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The FCC's new 400-page network neutrality ruling shows the fight is just beginning

FCC Chairman Tom Wheeler.
FCC Chairman Tom Wheeler.

The Federal Communications Commission let the rest of the country in on a big secret last Thursday: how it actually plans to make network neutrality (which it voted for two weeks earlier) work.

In a massive 400-page PDF, the agency laid out its vision for net neutrality. Reading the document closely — as I've spent the past four days doing — reveals just how controversial the regulations will be. The concept of network neutrality has attracted broad public support, but translating that concept into specific rules turns out to be surprisingly tricky. Even after hundreds of pages of explanation, the FCC left a number of important questions unanswered.

The document was so massive because both sides of the debate are preparing for a legal battle over whether the FCC has overstepped its authority. "The commission is aware that this is going to be subject to challenge," says Harold Feld of the pro-network-neutrality group Public Knowledge, adding that the agency has been "exceedingly thorough laying out its reasoning, pointing to every exception, pointing to the record of evidence."

Ultimately, the document makes clear that last month's vote was not so much the end of the network neutrality debate, but rather the beginning of a new phase. The courts still need to decide whether the new rules are within the FCC's power. They will also have to deal with arguments that the FCC rushed the rules through faster than the law allows. And if the rules are ultimately upheld, it will still be many years before we know what they really mean.

Broad, vague network neutrality rules

The three Democrats on the FCC: Mignon Clyburn, Tom Wheeler, and Jessica Rosenworcel. (Mark Wilson/Getty Images)

To obtain the authority it needs to enact strong network neutrality regulations, the FCC used a legal tactic called reclassification. This puts broadband service in the same legal category as old-fashioned telephone service.

Conservative critics charge that these utility-style laws, known to telecom nerds as Title II of the Communications Act, are outdated and will impose heavy-handed regulations on the internet. But after the courts nixed efforts to protect network neutrality without reclassifying, supporters felt they had little choice. Responding to a grass-roots lobbying campaign, President Obama endorsed the option in November, and FCC Chairman Tom Wheeler announced last month that the agency would use Title II.

But Title II doesn't just provide a legal foundation for network neutrality rules — it's a complex body of law in its own right. A key requirement is that telecommunications providers must behave in a "just and reasonable" fashion.

The FCC used this as the foundation of its network neutrality rules, declaring that it was not "just and reasonable" to block websites, slow them down, or create "fast lanes" for websites that paid extra.

The new regulations also bar "unreasonable interference and discrimination," a deliberately open-ended standard that will allow the FCC to police provider misconduct that doesn't run afoul of the other three rules. The standard is so broad that even the left-leaning Electronic Frontier Foundation urged the FCC to rethink it — which it didn't.

The FCC went beyond network neutrality

FCC Chairman Tom Wheeler. (Mark Wilson/Getty Images)

The FCC could have stopped there. While Title II includes a lot of other requirements, Congress gave the agency authority to decide not to enforce rules it judges as counterproductive. The FCC could have promised to police violations of network neutrality as contrary to the "just and reasonable" standard but declined to enforce other provisions of Title II.

But that's not what the agency did. Instead, the new rules invite the public to submit complaints if a broadband provider's conduct is not "just and reasonable" — even if the conduct doesn't run afoul of network neutrality principles.

A big motivation for doing this was to allow the FCC to deal with controversy over the ways big broadband providers have negotiated with content providers. For example, last year Netflix accused Comcast of forcing it to pay a "toll" to reach Comcast customers. This kind of negotiation is not governed by conventional network neutrality rules, but the hardline position Comcast took does raise many of the same concerns as conventional network neutrality violations.

Rather than try to write specific rules to settle this complex and volatile issue, the FCC is going to address it on a case-by-case basis. Aggrieved parties will be able to file complaints alleging that broadband providers' interconnection decisions are not "just and reasonable," and then the FCC will figure out what the phrase means.

The new rules create a lot of uncertainty for broadband providers

(Andrew Burton/Getty Images)

The kind of open-ended regulatory scheme the FCC has developed here comes with a big downside: it makes it harder for broadband providers to predict which business models will be considered legal. And that, in turn, could discourage investments in new infrastructure and experiments with new business models.

Here's an example: some wireless providers cap the amount of data customers can download (without paying extra), but exempt certain apps from the limit. T-Mobile, for example, offers a "music freedom" feature that allows users to stream an unlimited quantity of music, while limiting how much data other apps can consume. Critics have called this a violation of network neutrality. T-Mobile, naturally, defends it as a valuable benefit to consumers.

So what does the FCC say about arrangements in which some content is counted against data limits and other content is not? The agency writes that "the record reflects mixed views" on whether this practice is beneficial to consumers. So rather than give clear guidance on such arrangements now, the agency plans to apply its vague "no unreasonable interference/disadvantage" standard on a case-by-case basis.

The agency is taking the same stance with regard to the data-use limits: they're not necessarily illegal, but any company that uses them could wind up getting tied up in a lengthy and expensive court case.

Republicans say the FCC didn't give proper notice

FCC Commissioner Ajit Pai. (KAREN BLEIER/AFP/Getty Images)

The 400-page document ends with the comments of the two Republican commissioners, Ajit Pai and Michael O'Rielly, who made the case against the new rules. A key argument, articulated best by Pai, is that the FCC failed to provide the public with adequate notice of its proposal, depriving people of an opportunity to comment on the proposal and violating the Administrative Procedure Act in the process.

This is a crucial question, because regulations that don't follow the requirements of the APA can be struck down by the courts. That wouldn't permanently prevent the FCC from enforcing the rules, but it would force the agency to start the entire rule-making procedure over, delaying the rules from taking effect for two to three years.

The APA requires an agency to notify the public of its proposed rules, accept public comments, and then take those comments into account. But critics say the final regulations were so different from the original proposal that the public didn't have an opportunity to comment on the rules the agency actually chose.

In its original notice last May, the FCC proposed much weaker network neutrality rules that were not based on reclassification. Pai and other critics say the FCC should have released a new version of its rules and taken public comments before voting on them. They argue that by failing to do so, the agency deprived the public of an opportunity weigh in on the final rules.

But supporters of the ruling point out that the FCC did mention reclassification as an option in its initial notice. And they point to the flood of public comments the FCC received — both for and against reclassification — as evidence that the public had plenty of notice that reclassification was a possibility.

Wireless network neutrality regulations are the most vulnerable

(Michael Dorausch)

The FCC wants to impose network neutrality rules for both the wired networks that connect our homes and the wireless networks that power our smartphones. But there's a significant possibility that the courts will strike down the wireless rules, leaving only the rules that govern wired networks.

The decision to regulate wireless networks is a change from the FCC's previous rules, enacted in 2010, which largely exempted wireless. So under the APA the FCC needed to give notice about — and provide legal justification for — the change. But critics say the agency's May notice didn't adequately explain how it planned to regulate wireless, and that its legal justifications are weak.

For example, the law limits regulation of networks that are not connected to the "public switched network," which has traditionally meant the public switched telephone network that uses 10-digit telephone numbers. Because wireless data services are not part of this network — mobile web browsers use IP addresses and domain names, not phone numbers, to make connections — mobile data service has traditionally been exempt from most regulations.

The FCC's solution to this problem is to redefine the term "public switched network" to refer to both the traditional phone network and the internet. Network neutrality supporters such as Public Knowledge argue this is the FCC's right, as Congress gave the FCC the authority to choose a definition for the term. The FCC also notes that people can use apps such as Skype to make phone calls using mobile data service, so mobile data services are connected to the public switched network even under the old definition.

But Ryan Radia, a network neutrality critic at the Competitive Enterprise Institute, says that this redefinition goes too far. He points to the legislative history from 1994, the last time wireless laws were overhauled, suggesting that legislators regarded the term "public switched network" as synonymous with "public switched telephone network." In Radia's view, Congress couldn't have intended for the FCC to expand the phrase to encompass the internet, a totally separate network.

Feld — a network neutrality supporter — disagrees. He argues that Congress delegated the task of defining PSN to the FCC precisely so it could update the definition to reflect technological changes.

Last month's vote was a beginning, not an end

Many network neutrality activists viewed last month's vote as the end of a hard-fought battle to protect network neutrality. But in many ways, the vote was just the beginning.

It will take several years for the courts to decide the inevitable lawsuits over the regulations' legality. During this period, the FCC's efforts to enforce the rules will be hampered by uncertainty about their legal status.

And if the rules are upheld, it will still be a while before it's clear what they mean.

The word "reasonable" comes up over and over again in the new rules: "reasonable network management," "just and reasonable," "unreasonable interference." And what's reasonable is not self-evident. The precise meaning of these terms will only become clear after the FCC builds up a body of precedent that helps define exactly which practices are reasonable and which are not.

It's these decisions that will determine how the rules actually shape the internet economy. If enforced too aggressively, they could hamper worthwhile innovations and become an obstacle to further growth of the internet economy. Conversely, permissive rulings could make the regulations basically toothless.

And while the FCC tries to sort out these questions, the 2016 election will be looming. If another Democrat takes office in 2017, we can expect the agency to continue the effort it started last month. On the other hand, if a Republican takes the White House, a new Republican majority could toss out the rules and start over.

In short, these new rules are nowhere close to finally settling the network neutrality fight. But they at least give us a much clearer sense of where the battle lines will be.

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