President Obama wants the internet to be regulated as a utility…mostly. In a November 10th video statement, Obama laid out a new plan for addressing net neutrality. He proposed that FCC reclassify broadband providers as utilities under Title II of the Telecommunications Act, like traditional phone service providers. However, Obama also wants the agency to forbear “from rate regulation and other provisions less relevant to broadband services.”

This concept of forbearance is where things could get complicated in implementation. Essentially, the power to forbear means the FCC can change its rules over time, and the agency can specify which parts of the law should be ignored. Importing all regulations and requirements for telephone service providers might prove cumbersome and impractical. Obama wants the FCC to forbear from rate regulation, but the FCC may have to step in when significant innovations take place. For example, the New York Times notes that AT&T developed a new data service plan when the iPhone was introduced. Customers were going be using the phone to access the internet, and AT&T needed a way to determine how they would be charged for that use. If AT&T had been regulated as a utility, the company would have been required to submit the plan to the FCC for approval before offering it to customers.

While Obama’s call for action has “thrilled” the Columbia professor who first coined the phrase “net neutrality,” the President’s plan has set up potential conflicts between Obama and the FCC. As the President noted, the FCC is an independent agency, so the approach to take is ultimately up to the FCC. FCC Chairman Tom Wheeler had appeared to be leaning towards a “lighter-touch approach” to regulation, and he has now indicated that agency will need some time before being able to draft rules that will hold up in court.

The FCC is in a potentially difficult position; the agency’s Open Internet Order was struck down earlier this year, but the President’s plan urges the agency to try again and come back with stronger regulations. Meanwhile, AT&T has indicated that it will take the agency to court if the FCC attempts to classify internet service providers as utilities. President Obama’s statement has revived the discussion on net neutrality, but the next steps for the FCC are uncertain. What is certain, however, is that whatever regulations the FCC promulgates will likely end up in court.

Elizabeth Mulkey

One Response to Obama Weighs in on Net Neutrality

  1. Neil Issar says:

    I’ll admit that I haven’t read into the nuances of the net neutrality debate. But doesn’t the FCC already have sufficient authority to address paid prioritization, blocking, and throttling without having to reclassify ISPs under Title II regulation? And if broadband is regulated like a utility, I’m still unsure if there is adequate protection and incentivization for network investment, competition, and innovation. Would it be premised entirely on the FCC’s interpretation of (and promulgation of regulations to enforce) Title II, Section 202 (prohibiting common carriers from making “unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services”)? Or are we confident in the FCC’s ability to properly forbear (as you outlined)?

    FCC Chairman Wheeler’s hybrid proposal also appears insufficient to prevent ISPs from charging content providers for higher quality-of-service prioritization and imposing traffic caps and additional charges on subscribers for higher download volumes (even though Wheeler has continually represented himself as an advocate for net neutrality). Without greater detail about the extent of future FCC forbearance, it seems to me that the best pro-net neutrality solution is targeted regulation from the FCC (rather than Title II reclassification) designed to foster competition and bring innovation and choice to consumers. Of course, I recognize that hoping for such consumer-friendly regulation is idealistic, and Title II reclassification may be the best option we have available.