The FCC Forbears From The Rule Of Law

April 15, 2015

Harold Furtchgott-Roth

Forbes

Cogent Communications is reportedly considering petitioning the Federal Communications Commission to clarify rules for interconnection under the FCC’s new network neutrality rules. No doubt countless other petitions are in the works, and the FCC may soon recognize that it has become the Internet Czar—having absolute power to make arbitrary decisions that affect the lives of many.

Cogent states that it has congestion problems on its networks, and it quite reasonably seeks relief from the FCC. Any rational company would do the same. After all, it is impossible to read the new FCC network neutrality rules without concluding that the FCC has reserved enormous discretionary powers over Internet regulation for one body—itself. Under the new rules, the FCC may choose to side with or against Cogent or any of an infinite number of potential petitions.

Much public debate has focused on the legal issue of whether broadband properly is a Title II telecommunications service. But the FCC has raised other issues that go far beyond the black letter of the law: (1) Is there any limit to what the FCC can designate as a telecommunication service? (2) Can the FCC forbear from any law and rule based on whim? (3) Is there any limit to the enormous discretion the FCC has constructed and given to itself?

Is there any limit to what the FCC can designate as a telecommunication service?

For the better part of two decades, few thought it possible that the FCC had the legal authority to regulate the Internet and broadband. Certainly not Congress in 1996 with the passage of the Telecommunications Act of 1996. The bipartisan political mantras of the time were “Don’t regulate the Internet” and “Don’t tax the Internet.” Successive presidents said the same. Successive chairs of the House and Senate Commerce committees repeated the message. Successive FCC chairmen of both parties got the message.

For 20 years, the FCC did not contemplate regulating the Internet or broadband. Indeed, it took active steps to make clear that it was not regulating broadband or the Internet. Courts repeatedly supported those decisions. And the Internet and broadband flourished under what Senator Patrick Moynihan would have no doubt labeled benign neglect, or even benign cheerleading.

No more. The current FCC whistles past the graveyard of the Internet as we knew it. Today we have FCC regulation. If the FCC can regulate the Internet and broadband, what else might it regulate? The electricity power grid? Hospitals? Airlines? Automobiles? Apps? These and other entities have certain services that might be framed as telecommunications services under Title II.

And the FCC might just talk any industry into being regulated with large words such as “forbearance.” One can almost hear the sweet nothings from the FCC: “Don’t worry. Let us regulate you, and we promise to forbear from our bad regulations. We will protect you.” With such a regulator on the prowl, no industry is safe.

Can the FCC forbear from any law and rule based on whim?

One of the more peculiar aspects of the FCC’s network neutrality order is its heavy-handed approach to forbearance (paragraphs 434-532 theReport and Order for insomniacs).

Federal statute instructs the FCC as follows:

“ In making the determination under [forbearance provisions], the Commission shall consider whether forbearance from enforcing the provision or regulation will promote competitive market conditions, including the extent to which such forbearance will enhance competition among providers of telecommunications services.”

One might have expected the FCC to define markets, to examine vast arrays of market data, to analyze the competitive conditions in those markets, and to draw economic inferences from that analysis about the extent to which “enforcing the provision or regulation will promote competitive market conditions, including the extent to which such forbearance will enhance competition among providers of telecommunications services.”

There is none of that. No market definitions. No vast arrays of data. Indeed, there are no data at all. There is no analysis of such non-existent data, merely assertions. There is no effort to provide any economic inference about the likely effect of no enforcement of certain rules. Instead, there is a lexicographic review of practically every section of Title II and a declarative statement, without defensible and replicable analysis, as to whether it will be retained or subject to forbearance. The FCC even forbears from a statutory section that it specifically is precluded from forbearance.

If this is the standard for forbearance, then the FCC can forbear from anything for any reason. The FCC can simply announce tomorrow that it forbears from any combination of sections of the Act. And the next day, it can announce a different combination. In this manner, the FCC could and would rewrite a statute every day. That a court could possibly countenance this extraordinary exercise of agency power is doubtful. The FCC seeks to exercise the rule of whim, not the rule of law.

And if a court should find the that the Commission may govern by the rule of whim, the floodgates of tyranny are open to a future Commission to arrive and to set up a proceeding to exercise its own novel set of whims and forbear from its own selection statutory language. Congress need not write bills, and the President need not sign them, if federal agencies can pick and choose which provisions to enforce as easily as choosing the flavor of an ice cream cone.

And the whim the FCC seeks to exercise is administratively impossible. Sections of the Communications Act do not correspond on a one-to-one basis with the thousands of rules the FCC has written over the years. Practically every rule the FCC has on its books was promulgated with an ordering clause under a combination of statutory authorities.

The FCC has chosen to forbear from many sections of Title II. How does this affect a rule that was promulgated subject to one or more of those forborne sections, but also other sections from which the FCC did not forbear? Is the rule still in effect, or has the FCC implicitly forborne from it? You will not find the answer to that question in the FCC’s network neutrality order.

Is there any limit to the enormous discretion the FCC has constructed and given to itself?

Where does an ordinary American go to find out which rules are in place and which are not? Cogent has found that answer: one petitions the FCC.

Throughout the network neutrality order, the FCC reserves for itself discretion to decide matters. That is why Cogent and countless other companies will petition the FCC.

For 80 years, ordinary Americans who wanted to know the parameters of federal communications law could look it up in the U.S. Code or the Code of Federal Regulations. No more. In the brave new world of Internet regulation, ordinary Americans have to petition the FCC to find out what rules apply on the Internet, and what rules do not.

No matter how wise and well-intentioned is the FCC, a process of arbitrary judgments on a case-by-case basis to regulate the Internet cannot work.

Social Heading