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Throwing Shade at Title II with Forbearance Fearmongering

October 2, 2014 , , ,

This is a condensed version of a more in-depth examination of this topic, which appears here.

As the groundswell for reclassifying broadband as a Title II telecommunications service and creating strong net neutrality rules grows, the arguments against reclassification have grown increasingly shrill and desperate. Most recently they have focused on “forbearance.”  For those of you not living all of your lives in the world of telecom law, forbearance is the process the FCC could use to decide that some pieces of Title II should not apply to broadband.  As illustrated below, these arguments do not stand up to scrutiny.

Of course, forbearance only matters after the FCC has reclassified broadband access as a Title II service. If nothing else, the fact that we are now debating how to apply Title II to broadband is a huge win for advocates of strong net neutrality rules.

Forbearance is Easy

I blogged last July that the FCC can forbear fairly easily from any provisions of the Communications Act it thinks shouldn’t apply to broadband if it reclassifies broadband as Title II. However, as we pointed out at length in our official comments, Title II is generally worth keeping. Most of the provisions the anti-Title II crowd point to as potentially crushing the spirit out of Broadband Equestria (“Broadband Is Magic!”) have been effectively deregulated already for traditional telephone service, and other provisions actually support good stuff like Universal Service Fund or privacy rights for consumers. That being said, if the FCC feels the need to indulge in broad forbearance, it has the authority to do so. 

Nonetheless, some folks here in DC have devoted considerable effort in the last few months to explaining why, all cited evidence to the contrary, forbearing from Title II would be Utterly Impossible, and therefore reclassifying broadband access as a Title II service would be a Horrible Idea.

 These arguments break down into 2 basic categories: 

  1. Forbearance used to be possible, but the “Qwest Forbearance” (Don’t worry, I’ll explain what that is) changed everything.
  1. There is something magical and exceptional about broadband that makes forbearance impossible.

As I shall explain below, argument #1 relies on a fundamental misunderstanding of how administrative law works (and a failure to read any recent forbearance cases, which address this issue squarely and reject this argument), whereas argument #2 relies on a fundamental (and rather self-serving) misunderstanding of how the forbearance statute works. 

Argument 1: Qwest Forbearance Changes Everything 

A bit on the forbearance part….

Actual forbearance is a fairly straightforward 3-part process established in the Communications Act.  Basically, the FCC needs to find that a section isn’t necessary to make sure that everything is working in a just and nondiscriminatory way, that the section isn’t necessary to protect consumers, and that not enforcing the section is consistent with the public interest. 

This is a general checklist, but the FCC has opportunities to apply it to a broad set of dissimilar circumstances.  In order to do so, the FCC needs to determine what this checklist means in the context of the purpose of the particular service to be analized.  After all, TV stations aren’t “failing the public interest” if they don’t offer 4G service, and wireless carriers aren’t “failing the public interest” just because they don’t provide local programming because that’s beyond the scope of their purpose.

A law called the Administrative Procedure Act makes sure that the FCC can’t just interpret its obligations totally randomly.  The FCC has to justify why it makes the decisions it does and, if they decide to change their mind about how to do something, they need to at least acknowledge doing so.  But the FCC isn’t changing its mind or reversing precedent if it says: “We are going to apply the statutory standard in a particular way over here because the way we apply it over in those completely different cases over there is totally inapplicable.”

Now, on to this Qwest Forbearance thing…..

Here is a link to the relevant case out of the 10th Circuit.

The short version of this case is that the phone company Qwest asked the FCC to forbear from a handful of sections of Title II.  Although the FCC had been granting similar requests in the past, those requests had not worked out the way they had hoped, so the FCC decided to deny Qwest’s request.  Qwest sued the FCC and won, with the court admonishing the FCC for not explaining clearly enough that they were changing how they handled these types of request.  Quest reapplied and this time the FCC took its time to make it clear that it was changing the way it handed these types of request when it denied the request.  Qwest sued a second time, but this time the court said that the FCC changed its mind the right way and sided with the FCC (that’s the case linked above).

Opponents of strong net neutrality rules argue that this decision changed everything about forbearance and made it insanely impossible for the FCC to forbear from anything in the future (here’s a representative example of that argument).

They are wrong. The Qwest Forbearance established a standard for a market-specific, service-specific forbearance. It did not change the overall obligation of the Commission with regard to forbearance generally, or dictate a single standard for all forbearance cases. Especially in cases that involve big policy predictions for national markets ‘n stuff, forbearance remains the same old easy-peasy stuff that I cited to back in July.

I can be sure about this because the FCC has addressed this very question of the proper standard twice since the Qwest Forbearance and decided that I am totally right. 

First, in 2012, the FCC issued this massive Lifeline Reform Order. As part of that Order, the FCC granted general forbearances and some conditional forbearances in simple, straightforward (not insanely impossible) ways.

But even more relevant and controlling was the FCC’s decision in the broad forbearance petition from a laundry list of regulations filed by US Telecom in 2013. US Telecom sought national forbearance for all of its members (ILECs), just as the FCC would grant national forbearance for all broadband carriers here. The opponents of the US Telecom Forbearance raised exactly the same argument the OMG THE QWEST FORBEARANCE CHANGED EVERYTHING folks make here.  The Commission rejected this argument explicitly. It even quoted the D.C. Circuit cases that all the OMG THE QWEST FORBEARANCE CHANGED EVERYTHING people claim no longer apply, except that the FCC explicitly held in ft. 18 that these cases do apply. 

Argument 2: Broadband Forbearance is Impossible And Therefore Edge Providers Would be Forced to Pay ISPs Under Title II

The other theory is being flogged fairly hard by Phoenix Center, although it has other admirers as well (you can read the short version in Larry Spiwak’s op ed here.). Like the White Queen advising Alice to practice believing 6 Impossible Things before breakfast, Phoenix Center asks us to believe 6 Erroneous Things, combined with some false premises, to reach a conclusion that the FCC cannot forbear from the a part of Title II called Section 203 (47 U.S.C. 203).  The argument continues that unless the FCC decided to forbear from Section 203, the FCC would have to start setting tariffs and forcing edge providers to make extra payments to ISPs. 

There are many flaws with this argument that I won’t address here, but let us assume we accept for the sake of argument the necessary false premises and misstatements to test the conclusion that one could not forbear from Section 203. 

In this context, proponents of this argument frame the test that the FCC uses to decide if it can forebear from a section as “is there gatekeeper power?” But that is not actually the test.  Instead, the test is “do we need Section 203 tariffing to restrain the gatekeeping power, or do other sources of authority (or other factual circumstances) make it unnecessary to retain Section 203?” If other parts of Title II let the FCC do the job of preventing unjust reasonable rates and practices and otherwise protecting consumers, then the FCC “shall forbear.” 

This is not the first time the FCC has tried to answer this kind of question.  Ten years ago, when the FCC exercised forbearance for wireless voice service (also a Title II service), it considered whether to keep the Section 203 tariffing requirement. The FCC decided to forbear from tariffing because it retains sufficient power under other parts of Title II to address abuses, and because disclosure through advertising would (the FCC predicted) keep rates down. The FCC could similarly reasonably conclude here that those same other parts of Title II, combined with the mandatory network management practices disclosure rules affirmed by the D.C. Circuit under its Section 706 authority, make tariffing unnecessary in the case of broadband internet access. Done. 

Conclusion

 The fact that we are debating forbearance – whether and how much – shows how far we’ve come to acknowledging that Title II needs to be part of any real network neutrality solution. As this conclusion becomes increasingly inevitable, we can expect opponents of Title II to invent new objections to forbearance with equally increasing desperation. 

My goal here, therefore, is not to make a tit-for-tat reply to every objection to forbearance authority that may arise. Instead, my goal is to describe the basic method for dealing with these objections. In all cases, simply run the argument against the statutory criteria. As explained at length above, the Qwest Forbearance did not change any of this. The cases that make Section 10 forbearance easy-peasy remain good law. Nor is there anything particularly magical about broadband, as compared with other Title II services, that makes it impossible to forbear.