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What Title II Regulation of the Internet Actually Means

By Logan Albright, Research Analyst, FreedomWorks

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There is a great deal of discussion today about empowering the FCC to regulate internet services providers as if they were public utilities. Supporters of Net Neutrality tend to think this is a good idea, because they fear that ISPs will give discriminatory access to bandwidth, creating a so-called “internet fast lane” for companies with enough capital to pay.

The solution, many argue, is to classify the internet as a “common carrier” under Title II of the Federal Communication Act of 1934. The following is an extract from the FCC’s proposed rule.

 In a series of decisions beginning in 2002, the Commission has classified broadband Internet access service offered over cable modem, DSL and other wireline facilities, wireless facilities, and power lines as an information service, which is not subject to Title II and cannot be regulated as common carrier service.

In 2010, following the D.C. Circuit’s Comcast decision, the Commission issued a Notice of Inquiry that, among other things, asked whether the Commission should revisit these decisions and classify a telecommunications component service of wired broadband Internet access service as a “telecommunications service.” The Commission also asked whether it should similarly alter its approach to wireless broadband Internet access service, noting that section requires that wireless services that meet the definition of “commercial mobile service” be regulated as common carriers under Title II.

It all sounds very tidy and official. But how many supporters of this proposal have actually taken time to read the law to which they want to subject the internet – a law, it will be remembered, that was passed decades before anyone had even so much as dreamt the first hazy dream of microchips, email, and the kind of global communication network the internet would one day become?

A close reading of the actual law reveals just how dangerous this proposal is, and how much power it would grant the FCC. The entire law is 333 pages long, but let’s examine a few choice sections so that we may get a glimpse of what is actually being proposed, away from the fog of overly general rhetoric that too often influences public opinion.

Section 201:

It shall be the duty of every common carrier engaged in interstate or foreign communication by wire or radio to furnish such communication service upon reasonable request therefor; and, in accordance with the orders of the Commission, in cases where the Commission, after opportunity for hearing, finds such action necessary or desirable in the public interest, to establish physical connections with other carriers, to establish through routes and charges applicable thereto and the divisions of such charges, and to establish and provide facilities and regulations for operating such through routes.

The law appears to start off innocuously enough, but already we have companies compelled to provide service, not on their own terms, but on the terms of the FCC. Section 201 continues:

 All charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is hereby declared to be unlawful

Here we see the first occurrence of those subtle weasel words, “just and reasonable.” Who determines whether a practice is just and reasonable, and on what grounds? The FCC appears to claim nearly unlimited discretion in this regard.

In general, public utilities are subject to centralized ratemaking procedures in which the government dictates the prices that can be charged to consumers based on mathematical formulas that factor in costs of service, operating expenses, taxes, depreciation, investment in capital and interest rates. Rather than allow market competition to set prices, a centralized authority presumes to determine what is “fair.”

The U.S. Energy Information Administration lists more than 47,000 individual rates for electricity alone, illustrating the immensity and impracticality of this regulatory task, One can only imagine the chaos of trying to apply this process to something as decentralized and quickly evolving as the internet.

Section 205:

Whenever, after full opportunity for hearing, upon a complaint or under an order for investigation and hearing made by the Commission on its own initiative, the Commission shall be of opinion that any charge, classification, regulation, or practice of any carrier or carriers is or will be in violation of any of the provisions of this Act, the Commission is authorized and empowered to determine and prescribe what will be the just and reasonable charge or the maximum or minimum, or maximum and minimum, charge or charges to be thereafter observed…

A plain English translation of this somewhat obscure passage basically states that the FCC can impose any fine it likes on companies that violate its rules, so long as they are “just and reasonable,” which is again undefined and left to the discretion of the Commission.

Section 208:

No complaint shall at any time be dismissed because of the absence of direct damage to the complainant.

This section permits anyone to complain about the activities of a carrier to the Commission without any need of having actually been harmed. In short, there is no limit on the extent to which carriers can be harassed by their competitors who might wish to use the Act to their own advantage.

Section 210:

Nothing in this Act or in any other provision of law shall be construed to prohibit common carriers from rendering to any agency of the Government free service in connection with the preparation for the national defense

Note that the Commission is careful to leave themselves an opening to demand free service from any carrier they like, irrespective to the costs to that carrier. The Thirteenth Amendment to the U.S. Constitution, prohibiting involuntary servitude, appears to have been overlooked here.

This carries on for another hundred pages or so, where regulation is piled upon regulation, each one imposing a cost and inefficiency upon private carriers, but the point is made.

Like so much of the legislation passed under FDR’s New Deal, the broad scope of the powers granted to government here is breathtaking. The FCC wants the authority to force ISPs to provide service against their will, at times for free, to withstand endless harassment from complaints which are not the result of direct harm, and bend unquestioningly to whatever rules the intentionally vague and capricious “just and reasonable” Commission may demand. Furthermore, the FCC claims the authority to punish any violation of its unilateral terms by fines that are left entirely up to its own discretion.

If all that is not enough to convince you that the powers claimed by the FCC go far beyond the prevention of discrimination, into the realms of complete and dictatorial control over internet service provision, with potentially disastrous consequence, I urge all people who love the internet for the freedom of expression it allows to take heed of the following.

Section 223:

Whoever in interstate or foreign communications by means of a telecommunications device knowingly makes, creates, or solicits, and initiates the transmission of, any comment, request, suggestion, proposal, image, or other communication which is obscene, lewd, lascivious, filthy, or indecent, with intent to annoy, abuse, threaten, or harass another person shall be fined under title 18, United States Code, or imprisoned not more than two years, or both.

The internet is doomed.

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