A good slogan perhaps, but NOT the law

As the FCC prepares to impose its version of net neutrality upon wireless and wired Internet service providers (ISPs), the Internet is buzzing with comments on how such governmental intervention may affect the future development of the Internet. 

On the one hand are the application service providers (with Google leading the charge) who promote net neutrality as necessary for the preservation of the Internet. These folks did not invest in any of the transmission facilities that comprise the hardware pipeline of the Internet – but they are happy to rely on that pipeline to distribute their services.

On the other side are the ISPs (including folks who DID invest in the hardware) and technical experts who believe net neutrality is a solution in search of a problem and a dangerous overlay of regulation upon a dynamic, constantly evolving set of relationships.

This battle presents a range of legal issues. The question mentioned perhaps most often involves the FCC’s authority to regulate at all here:  the Commission (with a thumbs-up from the Supreme Court in the Brand X case) has held Internet data transmission to be an “information service” that cannot be regulated – well, at least not as common carriage. But if that’s the case, how can the Commission now try to impose common carrier-like obligations on ISPs?

Then there is the First Amendment of the U.S. Constitution.

Talk to the advocates of net neutrality, and they will tell you that net neutrality advances the interests embodied in the First Amendment. To them, net neutrality is the “First Amendment of the Internet.” This is an interesting way of looking at the First Amendment . . . because it is backward. To quote Adam Thierer in his very compelling blog about the issue:

After all, the language of the First Amendment could not be more clear when it says, “Congress shall make no law…” It doesn’t contain any caveats or footnotes. And the First Amendment most certainly was not intended as a tool for government to control the editorial discretion of private individuals or institutions. It was about restricting the power of the government to curtail speech and expression.

But net neutrality would open the door for government to exercise at least some control – and very possibly a lot of control – over speech and expression. So the advocates of net neutrality as the “First Amendment of the Internet” have it backwards. Further, they seem not to appreciate that those who would be most directly burdened by net neutrality, the ISPs, enjoy First Amendment rights like the rest of us. ISPs, too, have the right to be free from government regulation of their speech.  Ignoring (whether or not intentionally) that right, the net neutrality advocates  fail to acknowledge the burdens that would be imposed by net neutrality on the ISPs’ First Amendment right to choose to transmit, or not to transmit, particular viewpoints or messages. 

“What?” you say. “ISPs are not newspapers! They’re merely service providers.” If you were to believe that ISPs have no free speech rights, you would be wrong. Think about cable television, which is somewhat similar. Sure, cable companies have been required to carry local commercial television stations without being paid a dime for the carriage. But such carriage has been subject to repeated First Amendment attacks, attacks which were barely parried by a razor-thin 5-4 vote in the last go-around before the Supreme Court (in Turner). And the Supreme Court has repeatedly held – in the 1979 Midwest Video case, and again in the 1986 Preferred opinion, and once again in the 1994 Turner case – that cable companies do have First Amendment rights that exceed those of broadcasters.   (Of course, the more ISPs claim First Amendment protection because they are “speakers”, the more they expose themselves to additional potential liability, as suggested by our previous posts here and here. But that’s a blog for a different day.)

You might also argue that providing access to web sites, applications and content selected by the user is what the Internet is all about and, thus, net neutrality is merely requiring ISPs to do what it is that ISPs do. That is an interesting argument, but it ignores the fact that nothing compels an ISP to adopt any particular business model and nothing compels the ISP not to be a speaker. As stated above, the FCC treats ISPs as “information service” providers who cannot be compelled by the FCC to offer any service at all, let alone any particular type of service.  And this argument also begs the question of what will ISPs being doing in the future?

You might also be thinking that my view on the application of the First Amendment to ISPs is just a theory, and not something that has been decided by, say, a Federal court. Not entirely true. In 2000, a Federal District Court sitting in south Florida considered the constitutionality of a Broward County ordinance which required cable companies who use their systems for Internet access services to allow any and all ISPs to have access to the service on a nondiscriminatory basis. (It may come as no surprise that the ordinance was written by a local telephone company.) The court conducted a thorough analysis of this ordinance under the First Amendment and decided that a cable company offering Internet access service enjoys First Amendment rights and must be free to reject any ISP it wants to reject.

This observer believes that the FCC will have to conduct a thorough and searching First Amendment review of any net neutrality rules it may want to promulgate. I believe that the battle ground will be over the level of First Amendment scrutiny to which any FCC decision will eventually be subject. The FCC will undoubtedly argue that the toughest standard of judicial review — i.e., “strict scrutiny” – is not applicable here.  The FCC will have to make that argument because “strict scrutiny” is almost always fatal to a speech restriction. To justify a more regulation-friendly “intermediate” level of review, the Commission can be expected to turn to the Turner and Preferred cases to support its theory that net neutrality regulations are content neutral.

This observer believes strict scrutiny is the appropriate standard here because ISPs cannot claim that they possess the type of “bottleneck monopoly” which cable possessed in 1994, and which led the Turner court to apply the intermediate level of scrutiny. Nonetheless, let’s say, for sake of discussion, that the FCC’s regulations will receive an intermediate scrutiny analysis, and the FCC will rely upon the Supreme Court’s opinion in Preferred to urge that, “[w]here speech and conduct are joined”, the interests of the regulator must be considered. Still, Preferred and Turner would require that the burden of proof be placed on the FCC.  That, in turn, would require the FCC to show a factual basis for its belief that net neutrality is needed. And as the Turner court held, “a content neutral regulation will be sustained if it furthers an important governmental interest that is unrelated to the suppression of free expression and the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.”

This is where it gets sticky for the net neutrality proponents. Web sites and applications are not being blocked as a matter of course now or historically, except in instances in which sites depict the exploitation of children or in certain cases in which peer-to-peer applications hog too much bandwidth.  And if ISPs were to begin to block web sites and applications, what would the harm be? ISPs are operating in a competitive environment, and many new competitors are around the corner. For example, Clearwire has announced that it will bring WiMax services with a huge amount of channel capacity (i.e., more ability to move more bits) to over one-third of the population by the end of 2010 and two thirds of the population by 2017. Verizon Wireless, AT&T Mobility and other wireless service providers have announced that their 4G LTE offerings are just around the corner.

And let’s not forget the costs of regulation. As a regulatory lawyer of almost three decades  (and a former FCC employee, to boot), I can tell you without any reservation that regulatory authority inherently retards new and creative conduct  because of fears that the regulator may not like it, and because regulation inherently guides and restrains the development of markets and technology.

Regulating the Internet without hindering its development presents an especially difficult problem because the Internet is a rapidly evolving set of relationships that owe their evolution to technological developments and unique ideas for content and applications that simply cannot be anticipated.   The FCC appears to recognize that it may have problems attempting to regulate the Internet without thwarting its development – at least that’s the signal I get from  the broad principles which the Commission has proposed as its rules of the road for the Internet.

But how can the FCC’s proposed broad principles provide the clear rules of conduct that everyone will know and appreciate? They cannot. Litigation before the FCC will be the result. (Hint to FCC: better hire 50 or 100 lawyers for the Internet Litigation Bureau).   

Now you may be thinking that the FCC can react when its rules are found to hinder Internet development. Perhaps, but how fast?   Not fast enough. Regulators have a very difficult time adapting regulation to a fast changing marketplace. For one, the rules they must abide by under the Administrative Procedure Act and the Due Process Clause of the U.S. Constitution require a slow and cumbersome rule making process that cannot keep up with a fast changing industry. It is typical for the rule creation process to run for two or more years.

As I stated at the beginning of this blog, the Internet is buzzing with comments about the FCC’s soon-to-be-proposed net neutrality rules. And the net gets more robust every year, all without this proposed Government intervention that, excuse me, will meet some understandable and real crisis I have never seen. Doesn’t that say it all? In conducting my own research, everything I saw, I saw though my Internet connection. Strangely enough, I found only two articles that mentioned my position, and a host of articles that promoted “net neutrality as the First Amendment of the Internet.” Message to the ISPs: you are not doing a very good job of suppressing access to ideas that may hurt you.