6 problems of new internet law

By Bruce Mehlman
Internet Innovation Alliance

FCC Commissioner Ajit Pai had some strong words about the Commission and President Obama’s apparent plans to apply Title II regulations to the Internet. He started off with a bang, stating:

I believe the public has a right to know what its government is doing, particularly when it comes to something as important as Internet regulation. I have studied the 332-page plan in detail, and it is worse than I had imagined. So today, I want to correct the record and explain key aspects of what President Obama’s plan will actually do.

Pai then broke down six points he believes the public are being “misled” about by the President and the FCC. Those six points are:

1. The plan doesn’t include rate regulation, a claim Commissioner Pai calls “flat-out false.” From his statement:

The plan repeatedly states that the FCC will apply sections 201 and 202 of the Communications Act, including their rate regulation provisions, to determine whether the prices charge by broadband providers are “unjust or unreasonable… Thus, for the first time, the FCC would claim the power to declare broadband Internet rates and charges unreasonable after the fact.

2. The plan is aimed at pro-competitive broadband service offerings that benefit consumers, which Pai warns will actually create a regulatory headache. His words:

The plan expressly states that usage-based pricing, data allowances — really, any offers other than an unlimited, all-you-can-eat data plan — are now subject to regulation. Indeed, the plan finds that these practices will be subject to case-by-case review under the plan’s new “Internet conduct” standard.

Pai also warns that the plan clearly places things like data allowances on mobile “on the chopping block,” which could mean consumers using less data will end up paying for those who use more.

3. In contrast to the “light-touch” regulation that has been applied to the Internet up until now, the plan gives the unelected members of the FCC “broad and unprecedented discretion to micromanage the Internet.” How? Well, Pai held up interconnection as an example, stating:

The plan states that the FCC can determine when a broadband provider must establish physical interconnection points, where they must locate those points, how much they can charge for the provision of that infrastructure, and how they will route traffic over those connections.

4. The real winners from the plan will, in fact, be lawyers. Pai again:

The plan allows class-action lawsuits — with attorneys’ fees — should any trial lawyer want to challenge an Internet service provider’s network management practices or rates. Indeed, the plan expressly declines to forbear from sections 206 and 207 of the Act, which authorize such private rights of action.

Translated: Get ready for a flurry of lawsuits. Or, as Pai described it, “more litigation and less innovation.”

5. The plan is ripe for regulatory creep. Specifically:

The plan is quite clear about the limited duration of its forbearance determinations, stating that the FCC will revisit the forbearance determinations in the future and proceed in an incremental manner with respect to additional regulation. In other words, over time, expect regulation to ratchet up and forbearance to fade.

6. The plan “opens the door to billions of dollars in new taxes on broadband.” This point, really, should concern everyone outside of the regulatory bubble. Pai’s explanation:

The plan repeatedly states that it is only deferring a decision on new broadband taxes (such as Universal Service Fund fees and Telecommunications Relay Service fees, among others)—not prohibiting them. And it takes pains to make clear that nothing in the draft is intended to foreclose future state or federal tax increases. Indeed, the plan engage in the same two-step we saw last year with respect to the E-Rate program: Lay the groundwork to increase taxes in the first order, then raise them in the second. One independent estimate puts the price tag of these and other fees at $11 billion.

That’s $11 billion that would be passed on to consumers, by the way, all so the FCC can apply outdated, railroad-era regulation in order to achieve something we already have: an open Internet.

Pai ended his remarks by calling on the President and the FCC to release the plan to the public before the Commission enshrines it into law. “We should have an open, transparent debate,” he stated, and given the six points described above, it’s hard to argue with him. Here’s hoping the President and Pai’s fellow Commissioners are listening.