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Title II Reclassification Would Violate the President’s Executive Order on “Improving Regulation”

Yet another major obstacle to net neutrality activists’ call for the FCC to reclassify broadband as a common-carrier service is the President’s 2011 Executive Order on “Improving Regulation.”

By way of background, just weeks after the FCC passed its Open Internet Order (3-2) the President issued Executive Order 13563Improving Regulation and Regulatory Review.”

That means, if/when the FCC revisits its Open Internet Order to address the legal deficiencies that the D.C. Circuit Court of Appeals found in its recent Verizon v. FCC decision, any future FCC redo should comply with the President’s 2011 Executive Order 13563 that became operative after the original 2010 FCC Open Internet Order.  

Now consider how just three of the President’s 2011 required regulatory improvements would be highly problematic for proponents of Title II reclassification of broadband to overcome.

First, “General Principles of Regulation (a) Our regulatory system… must promote predictability and reduce uncertainty.”

Interrupting and completely reversing what has become a predictable, certain, and continuous 43-year FCC policy trajectory away from common-carrier regulation for data services could become the textbook definition of a regulation that did not “promote predictability and reduce uncertainty.”

  • (Please see the FCC’s eight consistent precedents rejecting common-carrier regulation of data services: 1970, 1980, 1986, 1998, 2002, 2004, 2005, and 2007 in order to fully appreciate the monumental policy-whipsaw that reclassifying broadband  as a common-carrier would be.)

Despite net neutrality activists’ spin that reclassifying is just an “administrative re-labeling,” the FCC, Congress, OMB, FCC Bar, industry, and many others all know that reclassifying broadband as a common-carrier service would be the equivalent of pulling the rug (of longstanding established FCC policy) out from under the broadband industry, the Internet ecosystem, and capital markets.

Such an unexpected and counterproductive policy-whipsaw would promote profound uncertainty, not certainty. Most everyone then could rightly fear, if three FCC commissioners were willing to go nuclear here, what other unpredictable policy-whipsaw might three FCC commissioners in the future be capable of?  

Second, “General Principles of Regulation (a) Our regulatory system… must identify and use the best and most innovative, and least burdensome tools for achieving regulatory ends.”

No industry in America, other than the rapidly-obsolescing, legacy-monopoly, Public Switched Telephone Network (PSTN), still uses antiquated common-carrier price regulation of prices, terms and conditions. PSTN common-carrier regulation is among the most burdensome regulatory tools imaginable because they involve upwards of a thousand different, detailed, regulatory-obligations, promulgated over decades.

Tellingly, all the other industries that previously employed common-carrier regulation have since completely abandoned it – over thirty years ago! Railroads were common carrier regulated from 1887-1976; bus-lines and trucking from 1935-1980, and airlines from 1938 to 1984.

Consequently, any net neutrality activist attempt to argue that common carrier price regulation of prices, terms, and conditions was “the best and most innovative, and least burdensome tools for achieving regulatory ends” -- would fail the most basic laugh test.   

Third, “Our regulatory system… must take into account benefits and costs, both quantitative and qualitative…”

This requirement is particularly problematic because the FCC was urged by industry to do a cost-benefit analysis before it passed the Open Internet order 3-2 and it did not do it.

At least part of the reason why the FCC did not conduct a cost-benefit analysis of the prophylactic net neutrality regulation in the Open Internet order is that, almost by design, and by definition, the known high-costs of prophylactic regulation exceed the unquantifiable prospective benefits of such regulation.

That is particularly true in the case of the net neutrality where it is the classic case of a solution in search of a problem. The utter lack of a real problem to be solved was manifest in the FCC’s very-weak, short list of alleged net neutrality problems, by a few accused broadband providers of the 1,600 operating in the U.S., over the several-year period that the FCC examined.

Simply, applying the most onerous regulation available on an industry that wasn’t doing anything wrong, in order to prevent speculative behavior that the industry was/is not doing and has publicly-pledged repeatedly not to do, is the epitome of a high-cost/minimal-benefit circumstance.

It’s hard to see how the high costs and minimal benefits of FCC reclassification of broadband as a common carrier service could possibly comport with the President’s Executive Order’s admonition that: “each agency must… propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs.”    

In short, for these reasons above, and others that are evident in the President’s Executive Order, any FCC effort to reclassify broadband as a common-carrier service would run into very rough sledding at the President’s Office of Management and Budget -- to put it mildly.   


Title II Reclassification Series

Part 1: FCC Reclassification is Eminent Domain, but with No Just Compensation or Authority [2-1-10]

Part 2: Title II reclassification: FCC can't redefine competition & not be arbitrary/capricious [3-4-10]

Part 3: Title II is no "solid legal foundation" for broadband [4-28-10]

Part 4: Why FCC faces such skepticism on Title II assurances [5-14-10]

Part 5: 5 BIG Implications from Court Signals on Net Neutrality - A Special Report [9-13-13]

Part 6: Video: Why FCC Title II Reclassification of Broadband is a Legal Non-Starter [9-22-13]

Part 7: Is Net Neutrality Trying to Mutate into an Economic Entitlement? [1-12-14]

Part 8: Cleland/Crawford Debate Common Carrier Regulation on WNYC Radio [1-15-14]

Part 9: Why Professor Crawford Has Title II Reclassification All Wrong [1-16-14]