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Perspectives from FSF Scholars           October 21, 2014        
                            

  



Open Internet and the Law, or Removing the Cart from Afore the Horse

 

by

 

Justin (Gus) Hurwitz  *

 

[Below is the first half of this Perspectives. A PDF of the complete Perspectives, in which Professor Hurwitz also responds to specific comments offered by Marvin Ammori, Susan Crawford, and Barbara Van Schewick, is here.] 

 

I had the privilege of participating in one - the last, in fact - of the FCC's Open Internet Roundtables, this one styled, "Internet Openness and the Law." In this paper, I will offer some perspectives on this particular Roundtable and comment briefly on a few key points raised in other roundtables.

 

The central question presented to our panel was the appropriate legal authority for the Commission's Open Internet rules. In other words: Section 706, Title II, neither, both, or something else? My response was to question the hypothetical: until we know the rules' purpose, we can't speak to the appropriate authority. Asking about the appropriate legal authority for the rules assumes we know the problems the rules are supposed to address. It is unclear today what sort of conduct would violate Open Internet principles, both because it's unclear what those principles are and what the corresponding conduct is. Both Section 706 and Title II offer broad, different, but limited authority. Either, neither, or both could conceivably be the appropriate tool to respond to a hypothetical violation of the rules; either, neither, or both could also be an inappropriate tool.

 

The question, in other words, is flawed. It assumes an answer that requires ex ante rules to "protect the Open Internet." The key message that I hope I left at the roundtable is that the choice between ex ante rules and no rules is a false dichotomy - one that has needlessly forced a heated debate over legal authority that has thrown the Commission into an existential crisis. It is based on a mistaken understanding, one that is pervasive in discussions about the NPRM and that has been promoted by the FCC itself. The notice for the Roundtables, for instance, starts by saying that the Verizon decision "left no legally enforceable rules for the Commission to prevent broadband providers from acting to limit Internet openness." FCC Chairman Tom Wheeler has made similar remarks, as well. These statements are simply wrong.

 

The problem with these statements is that the Communications Act itself is a grant of such authority - indeed, it is the grant of any authority that would form the legal basis for the Commission to adopt administrative Open Internet rules. Anything the Commission can do through rulemaking it can do through adjudication as well - this is a bedrock principle of administrative law dating at least to the Supreme Court's 1947 decision in SEC v. Chenery Corp. If the Commission hasn't previously adopted rules, or at least issued guidelines, it may be limited in the punitive action that it can take against firms engaging in conduct that the Commission deems inappropriate under the Communications Act (be it under Section 706 or Title II). But it is not limited in deeming certain conduct problematic on an ex post case-by-case basis. And, since "preserving the Open Internet" is about curtailing problematic conduct, the ability to deem the continuation of specific conduct as problematic is sufficient to address any problematic conduct that may arise.

 

So ex ante bright-line rules aren't needed. We can go further: they are also not desirable. There is an argument for this based on the legal theory of rules vs. standards that I will take up below. But there is an even more compelling practical reason that bright-line rules are not desirable, discussion of which featured prominently at the Roundtable: bright line rules will inevitably lead to litigation. There was remarkable agreement about this: everyone seems to agree that litigation is the inevitable result of the Commission's rulemaking process. I will go a step further than that and say that the Commission will lose any litigation over bright-line rules. There are simply too many ways in which "non-neutral" conduct can be pro-consumer for bright-line rules to survive being challenged as arbitrary and capricious. Both the economic and technical literatures make clear that non-neutral conduct can be either good or bad for consumers under a wide range of circumstances. We cannot say in the general case that specific forms of "non-neutral" conduct will be good or bad for consumers - but that is exactly what bright-line rules must try to do. Prohibiting such conduct generally, therefore, is very likely to be rejected by the courts.

 

As bothersome as having the D.C. Circuit reject the Commission's rules as arbitrary and capricious would be, inevitable litigation is problematic for an even more important reason. For better or worse, the Commission's Open Internet proceeding has caught the public's imagination. The continuing pendency of the proceeding is creating consumer anxiety and eroding trust in both the Commission and the Internet ecosystem. Needlessly prolonging this process - as adopting rules that would only lead to years of litigation and an eventual repeat of this entire process - would itself be contrary to the public interest.

 

The takeaway is simple: if the Commission doesn't need to adopt bright-line rules, and if the pursuit of bright-line rules will only increase uncertainty, delay, and confusion, the Commission should not adopt bright-line rules.

 

Rather, the Commission should issue guidelines, or perhaps "rules" built around flexible standards (e.g., commercial reasonableness - even commercial reasonableness with a presumption against paid prioritization). These guidelines should reiterate what the D.C. Circuit in Verizon made clear, that the Commission has substantial authority in this area under Section 706. And the Commission should say that, if Section 706 proves insufficient to curtail problematic conduct, it will explore other tools for protecting consumers from harmful conduct - including Title II or seeking greater Congressional involvement. And it should say what everyone knows -- that the world is watching - that the Commission, aided by a concerned Congress and an army of public interest lawyers and an agitated Silicon Valley, is watching, and that it won't hesitate to bring swift action against any firm that engages in problematic conduct.

 

At the Roundtable, I called this the "Hammer of Thor" authority - though it's more often known to regulators as "regulation by raised eyebrow." It is hard to imagine this approach not being amply sufficient to curtail any problematic conduct. Importantly, should anyone engage in conduct that does push the envelope, the Commission has a sound chance at winning a case over specific conduct - it certainly has a better chance of winning a case over specific conduct than it has of successfully defending bright-line rules. The challenge of such rules is that they address uncertain conduct with uncertain effects on consumers using uncertain authority. Adjudicating specific conduct does not subject the Commission to these risks. Even more important, this approach offers the immeasurably valuable benefit of bringing the net neutrality distraction to a close - unlike bright-line rules, which effectively guarantee these issues will continue to dominate the Commission's agenda for another several years.

 

* Justin (Gus) Hurwitz, a member of the Free State Foundation's Board of Academic Advisors, is an Assistant Professor of Law at the University of Nebraska College of Law.

 

The Free State Foundation is an independent, nonpartisan free market-oriented think tank located in Rockville, Maryland. 

 

A PDF of the complete Perspectives is here.

 

   

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