Democracy & Technology Blog New House Draft Offers Middle Ground

House Energy & Commerce Chairman Joe Barton (R-TX), Ranking Member John Dingell (D-MI) and others worked hard to get a broad bipartisan agreement on telecom reform. That effort failed over some absurd demands of greedy local officials, high tech companies and “consumer advocates” who act as if telecom and cable vendors are nonprofit agencies. Such expectations are hardly surprising, since telecom and cable vendors basically require government approval to innovate their services.
A new proposal bearing the imprimatur of three Republicans — Chairman Barton, Rep. Fred Upton (R-MI) and Rep. Chip Pickering (R-MS) — as well as Rep. Bobby Rush (D-IL) provides some welcome middle ground.

  • Any provider of video services could obtain a national franchise that would be subject to defined local taxation and regulation. Local bureaucrats would get 5% of gross revenues plus another 1% for publlic, education and government access in addition to the right to manage public rights-of-way. The secret consumer tax — the in-kind shakedowns which supposedly amount on average to another 3% of gross revenues — would finally end.
  • The right to construct municipal networks would be guaranteed. Enlightened regulation and taxation would do away with the need for most municipal networks, which expose taxpayers to unnecessary and in many cases significant risk. But mayors and city councils were elected for their brilliance and would rather tax, regulate and then subsidize; because otherwise they might not have anything to do — no reason to get out of bed in the morning, in the words of former FCC Chairman Reed Hundt.
  • Cities may not grant any preference or advantage to any network they own, control or are affiliated with. As long as cities are required to observe competitive neutrality, they should be treated like any other 18-year old. But its curious that the draft doesn’t guarantee recourse to the FCC for aggrieved commercial interests. Isn’t litigation costly and unpredictable? And what about the fact that this draft does not specifically authorize a right of action? Which brings us to net neutrality, or, “Enforcement of Broadband Policy Statement.”
  • “The Commission shall have the authority to enforce the Commission’s broadband policy statement and the principles incorporated therein.” There are some companies like Google, Amazon, Yahoo, eBay and others who are too poor or too tenuous to hire a lawyer and file a lawsuit if a dominant firm messes with them. The rest of us will have to subsidize a special tribunal with friendly decisionmakers to listen to their sob stories and issue justice that is faster and more efficient than anyone else could hope for. The principles the draft refers to are these:

    “(1) consumers are entitled to access the lawful Internet content of their choice;
    “(2) consumers are entitled to run applications and services of their choice, subject to the needs of law enforcement;
    “(3) consumers are entitled to connect their choice of legal devices that do not harm the network; and
    “(4) consumers are entitled to competition among network providers, application and service providers, and content providers.”

    Principles #1-#3 are noncontroversial. Principle #4 is the problem. The term “competition” means different things to different people. It could mean the right to enter a market, or it could mean the right to succeed in a market. Under this draft, it would be up the the FCC to decide. A political agency, the FCC will usually cut the baby in half.
    So what, beyond that, is wrong with simply clarifying that the FCC has authority to enforce these principles? Title I of the Communications Act already provides the FCC with extensive jurisdiction to do virtually anything, but since it is stated in general, not specific terms, the FCC has exercized great caution lest it be overturned on appeal. The draft would upset this careful balance. Years ago, before Congress had spoken on the matter, the FCC used its Title I jurisdiction to regulate cable, and the Supreme Court said okay. The net neutrality cabal fears that if the FCC invoked Title I authority it might not get Chevron-type deference — a rule which provides that the FCC should be upheld unless it acts completely irrationally. A court might actually examine the substance of the FCC’s action, not just whether the agency had the “right” to do it. So, this innocuous-sounding provision in the draft is actually a big deal.

Hance Haney

Director and Senior Fellow of the Technology & Democracy Project
Hance Haney served as Director and Senior Fellow of the Technology & Democracy Project at the Discovery Institute, in Washington, D.C. Haney spent ten years as an aide to former Senator Bob Packwood (OR), and advised him in his capacity as chairman of the Senate Communications Subcommittee during the deliberations leading to the Telecommunications Act of 1996. He subsequently held various positions with the United States Telecom Association and Qwest Communications. He earned a B.A. in history from Willamette University and a J.D. from Lewis and Clark Law School in Portland, Oregon.