Feature:Opinion

Unnecessary Collateral Damage From FCC Title II Internet Regulation

The collateral damage is beginning to pile up from the FCC’s February decision to trigger Title II telephone utility regulation of the Internet.

Long called the “nuclear” option, the FCC preemptively triggered Title II Internet regulation ostensibly to prevent potential new net neutrality problems, which the FCC admits it can’t yet identify.

Why is Title II so destructive to the Internet ecosystem?

Few appreciate the awesome governmental power of Depression-era Title II regulation.

Title II is inherently comprehensive, capturing the whole telecommunications ecosystem. It presumes end to end, and top to bottom, FCC control of a vertically-integrated AT&T monopoly, including local and long distance communications, telecom equipment and devices manufacturing, Bell Labs R&D and content, publishing and advertising in Yellow Pages directories.

Most every functional part of the 1934 Title II monopoly AT&T ecosystem has a functional communications equivalent in the 21st century Internet ecosystem.

Title II also is inherently an adversarial, command and control regulatory ecosystem designed for one provider and one decider — the AT&T telephone monopoly network and the FCC monopoly regulator, respectively. Title II Section 201 has sweeping catchall authority empowering the FCC to “prescribe such rules and regulations as may be necessary in the public interest.”

Dropping Title II ecosystem regulation on top of the Internet ecosystem is like dropping an antiquated square-peg model on a modern round-hole model, meaning that literally everything in today’s 21st century Internet eventually may have to be force-fitted into analogous 1934 Title II regulations by the FCC and/or the courts over a period of many years.

Just as the FCC was not the final legal authority over Title II regulation of the monopoly telephone system, the FCC is not the final authority over what portions of the Internet ultimately will be captured by Title II regulations of “telecommunications.”

That’s because any trial lawyer can sue to require that the FCC’s new re-definitions, like “telecommunications” to capture ISPs’ broadband service, be equally applied under the law to functionally similar services.

The courts ultimately will decide much of this, creating potential litigation uncertainty for most every player in the Internet ecosystem.

If broadband is now telecommunications, IP addresses are now the legal equivalent of a phone number, and the Internet itself is now the Public Switched Telephone Network (PSTN) per the FCC’s Internet Order, then are any apps that involve telecommunications of any kind, such as instant messaging, VoIP, or video communications etc., Title II telecommunications as well?

Are cloud service telecommunications analogous to broadband telecommunications?

Are over the top video streaming providers like Netflix, Google-YouTube, Amazon, etc. offering the functional equivalent of a Title II regulated telecommunications service?

Do online advertisers who use Title II Section 222 customer proprietary network information (user identifiers) in their cookies that telecommunicate back to their data centers, have to protect customer privacy like broadband providers do?

Under Title II Section 207 most everyone in the Internet ecosystem may be just one federal lawsuit and decision away from being sucked into the vortex of the Title II regulatory ecosystem.

Why was the Title II collateral damage unnecessary and avoidable?

All alleged net neutrality problems have been resolved without Title II. The relevant court indicated that the FCC’s 706 authority could support the FCC’s net neutrality rules without Title II.

And Congress has offered to codify FCC authority to implement the FCC’s 2010 court-overturned net neutrality rules.

What will be the likely collateral damage from Title II?

Consumers face the uncertainty of higher prices, fees and taxes over time, reduced competition and infrastructure improvements. Minority, poor, and underserved populations are especially at risk of losing service from higher prices, fees and taxes.

Innovators face the new and unnecessary uncertainty of FCC second-guessing and after the fact rejection of their innovations by opaque, arbitrary and unnecessary FCC innovation permission panels.

Investors face new unquantifiable litigation and business risks from an apparently arbitrary regulator picking winners and losers.

In a nutshell, lots of Americans, innovation and business will become collateral damage in an unnecessary, avoidable, and self-serving FCC war on potential future net neutrality problems, which the FCC admits it can’t yet identify.

It’s hard to imagine how another agency could inflict so much pain for so little gain.

Innocent bystanders beware, the FCC treats you as acceptable collateral damage.

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.