Un-Title II-ed: What Reclassification Means

Written by Stan Adams

CDT is committed to protecting the open internet. This post is part of a series that explores the implications of FCC Chairman Ajit Pai’s proposal to roll back net neutrality protections.

From a regulatory perspective, the heart of the net neutrality debate is about how the FCC classifies broadband internet access. This classification determines which part of the Communications Act (the Act) applies to ISPs and the scope of authority the FCC may use to regulate providers. Two years ago, after a decade of struggling to regulate ISPs under Title I of the Act, the FCC reclassified broadband internet access as a “telecommunications service.” As providers of telecommunications services, ISPs are subject to regulation under Title II of the Act. Now, Chairman Pai wants to reverse that classification, making broadband internet access an “information service” under Title I of the Act. So why all the fuss? To oversimplify, Title II explicitly provides the FCC authority to protect consumers and online businesses against “unjust or unreasonable” practices of ISPs. Title I does not.

[Note: This piece focuses primarily on fixed broadband provided through wires or fiber. There is a similar distinction for the classification and relevant regulatory authority the FCC has over wireless providers (commercial mobile radio service/ private mobile radio service) which is also at stake here, but which exceeds the scope of this post.]

Let’s break down the legal and policy arguments for both classifications and discuss their ramifications:

The legal arguments boil down to which definition provides a better fit for internet access. The Act defines “telecommunications” as “the transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sent and received.” When you click a link from your browser, the ISP delivers your message (“I want to see the information at this address”) to the host’s server, which then sends that information back to you. These messages are packaged by your computer, and the host’s server, as one or more packets, each of which is stamped with your respective addresses and other handling information. The ISP transmits the packets through its network, which connects your computer to the rest of the internet, carrying them from your computer to websites and services based on your direction.

Compare that to an “information service,” which provides the “capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications.” In the earlier days of the internet, before the explosion of third parties who now offer countless options for each of these activities, ISPs offered services like email, web hosting, and news aggregation. And because these services weren’t as widely available, many people used these included services and perhaps thought of internet access and the various additional services as one and the same. It’s true that ISPs still provide these additional services, and some customers may still use them, but for most internet users, ISPs are simply a conduit between them and the rest of the internet.

In the NPRM (Notice of Proposed Rulemaking) released by Chairman Pai, the FCC argues that internet access should be considered an information service. More specifically, the agency argues that because internet access allows people to connect to third parties that offer options for “generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information,” it provides the “capability for” those activities. By this logic, which conflates capability with access to capability, any communication technology could be considered an information service. Do ISPs offer information services? Yes. Is the internet access provided by an ISP an information service? Definitely not.

In addition to the arguments about which definition applies to internet access, there are a host of policy arguments. The telecos and Chairman Pai argue that any application of Title II to internet access providers will stifle investment and add job-killing regulatory burdens onto an industry that needs little or no oversight. They also argue that regulation under Title II causes “regulatory uncertainty” that leads to a similar chilling of investment in the expansion and improvement of networks. They claim that everyone would benefit from a Title I regime because they would be more likely to invest in network build-out (the laying of the physical wires to carry your internet services). Although the NPRM talks extensively about these effects, it fails to state exactly which parts of the current Title II approach cause either the burdens or the uncertainty.

CDT, along with other internet advocates, edge providers, and the vast majority of internet users believe that some oversight and consumer protections are necessary to prevent ISPs from leveraging their gatekeeper positions (you have to go through them to reach the rest of the internet) in ways that harm consumers and competition among edge providers. We believe that, in the absence of enforceable rules, ISPs have both the ability and the incentives to do this in a variety of ways, such as charging edge providers to prioritize their traffic (paid prioritization) or using data caps and zero rating to push users towards the content and services of ISPs and their affiliates. We’ll talk more about both in our next post.

So what would reclassifying internet access as an “information service” subject only to regulation under Title I mean? For the FCC, it would mean a dramatic reduction in its authority and ability to make consumer-protection rules for ISPs. Whereas Title II gives the Commission explicit rulemaking authority to prevent “unjust or unreasonable” practices by telecommunications providers, Title I merely provides the Commission with “ancillary authority.” This allows the Commission some latitude to regulate information service providers, but only when such regulation is tied to another, explicit delegation of authority elsewhere in the Act. So, for example, the FCC might use its ancillary authority to regulate information service providers if they were doing something that had some unwanted effect on a Title II service.

What the FCC cannot do, according to the D.C. Circuit’s opinion in Verizon v FCC, is make rules that impose Title II common carrier-type obligations on information service providers. This is not to say that the FCC would have no authority to regulate internet access as an “information service,” but it would mean that the existing bright-line rules against blocking, throttling, and paid prioritization are much less likely to withstand a legal challenge. A Title I reclassification would be a path toward defeating almost every protection put in place by the Open Internet Order.

So what can you do? The Administrative Procedure Act (and associated legal precedent) requires that agencies justify abrupt policy reversals like reclassification by showing how the facts or circumstances have changed enough to warrant the change in position. The FCC did this a little over two years ago by showing that the way people think of the services provided by ISPs has shifted away from viewing their subscription as a holistic bundle of access and information services to seeing access as the primary service and other offerings, like ISP-provided email, as distinctly separate add-ons. Chairman Pai will need to prove otherwise to keep his reclassification effort above the “arbitrary and capricious” standard intended to prevent unjustified policy changes. While the inevitable public outcry against Pai’s NPRM may not change the Commission’s vote, comments supporting the view that consumers view their ISP subscriptions as a means of communication rather than a package of information processing services would bolster the ensuing legal argument against reclassification.

Stay tuned for our next post discussing the role, and the roll back of the bright-line rules and the internet conduct standard.

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