Obama: Treat broadband—including mobile—as a utility

President Obama today urged the Federal Communications Commission (FCC) to reclassify broadband service as a utility and to impose rules that prevent Internet service providers from blocking and throttling traffic or prioritizing Web services in exchange for payment. Obama also said utility rules should apply both to home Internet service and mobile broadband.

In short, Obama is siding with consumer advocates who have lobbied for months in favor of reclassification while the telecommunications industry lobbied against it.

In a plan released today, Obama said, “The time has come for the FCC to recognize that broadband service is of the same importance [as the traditional telephone system] and must carry the same obligations as so many of the other vital services do. To do that, I believe the FCC should reclassify consumer broadband service under Title II of the Telecommunications Act—while at the same time forbearing from rate regulation and other provisions less relevant to broadband services. This is a basic acknowledgment of the services ISPs provide to American homes and businesses, and the straightforward obligations necessary to ensure the network works for everyone—not just one or two companies.”

As for cellular data, Obama wrote that “[t]he rules also have to reflect the way people use the Internet today, which increasingly means on a mobile device. I believe the FCC should make these rules fully applicable to mobile broadband as well, while recognizing the special challenges that come with managing wireless networks.”

Obama noted that the FCC is an independent agency and can disregard his advice. But FCC Chairman Tom Wheeler leads the commission because Obama appointed him, and he has apparently been creeping closer to reclassification in recent months. Wheeler’s latest plan would reclassify the connections between ISPs and websites as a Title II service but leave the connections between ISPs and consumers as a lightly regulated information service. By calling for “consumer broadband service” to be reclassified, Obama urged Wheeler to go one step further.

“The rules I am asking for are simple, common-sense steps that reflect the Internet you and I use every day, and that some ISPs already observe,” Obama wrote. His proposed rules are as follows:

• No blocking. If a consumer requests access to a website or service, and the content is legal, your ISP should not be permitted to block it. That way, every player—not just those commercially affiliated with an ISP—gets a fair shot at your business.
• No throttling. Nor should ISPs be able to intentionally slow down some content or speed up others — through a process often called “throttling” — based on the type of service or your ISP’s preferences.
• Increased transparency. The connection between consumers and ISPs — the so-called “last mile” — is not the only place some sites might get special treatment. So, I am also asking the FCC to make full use of the transparency authorities the court recently upheld, and if necessary to apply net neutrality rules to points of interconnection between the ISP and the rest of the Internet.
• No paid prioritization. Simply put: No service should be stuck in a “slow lane” because it does not pay a fee. That kind of gatekeeping would undermine the level playing field essential to the Internet’s growth. So, as I have before, I am asking for an explicit ban on paid prioritization and any other restriction that has a similar effect.

Reclassification of broadband service is almost certain to bring lawsuits from the telecommunications industry. Verizon sued to overturn the FCC’s previous net neutrality rules, which imposed prohibitions on blocking and discrimination without resorting to Title II. Verizon successfully argued that the FCC imposed common carrier rules without classifying broadband as a common carrier service, leading a federal appeals court to largely throw the rules out.

Obama: Utility rules won’t kill network investment

Now broadband providers potentially face much stricter rules. ISPs have argued that “forbearance” from some of the Title II rules is too onerous a process and won’t protect the ISPs from regulations that limit network investment.

Obama disagrees. “Importantly, network investment remained strong under the previous net neutrality regime, before it was struck down by the court; in fact, the court agreed that protecting net neutrality helps foster more investment and innovation,” he wrote. “If the FCC appropriately forbears from the Title II regulations that are not needed to implement the principles above—principles that most ISPs have followed for years—it will help ensure new rules are consistent with incentives for further investment in the infrastructure of the Internet.”

Wheeler issued a response to Obama’s statement, saying, “[a]s an independent regulatory agency we will incorporate the President’s submission into the record of the Open Internet proceeding. We welcome comment on it and how it proposes to use Title II of the Communications Act.” Wheeler said he opposes Internet fast lanes, just as Obama does.

The FCC had planned to issue rules by the end of this year but The Wall Street Journal reported Friday that it will likely be delayed until next year because of how complicated the proceeding is. Wheeler said today that he plans to “take the time to get the job done correctly.”

“The more deeply we examined the issues around the various legal options, the more it has become plain that there is more work to do,” Wheeler said. “The reclassification and hybrid approaches before us raise substantive legal questions. We found we would need more time to examine these to ensure that whatever approach is taken, it can withstand any legal challenges it may face.  For instance, whether in the context of a hybrid or reclassification approach, Title II brings with it policy issues that run the gamut from privacy to universal service to the ability of federal agencies to protect consumers, as well as legal issues ranging from the ability of Title II to cover mobile services to the concept of applying forbearance on services under Title II.”