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Net Neutrality Could Be Undermined By Lack Of Penalties For ISPs That Break The Rules

CREDIT: AP PHOTO
CREDIT: AP PHOTO

After years of infighting and intense public debate, the Federal Communications Commission (FCC) passed the much lauded net neutrality rules in February. The historic vote and the rules, which were released to the public last week, have been hailed as a solid win for consumers whose internet access is now squarely protected from blocking, throttling and fast lanes. But that protection doesn’t go very far partly because internet providers face little consequences for breaking the net neutrality rules.

“It’s such a clever document,” said Sascha Meinrath, tech policy expert and director for the New America Foundation, an independent think tank in Washington, D.C. “You don’t want to have regulations that are overly prescribed, especially in the technical realm. But let’s say [an ISP is] violating this stuff, what happens? There are no listed penalties.”

Post vote, net neutrality faces strong opposition. Pressure to toss the rules, which won’t go into effect 60 days after they’re published in the Federal Register, come not only from ISPs such as Verizon and Comcast, which are expected to sue the FCC, but conservatives and libertarian groups that say the rules in any form stifle businesses and innovation, and signify governmental overreach. Congressional Republicans have already introduced legislation to repeal the rules and scheduled a series of hearings to scrutinize the new regulations for ISPs.

The FCC’s inspector general has also launched a probe into the net neutrality decision amid accusations of being pressured by the White House to pass rules that aligned with President Barack Obama’s plan.

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Political push back was expected. But the rules advocates fought to reinstate to keep a level digital playing field could be undercut because high-speed internet companies have nothing to lose, Meinrath said.

“The FCC just says ‘don’t do it.’ But they will do it. And anyone who wants to argue otherwise, I would like to take that bet,” he said.

The FCC was able to gain legal ground to enforce net neutrality by reclassifying the internet as a telecommunications service under the Communications Act. But while the 400-paged guidelines primarily outline why broadband companies aren’t allowed to disrupt customers’ access for revenue, little space is given to what happens if rules are broken.

We conclude that violations of the open Internet rules will be subject to any and all penalties authorized under the Communications Act and rules, including but not limited to admonishments, citations, notices of violation, notices of apparent liability, monetary forfeitures and refunds, cease and desist orders, revocations, and referrals for criminal prosecution. Moreover, negotiated Consent Decrees can contain damages, restitution, compliance requirements, attorneys’ fees, declaratory relief, and equitable remedies like injunctions, equitable rescissions, reformations, and specific performance.

In a subsequent footnote, the FCC calls out public commenters’ concern that any penalties ISPs get should be “predictable and fair.” The agency said adding that all imposed penalties will be reviewed on the case-by-case basis and applied appropriately. But there is no breakdown of which penalties are applied and no details on how much the companies could be fined for blatantly or unintentionally violating the rules with discriminatory practices. The FCC only says it will review all “forfeiture orders over $25,000.”

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Alone, that sounds rather innocuous. But legal precedent mandates the FCC to tell telecommunications and now broadband companies the extent of the penalties in advance. If it doesn’t, companies can contest and ultimately not pay the fine because they weren’t warned.

To the extent that any questions arise as to specific provisions or regulations in the future, we can address those as needed at that time. We note in this regard that the Commission cannot impose a penalty for conduct in the absence of “fair notice of what is prohibited.”

That means if the $133 billion AT&T; is caught throttling customers or blocking access, and the FCC imposes a $10 million fine, the company can argue that it wasn’t given adequate notice and duck the fine, or any other that’s above $25,000.

The caveat is based on a 2012 U.S. Supreme Court case, FCC v. Fox Television Stations, which determined that the FCC didn’t give Fox enough notice or clarification for what it could be fined.

It’s a “get-out-of-jail-free card even if they were found guilty because they didn’t know they were liable for a $10 million penalty,” Meinrath said. The rules allow the FCC to “maintain the right to do something” without specifying what will be done.

FCC Republican commissioner Ajit Pai, who has vocally opposed the rules, said in his dissent that while the agency has Congressional authority to impose penalties, it’s hands are tied to enforce them.

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“The lack of express authority to issue rules, order conduct, or enforce compliance should be unsurprising…Congress expected the FCC to use the authority it hadgiven the agency elsewhere….The consequences of such a light-switch delegation of authority are hard to fathom. One would assume that once the delegation switched off, any adjudications or enforcement actions being taken by the FCC under that subsection would have to be dismissed, since we’d have lost the authority to prosecutethem.”

That vagueness and perceived impotence to punish broadband companies that run afoul of the rules, while somewhat concerning, may be a minimal threat to net neutrality in the long run, according to Robert Atkinson, president of Washington, D.C.-based think tank Information Technology and Innovation Foundation.

“I don’t think that’s something to worry about now because so much of the rules are aspirations and need to be clarified,” said Akinson, who believes the FCC shouldn’t have gone for Title II reclassification in the current rules and the FCC should have gone ahead with its original proposal. “Very little of it is clarified. To their defense, [net neutrality] is a little bit like the Supreme Court talking about pornography, ‘You know it when you see it.’ And that’s what it should be…But if you’re worried about net neutrality, worry about a Republican administration coming in 2017 and overturning Title II,” and the rules altogether.

ITIF opposed the new net neutrality rules and favored the original, and controversial, draft introduced last summer. Atkinson said the federal ruling that struck down the rules in January 2014 gave the FCC enough authority without Title II. With the new rules, there’s a risk for government overreach such as penalizing ISPs too harshly.

ITIF’s telecom policy analyst Doug Brake told ThinkProgress that ISPs weren’t likely to break the rules and the public pressure alone could cause the FCC to over penalize them.

“While I doubt we will see any flagrant violations of these rules — companies simply aren’t interested in the throttling or blocking people fear,” he said. “Given the public attention this proceeding garnered, I’d expect the [FCC] would be quick to show its rules have bite in the unlikely event they are violated. If you think this Commission is remiss to bring down the hammer on the companies they regulate, we haven’t been watching the same FCC.”

The FCC has been upfront about its light-touch approach for regulating ISPs under Title II, opting to forbear most of its afforded power including enforcing tough policies affecting rates and how much consumers are charged. Instead, the FCC is reviewing most violations and complaints against ISPs or the rules on the case-by-case basis.

Net neutrality supporters have basked in the legal victory with the Title II reclassification, but also readily admit the rules’ flaws.

“The rule does lay out factors that will help guide the analysis of whether a given practice violates the rules, such as the effect on innovation, free expression, and end-user control. However, the rule could still lead to overreach, and will certainly lead to expensive litigation….[and] punts many difficult questions to the general conduct rule,” a broad measure for determining what ISP behavior is acceptable or punishable but not addressed in the rules, said Kit Walsh, staff attorney who focuses on net neutrality, free speech and other issues for the Electronic Frontier Foundation in a blog post.

That rule plays in tandem with the FCC’s decision to only review complaints case-by-case and will form the basis of any punishment that gets handed down. FCC chairman Tom Wheeler has been criticized for it and an overall laissez-faire approach that might beproblematic for consumers.

“They have decided to throw the baby out with the bathwater…They’ve taken out some of the most important parts and left out enforcement,” said Bruce Kushnick, a telecom analyst who runs New Networks Institute, a research firm that has petitioned the FCC multiple times. “So if a rule is broken, the only way it’s going to get attention is through media and public pressure.”

Update:

Clarified the Information Technology and Innovation Foundation’s net neutrality position and added comments from the company’s telecom analyst Doug Brake.