964 Civil
Rights Act, discussed in more detail at the end of this
response.
The need to underscore the need for transparency.
Enforceable disclosure requirements are the key to consumer
protection online.
Section 706 can also be used to punish bad actors,
especially those engaged in blocking, as the D.C. Circuit Court
confirmed in Verizon v. FCC, the Commission has the authority
to do.
MMTC has also proposed that Section 706 look to stronger
enforcement mechanisms to effectively resolve consumer complaints.
Drawing from the U.S. Equal Employment Opportunity Commission (EEOC),
Title VII of the Civil Rights Act of 1964 (``Title VII'') could be
imported into the FCC's Internet regulatory process under Section 706
of the Telecommunications Act of 1996. The EEOC's complaint process
serves a vital role in resolving most employment discrimination
complaints before they reach the court system. By encouraging voluntary
mediation and informal settlement, the EEOC reduces the strain on
judiciary while promoting swift resolution of discrimination claims. At
the same time, the EEOC retain the ability to investigate and pursue
legal action against employers that have violated Title VII. If no
action is taken, individuals can pursue their legal claims privately
through civil law suits. In doing so, the EEOC complaint process acts
as a first line of defense against Title VII violations, guaranteeing
that individuals will have their complaints heard by the EEOC or will
be free to proceed on their own.
In the same way, this process, if adapted to open Internet
enforcement, could be the first line of defense for consumers who
believe they are aggrieved by an apparent violation of Internet
openness. The Title VII framework would provide the FCC with a flexible
and enforceable legal framework, a clearly established set of factors
and guidance, and mechanism to allow the FCC to evaluate challenged
practices on a case-by-case affordably, efficiently and expeditiously.
Such a procedure should help alleviate any misimpression that Section
706 is insufficiently muscular to preserve Internet openness, while at
the same time building consumer confidence in the FCC's stewardship of
the open Internet.\5\
---------------------------------------------------------------------------
\5\ See FCC Filing Dockets 14-28 and 10-27, ``Application of the
EEOC Complaint Process to 1996 Telecommunications Act Section 706
Complaints Regarding the Open Internet,'' September 18, 2014.
---------------------------------------------------------------------------
Instead of relying on a more formal complaint process under Section
208, the Title VII model would allow a complaint to provide the
Commission with enough information to make out a prima facie case of
specific or systemic harm, allowing the Commission to conduct an
initial screening and, if the Commission's staff issues a non-
precedential finding of probable cause, the agency may institute
expedited enforcement or mediation. This model would provide consumers
with an efficient, affordable and expedited means of pursuing alleged
rule violations and other claims against providers.\6\
---------------------------------------------------------------------------
\6\ See FCC Filing Dockets 14-28 and 10-27, ``Application of the
EEOC Complaint Process to 1996 Telecommunications Act Section 706
Complaints Regarding the Open Internet,'' September 18, 2014.
Question 3. As currently drafted, what protections does the
legislation provide that broadband reclassification would not?
Answer. The legislation would significantly establish an outright
ban on paid prioritization--one that the FCC likely could not adopt
under Title II of the Communications Act. According to several experts,
service differentiation will not be entirely banned under Title II.
Sections 201 and 202 of the Communications Act--the two provisions of
Title II that some have cited as support for rules addressing paid
prioritization--each require the FCC to engage in a highly fact-
specific, contextual analysis of whether particular conduct is ``just
and reasonable,'' and thus could not be used to adopt the sort of
categorical ban on paid prioritization appearing in the legislation.
Question 4. Do you believe, as the draft legislation suggests, the
FCC should not be able to claim any authority under Section 706 of the
Telecommunications Act of 1996?
Answer. No. The FCC is the expert agency and, as such, should be
able to exercise flexible authority that is responsive to our changing
information needs. We believe that there should be movement towards a
legislative compromise that preserves FCC's Section 706 Authority to
ensure the implementation and enforcement of net neutrality rules.
______
Response to Written Questions Submitted by Hon. Joe Manchin to
Nicol E. Turner-Lee, Ph.D.
Question 1. During the hearing, I received conflicting information
about how the Chairman's proposed legislation would impact Universal
Service Fund (USF) broadband programs like the Connect America Fund
(CAF) that help private companies make investments and expand their
network into rural, underserved areas. Due to the importance of these
programs to my state and the communities I represent, I am requesting a
written explanation of the anticipated impacts this bill would have on
USF programs from each of the witnesses, specifically:
Question 1a. What authority or authorities does the Federal
Communications Commission currently rely on to operate and execute USF
programs like the Connect America Fund?
Answer. The FCC's USF and CAF programs principally rely on Section
254 of the Communications Act, which governs contributions to and
disbursements from these programs, and Section 214 of the Act, which
establishes eligibility criteria for carriers seeking support.
Question 1b. Without either Section 706 of the Telecommunications
Act of 1996 authority or Title II of the Communications Act of 1934
authority, as proposed in the draft legislation, under what authority,
if any, could the FCC incentivize broadband deployment?
Answer. The legislation would not change the status quo regarding
the FCC's USF and CAF programs. Those programs today play a vital role
in promoting broadband deployment--and do so without classification of
broadband Internet access services as a Title II service. The
obligation of telecommunications carriers to contribute to those
programs, and the ability of those programs to support broadband
deployment, would remain the same.
Question 1c. What would happen to the Connect America Fund and
similar programs should this legislation pass in its current form?
Answer. I believe that nothing will happen to these programs if the
legislation passed. As noted above, since the CAF was established, the
program has been successful at promoting broadband deployment, and all
the while broadband Internet access service has been classified as an
information service. The legislation would leave that current
classification in place, and thus would not affect CAF support going
forward.
Question 2. One of the primary concerns I have about the proposal
we are discussing today is the removal of all rulemaking authority.
Businesses need certainty, and rulemaking allows businesses to
understand how the general goals and standards Congress establishes in
law--such as affordable and accessible Internet--will be specifically
applied before they make investment decisions. The proposed bill
removes all the transparency requirements included in rulemaking and
replaces them with a new, retroactive, case-by-case rulemaking process
that could be very difficult for small start-up businesses to
understand. Without rulemaking, how would entrepreneurs understand how
the FCC would apply the mandates of this bill to particular
circumstances?
Answer. The D.C. Circuit Court made clear in Verizon v. FCC that
``[S]ection 706 of the Telecommunications Act . . . furnishes the
Commission with the requisite affirmative authority to adopt [open
Internet] regulations.'' In 2012, the D.C. Circuit Court unanimously
upheld the transparency rule as a valid exercise of the FCC's authority
under Section 706. The D.C. Circuit Court also made clear that Section
706 would support the adoption of appropriately tailored rules
prohibiting blocking of online content and requiring ``commercial
reasonableness'' in business relationships between ISPs and edge
providers. The ``commercial reasonableness'' standard can be likened to
core Title II standards requiring just and reasonable terms and
conditions, and prohibiting unreasonable discrimination without the
substantial burdens and uncertainty created by common carrier
regulations. We should be following the D.C. Circuit Court's roadmap
for new open Internet rules under Section 706, whereas the FCC can
preserve the flexibility needed for regulating Internet access without
needlessly creating legal risk and uncertainty.
Question 2a. What opportunities would businesses and consumer
groups have to weigh-in on the FCC's application of these rules going
forward?
Answer. Businesses and consumer groups would have the opportunity
to participate in any rulemaking proceeding that the FCC undertakes to
adopt rules implementing the statutory requirements. In such a
proceeding, the FCC likely would need to develop a clear understanding
of certain concepts in the legislation (e.g., what constitutes
``blocking,'' what kinds of ``network management'' are ``reasonable,''
etc.), and businesses and consumers groups would be able to share their
insights on those matters. Moreover, businesses and consumer groups
could weigh in on any future petitions seeking declaratory rulings or
other guidance under the legislation. Such parties might also have the
opportunity to provide input on adjudicatory proceedings, to the extent
the FCC opens aspects of those proceedings to public comment.
Question 2b. How could any changes, however small, even be made to
reflect the specific concerns of entrepreneurs or small businesses with
the explicit prohibition on expanding Internet openness obligations
included in Subsection (b) the draft bill?
Answer. Even if the FCC cannot impose substantive restrictions
beyond those in subsection (b) of the draft bill, it still would be
accorded deference in interpreting the restrictions in the legislation
itself. And as the FCC considers how to interpret aspects of the
legislation (e.g., the meaning of ``blocking'' and ``reasonable network
management''), it will be obligated to consider the input of
entrepreneurs, small businesses, consumer groups, and others who submit
their views to the agency.
[all]