FCC and FTC Can Co-Exist on Net Neutrality | Commentary

Posted December 17, 2014 at 2:38pm

Yet another esteemed group of academics waded into the net-neutrality debate this month. While their contribution will not attract the attention that followed President Barack Obama’s Nov. 10 call for the Federal Communications Commission to reclassify the regulatory framework for broadband Internet access, they identify a serious problem. Unfortunately, they fail to embrace the obvious solution to that problem.

On Dec. 8, 32 scholars submitted a letter to members of the Federal Trade Commission — not the FCC, the agency that is in the midst of considering new open Internet or net neutrality rules. In brief, the letter urges the FTC to tell the FCC that the latter should not reclassify broadband Internet service under Title II of the Communications Act. The scholars argue that “reclassification would remove the FTC’s consumer protection enforcement authority over any service deemed a common carrier.” Indeed, they suggest this may be the most important reason for the FCC not to heed the president’s call.

Before explaining why this is the wrong solution, it is necessary to understand what is at issue here. The reason the FCC is revisiting net neutrality now is because its last attempt to promulgate such rules was overturned by the D.C. Circuit Court of Appeals in January 2014. In that decision—the Verizon case—the court did not question the wisdom of the now-vacated rules, nor did it challenge the policy concerns and considerations that animated them. Instead, the court determined that the FCC had overstepped its authority by imposing the functional equivalent of Title II (or “common carrier”) regulations on a service — broadband Internet service — that the agency had classified as a Title I (or “information”) service, rather than a Title II “telecommunications” service.

In the wake of the Verizon decision, the FCC released a notice of proposed rulemaking and solicited public comment concerning the appropriate regulatory framework for broadband Internet service. This process has drawn tremendous interest from industry participants, government officials, academics and the public at large. In simplest terms, the FCC has two options. First, it can continue its prior Title I classification and craft rules that are consistent with that section of the Communications Act. Second, it can reclassify broadband Internet service under Title II, which would provide the FCC with greater leeway to impose a more robust regulatory framework. (Some have also suggested a so-called “hybrid” approach that treats certain components of Internet service as a Title II service while treating others as a Title I service.)

Regardless of where one stands on the relative merits of these approaches, there is general consensus that if the FCC were to reclassify broadband Internet service as a telecommunications service — rather than an information service — then that would provide the basis to impose certain regulatory requirements on Internet service providers. That approach also would have a collateral consequence. As the scholars note, the FTC (which has a dual antitrust and consumer protection enforcement mission) does not have authority over common carriers subject to the Communications Act, at least insofar as those entities are engaged in common carrier activities. In fact, certain FTC commissioners have made the same observation.

It does not follow from this, however, that the only way to preserve meaningful FTC jurisdiction over Internet service providers is to abandon efforts to reclassify that service. There is another solution. And it is simple. Congress can pass a law that removes any limitation on the Federal Trade Commission’s enforcement authority over common carriers providing telecommunications services. Then, if the FCC does reclassify broadband Internet access service as a telecommunications service, there will be no impediment to the FTC’s exercise of jurisdiction over such entities.

Undoubtedly, some will argue that this can never happen—net neutrality has become too polarizing and political for this type of legislative fix. While such polarization exists (for example, Sen. Ted Cruz, R-Texas, calling the president’s statement “Obamacare for the Internet.”), it need not be an obstacle to a bill that should be able to garner bipartisan support. Republicans and Democrats — or at least those without some other agenda — should be able to agree that the Internet, and specifically broadband Internet service, is an indispensable tool for civic, social, economic and even political engagement in modern America. Given that reality, there also should be room for agreement that, regardless of the FCC’s ultimate regulatory determination, it makes no sense to cordon off the FTC’s antitrust and consumer protection expertise from such a vital area of the economy.

Put differently, this should not be a battle between independent agencies. The FTC’s mission should not be dependent on how the FCC exercises its own authority. Both have a critical role to play, and Congress can and should ensure that continues.

Robert M. Cooper is a partner at Boies, Schiller & Flexner LLP in Washington, D.C.