Category Archives: Infrastructure

New white paper from PFF on Title II "sins"

The Progress and Freedom Foundation has just published a white paper I wrote for them titled “The Seven Deadly Sins of Title II Reclassification (NOI Remix).”  This is an expanded and revised version of an earlier blog post that looks deeply into the FCC’s pending Notice of Inquiry regarding broadband Internet access. You can download a PDF here.

I point out that beyond the danger of subjecting broadband Internet to extensive new regulations under the so-called “Third Way” approach outlined by FCC Chairman Julius Genachowski, a number of other troubling features in the Notice indicate an even broader agenda for the agency with regard to the Internet.

These include:

  • Pride: As the FCC attempts to define what services would be subjected to reclassification, the agency runs the risk of both under- and over-inclusion, which could harm consumers, network operators, and content and applications providers.
  • Lust: The agency is reaching out for additional powers beyond its reclassification proposals — including an effort to wrest privacy enforcement powers from the Federal Trade Commission and putting itself in charge of cybersecurity for homeland security.
  • Anger: The “Third Way” may dramatically expand the scope of federal wiretapping laws, requiring law enforcement “back doors” for a wide range of products and services.
  • Gluttony: Reclassifying broadband opens the door to state and local government regulation, which would overwhelm Internet access with a deluge of conflicting, and innovation-killing, laws, rules and new consumer taxes.
  • Sloth: As the FCC looks for a legal basis to defend reclassification, basic activities — such as caching, searching, and browsing — may for the first time be included in the category of services subject to “common carrier” regulation.
  • Vanity: Though wireless networks face greater challenges from the broadband Internet than wireline networks, the FCC seems poised to impose more, not less, regulation on wireless broadband.
  • Greed: Reclassification of broadband services could vastly expand the contribution base for the Universal Service Fund, adding new consumer fees while supersizing this important, but exceedingly wasteful, program.

I’m grateful to PFF, especially Berin Szoka, Adam Marcus, Mike Wendy and Adam Thierer, for their interest and help in publishing the article.

Deconstructing the Google-Verizon Framework

I’ve just published a long analysis for CNET of the proposed legislative framework presented yesterday by Google and Verizon.

The proposal has generated howls of anguish from the usual suspects (see Cecilia Kang, “Silicon Valley criticizes Google-Verizon accord” in The Washington Post; Matthew Lasar’s “Google-Verizon NN Pact Riddled with Loopholes” on Ars Technica and Marguerite Reardon’s “Net neutrality crusaders slam Verizon, Google” at CNET for a sampling of the vitriol).

But after going through the framework and comparing it more-or-less line for line with what the FCC proposed back in October, I found there were very few significant differences.  Surprisingly, much of the outrage being unleashed against the framework relates to provisions and features that are identical to the FCC’s Notice of Proposed Rulemaking (NPRM), which of course many of those yelling the loudest ardently support.

At the outset, one obvious difference that many reporters and commentators keep missing (in some cases, intentionally), is that the Google-Verizon framework has absolutely no legal significance.  It’s not a treaty, accord, agreement, deal, pact, contract or business arrangement—all terms still being used to describe it.  It doesn’t bind anyone to do anything, including Google and Verizon.

All that was released yesterday was a legislative proposal they hope will be taken up by lawmakers who actually have the authority to write legislation.  But you’d think from some of the commentary that this was the Internet equivalent of the secret treaty between Germany and Russia at the start of World War II.  Some commentators sound genuinely disappointed that something more nefarious, as had been widely and wildly reported last week, didn’t emerge.

Summary – Compare and Contrast

Let’s start with the similarities, described in more detail in the CNET piece:

  • Both propose neutrality rules that are nearly identical, including the no blocking for lawful content, no blocking lawful devices, network management transparency, and nondiscrimination.  Of these, only the wording of the nondiscrimination rule is different (more on that below).
  • Both limit the application of the rules to principles of reasonable network management.
  • Both exclude from application of the rules certain IP-based services that may run on the same infrastructure but which are offered to business or consumer customers as paid services, such as digital cable or digital voice today and others perhaps tomorrow.  The NPRM calls these “managed or specialized services,” the framework refers to them as “differentiated services.”
  • Both propose that the FCC enforce the rules by adjudicating complaints on a “case-by-case” basis.
  • Both recognize that some classes of Internet content (e.g., voice and video) must receive priority treatment to maintain their integrity, and don’t consider such prioritization by class to be a violation of the rules.
  • Both encourage the resolution of network management and other neutrality related disputes through technical organizations, engineering task forces, and other kinds of self-regulation, much as the Internet protocols have always been developed and maintained.

Again, much of the ire raised at the framework relates to aspects for which there is no material difference with the NPRM.

Now let’s get to the differences:

  • The Google-Verizon framework would exclude wireless broadband Internet from application of the rules, at least for now.  Though the NPRM recognized there were significant limits to the existing wireless infrastructure (spectrum, speed, coverage, towers) that made it more difficult to allow customers to use whatever bandwidth-hogging applications they wanted, the NPRM came down on the side of applying the rules to wireless.  This was perhaps the most contentious feature of the NPRM, judging from the comments filed.

Google has notably changed its tune on wireless broadband.  In the joint filing with the FCC on the NPRM, the companies acknowledged this was an area where they held opposite views—Google believed the rules should apply to wireless broadband, Verizon did not.  Now both agree that applying the rules here would do more harm than good, if only until the market and technology evolve further.

  • The framework would deny the FCC the power to expand or enhance the rules through further rulemakings.  Though the framework is admittedly not at its clearest here, what Google and Verizon seem to have in mind is that Congress, not the FCC, would enact the neutrality rules into law and give the FCC the power to enforce them.

But the FCC would remain unable to make its own rules or otherwise regulate broadband Internet access, the current state of the law as was most recently affirmed by the D.C. Circuit in the Comcast case.  The framework, in other words, joins the chorus arguing against the FCC’s effort to reclassify broadband under Title II and also imagines the NPRM would not be completed.

Reasonable Network Management

Let me just highlight one area of common wording that has received a great deal of negative feedback as applied to the framework and one area of difference.

Consider the definitions of “reasonable network management” that appear in both documents.

First, the NPRM:

Subject to reasonable network management, a provider of broadband Internet access service must treat lawful content, applications, and services in a nondiscriminatory manner.

We understand the term “nondiscriminatory” to mean that a broadband Internet access service provider may not charge a content, application, or service provider for enhanced or prioritized access to the subscribers of the broadband Internet access service provider, as illustrated in the diagram below. We propose that this rule would not prevent a broadband Internet access service provider from charging subscribers different prices for different services.

Reasonable network management consists of: (a) reasonable practices employed by a provider of broadband Internet access service to (i) reduce or mitigate the effects of congestion on its network or to address quality-of-service concerns; (ii) address traffic that is unwanted by users or harmful; (iii) prevent the transfer of unlawful content; or (iv) prevent the unlawful transfer of content; and (b) other reasonable network management practices.

Now, the Google-Verizon framework:

Broadband Internet access service providers are permitted to engage in reasonable network management. Reasonable network management includes any technically sound practice: to reduce or mitigate the effects of congestion on its network; to ensure network security or integrity; to address traffic that is unwanted by or harmful to users, the provider’s network, or the Internet; to ensure service quality to a subscriber; to provide services or capabilities consistent with a consumer’s choices; that is consistent with the technical requirements, standards, or best practices adopted by an independent, widely-recognized Internet community governance initiative or standard-setting organization; to prioritize general classes or types of Internet traffic, based on latency; or otherwise to manage the daily operation of its network.

Note here that the “unwanted by or harmful to users” language, for which the framework was skewered yesterday, appears in nearly identical form in the NPRM.

Nondiscrimination

Here’s how the FCC’s “nondiscrimination” rule was proposed:

Subject to reasonable network management, a provider of broadband Internet access service must treat lawful content, applications, and services in a nondiscriminatory manner.

And here it is from the framework:

In providing broadband Internet access service, a provider would be prohibited from engaging in undue discrimination against any lawful Internet content, application, or service in a manner that causes meaningful harm to competition or to users.  Prioritization of Internet traffic would be presumed inconsistent with the non-discrimination standard, but the presumption could be rebutted.

That certainly sounds different (with the addition of “undue” as a qualifier and the requirement of a showing of “meaningful harm”), but here’s the FCC’s explanation of what it means by nondiscrimination and the limits that would apply under the NPRM:

We understand the term “nondiscriminatory” to mean that a broadband Internet access service provider may not charge a content, application, or service provider for enhanced or prioritized access to the subscribers of the broadband Internet access service provider….We propose that this rule would not prevent a broadband Internet access service provider from charging subscribers different prices for different services..

We believe that the proposed nondiscrimination rule, subject to reasonable network management and understood in the context of our proposal for a separate category of “managed” or “specialized” services (described below), may offer an appropriately light and flexible policy to preserve the open Internet. Our intent is to provide industry and consumers with clearer expectations, while accommodating the changing needs of Internet-related technologies and business practices. Greater predictability in this area will enable broadband providers to better plan for the future, relying on clear guidelines for what practices are consistent with federal Internet policy. First, as explained in detail below in section IV.H, reasonable network management would provide broadband Internet access service providers substantial flexibility to take reasonable measures to manage their networks, including but not limited to measures to address and mitigate the effects of congestion on their networks or to address quality-of-service needs, and to provide a safe and secure Internet experience for their users. We also recognize that what is reasonable may be different for different providers depending on what technologies they use to provide broadband Internet access service (e.g., fiber optic networks differ in many important respects from 3G and 4G wireless broadband networks). We intend reasonable network management to be meaningful and flexible.

Second, as explained below in section IV.G, we recognize that some services, such as some services provided to enterprise customers, IP-enabled “cable television” delivery, facilities-based VoIP services, or a specialized telemedicine application, may be provided to end users over the same facilities as broadband Internet access service, but may not themselves be an Internet access service and instead may be classified as distinct managed or specialized services. These services may require enhanced quality of service to work well. As these may not be “broadband Internet access services,” none of the principles we propose would necessarily or automatically apply to these services.

In this context, with a flexible approach to reasonable network management, and understanding that managed or specialized services, to which the principles do not apply in part or full, may be offered over the same facilities as those used to provide broadband Internet access service, we believe that the proposed approach to nondiscrimination will promote the goals of an open Internet.

Though the FCC doesn’t use the words “undue” and “meaningful harm,” the qualifying comments seem to suggest something quite similar.  So are the differences actually meaningful in the end?  Meaningful enough to generate so much sturm and drang?  You make the call.

Flurry of activity on net neutrality this week signals progress

At ten A.M. this morning, CNET News.com asked if I could write an article unraveling the legal implications of a rumored deal between Google and Verizon on net neutrality.  I didn’t see how I could analyze a deal whose terms (and indeed, whose existence) are unknown, but I thought it was a good opportunity to make note of several positive developments in the net neutrality war this summer.

Just as I was finishing the piece a few hours later, another shocker came when the FCC announced it was concluding talks it had been holding since June with the major net neutrality stakeholders.  It’s possible the leaked story about Google and Verizon, and the feverish response to it whipped up by the straggling remnants of a coalition aimed at getting an extreme version of net neutrality into U.S. law by any means necessary, soured the agency on what appeared to be productive negotiations.  Or maybe they’ve just gone as far as they can for now.

So I started over, and added emphasis to the outside-the-beltway developments that, in the end, may offer the best hope for a resolution to what is, after all is said and done, a technical problem requiring a technical solution.

I’ll let the piece speak for itself, in part out of necessity–I’m pooped.   (I now have renewed sympathy and appreciation for the work of real journalists, which I am not.)  But had I had more time and more column inches, I would have emphasized one point I hope comes across in the story.  And that is that the politicization of problems of network management has done nothing to solve them.  It has done the opposite.

What’s become even clearer in the last 24 hours is how the extremists in this largely-choreographed fight are determined not to have it end.  They don’t care about free enterprise, consumers, or respect for the rule of law–though these are the principles they make the most noise about.  But that’s just what it is, noise.

Memo to Silicon Valley:  you’re wise to avoid as much as possible the politics of technology.  But the best way to take issues away from politicians is to solve them with engineering.

The Horses are Gone–So Let's Close Some Other Barn Door

The White House and the Federal Communications Commission have painted themselves into a very tight and very dangerous corner on Net Neutrality.  To date, a bi-partisan majority of Congress, labor leaders, consumer groups and, increasingly, some of the initial advocates of open Internet rules are all shouting that the agency has gone off the rails in its increasingly Ahab-like pursuit of an obscure and academic policy objective.

Now comes further evidence, none of it surprising, that all this effort has been a fool’s errand from the start.  Jacqui Cheng of Ars Technica is reporting today on a new study from Australia’s University of Ballarat that suggests only .3% of file sharing using the BitTorrent protocol is something other than the unauthorized distribution of copyrighted works.  Which is to say that 99.7% of the traffic they sampled is illegal.  The Australian study, as Cheng notes, supports similar conclusions of a Princeton University study published earlier this year

Remember how we got here

What does that have to do with Net Neutrality?

Let’s recall how we got into this mess.

When it became clear in 2007 that Comcast was throttling or blocking BitTorrent traffic without disclosing the practice to consumers, the FCC held hearings to determine if the company had violated the agency’s 2005 Internet policy statement.  The Framework for Broadband Access to the Internet included the principle that “consumers are entitled to access the lawful Internet content of their choice . . . [and] to run applications and use services of their choice,” and many argued that Comcast’s behavior violated that principle.

In the interim, Comcast changed its method of managing high-volume activities and achieved a peaceful resolution with BitTorrent.  Still, the FCC concluded that Comcast had violated the policy and issued a non-financial sanction against the cable provider in 2008.

Comcast challenged the order to the U.S. Court of Appeals for the D.C. Circuit, which hears all appeals of FCC adjudications.  Comcast argued that the FCC lacked authority to enforce its policy, and the D.C. Circuit agreed.

While the D.C. Circuit case was pending, however, the FCC in October of last year issued its Notice of Proposed Rulemaking for “Preserving the Open Internet.”  The goal of this NPRM, still pending, is to codify and enlarge the 2005 Internet policy statement and transform it into enforceable net neutrality rules.

Why change the policy into rules?  In explaining the “Need for Commission Action,” the NPRM noted that “Despite our efforts to date, some conduct is occurring in the marketplace that warrants closer attention and could call for additional action by the Commission, including instances in which some Internet access service providers have been blocking or degrading Internet traffic, and doing so without disclosing those practices to users.”  (¶50)  The NPRM added to the four principles laid out in the 2005 policy a new requirement that ISPs make their network management practices more transparent to consumers.

But the NPRM premised the FCC’s authority to issue net neutrality rules on the same jurisdiction it used to issue the sanctions against Comcast, so-called “ancillary jurisdiction” under Title I of the Communications Act.

Once the D.C. Circuit ruled in April of this year that “ancillary jurisdiction” was insufficient, the FCC’s ability to complete and defend the NPRM was called into doubt.  The FCC couldn’t sanction Comcast under the policy statement, and may not be able to enforce the proposed rules either.  There may be no legal authority, the agency believes, to prohibit Comcast’s interruption of BitTorrent transfers.

So the FCC is now pursuing perhaps the most extreme option for shoring up its authority, and that is the reclassification of broadband Internet access to be a Title II “telecommunications” service subject to a dizzying array of potential new rules and regulations at the federal, state, and local level.

It is that leap of madness that has splintered the net neutrality coalition, and united Congress in calling for the FCC to step back from the brink.

Back to BitTorrent

Back to the BitTorrent studies.  The Australian and Princeton research makes clear what everyone already knows.  Despite the technical merits of the BitTorrent protocol and the best efforts of the company that manages the protocol, the vast majority of users availing themselves of this technology are using it for activities that violate U.S. and foreign copyright laws.

Here’s the problem.  The FCC’s Internet policy statement, the proposed rules, and the effort to ensure authority to enforce those rules under Title II are all premised on the sensible limitation that consumers should have the right to access the “lawful Internet traffic” of their choice.  (See ¶ 1 of the Title II Notice of Inquiry, e.g.) (emphasis added)

They don’t apply at all to unlawful activities, whether of consumers or content providers.  Which is to say, they don’t apply to the vast majority of BitTorrent file transfers.

Not clear?  Let’s keep going.  According to the NOI, the FCC reads the Comcast decision as holding “the Commission lacked authority to prohibit practices of a major cable modem Internet service provider that involved secret interruption of lawful Internet transmissions, which the Commission found were unjustified and discriminatory and denied users the ability to access the Internet content and applications of their choice.” (emphasis added)

The proposed net neutrality rules are equally emphatic:  they apply only to lawful Internet activity.  (The NPRM refers to “lawful content” nearly 50 times.)

If there’s any doubt about the intent of the old policy, the proposed new rules, or Title II to protect illegal file sharing, the FCC dispels it over and over in the NPRM.  “The draft rules would not prohibit broadband Internet access service providers from taking reasonable action to prevent the transfer of unlawful content,” according to the Executive Summary of the NPRM, “such as the unlawful distribution of copyrighted works.” (emphasis added)

This is a fine how-do-you do.  Comcast limited its arguments in the D.C. Circuit to jurisdictional and procedural flaws in the FCC sanctions.  But assuming Comcast had made the argument, now supported by ample evidence, that it was not blocking any or nearly any “lawful content” in the first place, neither the old Internet policy nor the proposed Net Neutrality rules would actually apply to Comcast’s interference with BitTorrent transfers–the “practice” that started this catastrophe and which has led us to the verge of policy warfare.

Indeed, under the Digital Millennium Copyright Act and other copyright laws, it’s very likely that Comcast could be compelled by the Department of Justice or affected copyright holders to stop the vast majority of BitTorrent transfers, on pain of large civil or even criminal penalties.  Which is yet another reason (if the FCC had needed another reason) that none of the proposed rules, regulations, or reclassifications would actually correct the only problem the FCC claims it is trying to address.

So neither the NPRM nor the Title II Notice of Inquiry, in the end, have anything to do with Comcast’s network management practices or the D.C. Circuit’s decision.  The sad irony here is that assuming the Commission goes ahead with reclassification and then completes the net neutrality rulemaking, there would be nothing to stop Comcast from going right back to blocking BitTorrent traffic.  There might even be legal authority compelling them to do so.

Meanwhile, the National Broadband Plan, the Commission’s stand-out achievement under Chairman Julius Genachowski, has taken a back-seat to hyperventilating over a non-event and a non-problem.

Please, can we get back to making the Internet better for more Americans?

After the deluge, more deluge

If I ever had any hope of “keeping up” with developments in the regulation of information technology—or even the nine specific areas I explored in The Laws of Disruption—that hope was lost long ago.  The last few months I haven’t even been able to keep up just sorting the piles of printouts of stories I’ve “clipped” from just a few key sources, including The New York Times, The Wall Street Journal, CNET News.com and The Washington Post.

I’ve just gone through a big pile of clippings that cover April-July.  A few highlights:  In May, YouTube surpassed 2 billion daily hits.  Today, Facebook announced it has more than 500,000,000 members.   Researchers last week demonstrated technology that draws device power from radio waves.

If the size of my stacks are any indication of activity level, the most contentious areas of legal debate are, not surprisingly, privacy (Facebook, Google, Twitter et. al.), infrastructure (Net neutrality, Title II and the wireless spectrum crisis), copyright (the secret ACTA treaty, Limewire, Google v. Viacom), free speech (China, Facebook “hate speech”), and cyberterrorism (Sen. Lieberman’s proposed legislation expanding executive powers).

There was relatively little development in other key topics, notably antitrust (Intel and the Federal Trade Commission appear close to resolution of the pending investigation; Comcast/NBC merger plodding along).  Cyberbullying, identity theft, spam, e-personation and other Internet crimes have also gone eerily, or at least relatively, quiet.

Where are We?

There’s one thing that all of the high-volume topics have in common—they are all moving increasingly toward a single topic, and that is the appropriate balance between private and public control over the Internet ecosystem.  When I first started researching cyberlaw in the mid-1990’s, that was truly an academic question, one discussed by very few academics.

But in the interim, TCP/IP, with no central authority or corporate owner, has pursued a remarkable and relentless takeover of every other networking standard.  The Internet’s packet-switched architecture has grown from simple data file exchanges to email, the Web, voice, video, social network and the increasingly hybrid forms of information exchanges performed by consumers and businesses.

As its importance to both economic and personal growth has expanded, anxiety over how and by whom that architecture is managed has understandably developed in parallel.

(By the way, as Morgan Stanley analyst Mark Meeker pointed out this spring, consumer computing has overtaken business computing as the dominant use of information technology, with a trajectory certain to open a wider gap in the future.)

The locus of the infrastructure battle today, of course, is in the fundamental questions being asked about the very nature of digital life.  Is the network a piece of private property operated subject to the rules of the free market, the invisible hand, and a wondrous absence of transaction costs?  Or is it a fundamental element of modern citizenship, overseen by national governments following their most basic principles of governance and control?

At one level, that fight is visible in the machinations between governments (U.S. vs. E.U. vs. China, e.g.) over what rules apply to the digital lives of their citizens.  Is the First Amendment, as John Perry Barlow famously said, only a local ordinance in Cyberspace?  Do E.U. privacy rules, being the most expansive, become the default for global corporations?

At another level, the lines have been drawn even sharper between public and private parties, and in side-battles within those camps.  Who gets to set U.S. telecom policy—the FCC or Congress, federal or state governments, public sector or private sector, access providers or content providers?  What does it really mean to say the network should be “nondiscriminatory,” or to treat all packets anonymously and equally, following a “neutrality” principle?

As individuals, are we consumers or citizens, and in either case how do we voice our view of how these problems should be resolved?  Through our elected representatives?  Voting with our wallets?  Through the media and consumer advocates?

Not to sound too dramatic, but there’s really no other way to see these fights as anything less than a struggle for the soul of the Internet.  As its importance has grown, so have the stakes—and the immediacy—in establishing the first principles, the Constitution, and the scriptures that will define its governance structure, even as it continues its rapid evolution.

The Next Wave

Network architecture and regulation aside, the other big problems of the day are not as different as they seem.  Privacy, cybersecurity and copyright are all proxies in that larger struggle, and in some sense they are all looking at the same problem through a slightly different (but equally mis-focused) lens.  There’s a common thread and a common problem:  each of them represents a fight over information usage, access, storage, modification and removal.  And each of them is saddled with terminology and a legal framework developed during the Industrial Revolution.

As more activities of all possible varieties migrate online, for example, very different problems of information economics have converged under the unfortunate heading of “privacy,” a term loaded with 19th and 20th century baggage.

Security is just another view of the same problems.  And here too the debates (or worse) are rendered unintelligible by the application of frameworks developed for a physical world.  Cyberterror, digital warfare, online Pearl Harbor, viruses, Trojan Horses, attacks—the terminology of both sides assumes that information is a tangible asset, to be secured, protected, attacked, destroyed by adverse and identifiable combatants.

In some sense, those same problems are at the heart of struggles to apply or not the architecture of copyright created during the 17th Century Enlightenment, when information of necessity had to take physical form to be used widely.  Increasingly, governments and private parties with vested interests are looking to the ISPs and content hosts to act as the police force for so-called “intellectual property” such as copyrights, patents, and trademarks.  (Perhaps because it’s increasingly clear that national governments and their physical police forces are ineffectual or worse.)

Again, the issues are of information usage, access, storage, modification and removal, though the rhetoric adopts the unhelpful language of pirates and property.

So, in some weird and at the same time obvious way, net neutrality = privacy = security = copyright.  They’re all different and equally unhelpful names for the same (growing) set of governance issues.

At the heart of these problems—both of form and substance—is the inescapable fact that information is profoundly different than traditional property.  It is not like a bush or corn or a barrel of oil.  For one thing, it never has been tangible, though when it needed to be copied into media to be distributed it was easy enough to conflate the media for the message.

The information revolution’s revolutionary principle is that information in digital form is at last what it was always meant to be—an intangible good, which follows a very different (for starters, a non-linear) life-cycle.  The ways in which it is created, distributed, experienced, modified and valued don’t follow the same rules that apply to tangible goods, try as we do to force-fit those rules.

Which is not to say there are no rules, or that there can be no governance of information behavior.  And certainly not to say information, because it is intangible, has no value.  Only that for the most part, we have no real understanding of what its unique physics are.  We barely have vocabulary to begin the analysis.

Now What?

Terminology aside, I predict with the confidence of Moore’s Law that business and consumers alike will increasingly find themselves more involved than anyone wants to be in the creation of a new body of law better-suited to the realities of digital life.  That law may take the traditional forms of statutes, regulations, and treaties, or follow even older models of standards, creeds, ethics and morals.  Much of it will continue to be engineered, coded directly into the architecture.

Private enterprises in particular can expect to be drawn deeper (kicking and screaming perhaps) into fundamental questions of Internet governance and information rights.

Infrastructure and application providers, as they take on more of the duties historically thought to be the domain of sovereigns, are already being pressured to maintain the environmental conditions for a healthy Internet.  Increasingly, they will be called upon to define and enforce principles of privacy and human rights, to secure the information environment from threats both internal (crime) and external (war), and to protect “property” rights in information on behalf of “owners.”

These problems will continue to be different and the same, and will be joined by new problems as new frontiers of digital life are opened and settled.  Ultimately, we’ll grope our way toward the real question:  what is the true nature of information and how can we best harness its power?

Cynically, it’s lifetime employment for lawyers.  Optimistically, it’s a chance to be a virtual founding father.  Which way you look at it will largely determine the quality of the work you do in the next decade or so.

The Seven Deadly Sins of Title II Reclassification (NOI Remix)

Better late than never, I’ve finally given a close read to the Notice of Inquiry issued by the FCC on June 17th.  (See my earlier comments, “FCC Votes for Reclassification, Dog Bites Man”.)  In some sense there was no surprise to the contents; the Commission’s legal counsel and Chairman Julius Genachowski had both published comments over a month before the NOI that laid out the regulatory scheme the Commission now has in mind for broadband Internet access.

Chairman Genachowski’s “Third Way” comments proposed an option that he hoped would satisfy both extremes.  The FCC would abandon efforts to find new ways to meet its regulatory goals using “ancillary jurisdiction” under Title I (an avenue the D.C. Circuit had wounded, but hadn’t actually exterminated, in the Comcast decision), but at the same time would not go as far as some advocates urged and put broadband Internet completely under the telephone rules of Title II.

Instead, the Commission would propose a “lite” version of Title II, based on a few guiding principles:

  • Recognize the transmission component of broadband access service—and only this component—as a telecommunications service;
  • Apply only a handful of provisions of Title II (Sections 201, 202, 208, 222, 254, and 255) that, prior to the Comcast decision, were widely believed to be within the Commission’s purview for broadband;
  • Simultaneously renounce—that is, forbear from—application of the many sections of the Communications Act that are unnecessary and inappropriate for broadband access service; and
  • Put in place up-front forbearance and meaningful boundaries to guard against regulatory overreach.

The NOI pretends not to take a position on any of three possible options – (1) stick with Title I and find a way to make it work, (2) reclassify broadband and apply the full suite of Title II regulations to Internet access providers, or (3) compromise on the Chairman’s Third Way, applying Title II but forbearing on any but the six sections noted above—at least, for now (see ¶ 98).  It asks for comments on all three options, however, and for a range of extensions and exceptions within each.

I’ve written elsewhere (see “Reality Check on ‘Reclassifying’ Broadband” and  “Net Neutrality and the Inconvenient Constitution”) about the dubious legal foundation on which the FCC rests its authority to change the definition of “information services” to suddenly include broadband Internet, after successfully (and correctly) convincing the U.S. Supreme Court that it did not.  That discussion will, it seems, have to wait until its next airing in federal court following inevitable litigation over whatever course the FCC takes.

This post deals with something altogether different—a number of startling tidbits that found their way into the June 17th NOI.  As if Title II weren’t dangerous enough, there are hints and echoes throughout the NOI of regulatory dreams to come.  Beyond the hubris of reclassification, here are seven surprises buried in the 116 paragraphs of the NOI—its seven deadly sins.  In many cases the Commission is merely asking questions.  But the questions hint at a much broader—indeed overwhelming—regulatory agenda that goes beyond Net Neutrality and the undoing of the Comcast decision.

Pride:  The folly of defining “facilities-based” provisioning – The FCC is struggling to find a way to apply reclassification only to the largest ISPs – Comcast, AT&T, Verizon, Time Warner, etc.  But the statutory definition of “telecommunications” doesn’t give them much help.  So the NOI invents a new distinction, referred to variously as “facilities-based” providers (¶ 1) or providers of an actual “physical connection,” (¶ 106) or limiting the application of Title II just to the “transmission component” of a provider’s consumer offering (¶ 12).

All the FCC has in mind here is “a commonsense definition of broadband Internet service,” (¶ 107) (which they never provide), but in any case the devil is surely in the details.  First, it’s not clear that making that distinction would actually achieve the goal of applying the open Internet rules—network management, good or evil, largely occurs well above the transmission layers in the IP stack.

The sin here, however, is that of unintentional over-inclusion.  If Title II is applied to “facilities-based” providers, it could sweep in application providers who increasingly offer connectivity as a way to promote usage of their products.

Limiting the scope of reclassification just to “facilities-based” providers who sell directly to consumers doesn’t eliminate the risk of over-inclusion.  Some application providers, for example, offer a physical connection in partnership with an ISP (think Yahoo and Covad DSL service) and many large application providers own a good deal of fiber optic cable that could be used to connect directly with consumers.  (Think of Google’s promise to build gigabit test beds for select communities.)  Municipalities are still working to provide WiFi and WiMax connections, again in cooperation with existing ISPs.  (EarthLink planned several of these before running into financial and, in some cities, political trouble.)

There are other services, including Internet backbone provisioning, that could also fall into the Title II trap (see ¶ 64).  Would companies, such as Akamai, which offer caching services, suddenly find themselves subject to some or all of Title II?  (See ¶ 58)  How about Internet peering agreements (unmentioned in the NOI)?  Would these private contracts be subject to Title II as well?  (See ¶ 107)

Lust:  The lure of privacy, terrorism, crime, copyright – Though the express purpose of the NOI is to find a way to apply Title II to broadband, the Commission just can’t help lusting after some additional powers it appears interested in claiming for itself.  Though the Commissioners who voted for the NOI are adamant that the goal of reclassification is not to regulate “the Internet” but merely broadband access, the siren call of other issues on the minds of consumers and lawmakers may prove impossible to resist.

Recognizing, for example, that the Federal Trade Commission has been holding hearings all year on the problems of information privacy, the FCC now asks for comments about how it can use Title II authority to get into the game (¶ 39, 52, 82, 83, 96), promising of course to “complement” whatever actions the FTC is planning to take.

Cyberattacks and other forms of terrorism are also on the Commission’s mind.  In his separate statement, for example, Chairman Genachowski argues that the Comcast decision “raises questions about the right framework for the Commission to help protect against cyber-attacks.”

The NOI includes several references to homeland security and national defense—this in the wake of publicity surrounding Sen. Lieberman’s proposed law to give the President extensive emergency powers over the Internet.  (See Declan McCullaugh, “Lieberman Defends Emergency Net Authority Plan.”)  Lieberman’s bill puts the power squarely in the Department of Homeland Security—is the FCC hoping to use Title II to capture some of that power for itself?

And beyond shocking acts of terrorism, does the FCC see Title II as a license to require ISPs to help enforce other, lesser crimes, including copyright infringement, libel, bullying and cyberstalking, e-personation—and the rest?  Would Title II give the agency the ability to impose its content “decency” rules, limited today merely to broadcast television and radio, to Internet content, as Congress has unsuccessfully tried to help the Commission do on three separate occasions?

(Just as I wrote that sentence, the U.S. Court of Appeals for the Second Circuit ruled that the FCC’s recent effort to craft more aggressive indecency rules, applied to Janet Jackson’s nipple, violates the First Amendment.  The Commission is having quite a bad year in the courts!)

Anger:  Sharing the pain of CALEA – That last paragraph is admittedly speculation.  The NOI contains no references to copyright, crime, or indecency.  But here’s a law enforcement sin that isn’t speculative.  The NOI reminds us that separate from Title II, the FCC is required by law to enforce the Communications Assistance for Law Enforcement Act (CALEA). (¶ 89) CALEA is part of the rich tapestry of federal wiretap law, and requires “telecommunications carriers” to implement technical “back doors” that make it easier for federal law enforcement agencies to execute wiretapping orders.  Since 2005, the FCC has held that all facilities-based providers are subject to CALEA.

Here, the Commission assumes that reclassification would do nothing to change the broader application of CALEA already in place, and seeks comment on “this analysis.”  (¶ 89)  The Commission wonders how that analysis impacts its forbearance decisions, but I have a different question.  Assuming the definition of “facilities-based” Internet access providers is as muddled as it appears (see above), is the Commission intentionally or unintentionally extending the coverage of CALEA to anyone selling Internet “connectivity” to consumers, even those for whom that service is simply in the interest of promoting applications?

Again, would residents of communities participating in Google’s fiber optic test bed awake to discover that all of that wonderful data they are now pumping through the fiber is subject to capture and analysis by any law enforcement officer holding a wiretapping order?  Oops?

Gluttony:  The Insatiable Appetite of State and Local Regulators – Just when you think the worst is over, there’s a nasty surprise waiting at the end of the NOI.  Under Title II, the Commission reminds us, many aspects of telephone regulation are not exclusive to the FCC but are shared with state and even local regulatory agencies. 

Fortunately, to avoid the catastrophic effects of imposing perhaps hundreds of different and conflicting regulatory schemes to broadband Internet access, the FCC has the authority to preempt state and local regulations that conflict with FCC “decisions,” and to preempt the application of those parts of Title II the FCC may or may not forbear. 

But here’s the billion dollar question, which the NOI saves for the very last (¶ 109):  “Under each of the three approaches, what would be the limits on the states’ or localities’ authority to impose requirements on broadband Internet service and broadband Internet connectivity service?”

What indeed?  One of the provisions the FCC would not apply under the Third Way, for example, is § 253, which gives the Commission the authority to “preempt state regulations that prohibit the provision of telecommunications services.” (¶ 87)  So does the Third Way taketh federal authority only to giveth to state and local regulators?  Is the only way to avoid state and local regulations—oh, well, if you insist–to go to full Title II?  And might the FCC decide in any case to exercise their discretion, now or in the future, to allow local regulations of Internet connectivity?

What might those regulations look like?  One need only review the history of local telephone service to recall the rate-setting labyrinths, taxes, micromanagement of facilities investment and deployment decisions—not to mention the scourge of corruption, graft and other government crimes that have long accompanied the franchise process.  Want to upgrade your cable service?  Change your broadband provider?  Please file the appropriate forms with your state or local utility commission, and please be patient.

Fear-mongering?  Well, consider a proposal that will be voted on this summer at the annual meeting of the National Association of Utilities Commissioners.  (TC-1 at page 30)  The Commissioners will decide whether to urge the FCC to adopt what it calls a “fourth way” to fix the Net Neutrality problem.  Their description of the fourth way speaks for itself.  It would consist of:

“bi-jurisdictional regulatory oversight for broadband Internet connectivity service and broadband Internet service which recognizes the particular expertise of States in: managing front-line consumer education, protection and services programs; ensuring public safety; ensuring network service quality and reliability; collecting and mapping broadband service infrastructure and adoption data; designing and promoting broadband service availability and adoption programs; and implementing  competitively neutral pole attachment, rights-of-way and tower siting rules and programs.”

The proposal also asks the FCC, should it stick to the Third Way approach, to add in several other provisions left out of Chairman Genachowski’s list, including one (again, § 253) that would preserve the state’s ability to help out.

Or consider a proposal currently being debated by the California Public Utilities Commission.  California, likewise, would like to use reclassification as the key that unlocks the door to “cooperative federalism,” and has its own list of provisions the FCC ought not to forbear under the Third Way proposal.

Among other things, the CPUC’s general counsel is unhappy with the definition the FCC proposes for just who and what would be covered by Title II reclassification.  The CPUC proposal argues for a revised definition that “should be flexible enough to cover unforeseen technological [sic] in both the short- and long-term.”

The CPUC also proposes the FCC add to the list of those regulated by Title II providers Voice over Internet Protocol telephony, which is often a software application riding well above the “transmission” component of broadband access.

California is just the first (tax-starved) state I looked for.  I’m sure there are and will be others who will respond hungrily to the Commission’s invitation to “comment” on the appropriate role of state and local regulators under either a full or partial Title II regime.  (¶ 109, 110)

Sloth:  The sleeping giant of basic web functions – browsers, DNS lookup, and more – The NOI admits that the FCC is a bit behind the times when it comes to technical expertise, and they would like commenters to help them build a fuller record.  Specifically, ¶ 58 asks for help “to develop a current record on the technical and functional characteristics of broadband Internet service, and whether those characteristics have changed materially in the last decade.”

In particular, the NOI wants to know more about the current state of web browsers, DNS lookup services, web caching, and “other basic consumer Internet activities.”

Sounds innocent enough, but those are very loaded questions.  In the Brand X case, in which the U.S. Supreme Court agreed with the FCC that broadband Internet access over cable fit the definition of a Title I “information service” and not a Title II “telecommunications service,” browsers, DNS lookup and other “basic consumer Internet activities” were crucial to the analysis of the majority.  Because cable (and, later, it was decided, DSL) providers offered not simply a physical connection but also supporting or “enhanced” services to go with it—including DNS lookup, home pages, email support and the like—their offering to consumers was not simple common carriage.

Justice Scalia disagreed, and in dissent made the argument that cable Internet was in fact two separable offerings – the physical connection (the packet-switched network) and a set of information services that ran on top of that connection.  Consumers used some information services from the carrier, and some from other content providers (other web sites, e.g.).  Those information services were rightly left unregulated under Title I, but Congress intended the transmission component, according to Justice Scalia, to be treated as a common carrier “telecommunications service” under Title II.

The Third Way proposal in large part adopts the Scalia view of the Communications Act (see ¶ 20, 106), despite the fact that it was the FCC who argued vigorously against that view all along, and despite the fact that a majority of the Court agreed with them.

By asking these innocent questions about technical architecture, the FCC appears to be hedging its bets for a certain court challenge.   Any effort to reclassify broadband Internet access will generate long, complicated, and expensive litigation.  What, the courts will ask, has driven the FCC to make such an abrupt change in its interpretation of terms like “information service” whose statutory definitions haven’t changed since 1996?

We know it is little more than that the Chairman would like to undo the Comcast decision, of course, and thereafter complete the process of enrolling the open Internet rules proposed in October.  But in the event that proves an unavailing argument, it would be nice to be able to argue that the nature of the Internet and Internet access have fundamentally changed since 2005, when Brand X was decided.  If it’s clear that basic Internet services have become more distinct from the underlying physical connection, at least in the eyes of consumers, so much the better.

Or perhaps something bigger is lumbering lazily through the NOI.  Perhaps the FCC is considering whether “basic Internet activities” (browsing, searching, caching, etc.) have now become part of the definition of basic connectivity.  Perhaps Title II, in whole or in part, will apply not only to facilities-based providers, but to those who offer basic Internet services essential for web access.  (Why extend Title II to providers of “basic” information service?  See below, “Greed.”)  If so, the exception will swallow the rule, and just about everything else that makes the Internet ecosystem work.

Vanity:  The fading beauty of the cellular ingénue – Perhaps the most worrisome feature of the proposed open Internet rules is that they would apply with equal force to wired and wireless Internet access.  As any consumer knows, however, those two types of access couldn’t be more different. 

Infrastructure providers have made enormous progress in innovating improvements to existing infrastructure—especially the cable and copper networks.  New forms of access have also emerged, including fiber optic cable, satellite, WiFi/WiMax, and the nascent provisioning of broadband over power lines, which has particular promise in remote areas which may have no other option for access.

Broadband speeds are increasing, and there’s every expectation that given current technology and current investment plans, the National Broadband Plan’s goal of 100 million Americans with access to 100 mbps Internet speeds by 2010 will be reached without any public spending.

The wireless world, however, is a different place.  After years of underutilization of 3G networks by consumers who saw no compelling or “killer” apps worth using, the latest generation of portable computing devices (iPhone, Android, Blackberry, Windows) has reached the tipping point and well beyond.  Existing networks in many locations are overcommitted, and political resistance to additional cell tower and other facilities deployment is exacerbating the problem.

Just last week, a front page story in the San Francisco Chronicle reported on growing tensions between cell phone providers and residents who want new towers located anywhere but near where they live, go to school, shop, or work.  CTIA-The Wireless Association announced that it would no longer hold events in San Francisco, after the city council, led by Mayor Gavin Newsome, passed a “Cell Phone Right to Know” ordinance that requires retail disclosure of a phone’s specific adoption rate of emitted radiation.

Given the likely continued lagging of cellular deployment, it seems prudent to consider less stringent restrictions on network management for wireless than for wireline.  Under the open Internet rules, providers would be unable to limit or ban outright certain high-bandwidth data services, notably video services and peer-to-peer file sharing, that the network may simply be unable to support.  But the proposed open Internet rules will have none of that.

The NOI does note some of the significant differences between wired and wireless (¶ 102), but also reminds us that the limited spectrum for wireless signals affords them special powers to regulate the business practices of providers. (¶ 103)  Under Title III of the Communications Act, which applies to wireless, the FCC has and makes use of the power to ensure spectrum uses are serving a broad “public interest.”

In some ways, then, Title III gives the Commission powers to regulate wireless broadband access beyond what they would get from a reclassification to Title II.  So even if the FCC were to choose the first option and leave the current classification scheme alone, wireless broadband providers might still be subject to open Internet rules under Title III.  It would be ironic if the only broadband providers whose network management practices were to be scrutinized were those who needed the most flexibility.  But irony is nothing new in communications law.

One power, however, might elude the FCC, and therefore might give further weight to a scheme that would regulate wireless broadband under Title III and Title II.  Title III does not include the extension of Universal Service to wireless broadband (¶ 103).  This is a particular concern given the increased reliance of under-served and at-risk communities on cellular technologies for all their communications needs.  (See the recent Pew Internet & Society study for details.)

While the NOI asks for comment on whether and to what extent the FCC ought to treat wireless broadband differently and at a later time from wired services, the thrust of this section makes clear the Commission is thinking of more, not less regulation for the struggling cellular industry.

Greed:  Universal Service taxes – So what about Universal Service?  In an effort to justify the Title II reclassification as something more than just a fix to the Comcast case, the FCC has (with some hedging) suggested that D.C. Circuit’s ruling also calls into question the Commission’s ability to implement the National Broadband Plan, published only a few weeks prior to the decision in Comcast. 

At a conference sponsored by the Stanford Institute for Economic Policy Research that I attended, Chairman Genachowski was emphatic that nothing in Comcast constrained the FCC’s ability to execute the plan.

But in the run-up to the NOI, the rhetoric has changed.  Here the Chairman in his separate statement says only that “the recent court decision did not opine on the initiatives and policies that we have laid out transparently in the National Broadband Plan and elsewhere.”

Still, it’s clear that whether out of genuine concern or just for more political and legal cover, the Commission is trying to make the case that Comcast casts serious doubt on the Plan, and in particular the FCC’s recommendations for reform of the Universal Service Fund (USF).  (¶¶ 32-38).

Though the NOI politely recites the legal theories posed by several analysts for how USF reform could be done without any reclassification, the FCC is skeptical.  For the first and only time in the NOI, the FCC asks not for general comments on its existing authority to reform Universal Service but for the kind of evidence that would be “needed to successfully defend against a legal challenge to implementation of the theory.”

There is, of course, a great deal at stake.  The USF is fed by taxes paid by consumers as part of their telephone bills, and is used to subsidize telephone service to those who cannot otherwise afford it.  Some part of the fund is also used for the “E-Rate” program, which subsidizes Internet access for schools and libraries.

Like other parts of the fund, E-Rate has been the subject of considerable corruption.  As I noted in Law Four of “The Laws of Disruption,” a 2005 Congressional oversight committee labeled the then $2 billion E-Rate program, which had already spawned numerous criminal convictions for fraud, a disgrace, “completely [lacking] tangible measures of either effectiveness or impact.”

Today the USF collects $8 billion annually in consumer taxes, and there’s little doubt that the money is not being spent in a particularly efficient or useful way.  (See, for example, Cecilia Kang’s Washington Post article this week, “AT&T, Verizon get most federal aid for phone service.”)  The FCC is right to call for USF reform in the National Broadband Plan, and to propose repurposing the USF to subsidize basic Internet access as well as dial tone.  The needs for universal Internet access—employment, education, health care, government services, etc.—are obvious.

But what has this to do with Title II reclassification?  There’s no mention in the NOI of plans to extend the class of services or service providers obliged to collect the USF tax, which is to say there’s nothing to suggest a new tax on Internet access.  But Recommendation 8.10 of the NBP encourages just that.  The Plan recommends that Congress “broaden the USF contributions base” by finding some method of taxing broadband Internet customers.  (Congress has so far steadfastly resisted and preempted efforts to introduce any taxes on Internet access at the federal and state level.)

If Congress agreed with the FCC, broadband Internet access would someday be subject to taxes to help fund a reformed USF.  The bigger the category of providers included under Title II (the most likely collectors of such a tax), the bigger the USF.  The temptation to broaden the definition of affected companies from “facilities based” to something, as the California Public Utilities Commission put it, more “flexible,” would be tantalizing.

***

But other than these minor quibbles, the NOI offers nothing to worry about!