Simply imposing Title II won’t work.

[Blogmeister’s Reminder: The views here are those of the author, not necessarily shared by FHH colleagues and clients. Responses are welcome.]

Many of the three million (or so) comments in the net neutrality proceeding, based on our own small sample, urge the FCC to impose net neutrality rules by regulating the Internet “like a utility.”

Sorry. It won’t work.

“Regulating like a utility” means bringing Internet service providers (ISPs) under Title II of the Communications Act, which is the statutory basis for common carrier regulation. Title II prohibits “unjust or unreasonable discrimination.” Preventing discrimination is also the purpose of net neutrality. That looks like a good fit. Why isn’t it enough?

Congress enacted Title II in 1934 primarily to regulate telephone service. Telephones of that era delivered exactly one functionality: real-time voice transmission. Non-discrimination meant that everybody got a dial tone on equal terms. That was easy to regulate. Enforcement was easy, too, since one company handled local service in nearly every city and town, and was also the country’s only long-distance provider.

The Internet is vastly more complicated, with astronomical numbers of providers and services. A simple rule saying nothing more than ISPs “shall not discriminate” would be meaningless. An ISP’s capacity is, after all, finite. At peak times it may not be able to accommodate 100% of all potential content – email, Facebook posts, Netflix video, VoIP calls, people working from home, casual browsing. At those times, some discrimination must necessarily occur in allotting access to providers. The question, then, is how to ensure that the discrimination is “fair”. An effective non-discrimination rule would give an ISP managing a traffic overload clear guidance on which bits to send on and which to hold back in every possible situation. More than that, a proper rule would let the ISP program in algorithms that make these decisions automatically, on the fly.

Here at the law firm we spend much time reading and analyzing rules, identifying their weaknesses, and sometimes proposing improvements. It’s part of what regulatory lawyers do. But even supposing Title II applies, we can’t find a way to write a net neutrality rule in a manageable number of words, and still leave only minimal discretion to the ISP. The discretion part is important. The purpose of net neutrality is to fairly prioritize various providers’ and customers’ competing needs. Any element of vagueness that lets the ISP make its own decisions – in particular, any recourse to “reasonable” behavior – fails as a guide and becomes instead a source of litigation.

The currently proposed rule intended to curb discrimination (meant to function outside Title II) reads like this:

A person engaged in the provision of fixed broadband Internet access service, insofar as such person is so engaged, shall not engage in commercially unreasonable practices. Reasonable network management shall not constitute a commercially unreasonable practice.

Everybody clear on what this prohibits? Not unless we know what the term “commercially unreasonable practice” means. And we cannot know that with any precision because “commercially unreasonable practice” is not defined in the rules. An ISP with a good lawyer – and they all have good lawyers – could plausibly argue that the rule allows almost any activity at all.

There is a way to solve this problem, one that regular CommLawBlog readers have seen before. It entails applying Title II to the ISPs, plus one step more: a rule that requires the ISP to open its channels (cable or phone line or fiber) to competing ISPs. Those competitors would have to pay for use of the channel. Under this approach, a consumer dissatisfied with the performance of one ISP could easily switch to another with no change to the household wiring – an impossibility in today’s system. That would fix the net neutrality problem overnight with no further regulation. A customer unhappy that his cable-company ISP was slowing down Netflix, for example, would simply go online to change over to a different ISP that used the same cable connection. Done in ten minutes; no service call needed.

We know this approach works because it did work, very well, all through the Internet’s dial-up days. Back then nearly all Internet access was over the telephone lines. A set of FCC rules called Computer III required just the kind of shared access to those lines that we propose here. Thousands of small ISPs and a few larger ones, including the phone companies themselves, fought to outdo each other in serving their customers. A big-city resident had dozens of ISPs to choose from. The phone company ISPs’ advantage, if any, was small. No one talked about net neutrality. No one had to, because any ISP that messed with the content would soon be out of business.

In the early 2000s, following the advent of broadband, the FCC interrupted this regime with a colossal two-part error. First, it declined to apply Title II and Computer III shared access requirements to cable broadband delivery. Second, a few years later, it removed those same requirements from telephone company broadband. The result today is Internet monopolies, or duopolies at best, in nearly every U.S. market. Most of us get wired Internet service from very large cable and telephone ISPs. These companies have both the means and (arguably) the incentive to discriminate among content providers, so as to protect their own offerings and services. Even in a duopoly, the cost and inconvenience of changing providers are so great as to keep customers effectively locked in.

The cable and telephone ISPs like the present arrangement. They hate Title II, and they have the political clout to fight it. The last FCC chairman said flatly that he would not re-impose Title II; the current chairman has said the option is open if needed, but no one thinks that overcoming the well-funded objections of the cable and telephone companies would be easy. Even if the FCC were to adopt the Title II approach, the reinstatement of a Computer III-type access regime on top of it would arouse even stronger opposition. Much as the wired ISPs would dislike becoming regulated monopolies, we suspect they would like a truly competitive environment even less. Sadly, though, that is the only practical way to bring about net neutrality. Simply reclassifying the ISPs as Title II carriers will trigger a vast flood of litigation, but bring little relief to consumers who simply want unfettered access to the Internet.