Pots and Pans and the Net Neutrality Mess

Pots and Pans and the Net Neutrality Mess
May 11, 2014

Randolph J. May

Randolph J. May is President of The Free State Foundation in Potomac, Md. (read full bio)

What a mess!

I am speaking, of course, of the “deliberation” concerning FCC Chairman Tom Wheeler’s plans for the FCC to consider adopting a new net neutrality rulemaking. I put “deliberation” in quotes, in part, because Free Press is calling on its supporters to“bring pots and pans and whatever else you can bang on” to make a lot of noise on the FCC’s doorstep.

Well, the “Pots and Pans” strategy is one way of thinking about what influences the FCC’s decision-making process. And this way of thinking doesn’t particularly go hand-and-hand with the notion of the agency’s commissioners calmly trying to figure out how to employ their so-called policymaking “expertise.”

As regular readers know, it has been my firm position that, after the DC Circuit’s Verizon decision, absent convincing evidence of market failure and demonstrable consumer harm, the FCC should not try to reinstate the net neutrality regulations the DC Circuit tossed out. Nevertheless, when Chairman Wheeler announced his intent to move forward with yet another net neutrality rulemaking, this time one based on a “commercial reasonableness” standard for assessing Internet providers’ practices, I said in a statement that “there appear to be elements in his proposal that may mitigate the otherwise potential harmful effects of unnecessary government intervention.”

I understand the pressures that Chairman Wheeler apparently felt as a result of the blowback and sloganeering from “consumer advocacy groups” and even the media. But I wish that he had offered a principled, consistent defense of his position regarding the commercial reasonableness standard. Instead, he seemed, at least rhetorically, to back away from articulating such a defense, rather quickly pivoting to a “get tough” mode of threatening Internet providers with Title II common carrier regulation -- the regime devised early in the last century to regulate POTS, or "plain old telephone service."

Chairman Wheeler’s noticeable shift to “Title II talk” didn’t at all mollify the net neutrality advocates. It only further fueled their Title II fires and calls for pots and pans to bang on.

With almost a decade’s worth – yes, you read that right – of pieces on the Free State Foundation website explaining why, at least absent evidence of market failure and consumer harm, adoption of net neutrality regulation is unwarranted, I don’t want to re-argue the case here. I just want to suggest two points for your consideration at this particular moment in time:

First, in my view, it is not nearly as clear as the pro-net neutrality advocates seem to believe that Title II classification of ISPs – that is, classifying them as common carriers – would survive a judicial challenge. Indeed, I think the FCC’s legal case would be fairly problematic.

While it is true enough that, under established administrative law principles, an agency may change its mind, it nevertheless must provide a well-reasoned explanation for such a change. Pointing to the number of protesters banging on pots and pans outside the FCC’s doors is not likely to suffice. Neither is pointing to the agency’s disappointment at already having been twice rebuffed by the DC Circuit under alternative theories.

The main reason the FCC’s case for sustaining a Title II challenge would be problematic is this: In defending its decision to classify Internet service providers as information service providers – thereby removing them from the ambit of Title II regulation – the Commission argued that, from a consumer’s perspective, the transmission component of an information service is integral to, and inseparable from, the overall service offering. This functional analysis of ISPs’ service offerings was the principal basis upon which the Supreme Court upheld the FCC classification determination in 2005 in its landmark Brand X decision.

I don’t think the integrated, inseparable nature of ISPs’ service offerings, from a functional standpoint, and from a consumer’s perspective, has changed since the Brand X decision, so it won’t be easy for the Commission to argue that it is changing its mind about the proper classification based on changed consumer perceptions of the service offerings’ functionality. And to the extent that the Brand X Court cited favorably to the FCC’s claims concerning the then-emerging marketplace competition and the dynamism in the broadband marketplace, those factors, if anything, today argue even more strongly for a non-Title II common carrier classification.

I understand the role that so-called Chevron deference can play in upholding agency decisions. Indeed, it played an important role in the Court’s decision in Brand X. But invoking Chevrondeference won’t relieve the FCC of the need to provide persuasive reasoning in support of an abrupt about-face on a point the agency litigated – successfully – all the way up to the Supreme Court.

The second point I wish to make is this: We have now come to a juncture where – again, assuming no present convincing evidence of market failure and consumer harm – the FCC ought to await further direction from Congress. I understand that inVerizon the majority, over a dissent, interpreted Section 706 in a way that arguably gives the agency authority to adopt new net neutrality rules, as long as they don’t, as a practical matter, amount to imposing common carrier obligations on ISPs. And I understand the DC Circuit’s decision represents the current “state of the law” on the question of Section 706 authority. But I think Commissioner Michael O’Rielly makes a persuasive argument – an argument that happens to reflect the Commission’s original position until it did a late switcheroo – that Congress never intended Section 706 to be interpreted as an affirmative grant of authority to allow the agency to adopt a net neutrality-like regime. I’m glad Commissioner O’Rielly articulated his position at the Free State Foundation’s annual conference.

Now that we’ve come to the present point – the “What a mess!” point – the FCC ought to give Congress an opportunity to act before moving forward. After all, the members of Congress actually were elected to make important policy decisions. In order to agree with me, you don’t have to believe the FCC couldn’t possibly succeed in adopting new net neutrality regulations. You simply have to agree that it is a good time for Chairman Wheeler and his colleagues to exercise a modicum of regulatory humility.

[Originally published at The Free State Foundation]

Randolph J. May

Randolph J. May is President of The Free State Foundation in Potomac, Md. (read full bio)