Utility

Republicans and Telecom CEOs Threaten Legal War If FCC Makes the Internet a Utility

The FCC chairman is under pressure from liberal advocacy groups to apply stronger regulations to the Internet.

By Brendan Sasso

Liberal advocacy groups are begging the Federal Communications Commission to turn broadband Internet into a heavily regulated public utility. And FCC Chairman Tom Wheeler is starting to indicate that he will hesitantly, cautiously consider the option.

The move would give the agency broader authority to enact net-neutrality rules that require Internet providers to treat all traffic equally.

But Republicans and the broadband industry have a message for Wheeler: Don't even think about it.

In recent days, top congressional Republicans and the CEOs of every major broadband provider have sent letters making it clear that they would make Wheeler's life hell if he reclassifies how the government regulates the Internet.

House Speaker John Boehner, Majority Leader Eric Cantor, Whip Kevin McCarthy, and GOP Conference Chairwoman Cathy McMorris Rodgers warned Wheeler on Wednesday that applying "antiquated regulation on the Internet" would "needlessly inhibit the creation of American private-sector jobs, limit economic freedom and innovation, and threaten to derail one of our economy's most vibrant sectors."

In a separate letter Tuesday, Senate Minority Leader Mitch McConnell, Sen. John Thune, Sen. John Cornyn, and other Senate Republicans told Wheeler that utility-style regulations "would create tremendous legal and marketplace uncertainty and would undermine your ability to effectively lead the FCC." Industry groups are firing similar warning shots at the agency.

In a Tuesday letter, the CEOs of Comcast, Verizon, Time Warner Cable, AT&T, and all of the other major broadband providers argued that turning their businesses into utilities would "impose great costs, allowing unprecedented government micromanagement of all aspects of the Internet economy." The new rules would stifle investment, "holding back Internet speeds and ultimately deepening the digital divide," they claimed.

The executives hinted that they are ready for an all-out legal war over the issue. They said it's "questionable" that the FCC could defend reclassification in court and warned that the agency would face "years—if not decades—of endless litigation and debate." The National Cable and Telecommunications Association and U.S. Telecom, two industry lobbying groups, made similar threats of litigation in their own letters Wednesday.

Liberal groups are urging the FCC to classify broadband as a "common carrier" utility under Title II of the Communications Act because it would give the agency more regulatory power. Earlier this year, the D.C. Circuit Court of Appeals struck down the FCC's net-neutrality rules because the agency relied on weaker authority under Title I.

Wheeler is now trying to rework the rules under their existing authority without reclassifying the Internet. But to have any hope of surviving future court challenges, he has had to water down the old rules.

His net-neutrality proposal, set for a preliminary vote Thursday, would bar Internet providers from blocking any websites. But the providers could charge websites for special "fast lanes" as long as the agreements are "commercially reasonable."

The proposal, which first leaked out last month, has prompted an outpouring of public anger. Eleven Senate Democrats, led by Ron Wyden of Oregon, sent a letter last week, warning that the proposal would "allow discrimination and irrevocably change the Internet as we know it."

"Small businesses, content creators and Internet users must not be held hostage by an increasingly consolidated broadband industry," the Democrats wrote.

More than 100 tech companies, including Google, Facebook, Amazon, Microsoft, and Netflix, also urged Wheeler to ban paid-prioritization of Internet traffic.

Members of the Congressional Progressive Caucus have their own letter explicitly calling for Title II regulation, saying it's "common sense."

In response to the public outcry, Wheeler tweaked his net-neutrality proposal to expand a section asking for comment on whether the FCC should use its Title II powers on the Internet. Advocates of Title II regulation, such as consumer groups Free Press and Public Knowledge, argue that the Internet has become an essential part of modern life—much like other utilities such as water, electricity, or the telephone. The government should use its full authority to protect the main communications tool of the 21st century from manipulation by broadband providers, the groups argue.

A Title II classification would trigger a slew of new rules, including price controls and obligations to provide universal service. But the FCC can choose to exempt Internet providers from some of those requirements.

Wheeler would clearly prefer not to pick a fight with Republicans and the broadband industry over the issue. But he has repeatedly said the option is still on the table.

"If someone acts to divide the Internet between 'haves' and 'have-nots,' we will use every power at our disposal to stop it," Wheeler said recently before a conference of cable executives.

"I consider that to include Title II. Just because it is my strong belief that following the court's road map will produce similar protections more quickly, does not mean I will hesitate to use Title II if warranted."