Monday, May 01, 2017

If you sell access to the network known as "the internet", you're a common carrier

Federal Communications Commission Chairman Ajit Pai (Twitter account link) has laid down the gauntlet in his quest to reverse a 2015 ruling that classifies Internet Service Providers (ISPs) as common carriers. Mr. Pai seems to think that classifying ISPs as information services will restore freedom to the internet.

Pai says that the FCC must dial it back to the lighter touch that was applied before the ruling with Chairman Tom Wheeler at the helm, so that ISPs will invest in their infrastructure again. This despite the fact that more than 450 cities have built their own world class ISPs when they could not get service from incumbent service providers - and most of them were built before 2015.

Mr. Pai has filed a notice of rulemaking and a request for comments, here is a factsheet for that filing. You can file your comments on the same here. The vote on the proposed rule isn't until May 18th and even after that, there will be a lengthy period of public comment available (no deadline has been formally announced yet). Ars Technica has a brief article with some very interesting analysis, here. The best analysis I've found so far can be seen at Y-Combinator here (highly recommended!).

I wrote about this issue in 2014 when the FCC and Congress were debating the idea of classifying ISPs as common carriers in my article, "Justice Scalia told us cable ISPs are common carriers 10 years ago". Here is the nugget of the article:
Scalia's opinion notes that the cable ISPs are providing the same telecommunications service that the phone companies offer, just using different hardware, while offering "information services". The cable companies offered free email addresses and websites to show that they are "information services", too. The FCC took this to mean that since they are offering information services, they must be classified as an information service rather than a telecommunications service. Scalia's point is that even if the cable companies offer "information services", they are still providing "telecommunications services" and are thus Title II Common Carriers.
This is the same point as the Y-Combinator article posted above. Lest there be any confusion, let's see what the FCC regulations can say. But before we can get to that, a short civics lesson is in order. The way power is delegated in American law is that all power resides in the people and they delegate power certain powers to Congress. Congress writes the laws and when they write the laws, they delegate power to implement the law to the executive branch. Usually, they delegate such power to the head of an agency. In this case, we're talking about the chairman of the FCC. And when Congress delegates that power, they delegate the power to write rules on how the law should be interpreted and implemented. Those rules are called regulations and they are found in the Code of Federal Regulations. 

So how does Congress define a common carrier? 47 U.S. Code § 153 - Definitions
(11) Common carrier
The term “common carrier” or “carrier” means any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio or interstate or foreign radio transmission of energy, except where reference is made to common carriers not subject to this chapter; but a person engaged in radio broadcasting shall not, insofar as such person is so engaged, be deemed a common carrier. (emphasis mine)
Congress was specifically identifying communication by wire or radio, meaning, if you own the wire, you're a common carrier. Even if you don't own the wire and you rent the wire to someone else, you're still a common carrier. So if you just sell access to the network of wires, you're still a common carrier. That means, ATT, Verizon, Comcast, Time-Warner and any other entity that sells access to a network, regardless of ownership.

Since this is a delegation of power from the Congress to the FCC, no regulation promulgated by the FCC can exceed the power delegated to it, including the definition of "common carrier". The FCC can neither reduce nor increase the scope of the definition without a grant of power from Congress to do so.

For decades, ISPs have been hiding behind their "information services" while selling access to their network, pretending that they're not telecommunications services. To paint a bright red line around it, you cannot sell access to the network and then claim you're not a telecommunications provider just because you include "information services", too. This is the issue that was discerned by Justice Scalia NATIONAL CABLE & TELECOMMUNICATIONS ASSOCIATION et al. v. BRAND X INTERNET SERVICES et al. [04-277]:
     If, for example, I call up a pizzeria and ask whether they offer delivery, both common sense and common "usage," ante, at 18, would prevent them from answering: "No, we do not offer delivery--but if you order a pizza from us, we'll bake it for you and then bring it to your house." The logical response to this would be something on the order of, "so, you do offer delivery." But our pizza-man may continue to deny the obvious and explain, paraphrasing the FCC and the Court: "No, even though we bring the pizza to your house, we are not actually 'offering' you delivery, because the delivery that we provide to our end users is 'part and parcel' of our pizzeria-pizza-at-home service and is 'integral to its other capabilities.' " Cf. Declaratory Ruling 4823, ¶39; ante, at 16, 26.1 Any reasonable customer would conclude at that point that his interlocutor was either crazy or following some too-clever-by-half legal advice.
     In short, for the inputs of a finished service to qualify as the objects of an "offer" (as that term is reasonably understood), it is perhaps a sufficient, but surely not a necessary, condition that the seller offer separately "each discrete input that is necessary to providing ... a finished service," ante, at 19. The pet store may have a policy of selling puppies only with leashes, but any customer will say that it does offer puppies--because a leashed puppy is still a puppy, even though it is not offered on a "stand-alone" basis.
     Despite the Court's mighty labors to prove otherwise, ante, at 17-29, the telecommunications component of cable-modem service retains such ample independent identity that it must be regarded as being on offer--especially when seen from the perspective of the consumer or the end user, which the Court purports to find determinative, ante, at 18, 22, 27, 28. The Commission's ruling began by noting that cable-modem service provides both "high-speed access to the Internet" and other "applications and functions," Declaratory Ruling 4799, ¶1, because that is exactly how any reasonable consumer would perceive it: as consisting of two separate things.
Note also that this is an excerpt from a dissenting opinion with concurrence of Justice Souter and Justice Ginsburg. Even Ginsburg, a liberal almost diametrically opposed to Scalia on many issues, concurs with Scalia! Though it is a dissenting opinion, it is worth noting that dissenting opinions do sometimes become the majority opinion in future cases.

I will be posting my own comment on this issue as well as the many thousands, perhaps millions of others will, and I hope you do, too. The point we must make to the FCC in our filings is this: if you own the pipes, or even sell access to the pipes, you're a common carrier. Even if you add some fancy information service on top of that, you're still a common carrier by virtue of selling access to the network you manage, lease or own. The network includes the last mile, the copper cable or fiber that gets your signals to the internet and that means the companies we love to hate must be regulated as common carriers.

Sticking to this point and this point alone will bring the debate to a head and finally pull back the facade of "information services" to reveal ISPs as common carriers.
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