O'Rielly, Telco Officials Urge Congress to Act on Title II, Open Internet Issues

FCC Commissioner Michael O'Rielly and telco officials said Wednesday that Congress needs to tackle open internet issues, even as the agency carries out a rulemaking aimed at undoing Title II broadband regulation under the Communications Act. Speaking at a Phoenix Center event, they agreed broadband Title II classification made no sense, but they said lawmakers should give regulators a clearer statutory mandate in order to bring more policy stability.

“It has to be addressed by Congress. That is the only way,” said O'Rielly, who was questioned by Phoenix Center President Larry Spiwak. “Congress needs to step in and address what they would like out of the commission. We have been shoe-stringing different provisions based on our philosophical viewpoints over the last three or four commissions, and that’s not the way you want an agency to go."

Telco officials said they're confident the FCC is building a complete record that will produce a better outcome in court than the 2015 order that reclassified broadband as a Title II telecom service and imposed net neutrality rules. The coming FCC decisions will be like "software patches" that fix a problem, said USTelecom President Jonathan Spalter, on a subsequent panel. Ultimately, he said, policymakers "need to start with a clean slate" and write a new law. It's been 21 years since the Telecommunications Act passed and it's time for it be "put out to pasture," he said, noting he didn't necessarily expect a rewrite soon. FCC revisions will be helpful, but "What do you get?" asked AT&T Vice President Hank Hultquist, suggesting new legislation was needed.

O'Rielly acknowledged he's not a "blank slate" but said he didn't want to prejudge the outcome of the FCC rulemaking: “I have my pre-existing beliefs, and I’m looking at the record, combined with an analysis of the law to see if that changes my mind." He said he will first look for "actual incidence of harm" in the market and then figure out the best course of action if he believes it's authorized: “I’m willing to go wherever the record takes me."

The FCC has received almost 5 million comments, O'Rielly noted (see docket 17-108). “A lot of them suggest things that I should do to myself, things that the commission should do to each other. It’s very interesting commentary. But I’m looking for substantive comments," he said. "I used to say if you come in with a one-pager, you better back it up with a 20-pager. ... I do care about all of the people who filed, and I do take that into overall consideration, but there’s only so much weight I can give it." He hopes for action in "early fall" but said that's up to Chairman Ajit Pai, who's doing a "wonderful job."

The prior FCC took a "couple of things" and created a "parade of horribles" that "morphed" into a demand for Title II, three bright-line net neutrality rules and a "catch all" general conduct standard that turned the agency into a "roving cop" of the internet, O'Rielly said: "If you have a catch-all provision, why do you need the other three bright-line rules? You don’t need a commission because all you need is one person in the Enforcement Bureau to do whatever they want. ... Why have a statute if you’re just going to abuse it?” O'Rielly quipped that he spent a lot of time on the law, "sometimes in crafting it, sometimes in fighting it, and sometimes in praying against it." That gave him firsthand experience about congressional intent, he said: “When you have particular members who have personalities who scream exactly what they want into your face, you tend to remember.”

O'Rielly said the FCC "did a very shoddy job" in its 2015 order explaining its views, and yet the U.S. Court of Appeals for the D.C. Circuit upheld its decision twice. "They kind of threw up their hands and they got tired with the issue and they moved along.” He said the FCC wasn't so lucky recently when the D.C. Circuit largely shot down its inmate calling service rate decisions. “They combined two completely different sections to create a new standard -- ‘just and reasonable’ over here and then ‘fair’ over here -- they’re like ‘just and reasonable and fair," he said. "But the statute is not a ransom note from some bad terrorist who wants to extort money from you. It’s not like you took two words from here, five words from over here and three words from over here and we staple them together and I get what I want, because if that’s the case, boy, we can deregulate ‘til the cows come home.”

Spalter said the Title II order addressed "abstractions," but it was doing real harm as broadband providers cut back on broadband investment. He cited actions by Verizon, Alaska Communications and smaller telcos. Wilkinson Barker attorney Bryan Tramont said there were a "boatload of problems" with utility-like Title II regulation. He said he believes it's "more likely than not" the Supreme Court will review the current litigation.

University of Maryland-Baltimore County economics and public policy professor Tim Brennan, a former FCC chief economist, said it was "painful" to read the agency's recent NPRM because it went through "contortions" to try to get around the dissent of late Justice Antonin Scalia in the 2005 Brand X ruling. The Supreme Court found the FCC's earlier Title I cable modem/broadband classification permissible, but Scalia said it was a Title II telecom service. O'Rielly said he wasn't concerned about an administrative procedure problem.