Net Neutrality, Yes. FCC Regulation No!

Net Neutrality, Yes. FCC Regulation No!

The Internet is “the most dynamic, free-wheeling and innovative platform in history” and Net neutrality has been the basis for its success. The “Internet” is not just another telephone company to be “regulated” by federal and state agencies that are self-perpetuating and unaccountable to the voters.
What we call the “Internet” today is probably the first, and certainly the largest, not-for-profit “commercial” enterprise in economic history. The Internet is truly free and accessible to everyone at the level of certain basic services: email communications run over the internet, and publishing web pages by simply typing into a word processor.

The Internet is not a “free” good

As a result, many government regulators and political scientists still seem to believe that the Internet is what the old laissez-faire economists used to call a “free good” just as they once thought that air and water were “free goods” until economic reality in the late 20th century eventually established that potable water was not a free good.
One of the most popular political positions, “there should be no toll takers between you and your Internet content.” has obscured the real issues regarding Net neutrality.
While it may be a natural human desire to get something for nothing, there are costs associated with every human action and activity. “Free” access to the Internet requires payment by someone to the Internet Service Provider (ISP)—a business entity, which might be an enterprising individual in the non-industrial world, or a multinational conglomerate communications corporation—that provides access to the Internet.
Internet access is not really free and it should not be free within any economy based on the free enterprise system.

Don’t fix what ain’t broke

While trying to “fix” a well-functioning system that “ain’t broke”, another federal agency—the Federal Communications Commission (FCC)— reached out to expand its jurisdiction, enlarge its staff, and increase its control over the American Free Enterprise System by applying the same archaic rules that used to govern rural telephone service and early efforts to provide “cable” television service to broadband, with the “hope” that it ensures the fair and equal treatment of all traffic on the Internet
Historically, however, every attempt at government regulation of free enterprise produces winners and losers as a result of the government regulation effort rather than the marketplace. Should this be allowed to happen to the Internet as well?
The FCC is promising more employment for time-billing lawyers and lobbyists and less service to the American people.
The FCC staffers have determined that “broadband providers represent a threat to Internet openness and could act in ways that would ultimately inhibit the speed and extent of future broadband deployment”; and “broadband providers may be motivated to discriminate against and among edge providers.”
The freedom of speech and freedom of the press which are guaranteed by the First Amendment have been adequate to protect those rights against most attempts to deny them. There is no reason to believe that an administrative agency such as the Federal Communications Commission will do a better job than our courts have in protecting those rights since the Constitution was ratified.
The fear that without absolute Net neutrality or Open Internet rules imposed by administrative fiat, network operators will abuse their power, is no different from the plea to allow “preventive detention” of individuals some government authority suspects might commit some crime at an undetermined time in the future?
A new FCC, led by Chairman Ajit Pai, voted 2-1 has commenced a proceeding to repeal rules adopted in 2015 impose net neutrality rules. This final proposal by a new FCC , titled “Restoring Internet Freedom,” was made public on May 23 and calls for “re-evaluating the existing rules” on net neutrality, which currently aim to ensure that internet service providers (ISPs) don’t block or slow users’ access to certain websites or services or create so-called fast lanes for content delivery.
The FCC’s notice of proposed rulemaking specifically proposes to reverse the 2015 FCC decision to classify all broadband internet access services as information services and eliminate the internet conduct standard, which allows the FCC to prohibit practices it determines unreasonably interfere with or disadvantage consumers’ ability to use the internet. More than 9 million comments were filed before the July 17, 2017 deadline for comments.

The Net Neutrality battle lines remain the same

The giant telecommunications companies led by Verizon and AT&T claim quite accurately that “As a threshold matter, there have been no ‘net neutrality’ rules of any kind for most of the broadband era, and—despite incessant warnings to the contrary—no problems arose in that unregulated environment.” They claim that the Title II-specific rules have imposed “massive costs on the broadband ecosystem in the form of diminished incentives for investment and innovation.”
A number of tech companies led by Amazon oppose the proposed changes to net neutrality rules, arguing that net neutrality has fostered innovation on the internet by lowering the barriers to entry for new websites and that “removing or weakening open internet rules will disrupt” the openness of the internet. They claim that a regulatory climate hospitable to innovation allowed U.S.-based Internet companies to develop once unimaginable new products and create entire new sectors of the economy.”

What are the “controversial” FCC Net neutrality rules?

The existing FCC Net neutrality rules essentially state that broadband providers cannot block competing traffic on their network or discriminate against another company’s services that ride over its network in order to benefit their own competing services. On its face, this may seem to be a reasonable position, particularly if it were limited to prohibiting broadband providers from blocking or slowing down traffic on wired and wireless networks.
However, the 2015 FCC majority went further and sought to ban Internet service providers from offering paid priority services that could allow them to charge content companies, such as Netflix, Amazon and Google fees to access Internet “fast lanes” to reach customers more quickly when networks are congested.
The question is whether the FCC in 2015 trampled on the American Free Enterprise System. The telecomm giants and their supporters claim the existing rules fail to recognize the role of rapidly advancing technology within the structure of the American Free Enterprise System and that the existing net neutrality rules are a direct assault upon the constitutional rights of businesses upon which the American economy depends.

The arguments creating the controversy

The cable operators, wireless providers and phone companies argue that regulating the broadband industry stifles innovation. History clearly establishes the truth of this argument, particularly in the telecommunications industry.
More significantly, the FCC regulations would allow the government to impose new taxes and tariffs which will certainly increase consumer bills as the internet service providers pass them through to their customers just as the telecoms do today.
The political question of whether the 2015 FCC Internet regulations are part of a secret plan to regulate the Internet and limit freedom of speech and free expression and exchange of ideas will have to be determined over time by open political discussion and legislative debate. It should not be allowed to occur as an “unintended consequence” of regulatory action.

Return to the Courthouse

In 2005, the Supreme Court of the United States ruled that broadband services should not be classified as telecommunications services and refused to consider the infrastructure of broadband providers as a public right of way subject to regulation under the common carrier concept. However, in the same decision the Supreme Court determined that the infrastructure used to deliver Internet content of all kinds including web pages, video and audio-streaming services, should be open to anyone accessing or delivering that content.

Continuing clumsy efforts…

Whatever the decision by this new FCC majority, we can expect litigation which, if it proceeds the way prior litigation has, will accomplish little more than improve the bottom line for a number of major law firms and ensure their continued clumsy efforts to fashion legal arguments which will not reflect nor resolve the fundamental social, political, and economic issues surrounding Net neutrality.

Why not a public interest class action?

The only way these questions and issues will ever be properly presented to a court for adjudication is in the context of a public interest class action seeking to declare the rights of Internet users and Internet service providers and Internet content providers.
Because declaratory judgment actions are by definition non-adversary proceedings, they permit the court to hear and evaluate all of the relevant evidence which can be presented by competent witnesses and listen to the arguments from every affected party with an interest in the outcome. During the pendency of such an action, the equitable jurisdiction of the court can and should be exercised to stay any further action by the Federal Communications Commission towards promulgating and implementing broadband regulations.

Why a public interest class action for declaratory judgment

A public interest class action for Declaratory Judgment would go to trial immediately without lengthy, debilitating discovery and would certainly not generate the amount of billable hours for lawyers which most conventional litigation usually ensures and which has already occurred in the prior Net neutrality FCC administrative proceedings and the related litigation.
This would certainly be a positive good for Society since some kind of definitive ruling subject to analysis and definitive decision on appeal could be expected within a year and perhaps in time for the next presidential and congressional elections.

Who should bring a public interest class action?

The action should be brought by one or more not-for-profit organizations or perhaps even a Consortium of such organizations. However, it might be necessary to create an ad hoc not-for-profit organization since the mission statements or previous positions on Net neutrality of many existing §501(c)(3) and §501(c)(4) organizations indicate they have limited special interest positions to assert and would not be actively seeking a declaration of the rights of each of the disparate stakeholders subject only to limitation by the rights of all the other stakeholders.
Each of the many stakeholders in the Net neutrality conflict could be expected to intervene in this action and vigorously present the evidence which they believe supports their position and arguments on the issue of Net neutrality.
Should the mass media provide reasonable coverage of the trial, the general public might obtain sufficient information to make reasonable recommendations to their elected officials in time for legislative and executive action before the Courts rule and before the next elections.
For the organization bringing this kind of declaratory judgment action in the public interest the cost would be relatively low when compared with the costs of comparably sized litigation conducted in an adversary proceeding by parties with deep pockets and certainly less than the cost of extensive administrative proceedings.

The Relief sought in the Declaratory Judgment Action

The Court should first consider whether it would be appropriate to remove existing regulatory barriers to broadband deployment. A reasonable reading of §706 of the Telecommunications Act of 1996 vests the Federal Communications Commission with affirmative authority to enact measures encouraging the deployment of broadband infrastructure, and it would not be unreasonable for the courts to start from that mission mandate and evaluate any actions by the FCC against the standard of “encouraging the development and deployment of broadband infrastructure”.

Internet user issues the Court must decide

Should a broadband provider be permitted to purposely slow down traffic from Internet content providers such as Netflix, Amazon, and Google that use its network to deliver services which compete against the broadband provider’s own on-demand video service?
Should broadband providers be permitted to create tiers of service that would require Internet companies trying to reach their customers over this infrastructure to pay a fee for a certain quality of service?
Should network operators, particularly the big three, Comcast, AT&T and Verizon, have an absolute right to freely manage congestion on their networks without regard to any government regulatory oversight?
Isn’t the existing Anglo-American system of Equity Jurisprudence sufficient to protect any Internet user who feels that their traffic is being unfairly blocked in an anti-competitive manner?
Is it reasonable to believe that the free market and competition upon which the American Free Enterprise System is based will ensure that broadband providers do not prevent consumers from accessing any Internet content?
Should Internet service providers be permitted to block any information or service they choose from reaching end users?

Internet industry issues the Court must decide

Should government regulation be allowed to discriminate between fixed broadband providers such as cable companies and wireless operators?
Should the broadband operators and backbone Internet providers which provide the nationwide infrastructure for the Internet be permitted to create new revenue streams by charging Internet content companies, such as Amazon, Google, and Netflix fees for priority delivery of their content?
The unregulated Voice over Internet Protocol (VOIP) has allowed unregulated Internet service providers to compete directly with regulated telephone companies. Should VOIP be subject to the same regulations as the telephone companies with which they compete?
Congress, of course, can moot the entire issue with legislation preempting or at least guiding removing jurisdiction over broadband from the Federal Communications Commission. Perhaps it should.