Earlier today, Federal Communications Commission (FCC) Chairman Ajit Pai proposed that the agency repeal its 2015 decision to reclassify broadband providers as common carriers under Title II of the Communications Act. His announcement will likely meet significant opposition from net neutrality advocates, who have long tried to confuse these separate issues. It is worth pausing to explain precisely what Title II is and how it differs from net neutrality (the idea that broadband providers should treat all internet traffic the same and not favor some content over others). Even some net neutrality proponents recognize that repealing Title II will be a boon to the internet ecosystem.
Repealing Title II would mean broadband providers are no longer subject to outdated public utility regulations
Congress passed Title II back in the 1930s. Forget the internet — this was before most Americans had television. Modeled on 19th-century railroad regulations, the original purpose of Title II was to rein in the old Bell Telephone monopoly. In its full glory, Title II subjects regulated entities to significant government oversight regarding what services they must offer, to whom, and at what rates. While this regulatory model may be appropriate for static utility monopolies such as water delivery, it is inappropriate in a competitive, dynamic market such as internet access. Companies must be able to adapt quickly to meet competitive challenges and provide new goods and services. Common carriage obligations make it difficult for companies to do so by holding out an ever-present threat of regulatory interference to thwart innovation.
In fact, most traditional common carriage industries — including airlines, trucking, electricity, and even telephones — have long been retreating from the public utility model. In that sense, the Obama FCC’s reclassification decision was a big step backward, in many senses of the word.
Repealing Title II clarifies the law in areas such as online privacy
Admittedly, the FCC has voluntarily “forbeared” from applying the most stringent parts of Title II to broadband providers, such as rate regulation. This is because the Obama-era FCC did not truly believe broadband providers were public utilities like the Bell monopoly; it sought Title II reclassification merely as a means to enact net neutrality rules. But the effect was akin to fitting square pegs into round holes, as the FCC used Title II in ways Congress never intended. Because the law was an imperfect fit, it led to significant gaps and confusion that made regulation worse rather than better.
The recent online privacy debate is an excellent example of this. Before 2015, the Federal Trade Commission (FTC) had long been the “cop on the beat” for privacy issues, both offline and online. But one of the unintended consequences of the FCC’s reclassification order was to strip the FTC of jurisdiction over broadband providers, as the FTC cannot regulate common carriers. The FCC could have filled this void by simply applying the FTC’s rules to broadband providers. Instead, it adopted a more stringent regime, creating an uneven playing field where competing companies were subject to different rules imposed by different regulators. This unfairness led Congress to repeal the FCC’s privacy rule, leaving broadband providers again unregulated.
Repealing Title II would strip broadband providers of the common carrier designation and restore FTC jurisdiction over their privacy practices. This would once again unite privacy law under one regulator, a regulator with vast experience overseeing privacy issues and with a clear understanding of how privacy law affects policies throughout the internet ecosystem.
Repealing Title II reduces the risk of future government mischief and likely boosts infrastructure investment
While the FCC is currently forbearing from applying Title II’s most draconian measures, there is no guarantee that future commissioners will continue to honor this self-imposed limitation. At any moment, the agency could conclude that forbearance is no longer appropriate and subject regulated entities to rate regulation, tariffing, and a host of other public utility requirements. In this legal regime, Title II hangs as a sword of Damocles over the broadband industry, generating uncertainty, limiting innovation, and likely reducing capital investment in the sector. This makes it more difficult for broadband providers to build the networks needed to close the digital divide, because of fear that these networks will be subjected to unclear future regulatory mandates. Repealing Title II alleviates that anxiety and should restore capital investment to pre-2015 levels.
Repealing Title II does not eliminate net neutrality
Finally, contrary to the claims of many advocates, repealing Title II does not necessarily mean the elimination of net neutrality. Before 2015, the DC Circuit Court offered the FCC a path to enact net neutrality rules without using Title II. A bipartisan Congress also offered to adopt the rules by statute. The Obama-era FCC rejected these compromise measures, but they remain on the table. While they may not regulate broadband providers as completely as Title II, they do allow the agency to enforce core net neutrality principles: that broadband providers should not be able to block or unreasonably discriminate against lawful internet content. Chairman Pai seeks to protect these principles, without the additional baggage that comes from Title II.
This post originally appeared on AEI.org (0).