Pai Disputes Wheeler's 'Light Touch' Net Neutrality Claims

Forbearances from eight Communications Act Title II sections Wheeler had cited in saying he was taking a “light-touch” approach to reclassification are being done only “at this time,” and the agency would “revisit the forbearance determinations in the future,” Pai said. He said forbearance would likely “fade” over time. Commissioner Mike O'Rielly also raised some concerns about the order in a statement.

An agency spokeswoman disputed many of Pai’s remarks, saying the order wouldn't regulate broadband prices. The spokeswoman referred a reporter to Wheeler’s remarks at a January press conference. Noting the agency hasn’t released drafts before, Wheeler said: “ You don’t change that decades old precedent overnight” without a process to examine the change.

“There is no intention to signal that forbearance is temporary,” the spokeswoman also said. The order only reflects the fact that forbearance says a regulation or law won't be enforced, but it doesn’t remove it from the books, the agency spokeswoman said. “This is not forbearance light -- it is like any other forbearance we have granted.”

But O’Rielly, another critic of reclassification, said the agency’s fact sheet acknowledges the draft will leave many Title II sections in place. “The promised forbearance amounts to fauxbearance,” O’Rielly said in a statement to us. “Indeed, sections 201 and 202, by themselves, are so broad in scope that they could easily be used as a means to backfill all of the fauxbearance provided from other provisions.”

Despite the agency’s claims in a news briefing, fact sheet and op-ed, Pai said the draft says only that it wouldn't subject broadband rates to ex ante rate regulation -- which “only means that the FCC won’t set rates ahead of time.” The draft “repeatedly states that the FCC will apply [Communications Act] Sections 201 and 202 … to determine whether the prices charged by broadband providers are 'unjust or unreasonable,'" said Pai.

Sections 201 and 202 would allow the agency to judge some rate increases, said Public Knowledge Senior Vice President Harold Feld in a call with reporters after Pai’s remarks. “If Comcast doubles its prices, the FCC can say that’s crazy. Come back with something that passes the laugh test.” Feld said that’s a far cry from the image of tariffs and legacy rules the term “rate regulation” conjures. Pai’s statements largely reflected much of what Wheeler already had disclosed, Feld said, likening fears of future rate regulations and tax increases to “conspiracy theories” and “broadband Benghazi.” The agency spokeswoman, though, said, ”Mobile voice services have been classified under similar Title II rules for over two decades without the FCC regulating wireless prices."

Pai said the draft also “repeatedly” invites complaints about Section 201 and 202 violations from end users and edge providers. The draft “goes out of its way” to say that under the 25 Mbps download “yardstick” the agency approved in January (see 1501290043), broadband competition doesn't exist for most Americans, Pai said. “To think that rate regulation and other utility-style regulation will not happen in the face of such findings is naïve.”

In addition to the just and reasonable aspects of sections 201 and 202, O’Rielly said he’s “equally troubled” that Section 201(a) “requires common carriers to provide service upon ‘reasonable request’ and empowers the Commission to order carriers ‘to establish physical connections’ and ‘through routes.’ “In other words, the Commission could demand that ISPs provide service, including interconnection,” he said. Wheeler had said he is proposing “bright line rules,” but leaving many of the decisions on a case by case basis “raises many more questions than answers, and exposes the uncertainty that will chill broadband investment and innovation to the harm of consumers,” O’Rielly said.

Pai's "nonsense will be cheered by the cable and telecom industries, which make the same unfounded claims. And his fear-mongering may resonate in the echo chamber of misinformation about Title II," said Free Press Policy Director Matt Wood in a statement. Wood said Pai "is wrong on the facts and the law, and he's out of step with what millions of Internet users and businesses have asked the FCC to do: Protect them from abuse with strong rules that will survive in court."

The draft, according to Pai, also “expressly states that usage-based pricing, data allowances -- really, any offers other than an unlimited, all-you-can-eat data plan,” would be subject to case-by-case review under an “Internet conduct” standard. The agency last week said the draft would have a general conduct standard that ISPs can't harm consumers or edge providers to try to capture any issues that arise. Pai said the standard consists of “at least seven vaguely defined factors in determining whether a practice is allowed.” The plan “makes clear” the practices “are now on the chopping block, with those of mobile operators under special scrutiny,” Pai said. “If you like your current service plan, you should be able to keep your current service plan. The FCC shouldn’t take it away from you.”

The draft wouldn't prohibit usage-based pricing, the agency spokeswoman said, but would “ensure that if broadband providers implement usage-based pricing in ways that harm consumers the commission can step in to protect them.”

Pai criticized the draft’s plans to deal with interconnection agreements on a case-by-case basis (see 1501270030) as giving “a Washington bureaucracy a blank check.” The draft “states that the FCC can determine when a broadband provider must establish physical interconnection points, where they must locate those points, how much they can charge for the provision of that infrastructure, and how they will route traffic over those connections,” Pai said. “That is anything but light touch regulation.” By not forbearing from Sections 206 and 207, which authorize private rights of action, the draft also would allow anyone to “challenge an Internet service provider’s network management practices or rates” in court, which Pai said would lead to “more litigation and less innovation."

The agency had acknowledged it wasn't forbearing from Section 254, which allows the agency to require broadband to pay into the USF, but wasn't calling for the requirement in the order. Pai said that allows the agency to lay the groundwork for USF fee increases. Responding to the separate concern that states could apply telecom taxes and fees on broadband after reclassification, the agency spokeswoman emailed: "The Open Internet proposal does not raise taxes or fees. Period. The Internet Tax Freedom Act bans state and local taxes on broadband access regardless of how the FCC classifies it. Congress already took care of it" (see 1502060058).

In discussing details of the order, Pai departed from agency practice. The public “has a right to know what its government is doing, particularly when it comes to something as important as Internet regulation,” he said. Pai said he wasn't violating agency rules because he wasn't quoting directly from the draft. The agency spokeswoman wouldn't say whether Pai violated any agency policies. Feld dismissed calls, including from congressional Republicans, to release the draft (see 1502030050) as “a desperate attempt” to thwart the scheduled vote.