FCC's Wheeler aims to update Title II for new net neutrality rules

FCC Chairman Tom Wheeler revealed that his proposed new net neutrality rules will reclassify broadband as a telecommunications service under Title II of the Telecommunications Act.

Wheeler laid out his thoughts in an op-ed article in Wired. In the op-ed, he provides more details on what he told attendees at the Consumer Electronics Show (CES) in January--that he is leaning toward proposing net neutrality rules where broadband providers will be reclassified as utilities under Title II of the Communications Act.

He noted that he originally believed the FCC could codify net neutrality regulations using a standard of "commercial reasonableness" under Section 706 of the Telecommunications Act. Wheeler wrote that while a federal appeals court decision in January 2014 seemed to point the FCC toward that approach, he "became concerned that this relatively new concept might, down the road, be interpreted to mean what is reasonable for commercial interests, not consumers."

In November, President Barack Obama urged the FCC to use Title II to implement net neutrality. 

The new rules will also include provisions to ban prioritization, and the blocking and throttling of lawful content and services. They will also apply to mobile broadband services.

Contrary to arguments made by large telcos such as AT&T (NYSE: T) and Verizon (NYSE: VZ), Wheeler wrote that the FCC can use Title II to create net neutrality rules "while encouraging investment in broadband networks."

"To preserve incentives for broadband operators to invest in their networks, my proposal will modernize Title II, tailoring it for the 21st century, in order to provide returns necessary to construct competitive networks," he wrote. "For example, there will be no rate regulation, no tariffs, no last-mile unbundling. Over the last 21 years, the wireless industry has invested almost $300 billion under similar rules, proving that modernized Title II regulation can encourage investment and competition."

Whatever the ultimate outcome is, it is going to incite a number of legal challenges from major telcos and cable operators. Service providers like AT&T and Verizon have been vocal that reclassifying ISPs under Title II will create a litigious environment.

AT&T CEO Randall Stephenson predicted in January that a fight over the net neutrality rules would incite a host of legal challenges that would eventually reach the U.S. Supreme Court.

Likewise Verizon wrote wrote in a filing that the FCC does not need to use Title II to ensure net neutrality rules, and can codify the rules "by reaffirming that broadband Internet access service is an integrated information service, relying upon its authority under Section 706 and the roadmap set out by the D.C. Circuit for issuing sustainable rules."

It appears that both telcos are ready to fight the new rules when they are presented later this month. Citing an unnamed source, a VentureBeat article revealed that AT&T and Verizon Communications will file lawsuits "almost immediately" after the Title II reclassification becomes official. Verizon was a key challenger to the FCC's 2010 rules.

These service providers maintain that even if the FCC uses "forbearance" and abstains from many Title II regulations, there will be tremendous uncertainty in the market, which will hamper investments. Broadband services traditionally have been treated as a lightly-regulated information service. Net neutrality proponents have long argued that the FCC needs to reclassify broadband to put net neutrality rules on firmer legal footing. 

At the same time, Wheeler is refusing to share his proposed rules with Republican senators before they officially make the rules public at their meeting later this month. Wheeler is expected to circulate the draft order to his fellow FCC commissioners on Thursday, and the agency is expected to vote on the proposal at its Feb. 26 open meeting.

In a letter sent to Senate Commerce Chairman John Thune (R-S.D.), House Energy and Commerce Chairman Fred Upton (R-Mich.) and House Communications and Technology subcommittee Chairman Greg Walden (R-Ore.), Wheeler said that releasing the draft rules early "runs contrary" to past FCC procedure under Democratic and Republican leadership, Wheeler asserted. 

"If decades of precedent are to be changed, there must be an opportunity for thoughtful review in the lead up to any change," Wheeler wrote in the letter to Republicans.

These Republican lawmakers have reportedly proposed another method for the FCC to regulate broadband providers by developing what is called "Title X," a special element of the Communications Act. Under the Republican plan, they will ensure the openness of the Internet while not permitting the agency to reclassify broadband as a utility under Title II of the Communications Act.

For more:
- Wired has this article
- The Hill has this article
- see this VentureBeat article
- see this AT&T blog post
- FierceWireless has this article

Related articles:
FCC to strengthen oversight of ISP interconnection deals
AT&T, Verizon challenge FCC's authority on net neutrality
Verizon says net neutrality should not touch interconnection arrangements
Verizon tells FCC to address blocking and paid prioritization without Title II reclassification
Verizon's Shammo clarifies remarks about net neutrality impact on company's investment strategy

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