A Reader on Net Neutrality and Restoring Internet Freedom

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Telecommunications & Electronic Media Practice Group, was recorded on Tuesday, October 16, 2018 during a live teleforum conference call held exclusively for Federalist Society members.  

 

Wesley Hodges:  Welcome to The Federalist Society's teleforum conference call. This afternoon's topic is A Reader on Net Neutrality and Restoring Internet Freedom, a new book published by The Free State Foundation. My name is Wesley Hodges, and I'm the Associate Director of Practice Groups at The Federalist Society.

 

      As always, please note that all expressions of opinion are those of the experts on today's call.

     

      Today we are very fortunate to have with us Mr. Randy May, who is President of The Free State Foundation, as well as Seth Cooper, who is a Senior Fellow at The Free State Foundation. With us also is Daniel Lyons, who is Associate Professor at the Boston College of Law School and a member of The Free State Foundation's Board of Academic Advisors. With us also is Blair Levin, who is a Nonresident Senior Fellow at the Brookings Institution. Thank you very much for speaking with us. Randy, I believe the floor is yours.

 

Randolph J. May:  Wes, thank you, and thanks to The Federalist Society for hosing this teleforum. We all appreciate it. I'm going to just tell you about this book and the contents of the book at the proverbial 30,000-foot level, and then our panelists, which have been introduced, will dive in probably somewhere around the 5,000-foot level. And then, hopefully, if you like when we get to some back-and-forth among the panelists and Q&A, we can really dive into the trenches, maybe even below sea level – get into the nitty gritty.

 

      So in December 2017, the FCC adopted its landmark Restoring Internet Freedom Order that in essence repealed the public utility-like regulations, which were applied to broadband internet service providers by the Obama administration FCC in 2015. The 2017 order returned to what the new Trump administration FCC called a "light-touch internet broadband policy'' that fosters free-market competition, investment, and innovation. It did this primarily by adopting a set of transparency and disclosure requirements that the internet service providers must follow relating to the terms of their service such as, for example, speed, quality of service, and so forth. If the ISPs don’t adhere to the representations they're required to make, then the FTC – the Federal Trade Commission – can take enforcement actions. And, of course, the antitrust authorities can always take action to address claim competition concerns.

 

      So the book that The Free State Foundation has published contains 24 different selected pieces from The Free State Foundation's published work. And these pieces explore both policy and legal rationales that support the December 2017 action. They range in time from a piece of mine published in September 2013 called, "It's the Consumer, Stupid"—I consulted with James Carbo (sp) on the title—to Seth Cooper's February 2018 piece on the likelihood of success of FCC preemption of state net neutrality regulations that are inconsistent with the FCC's new approach.

 

      The volume also contains a fresh introduction that puts all the material in the book in context. By the way, just during the last couple of years, FSF has published over a 100 papers and blogs on the net neutrality controversy. So in putting together the book, we took care and took time to [comb] through all of these pieces to pick out the selections that we thought would be most useful as a scholarly and practical resource. The authors represented in this book, which I just want to mention briefly, in addition to Seth and myself are FSF in-house scholars, Ted Bolema and Mike Horney, as well as the following members of The Free State Foundation's Board of Academic Advisors, all distinguished professors of law or economics: Daniel Lyons, who you will hear from shortly, Joshua Wright, Gus Hurwitz, James Prieger, Tim Brennan, Dennis Weisman, and Robert Crandall.

 

      So as most of you know, and I'm not going to belabor this point, the material in the book is still very timely. The FCC's order is on appeal in the D.C. Circuit. It's now being briefed. And the Department of Justice and FCC and internet service providers are presently seeking a preliminary injunction against a just-adopted California law that the feds claims is unlawful under the Commerce Clause and preempted because [it's] in conflict with FCC policy. So the net neutrality controversy, which is now at least 13 years old – maybe longer, continues on and likely will continue for some time.

 

      I normally, don’t read dedications in the book, but before I turn it over to Seth, I'm going to read the dedication in this book because it's relevant to the point I just made. I dedicated this particular book to my grandchildren. I won't name them here, but I said, "For my grandchildren with the hope that sometime before they have children of their own, the net neutrality controversy will be ancient history or at least history." I'm not sure that will be the case, but at least that's my hope. So the book is now available on Amazon and in the Kindle version. I'm not going to mention any prices now, but it's ridiculously cheap.

 

      So now I'm going to turn it over to the panelists. Seth is going to go first, and then he is going to be followed by Professor Lyons, who I should mention is also a member of our Board of Academic Advisors, and then by Blair. In addition to Blair's current position, I'll just mention not only is he a longtime friend of mine, but he's held senior positions at the FCC, both the Clinton and Obama administration FCCs. So with that, Seth, why don’t you take it away?

 

Seth L. Cooper:  Thank you, Randy. And thank you to The Federalist Society. Our book, A Reader on Net Neutrality and Restoring Internet Freedom as Randy pointed out, it collects a series of writings, which includes certainly warnings against the downsides of imposing public utility regulation on broadband internet access services—the downsides for innovation, for investment, and, ultimately, consumers. So it highlights some of the dubious aspects of the Title II Order that impose that kind of regulation. And then it proceeds to a defense of the Restoring Internet Freedom Order, which repealed that regulation. And so the book defends the benefits, or explains the benefits, of a light-touch, market-oriented policy approach to broadband services—the benefits for innovation, for market investment, and, ultimately, consumers. So I'll touch a little bit on a couple key legal and policy underpinnings of the Restoring Internet Freedom Order, and those are contained in the book in more detail.

     

      First and foremost is the issue of definitions of statutory terms. And that's not a super exciting issue compared to some of the others, and it's maybe a bit tedious. But the statutory terms and their meanings are the legal basis for the Restoring Internet Freedom Order. And that's going to be legal issue upon which the Restoring Internet Freedom Order will stand or fall as it's now under appeal – an appeal that's consolidated the D.C. Circuit Court of Appeals.

 

      In the Restoring Internet Freedom Order, what the FCC did is it provided a really straightforward and, I think, persuasive interpretation. It said that broadband internet access services meet the statutory definition of an information service. And roughly speaking, information services offer the capability for acquiring, storing, processing, [and] transforming information. And the FCC determined that broadband internet service providers offer those capabilities, certainly in conjunction with connecting consumers to third-party websites. But in their own right, broadband internet service providers offer capabilities such as the main name service functionality and cashing functionalities.

 

      So in making that determination, the FCC was actually returning to its prior understanding of its classification for broadband services. This is not totally unchartered waters – quite the opposite. This is consistent with its prior precedents; its precedents prior to the 2015 Title II Order. And the underlying logic of that statutory determination was ultimately upheld by the Supreme Court in the NCTA v. Brand X decision going back to 2005. So when this is considered by the D.C. Circuit, the FCC has, not only got some solid backing in precedence, it will also have the benefit of the Chevron deference doctrine. Certainly, when the Title II Order made a very, very contrary statutory determination, the D.C. Circuit showed an abundance of deference to the FCC's statutory interpretation. And certainly, the FCC should receive that same kind of deference in this case. And I think on that basis, the Restoring Internet Freedom Order will be clearly upheld.

 

      Now, the consequence, though, a very important consequence of this Title I classification is that it means that the FCC lacks the power to impose Title II-like regulation. It means that broadband services are an interstate information service, and it means that there is a federal policy in place of market competition for these services of light-touch regulation rather than prescriptive regulation. And so what that means is that state attempts to try and impose public utility-like restrictions or to essentially repeat the repealed Title II Order at the state level, those will conflict with that federal light-touch policy of market competition for broadband services, and those kinds of state laws that conflict will be preempted. And I think the California statute that was passed recently, and that was subject to a lawsuit by the Department of Justice, I believe that will ultimately be preempted as a consequence of the Restoring Internet Freedom Order and the Title I market-oriented policy that it adopted because these services are interstate and that will settle the matter.

 

      Now, our book includes a narrower preemption issue as well, and that has to do with state government executive orders that purported to use proprietary authority or contracting authority to essentially bring about Title II-like regulation or public utility-like regulation at the state level that mirrors the repealed Title II Order. So I go into that in one of the writings that I contribute, particularly with the state of Montana. I identify some of the problems there, and that it certainly exceeds the normal exercise of state contracting functions. And it would essentially require broadband service providers in that state to agree to adhere to the contours of the repealed Title II Order for all consumers throughout the state. And that certainly exceeds normal kinds of contracting or certainly normal kinds of consumer or market participant kinds of activities. And so an executive order like that wouldn’t receive immunity from preemption.

 

      And I really now want to just finish up by talking about one very, very important policy underpinning of the Restoring Internet Freedom Order in that it provides consumers with protections. Consumers are protected under the Restoring Internet Freedom Order. An important takeaway from the Restoring Internet Freedom Order is that it restored the FTC's jurisdiction over broadband internet service providers. The Federal Trade Commission's jurisdiction had been removed as a consequence of the Title II classification of the Title II Order. But now with Title I restored, the FTC's jurisdiction is restored. And as Randy and I discuss in the introduction to our book, earlier this year in the case of AT&T Mobility v. the Federal Trade Commission, the Ninth Circuit Court of Appeals en banc unanimously determined that when a voice service provider offers common carrier services, it's non-common carrier services are subject to the FTC's jurisdiction regarding unfair and deceptive trade practices. This is important because the major internet service providers pledge in their terms of service with consumers not to block their access to lawful content of their choice. They pledge not to degrade or throttle consumers' access to lawful content of their choice. And they pledge to not engage in harmful forms of paid prioritization.

 

      And so with the FTC's jurisdiction restored, that means that if an internet service provider fails to live up to its pledges, fails to live up to its promises, or at least has alleged to have done so, the FTC will have enforcement authority on a case-by-case basis to take action and hold them accountable. And in our book, my colleague, Ted Bolema, does a nice job of describing the FTC's institutional experience and competence and expertise in protecting consumers in this context. And I'd be certainly remiss, also, not to mention former FTC Commissioner Joshua Wright's contribution to this volume where he discusses the protections that are also afforded by antitrust. And he provides a very interesting and illuminating discussion of antitrust precedence, recognizing the way antitrust can protect consumers against monopolizing practices that harm innovation or substantially raise prices. So the FTC and the Department of Justice have antitrust tools at their disposal to protect consumers as well. Thank you.

 

Randolph J. May:  Daniel, do you want to take it next? Please?

 

Prof. Daniel Lyons:  Sure. And thanks for inviting me today. Randy had asked me to talk about two of the chapters that I had contributed to the Reader. The first was entitled "Title II is Rate Regulation." And that focuses on the consequences of the 2015 decision to reclassify broadband providers as Title II carriers, and specifically, the claim that former Chairman Tom Wheeler had put forth that there would be no rate regulation under the reclassification plan. My argument was that this promise was suspect at best. At a minimum, the Open Internet Order prohibited paid prioritization, which effectively sets a specific rate, namely zero, for priority traffic on broadband networks. But even if we understood Chairman Wheeler's claim to mean that there would only be no rate regulation of retail rates, it's still potentially problematic because Title II was, at its core, a rate regulation regime.

 

      Section 201 mandates that all charges, practices, and classifications by providers be just and reasonable. And Section 202 prohibits unjust or unreasonable discrimination in charges, practices, and classifications. Section 208 gives any aggrieved party the opportunity to file a claim alleging violations of Sections 201 and 202. And if they do file such a claim, it was the duty of the Commission to investigate. So while the Commission [forbore] from the most onerous rate regulation parts of Title II, namely tariffing under Section 203, the D.C. Circuit has made clear in a case called Orloff that 201 and 202 remain binding on Title II entities even in an un-tariffed environment.

 

      And Orloff is an interesting case. Orloff involved a woman who claimed that haggling – allowing customers to bargain with their wireless providers for better rates – violated Section 202 because it resulted in rate discrimination, right? Different rates for the same service. The D.C. Circuit agreed that even in an un-tariffed environment this claim was cognizable. Although, ultimately, it deferred to the FCC's dismissal of the claim because the FCC had found that the wireless market was competitive and therefore the agency could rely on market forces to assure that rates for wireless service were just and reasonable.

 

      During the net neutrality debate, Chairman Wheeler often analogized Title II broadband to Title II wireless service. But the Orloff case shows a bit of a hole in that logic. One could imagine that after the Title II Order came into place, one might see an Orloff-like consumer bring 201 or a 202 complaint about a broadband provider's rates. And under 208, the Commission would have to investigate. But unlike in Orloff, it couldn't rely on a conclusion that market forces assured that the rate was just and reasonable because at the time, the FCC had concluded that broadband was, in fact, not competitive. And that was a conclusion that the FCC came to partly to justify its Title II Order. Instead, as the Commission explained in a different case, the prison call order. In the absence of competitive pressure, the default of cost-based regulation should apply, when the Commission has to assure that rates are just and reasonable. So what that means is that had the Title II regime continued, it was likely that the FCC would've eventually faced a duty to investigate a broadband provider's rates and because of its conclusion about broadband competitiveness, it would likely have had to determine the propriety of that rate based on the cost of service, which is, essentially, rate regulation.

 

      All right. So the second piece that I contributed focuses on regulating privacy, and that remains a hot-button issue today. I wrote this piece right as Congress was repealing the FCC's broadband privacy rules under the Congressional Review Act. And Seth had noted that one of the unintended consequences of reclassifying ISPs as common carriers was that it stripped the Federal Trade Commission of jurisdiction over ISPs, which among other things left a big hole in privacy law because the FTC is America's primary privacy enforcement force.

 

      So having created this hole, the FCC then compounded this area by filling the legal vacuum with a somewhat onerous opt-in privacy regime that applied only to broadband providers and was far more restrictive than the opt-out rules that the FTC applied to every other player in the internet ecosystem. And the difficulty with this approach, I think, was that it created an unlevel playing field in the market for digital advertising. Access to consumer data is what allows companies to provide more targeted ads, and that's more valuable to advertisers. So imposing an opt-in requirement on ISPs meant that ISPs would've had less data than edge providers like Google and Facebook with which to compete for those advertising dollars. And this mismatch seemed particularly unfair given that it's edge providers, not ISPs, that dominate the digital advertising space. The last numbers I'd seen were 2016, but as of that time, Google collected over half of all internet advertising money. And if you add Google and Facebook together, they account for about two-thirds of all digital ads spent, which is insane.

 

      So my first point in the piece was whatever the rules should be, they should be the same throughout the internet ecosystem. But that didn't answer the question of whether that uniform regime should be an opt-in regime or an opt-out regime. And in the article, I lean toward the latter. The primary reason being that privacy can't really be assessed in a vacuum. It has to be examined in light of the role that consumer information plays in the internet ecosystem. And it only gets too exaggerated to say that consumer information is the lifeblood of the internet. The monetization of consumer data is the mechanism by which companies make available those services that we've come to expect is free, like email, search, YouTube access. Shifting from an opt-out rule to an opt-in rule would dry up that pool of data and that makes less data available for monetization and would thus suggest the need for those companies to find revenue elsewhere. That could mean the things that they currently provide for free they would have to start charging for, and that could exacerbate the digital divide. Now, of course, the FCC ultimately solved this problem by repealing the Title II Order, and that restored the FTC's jurisdiction and restored a unified privacy policy, at least at the federal level.

 

Randolph J. May:  Daniel, thank you very much. Before calling on Blair, I just want to remind the listeners -- now, you can already tell, I hope, that we have a lot of expertise here on all things net neutrality. So I hope you'll be thinking of questions that you might have to ask the experts, and it's a good opportunity to do that. So now we're going to turn to Blair. As I mentioned, he served as a senior official in both the Clinton administration FCC and the Obama administration FCC, and why don't you take it now, Blair, for about five or six minutes?

 

Blair Levin:  Thank you very much, Randy, and thank you very much to The Federalist Society for inviting me on. I want to start by saying that in my two stints in the government, both as Chief of Staff to Chairman Reed Hunt in the first Clinton term as well as in my second stint doing the National Broadband Plan, I greatly appreciated Randy and The Free State Foundation who I talked to a lot, not because we agreed but because they provided very thoughtful critique. And I will say without giving them -- casting blame for a number of mistakes we made, which I'd be happy to admit, though I think we did some pretty good things. I would say that they kept us from making even more foolish mistakes. And I mean this quite sincerely. I'm very grateful for that. I think it's real important that that kind of conversation occur, and I hope that in my own role here today it's not really to have a point-by-point rebuttal but rather to provide some insight into some other thoughts and ideas both in terms of the history of the net neutrality debate and in terms of its future – things to keep in mind.

 

      Well, probably most relevant, however, other than my government experience is the fact that I've spent a good deal over the last 18 years being a Wall Street analyst. And, in fact, I wrote my first piece on net neutrality in December of 2001 before it was even named net neutrality. And it was a piece entitled "The Edge Versus the Network," because that's from an economic perspective what I thought it was. And I think that it's important to note that since December of 2001, there's only four people I know of who've actually changed their minds on the topic: Barack Obama, who in 2010 thought it should be Title I and in 2014 thought it should be Title II, or at least that's what his staff said, whether he himself -- I'm certain he himself in 2014 said it should be Title II; Julius Genachowski, the first Obama chair, who in April of 2010 thought it should be Title II and then shifted to Title I; and then Tom Wheeler, who in the course of responding to the defeat of Genachowski regime thought it should be Title I and then eventually chose Title II.

 

      The fourth person is myself. And the reason I kind of made a change was from thinking it was a really important issue to actually thinking it's not that important an issue. And, indeed, we did nothing on it with the National Broadband Plan is because when one thinks about the incentives to discriminate -- that is to say why would a business discriminate? What value is there in discrimination? The value goes down as the average speed that customers are getting for bandwidth goes up. Most of the concerns that people have, which really are much more about prioritization, the incentive to prioritize becomes less important if everybody's getting 100 megabits or a gig or whatever.

 

      And so one of the things that's been interesting to me when I returned to Wall Street post doing the National Broadband Plan is that, in fact, Wall Street has not really cared about this issue for some time. I think reflecting the economics, which is -- while they are skeptical of the threat of not having a Title II regime—they're very skeptical of that. But they're also skeptical that there's a lot of upside to getting rid of that regime since the kind of fundamental rules, and I think one of the prior speakers noted this, the fundamental rules of no blocking, no throttling, and no unreasonable paid prioritization remain in effect, and that market forces and transparency fundamentally prohibit people from doing those kinds of things.

 

      So I just want to offer a first initial thought, which is that from a political capital point of view, we have spent a huge amount of time and effort on this issue. This isn't to knock academic work of what the Free State Foundation is doing. But it is simply to say that in the light of the different challenges that we might have on broadband – privacy, for example, clearly being one of the future ones – it is diminishing in my view in importance.

 

      The second thing I would just kind of like to note that it'll be very interesting to see what the different courts do to this. I, obviously, have a different point of view as to what courts maybe should do. But I would say I haven't really practiced law in 25 years, so I wouldn’t take what I think courts should do that seriously. I would say that I think the case -- I mean, it's easy for people, as everyone does in Washington, to predict what courts will actually do. I think both cases are very much up in the air. Courts could go either way, and I think there's a little bit of an Achilles's heel in what the most recent FCC did to suggest, as they do, that -- they actually went beyond the kind of Title I view that Julius Genachowski had or that Michael Powell and Kevin Martin had. Keven Martin's own Title I view was also thrown out by the courts.

 

      The view that Congress gave the FCC zero authority to regulate in this space, except for the authority to preempt everybody else – states and local, I think is a challenging position, and certainly will be challenged. Whether it's a successful challenge or not, I don't have a strong opinion on. But I think that's a very kind of odd constitutional framework to think about. And I would just also mention it was mentioned earlier that in the Brand X case, the Court gave the FCC Chevron deference to define it as a Title I service, which of course it did. But I think it's very notable that Scalia, who was certainly the most experienced telecom lawyer since he had worked in the NTIA, gave what was a very thoughtful -- and, obviously, I was not a Scalia fan. I'm not saying I totally agreed, but I think it is a dissent that is very much worth reading about why the law actually compels a Title II version. And there're lots of ways of distinguishing. But I think it's an important thing to know about.

 

      And then, finally, let me just close by talking a little bit the future. I have actually spent a lot of the last week talking with Wall Street about the meaning of the California case. I think the California case may turn out to be one of the most important cases for jurisprudence in the country for lots of reason, but none of them have anything to do with net neutrality. The reason I say that is that as the economy moves to fundamentally an information platform and that information platform has enormous amounts of interstate elements, if you will, it is not quite clear to me what the limiting factor is for the Interstate Commerce Clause. In other words, if one takes the view that was expressed simply upon the filing of the litigation against California's net neutrality law that it's interstate commerce, and therefore states have no role here, you are basically wiping out a lot of state jurisprudence – a lot of state authority. And that would include issues that are going to be huge issues in the future: privacy, cybersecurity, all kinds of consumer protection. I'm not saying that that position is wrong; I'm simply saying that in what was fundamentally a manufacturing economy or fundamentally an agricultural economy, the Interstate Commerce Clause is going to mean something very different when we're fundamentally an information economy, where information's always traveling across state lines. And so what the proper -- particularly for a society like yourselves, which is kind of founded on a notion that we ought to keep those lines coherent, how we do that with this case is, I think, really important. And I don't have an easy answer. I'm just saying the case will raise that.

 

      The second thing the case will raise, I think, eventually will be the First Amendment claim. This has been tried before. It has always failed, but new-Justice Kavanaugh has explicitly said that net neutrality is wrong not for the reasons that have been discussed on this phone but because it violates the First Amendment. And if it does violate the First Amendment, and I don't think it does, but reasonable minds apparently can differ on this subject, is there any regulation? Earlier, it was said that consumers are protected. Because of the FTC, they will have to say, "We promise not to block, throttle, or unreasonably use paid prioritization." It seems to me that if you try to enforce those things against an entity that has a First Amendment right, it's actually going to be very difficult.

 

      So one of the things that Randy taught me—I'll close with this—back in the mid-90s, and I really appreciated him doing this, is anytime the government adopts a policy, you have to think about what is the limiting factor on that policy if you applied that policy. And I think the earlier speaker did a really interesting job on rate regulation. Frankly, Wall Street was never that worried about it. But his legal point probably is right, that the threat of that remained because although Tom Wheeler rhetorically limited price regulation, the law was still there. It's really important to have limiting factors, and I think when we think about interstate commerce and the First Amendment in an information economy, it is not quite clear what the limiting factors are. And with that, let me close and open it up for questions.

 

Randolph J. May:  Blair, thanks very much. And, Wes, maybe while we ask people to queue up for questions, I want to take just a minute or two just for some comments to follow what Blair said, and then we will be, I think, in a position to open up the lines, if that makes sense to you.

 

Wesley Hodges:  Absolutely, Randy. That's a great idea.

 

Randolph J. May:  First of all, I appreciate everyone's remarks. And I think Blair really did highlight an important aspect of the California case in a larger sense, and I appreciate the way he did that. I think it's -- my own sense is over the next couple years, it may be the most important thing that's happening in communications law. And we do presage some of it – quite a bit of it, I think, in this. But I happen to be at the FCC back in the late-70s and early 80s when the FCC was doing its so-called Computer II Proceeding, in which it was first making a distinction between what we now call information services and basic telephone services back then. And the thing that I would say the FCC then, actually, preempted -- it exercised preemption authority to preempt inconsistent state regulations. And that was upheld by the D.C. Circuit. And later in the late-90s, there were cases, actually, in the Ninth Circuit, which is interesting. When the FCC got around to Computer III, and without going into any details, the FCC again exercised preemption authority. It took a couple times before the Ninth Circuit, but once again the [court] did uphold FCC's preemption authority on the basis—and this is really my point—that it was these new types of services, which we're now talking about, the internet services, the reality is it's practically impossible to distinguish the nature of the communications between intrastate and interstate communications like in the old analog telephone days; that it's just not the way the networks work. So there's some longstanding support for that, although Blair has raised interesting questions about the limitations.

 

      The other thing I would just say, and I'm just going to refer to it so we can get to the questions if there are some, Seth and I did just publish a piece about a week ago, I think, Seth, or maybe ten days ago, in which we went back looking at John Marshall's jurisprudence, of course, on the commerce power, including the famous [Gibbons] v. Ogden case. And that was all about why in cases that were, in fact, interstate commerce the federal government did have authority to ensure that commerce was not burdened. And so you've got that jurisprudence too. It's not to say they're not going to be interesting questions, but I'm pretty confident that if the California case, for example, gets to the Supreme Court that the Court will decide, in this case, that these services truly are interstate in nature and shouldn't be burdened under the Commerce Clause.

     

      So with that, Wes, why don't we see whether we've got some questions lined up?

 

Wesley Hodges:  Thank you, Randy. It looks like we do have two questions in the queue. So might as well go to our first audience caller.

 

Caller 1:  After the FCC repeals net neutrality, I remember very dramatic announcements from members of the FCC that disagreed with the appeal, that they said that the FCC was abandoning its commitment to the consumer. Are all FCC decisions usually so hotly contested?

 

Randolph J. May:  Well, this is Randy, and I'll just jump in first. And I think we'll probably all agree a lot of the important ones are fairly hotly contested. In this instance, the question about how to regulate broadband providers, and whether you call it net neutrality or something else, it's been hotly contested for a number of years and likely will be for some number of years in the future. So I think the answer is -- and just to put a point on that, during the Obama administration FCC, Tom Wheeler's 2015 FCC Order, that was a 3-2 decision, with three Democrats on one side and the two Republicans on the other. And it was exactly -- and it was reversed in 2017 on about a partisan basis as well.

 

Wesley Hodges:  Great. Thank you very much, caller, for your question. We do have one more question in the queue. Let's go to our second caller.

 

Drew Clark:  My name is Drew Clark with BroadbandBreakfast.com. I started off with one question, now I have two. So the first question is really about legislation. And when Wheeler's decision came down in 2015, I wrote a call on the obvious thing would be for Congress to deal with this. This is just too contested. And now that the FCC's completely reversed it, we've heard some of that, but maybe not quite as much. Is it either or any of your gentlemen's sense that Congress is or will or should or shouldn't -- I mean, clearly they can, can they not? Because the situation we're in, this is such a partisan issue, and it motivates the base particularly on the pro-net neutrality side. It just seems that we're going to have uncertainty as to a regulatory policy with the switch of every administration until something changes that takes us out of the realm of Chevron or regulatory authority. So that's my first question.

 

      And the second one, let me just go ahead and pose it now. Blair, you’ve had some great points there about the California case and dormant commerce clause. I actually want to ask about the other case, the Supreme Court case. On the 26th, there's a conference on whether they should still take the Daniel Berninger v. FCC appeal of the old Obama decision. And this is still undecided. The Supreme Court will decide whether to take the case and vacate it. Could any of you speak to how this impacts the new 2017 decision since we are really talking about the legal questions involved? So I'll listen to your reactions to those two questions.

 

Randolph J. May:  Drew, thanks for your questions. And maybe a way we could try and proceed is to let Daniel have a crack at this first and then followed by Blair and then Seth can add anything that he wants to add, and I'll just stay out of it. Why don’t we do it that way? Daniel, do you want to take a crack at Drew's questions?

 

Prof. Daniel Lyons:  Yeah, thanks. On the question of the Berninger case, I think it's highly unlikely the Supreme Court's going to grant cert. I0t has a discretionary docket and takes very few cases each year. And I don't see the really strong federal interest in reviewing a policy that the agency itself has since repealed. I think it does present some really important questions and had it been presented in a different posture, I think it would've been a really juicy case for the Supreme Court. But given where it's at, I don’t see the Court taking it.

 

      On the issue of legislation, I think that's absolutely right. I think we're in this mess in part because we're dealing with a statute that Congress hasn’t really revisited since 1996, right? If you go back to '96, what, half of us had broadband and most who did accessed it by dialup, right? That weird, like, donkey static noise thing [speaker imitates donkey and whirring noises], right? The statute is really outdated and that's a big chunk of why so much important policy has moved from Capitol Hill down to the FCC. And to the previous caller's comment, I think that's part of why these FCC disputes have become so much more contentious than, I think, history suggests they had been in the past because Congress has passed the bug. And I think it's time for Congress to step in and declare what the rules of the road should be going forward. But I think it's important that any effort to do so needs to be done on a bipartisan basis because otherwise, I think you'll just have a transfer of that acrimony back to Capitol Hill and won't really solve anything.

 

Randolph J. May:  Blair?

 

Blair Levin:  On that question of could there be legislation, yes, sure, there could be. I think it's highly unlikely. I think it's pretty difficult to exaggerate how poisoned the atmosphere is on Capitol Hill. But I will also say that by January 1, it will be much worse. And I don't know what's going to happen in this election, but I do have a feeling about certain things that are going to happen between the election and the new Congress and that will make it worse. So it's going to be bad for a while, and I think the kind of big, bipartisan legislation like this on '96 is highly unlikely.

 

      I'm not sure I disagree that there should be a new law, but I will simply say when the last law passed, and a lot of us on the call actually were involved in it, there was a very clear motive, which was to enable long-distance guys to get into local and local to get into long-distance and to lower voice rates. Well, on that level it succeeded, right? I mean, who cares about what they pay for voice now. A lot of people pay nothing. Now, whether that was the largest technology, we could argue about. But my point is there's no single, animating problem that everyone agrees we need to solve this problem. You could say it's privacy, but I'm not quite sure that's right. You could say it's net neutrality. And I think that a lot of people could easily write legislation that a lot of people would agree with. But it's difficult to get it through this Congress.

 

      I should note, though, that if the Kavanaugh view of the First Amendment holds, legislation is impossible because I'm not sure legislation would be allowed if you really grant the ISPs -- if you say they have the same editorial right as the op-ed page in the Washington Post, which I believe Kavanaugh said.

 

      And then, finally, I would just note, I do have some kind of bizarre optimism that in about three or four years, people will come to the same understanding that I think Wall Street and I have had for the last five or so years, which is as you start to get multiple choices for incredibly fast abundant bandwidth networks, that is to say when 5G actually gets to, let's call it 50 percent of the market, what you're going to see is an understanding that there's just not much risk of net neutrality, and maybe the issue goes away. But I could be wrong. And it has been striking to me how politically fraught on all sides this issue is, which is very different than the atmosphere that I now, in retrospect, understand. So that last question – we never had an issue like this from '93 to '97. It was so divided in the FCC. Yes, we had differences between Democrats and Republicans. But we implemented the '96 Act – 110 different policies we adopted, there was never a single vote that just went along party lines.

 

Randolph J. May:  Seth, do you have anything you want to add on any of those points that were just discussed?

 

Seth L. Cooper:  Yeah, I do. I agree with Daniel. I think that it's highly unlikely the Supreme Court would take up the appeal of the Title II Order decision, U.S. Telecom v. FCC. They only decide about 80 or so cases a year. That's just a lot of work and a lot of resources for something that's not really current and timely. So I think that the future decision by the D.C. Circuit on the Restoring Internet Freedom Order or perhaps what's coming out of California in that litigation, perhaps those could be candidates for something at the Supreme Court. But I don't think that the litigation surrounding the Title II Order would be the one that they would take up.

 

      I think you probably would see flurry of either new legislation or perhaps just floating some ideas once the dust settles a bit from the legal decision from the D.C. Circuit regarding—or perhaps California—regarding the Restoring Internet Freedom Order; once, of course, weighed-in, once again, perhaps you might see some kind of response in terms of bills being filed or things being discussed. I understand, certainly, that from a practical standpoint, it doesn't look like the prospects are hospitable for legislation. You know, that doesn’t stop folks like us who are think tanks from coming up with ideas or starting points, and that certainly is what Randy and I did in putting together our book #CommActUpdate. But certainly a bipartisan consensus for many of the building blocks would need to be in place, even if they leave certain matters up to the discretion of the Commission going forward in the future.

 

      I guess if I were to say one other thing is I will make a defense of the Judge Kavanaugh view of the First Amendment, or at least a qualified version of it. And Randy and I have certainly been in the position for some time that broadband service providers do perform often a kind of editorial-like function and do receive some First Amendment protection for that. I think that can be done; I think consumer protection can still exist at the same time. I don't think freedom of speech means you can make promises and break them to consumers. I think one of the wrinkles here, why perhaps my defense of now-Justice Kavanaugh's First Amendment view is a little bit qualified is in the U.S. Telecom v. FCC decision—that's the en banc review by the D.C. Circuit—Judge Srinivasan, I believe it was, made the point that it's kind of almost a secret really – the bright-line rules regarding no throttling, no blocking, no paid prioritization, those kinds of things, were in a sense voluntary for the broadband service providers. The FCC in the Title II Order had defined what constitutes broadband internet access service, and those prohibitions were sort of baked into the FCC's definition of what broadband services are.

     

      And so as a consequence of that, the FCC was saying to the broadband service providers, if you want to hold yourself out to the public as providing broadband internet access service, you cannot engage in these kinds of things. But it left them the option to rebrand their internet service as some other kind of narrower or specialized service, or something like that. And it was on that basis that then-Judge Kavanaugh's colleagues disagreed on the First Amendment question. I actually think there's a point to that response on the First Amendment because of the voluntary aspect of it. But I still do think, and we'll see how this plays out, I still do think, though, that as a general matter, you can have First Amendment protections but not be entitled to treat consumers unfairly or to deceive them, and you can still be held accountable. It's not an absolutist kind of either/or matter.

 

Randolph J. May:  So I want to associate myself with Seth's remarks, which I would've tried to articulate myself, but for Seth doing it. You know, I will say this. I wrote a law review article back in 2006—this once again demonstrates how long this issue has been around—or maybe it was 2007, in which I argued that net neutrality proposed restrictions that were being bandied about at that time were inconsistent with the First Amendment then. So I do have, I guess, a different view than Blair.

 

      But one thing that I pointed out, which I think is important, if you look at the Turner Broadcasting case, which related to cable companies in -- you know, not the information providers but the discussion about the First Amendment right of speakers in the communications marketplace is quite relevant. And one thing that Sandra Day O'Connor pointed out when she -- in dissent because she thought that the case was wrongly decided in denying the cable operators in upholding a must-carry requirement, that they must carry certain programs, she said, "If they had been declared common carriers, then that would be a different matter in terms of thinking about the First Amendment." In other words, she, I think, was saying if these information service providers were actually declared common carriers and that were upheld as the 2015 order, then the First Amendment issue is different and not strong – the contention. But it does make a difference otherwise. And I think the Turner case still has some relevance to the way we think about today's information service providers.

 

      Okay, Wes, any other questions before we have to end up?

 

Wesley Hodges:  Looks like there's no questions in the queue. I turn the mic back to you, Randy.

 

Randolph J. May:  Well, thanks again, Wes, for hosting this. So I will close in a moment. There was something that Blair said that I thought was important. I'm just going to allude to it, and we'll probably save it for a future podcast, or maybe Seth and I will write about it. But Blair made a point that the 2017 order repealing the public utility regulations or Title II regulations and going to back to a Title I framework went beyond the previous thinking about the Title framework and the FCC's degree of continuing oversight, I think, arise [inaudible 52.20]. I think that was Blair's point, and therefore the preemption -- in other words, the FCC in that view is not itself actively exercising even the forms of regulation that were contemplated perhaps earlier under a Title I framework. And I think to that extent -- and Blair associated that with the preemption discussion and whether it effected it.

 

      And I think that's going to be it. I'll just say that it's going to be -- I think it will be something that's brought up, and it's going to be an interesting part of it because it is true that the FCC has removed itself a bit further than possibly it could have. In my own view, it's -- the preemption case, in my view, is still strong. But I do want to say that I think that was a good point, and one that's certainly going to be addressed in the coming months.

 

      So, Wes, thanks. I'm going to turn it back to you. But I'll just say, again, thanks to our panelists: Seth, Daniel, and Blair. I know that Seth and I appreciate it. And thanks to you, Wes, for hosting the call.

 

Wesley Hodges:  Thank you, Randy. Again, everyone the book is A Reader on Net Neutrality and Restoring Internet Freedom. If you look to the FedSoc website, you'll be able to find the link to Amazon. I encourage you to buy it. Like Randy said earlier, it's ridiculously cheap and a good read. So we really do encourage you to check it out.

 

      On behalf of The Federalist Society, I'd to thank our experts for the benefit of their valuable time and expertise today. We welcome all listener feedback by email at [email protected]. Thank you all for joining. The call is now adjourned.

 

Operator:  Thank you for listening. We hope you enjoyed this practice group podcast. For materials related to this podcast and other Federalist Society multimedia, please visit The Federalist Society's website at fedsoc.org/multimedia.