A three-judge panel has struck down the Federal Communications Commission's net neutrality rule — the regulation saying broadband providers can't, for instance, favor Netflix traffic over Hulu, or block gaming traffic in favor of e-mail. Consumer advocates are up in arms over the decision. The best services on the Web, they argue, may potentially become more expensive as companies start paying network operators to get to their subscribers. Meanwhile, new services might get snuffed out by bigger, more established companies before the startups have a chance to succeed.
But there's one weird trick that can save net neutrality, and the U.S. Court of Appeals for the District of Columbia has very subtly hinted it might look favorably on it. The idea is called reclassification, and it basically transforms broadband providers from the untouchable companies they currently are into the kind of telecommunications companies the FCC regulates without question all the time, such as wireless operators.
To understand what this would involve, it helps to talk about what the FCC is and isn't allowed to do.
The Internet as a series of information services
You could say the FCC's authority to regulate communications technology is spread across different buckets. One bucket tends to be heavily regulated, and it's in this category we find phone companies and cellular companies. Industry people call this bucket Title II, after the part of the Telecommunications Act that gives the agency its authority to regulate telecom services.
Then there's another bucket, the one that industries like better because the FCC can't regulate it as heavily. This bucket covers what are called "information services," a loosely defined term covered under Title I of the law.
Not long after the dot-com bust, the FCC decided to classify Internet service providers (ISPs) as Title I information services. It seemed to make sense at the time; after all, what does a cable modem do but give people access to a huge repository of networked knowledge?
"When an entity offers transmission incorporating the ‘capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information,’" the FCC explained in 2002, quoting from an older report, "it offers an ‘information service’ even though it uses telecommunications to do so."
With that, the FCC effectively sealed net neutrality's fate — even though the term wouldn't be coined for another year at least, and the court case that finally killed it wouldn't take place for more than a decade.
That case was decided yesterday. In its opinion, the D.C. Court ruled that the FCC had tried to limit broadband providers with what looked awfully like Title II-style regulation. Problem is, the FCC can't use its Title II authority to regulate businesses that are classified under Title I. Even though the court agreed that the FCC should be free to regulate broadband in general, and even supported the idea of net neutrality regulations in particular, it has forbidden the agency from slapping ISPs with Title II obligations specifically.
(Let's pause for a bit of irony: In 2005, the FCC used the reasoning behind Title I classification to argue a big Internet-related Supreme Court case, and actually convinced the justices it was right. That position didn't exactly bolster the FCC's case before the D.C. Circuit, eight years later.)
The FCC had its sights set on the right job — preserving innovation and competition — but used the wrong tool, the D.C. Circuit effectively said. But the right tool — Title I regulation — would have meant a much weaker set of rules, and nobody at the agency wanted that.
What can the FCC do now?
Which brings us to reclassification. If the FCC were really determined to push net neutrality, it could try to redefine broadband companies as Title II common carriers, much like the telecom companies. This would give the FCC much wider latitude to implement its net neutrality rules. Tuesday's court ruling seemed to leave that possibility open.
"The court essentially invited them ('remand the case for further proceedings') to try to better articulate" the FCC's regulatory authority on broadband, said Jeffrey Silva, a policy analyst at Medley Global Advisors.
Reclassification would be legally very simple; the FCC is allowed to classify technologies however it wants. In the case of broadband providers, the agency would merely need to explain why it was wrong about the way it had previously defined ISPs.
"The fact that they said one thing, one day, doesn't create a higher burden to say something different another day," said John Bergmayer, a senior staff attorney at the pro-net neutrality group Public Knowledge.
But any move to reclassify would set off a huge outcry from industry groups. Sorting through the various interests and lining up the votes at the FCC would probably be a political nightmare. How do we know this? Because the agency has actually tried this once before.
Why the FCC stands a chance
So what makes us think the outcome would be any different today? Well, for one thing, the FCC has a new chairman. Despite his background as a former cable and wireless lobbyist, Tom Wheeler has been quick to lay out a governing philosophy prioritizing consumer access to technology. In various public appearances recently, Wheeler has been promoting an idea he calls "the network compact," which tries to capture the notion that private companies should serve the general interest.
Meanwhile, as we live more of our lives on the Internet, the FCC risks becoming a marginalized agency if it doesn't find a significant way to weigh in on broadband. For self-preservation reasons alone, the FCC will need to address ISPs sooner or later, according to Tim Wu, the Columbia law professor who first coined the term "net neutrality."
"If the FCC doesn't try, as an agency it'll basically be left to allocating spectrum," Wu said in an interview. "Striking down the anti-blocking rule forces the agency's hands, despite it being a politically challenging proposition."
There are other ways the FCC could try to find a workaround on net neutrality. It might try to get the Supreme Court's attention. It could also take advantage of a tactic known as en banc, in which it asks the D.C. District Court to rehear the same case with different judges. Since the Obama administration is in the process of confirming new judges to the court, that means potentially friendlier justices might take the FCC's side. The agency could also try to find some leeway within its Title I authority to regulate broadband a little more strongly, though still not to the same extent as full-on net neutrality rules.
Of course, if the FCC tries anything new, that'll be subject to litigation as well. Either way, we're probably in for some more lawsuits.