The Free State Foundation will celebrate its 15th anniversary at an in-person luncheon event at the National Press Club in Washington Oct. 15.

The event will be circumscribed by the Press Club's COVID-19 guidelines and precautions.

That means that all the in-person attendees and participants must either have to have been vaccinated or show proof of a negative COVID test in the previous 72 hours.

Free State, headed by Randolph May, has been a leading voice for free market-based communications policies.

Also Read: Free State Hosts First Simington Speech

Speakers include a Republican-only lineup of current and former FCC commissioners (commissioners from both parties were asked), including Brendan Carr and Nathan Simington, as well as former commissioner Michael O'Rielly and Deborah Lathen, former chief of the since re-named Cable Bureau.

There will also be a tribute video featuring a bipartisan host of current and former top D.C. policymakers and implementers including former FCC chairs Richard Wiley, Mark Fowler, William Kennard, Michael Powell and Ajit Pai and former commissioners Henry Rivera, Harold Furchgott-Roth, Kathleen Abernathy, Meredith Baker and Robert McDowell.

The Free State Foundation has a big issue with the way the House Ways & Means Committee is reconciling President Joe Biden's $3.5 trillion spending plan, which includes big bucks for broadband.

Both houses of Congress have passed a general outline of the budget, but committees in both chambers are now charged with filling in matching details. 

Randolph May, president of the Potomac, Maryland-based free-market think tank, is calling ill-conceived a provision that would provide a tax break to municipal broadband buildouts.

Also Read: More Muni, More Money

The president has favored such municipal broadband in his proposals for billions of dollars in subsidies to promote universal, affordable and competitive high-speed internet service.

But May said Congress should not give a tax break for the maintenance and operation of government-owned broadband systems.

One knock on such systems historically has been that once funded, they can't cover operating expenses and have been known to fold, leaving taxpayers to foot the bill.

Also Read: Biden Broadband Plan Favoring Government-Owned Networks Lacks a Constitutional Foundation

But May said government-owned networks already get preferential treatment when it comes to “accessing public rights of way, avoiding cumbersome permitting processes, and benefitting from taxpayer-funded subsidies.”

He said the tax break would make it harder for private operators who have to invest their own risk capital to upgrade service. “Marketplace competition for broadband services would be dampened and consumers will be the losers” if the tax break for munis is granted, he said.

The Administrative Conference of the U.S. (ASUC)* has recommended federal agencies take a number of steps to address the issues of mass computer generated and falsely attributed comments.

Free State Foundation President Randolph May, who is a member of the conference, also had some advice in a separate statement. 

Both the recommendations and statement were published in the Federal Register.

Mass, duplicative and falsely attributed comments were all big issues in the FCC's last public comment docket on proposed changes to net neutrality rules, something May pointed out in his comments.

ACUS describes itself as "an independent federal agency charged with convening expert representatives from the public and private sectors to recommend improvements to administrative process and procedure."

In this case, it is recommending that agencies like the FCC, who must give members of the public the opportunity to weigh in on proposed rules for the agency's consideration, find better ways to manage what can be a flood of comments in the digital age.

"Not all agencies will encounter mass, computer-generated, or falsely attributed comments. But some agencies have confronted all three, sometimes in the same rulemaking," ACUS said, and could have been talking about the FCC net neutrality comment docket.

Among the recommendations are for agencies to 1) "welcome" the filing of mass, "identical or substantively identical," comments as a single comment over multiple signatures; and 2) "consider alternative approaches to managing the display of comments online, such as by posting only a single representative example of identical comments in the online rulemaking docket or by breaking out and posting only non-identical content in the docket," to make it easier to navigate the system.

But if an agency does do that, it should include the multiple comments in any reported total of comments received.

Also Read: FBI Investigating FCC Docket

When it comes to falsely attributed comments, ACUS suggests that agencies should give those to whom the comments have been falsely attributed a chance to have those comments anonymized or removed from the online docket. It should also note in the docket what actions it has taken.

ACUS did not say the FCC can't take into account falsely attributed comments when making a decision, but says it should note any such comments it relied on. Beyond that, it said the FCC should inform the public generally about its policies concerning posting and use of mass generated and falsely attributed comments.

In his comments, Randolph May said he hoped that ACUS would next tackle the issue of the appropriateness of curbing the kind of mass computer-generated filings that turned the net neutrality docket into a a comment "nuclear" option that deluged the FCC with 22 million comments that overwhelmed the system and "often rendered the ability to search for comments that might possibly contain relevant data and information well-nigh impossible."

May said he recognized the value of widespread participation by interested parties, but that there ought to be a way to discourage the kind of comment war that erupted in the FCC's net neutrality docket.

He also pointed out that the comment war suggested both sides thought that the volume of comment should influence the outcome. As an independent agency, the FCC is charged with making its decisions in the public interest using its expert judgment, not based on how many people are prompted or able to comment on either side.

On March 31, the Biden Administration announced that its broadband plan would prioritize and subsidize the construction and operation of government-owned broadband internet networks over and against privately owned networks. The Biden Administration's plan also indicated it would dislodge duly adopted state laws that limit the ability of local governments to own and operate broadband networks. So aside from its other significant flaws as a matter of policy, the Biden broadband plan poses serious constitutional problems. This is another reason it should be rejected.

American constitutionalism strongly favors the acquisition and use of private property, thereby promoting commerce by private market participants, including private broadband internet service providers. But by prioritizing government-owned networks, the Biden plan expands the occasions for local governments to serve the dual roles of regulator and competitor, thereby discouraging private investment in communications networks that are an integral part of the stream of interstate commerce. Moreover, federal preemption of state law limits on local governments operating broadband networks, as the Biden plan implies, would be at odds with principles of federalism.

Furthering federal objectives by regulating states' internal political authorities like cities and counties violates the states' core sovereignty. Local governments are political subdivisions of states, and the Constitution provides local governments no basis for providing broadband or other business services contrary to the will of their own states.

According to the Constitution's framers, one of the primary purposes of government is to protect individual rights to keep, use, and acquire property. Importantly, the political philosophy of the framers strongly favored private property ownership. It was the framers' background expectation that commerce is to be carried out among private market providers of goods and services. And they viewed it the government's responsibility to promote that commerce, including by prescribing rules regarding how it ought to be conducted. In the Article I, Section 8 Commerce Clause, the framers expressly entrusted Congress with the role of regulating commerce among the states.

Federal communications policy has long emphasized and relied on free market competition among private providers of broadband internet services. In the Telecommunications Act of 1996, Congress established the policy of the U.S. "to preserve the vibrant and competitive free market that presently exists for the internet." Additionally, federal law establishes the distinct role of the Federal Communications Commission regarding spectrum allocations for private networks providing commercial broadband internet services. Meanwhile, federal law recognizes the roles of other federal agencies in carrying out public safety, military, and other distinctly governmental purposes.

This policy favoring private market providers operating in a free market environment has successfully propelled the U.S. to world leadership in commercial broadband internet services. Private broadband providers have invested massive resources developing and deploying next-generation broadband networks that benefit our nation's economy. Fixed wireline broadband providers invest about $80 billion or more per year in network infrastructure used to deliver advanced services. USTelecom estimates that the private sector has invested $1.8 trillion in U.S. communications networks over the past 25 years. Wireless providers have invested $261 billion in 4G networks over the past decade, increasing wireless gross domestic product (GDP) by 253%, and creating nearly 10% of the total increase in U.S. GDP during that brief time span. Also, it is estimated that $225 billion in private capital expenditures will be needed over 2019 – 2025 to fully deploy 5G in the U.S., and that this investment will create 1.2 million new jobs each year and create $1.7 trillion in additional output during that time span.

According to a March 2021 White House fact sheet, the Biden broadband plan "prioritizes support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives – providers with less pressure to turn profits and with a commitment to serving entire communities." Altering federal policy to prioritize local government entry or expansion in broadband internet markets would be contrary to the idea that government's primary role is to promote private property ownership and private market enterprise. A shift away from private market competition would thwart the investment-backed expectations of broadband internet service providers. And the threat of competition with federally assisted government providers would deter vitally needed private investment in next-generation network upgrades and new deployments to unserved Americans.

Additionally, the White House fact sheet states that the Biden broadband plan seeks to promote competition by "lifting barriers that prevent municipally-owned or affiliated providers" from "competing on an even playing field with private providers." About 18 states restrict local government entry into the broadband business. Some states outright prohibit government-owned broadband networks. And other states impose procedural safeguards or conditions, such as public hearing requirements, preparation of business plans subject to public disclosure, and local voter approval. These state restrictions reflect genuine policy concerns about the inherent risk of a conflict of interest in government serving as both a regulator and a market participant. For example, local governments that possess powers over use of rights-of-way and infrastructure siting permit processes can act on incentives to give special treatment to government-owned networks, thereby putting private market providers at a regulatory disadvantage. In addition to the foregoing, states also rightly have been concerned about potential financial harm to taxpayers resulting from municipalities engaging in highly capitalized and financially risky business ventures.

The Biden Administration's implied prescription of federal preemption of those state laws clashes with fundamental principles of constitutional federalism. Local governments derive their authority from the states, and states retain the power to alter or dissolve them. Longstanding Supreme Court precedents recognize that local governments are subdivisions or instrumentalities of states. Accordingly, states are well within their sovereign rights to impose safeguards or restrictions on the ability of their local governments to enter into business markets and compete against private market providers.

In Nixon v. Missouri Municipal League (2004), the Supreme Court expressly rejected claims that Communications Act Section 253(a) preempted Missouri’s statute prohibiting its cities and counties from offering telecommunications services. The decision in Nixon was based on the clear statement rule, according to which Congress must make "clear and manifest" in a statute any intention to alter the historic balance between the federal government and the states. The Court in Nixon determined that it was far-fetched to treat Section 253(a)'s language prohibiting state or local laws or regulations that "prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunication service" as expressing Congress's intent to preempt states' control over their own political subdivisions.

Similarly, in Tennessee v. FCC (2016), the U.S. Court of Appeals for the Sixth Circuit vacated the Commission's 2015 order that attempted to preempt state laws prescribing jurisdictional limits as to where government-owned broadband networks can operate. The Commission's 2015 order claimed that those laws were preempted by Section 706 of the 1996 Act, which includes a general directive to "promote competition in the telecommunications market." Applying Nixon, the Sixth Circuit observed that the states' laws implicated "core attributes of state sovereignty" and that the Commission's 2015 order essentially served to "re-allocate decision-making power between the states and their municipalities." It determined that Section 706's pro-competition language fell "far short" of a clear statement of intent by Congress to make such a reallocation of power.

Even if Congress passed a law that manifested a clear intent to preempt state limits on government-owned broadband networks, such a law would still conflict with federalism principles. The clear statement rule is a method for statutory interpretation, and cases decided according to the rule are not direct adjudications of constitutional questions. In other words, even if Congress expressly and unambiguously declared its intent to preempt state laws regarding government-owned networks, states still have strong objections based on state sovereignty interests protected by constitutional provisions such as the Tenth Amendment.

As the Supreme Court explained in Printz v. United States (1997): "The Framers explicitly chose a Constitution that confers upon Congress the power to regulate individuals, not States." But preempting states' decisionmaking about local government authority to engage in business ventures would amount to an unconstitutional regulation of states as states. It would be constitutionally improper for Congress to turn counties or cities into enclaves with powers that their own states never delegated to them in the first place. And it would create a scenario in which local governments would enjoy special federal rights to enter broadband markets without accountability to their states.

Such a bizarre scenario would be starkly at odds with precedents such as Ysursa v. Pocatello Education Association (2009), which reaffirmed that a political subdivision "created by the state for the better ordering of government, has no privileges or immunities under the federal constitution which it may invoke in opposition to the will of its creator." By that same reasoning, no local government should be able to claim rights under a federal statute to enter into the broadband business or expand its operations contrary over and against the will of the state to which it belongs.

In sum, favoring government-owned networks with subsidies and implausible preemption, as the Biden plan proposes, would be detrimental to private market investment. And lacking any proper constitutional foundation, implementation of the Biden plan's preferential treatment of local governments would foul up federal, state, and local government relations. Congress should decline to pursue those misguided proposals. Instead, Congress should prefer a constitutionally responsible path by continuing to promote private investment in next-generation broadband networks within a free market enterprise context.

Randolph J. May is president and Seth L. Cooper is director of policy studies and a senior fellow of the Free State Foundation, a free market-oriented think tank in Rockville, MD.

Free State Foundation president Randolph May is scratching his head over a tweet that Twitter refused to allow him to promote.

May said that he had wanted to spend $50 to promote one of his "quotes of the day" he tweets periodically. 

He said the tweet was as follows: "The principle of the Constitution is that of separation of Legislative, Executive, and Judiciary functions, except in cases specified...and it ought to be so commented and acted on by every friend of free government." #ThomasJefferson."

According to a copy of an email from Twitter, the platform immediately rejected the tweet promotion as a violation of its policy against political tweets in ad campaigns.

Twitter and other platforms are under pressure to prevent election meddling, including through political ads and paid promotions.

May points out he has defended Twitter's freedom to decide what goes on its platform, but was surprised that a tweet about Thomas Jefferson and separation of powers was off limits for promotion.

"I’ll continue to defend Twitter’s First Amendment right to reject whatever speech or content it decides it doesn’t want to carry, even when its decisions are beyond silly or capricious," said May. "But it’s a sad state of affairs, not for me but for the country, when Twitter determines that quoting Thomas Jefferson on separation of powers as a means protecting free government cannot be promoted because it's a ‘political’ statement rather than the statement of foundational constitutional jurisprudence and philosophy which it is."

He ads that it is "more than a little ironic" that a defender of net neutrality for ISPs does not apply that same policy to itself.

The Supreme Court's decision to hear the FCC/broadcaster appeal of the Third Circuit's most recent smackdown of the FCC's broadcast dereg efforts drew a crowd Friday (Oct. 2).

That may be because the FCC for almost two decades has been responding to remands from the Circuit as the commission under Republican chairmen tried to eliminate the newspaper-broadcast crossownership rule and other local station ownership restrictions but this is the first time the Supremes will get involved.

“I’m elated that the U.S. Supreme Court has granted cert in FCC v. Prometheus Radio Project and will finally review the FCC’s broken and outdated media ownership rules," said FCC Commissioner Michael O'Rielly, who has been instrumental in some of the broadcast deregulation that has been achieved, particularly when it coms to KidVid.

Related: Third Circuit Won't Hear Appeal of Dereg Smackdown

"Our existing 1970’s-era regulations don’t come close to matching up with today’s vastly competitive media marketplace or the law and must be jettisoned," said O'Rielly, whose vote was key in FCC approval of the media ownership dereg decision the Supremes will review. "Failure to do so further penalizes U.S. broadcasters and the American public," said O'Rielly. "While I hope the court ultimately agrees with my position, it is most important to receive a definitive outcome so all parties can move forward. The U.S. Court of Appeals for the Third Circuit has bungled this matter long enough—to the detriment of everyone.” 

"Of course, we are disappointed at this additional delay," said Benton Institute Senior Counselor Andrew Jay Schwartzman. "But we are confident the court will see that the FCC has failed to obey its mandate to promote diversity in media voices."

“The Third Circuit rejected the FCC’s media ownership rule changes time and time again because each time the FCC ignored the Third Circuit’s insistence to provide evidence supporting those changes," said Michael Copps, special adviser to Common Cause and a former FCC commissioner and chairman who opposed broadcast deregulation. "The FCC has a statutory mandate to examine the impact that changing its media ownership rules would have on ownership diversity. But as the Third Circuit most recently found, the FCC used flawed data and woefully insubstantial analysis that failed to consider how changing its rules would impact ownership diversity. We know that the number of broadcast stations women and people of color own is abysmally low as media conglomerates continue to consolidate. Our democracy suffers when just a few entities own the majority of our media, and the FCC’s media ownership rules are intended to prevent that from happening."

"The Court's decision to hear the FCC's media ownership rules is long overdue," said Adonis Hoffman, CEO of The Advisory Council and a former top FCC staffer. "I hope the argument for the relaxation of restrictions will carry the day. Broadcasters deserve the opportunity to develop the scale to compete with Big Tech and private equity media owners who do not have the same limitations on media distribution."

"The FCC's media ownership limits hark back more than 40 years to a reality long ago upended by marketplace forces. Section 202(h) of the 1996 Act requires the Commission every four years to consider whether its rules 'are necessary in the public interest as a result of competition," said Free State Foundation senior fellow Andrew Long. "Over the nearly two decades during which a divided Third Circuit repeatedly has blocked agency efforts to relevel the regulatory playing field, we have witnessed numerous examples of new entrants disrupting the media landscape – and, in the process, chipping away at the relevance of traditional outlets. But in terms of game-changing competitive impact, one need only consider the Internet. Facebook was created in 2004. YouTube in 2005. Twitter in 2006. Over half of U.S. adults today obtain at least some of their news and information from social media, and more identify it as their primary source of political news than either local television stations or newspapers. I therefore welcome the announcement that the Supreme Court will hear the FCC's appeal."

Free State Foundation said that Congress is the best place for a needed review of edge provider's Sec. 230 immunity from civil liability for most third party content, but that the FCC likely has the authority to do so as well, and could do so without necessarily running afoul of the First Amendment.

That came in comments on the National Telecommunications & Information Administration petition--mandated by President Trump--that FCC find a way to regulate social media content despite that Sec. 230 protection.

Related: Sec. 230 Is the Protection Section

The free market think tank told the FCC that it is appropriate to review that section of the Communications Act, either by Congress or the FCC, but that Congress is the "more appropriate venue."

Free State said that despite some commenters' opinions to the contrary, it said the FCC "likely" has the authority to "interpret and clarify" the meaning of Sec. 230, in contrast with issuing rules on what edge providers can and can't publish, censor or not censor.

Free State said the authority it is talking about is to clarify interpretations of ambiguous provisions, like 230.

Related: FCC Puts Trump Petition Out for Comment

Free State said many critics of the petition are equating any action to narrow the immunity with government-mandated censorship of protected speech. Whether or not that is sound policy, it told the FCC, altering liability does not necessarily compel websites to say anything or censor anything. It could simply mean they have more incentive to be transparent about how they make their decisions about how they moderate that content, and must defend legal claims they have acted unlawfully.

Free State used the Supreme Court's Brand X decision to buttress its case for FCC authority. In Brand X, the court deferred to the FCC's definition of broadband access, saying that "Congress has delegated to the Commission the authority to execute and enforce the Communications Act and to prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of the Act."

Free State said it recognizes Brand X is about clarifying statutory definitions rather than terms, but does not see a material difference. It also said that while it recognizes some argue the Sec. 230 terms are not ambiguous, others said they are and that is why there are courts of law.

And if the FCC decided to clarify the meaning of Sec. 230 "otherwise objectionable" term for the content that can be restricted with liability protection, Free State said that would not "necessarily" violate the First Amendment.

The Free State Foundation said there is nothing wrong with the FCC or Congress, or both, casting a critical eye over the 25-year-old Sec. 230 immunity for Web sites from liability over most third-party content.

That came in comments on the Trump Administration efforts--via a National Telecommunications & Information Administration petition--to get the FCC to open a rulemaking to "clarify" provisions of Sec. 230 of the Communications Act. 

Initial comments were due Wednesday (Sept. 2), with reply comments due Sept. 17.

Related: CDT Says FCC Should Not Abet Trump Attack on Web

Rather than weigh in on what the meaning or scope of the section is, Free State's main point was that the immunity provision should not itself be immune from review. "Unlike the Ten Commandments handed down from Mt. Sinai, Section 230 is not etched in stone, but like most statutes, it should be periodically reviewed with an eye to considering whether any revisions are in order," Free State Foundation president Randolph May and director of policy studies and senior Fellow Seth Cooper told the FCC. 

New America’s Open Technology Institute (OTI), one of the petition's critics, told the FCC that the NTIA petition "would improperly broaden the statutory authority of the Commission, violate the First Amendment, and chill the free speech of users online."

Free State is a big defender of the First Amendment, but they don't see an FCC clarification as running afoul of that speech protection. "It is difficult to understand how Commission action engaging in such clarification and interpretation – as opposed to its issuing orders or regulations actually restricting, or purporting to restrict, any content providers' speech – violates any entities' First Amendment rights, as some claim," they said. 

They argue that the apoplectic opposition and doomsday scenarios regarding a review by the FCC (or Hill), which include that the FCC lacks authority even to consider the petition, are ironic coming from those, notably Google, Facebook, and Twitter, who predicted the FCC's elimination of net neutrality regs would mean the end of the internet.

As to the FCC's authority to review the section, Free State said it almost certainly has the power "to issue clarifying interpretations of ambiguous Communications Act provisions like Section 230" and that such a review is warranted given the "dramatic changes in the Internet ecosystem over the last twenty-five years."

Free State is a free market think tank supported by media outlets. 

The Free State Foundation is squarely behind Charter's request that the FCC let it out early from a couple of its Time Warner Cable deal conditions. 

Charter last month asked the FCC to terminate the seven-year interconnection condition on its 2016 deal to acquire Time Warner Cable and Bright House Networks on May 18, 2021, two years early — in light of the ”dramatic“ changes in the online video marketplace. Charter also wants a similar early exit from its ”no data caps or usage-based pricing“ condition.   

Related: Newsmax Says FCC Jumped Gun on Charter Petition 

In comments on the Charter petition filed with the FCC Wednesday, Free State president Randolph May and Director of Policy Studies and Senior Fellow Seth Cooper said that "because the market for online video distribution (OVD) services is competitive and the harms that the Commission speculated might occur have never materialized, the Commission should sunset those conditions." 

They also say the conditions--imposed under a Democratic-led FCC, were not merger specific and reflected an incorrect view of both usage-based pricing and interconnection regulation that no longer reflect the views of the current--Republican-led--FCC. 

"Because continued imposition of the two conditions risks putting Charter at a disadvantage compared to its competitors and deprives consumers of the benefits of Charter having more flexibility in devising its service offerings, the Commission should sunset those conditions," they said. "Indeed, given the compelling reasons supporting termination, the Commission should terminate them prior to May 2021," even earlier than Charter has requested. 

Randolph May said Twitter rejected his effort to promote a tweet (below) associated with his FSF Perspective: “Don’t Regulate the Internet as a Public Utility."

"In light of all the positive feedback I’ve received regarding my FSF Perspectives and my associated tweet, I decided to spend $50 to promote the tweet further —something I’ve only done 2-3 times in 10 years--he told Multichannel News in an email. "[T]o my surprise, Twitter rejected it as 'political.' This is the same Twitter, I think, which proclaims vociferously it favors 'net neutrality.' I guess the neutrality doesn’t apply to tweets opposing its net neutrality position!"

According to Twitter's ad policy, it "prohibits the promotion of political content,"  which includes ads that contain "advocacy for or against regulation." 

That policy stems from complaints that social media advertising and promotion was being used by outside elements to influence and disrupt U.S. elections.

Free State Foundation is a free market think tank backed by some major media outlets.

The Free State Foundation said all systems are go for its policy conference March 10 in Washington. 

Free State released the final agenda for the conference, which includes an A-list of policymakers. 

Related: ACA Connects Postpones D.C. Conference 

Among those scheduled to participate are FCC chair Ajit Pai and commissioners Michael O'Rielly and Brendan Carr. 

The FCC has suspended non-essential travel and appearances at "large gatherings" due to concerns over the coronavirus, but the FSF conference is more of a boutique event and in the FCC's back yard. 

Related: CPAC Attendee Tests Positive for Coronavirus

FSF president Randolph May confirmed that he had checked with the relevant FCC offices and the speakers were a "go" as well. 

FCC Chairman Ait Pai is the latest to join an A-list lineup for the Free State Foundation's annual policy conference in Washington, Broadband Beyond 2020: Competition, Freedom and Privacy.

Related: Free State Unveils Key Keynoters

Pai will deliver a luncheon speech March 10 at the National Press Club in Washington. 

The other speakers include Deputy Attorney General Jeffrey Rosen, FCC commissioners Michael O'Rielly and Brendan Carr, former FCC commissioner Mignon Clyburn, Federal Trade Commissioner Christine Wilson, and Jim Cicconi, senior EVP, AT&T. 

Topics of discussion, according to Free State, include net neutrality, broadband deployment, competition policy, 5G, privacy, the changing video services landscape and the regulatory environment for all those. 

The FCC has sought comment on whether its leased access rules, which require cable operators to lease capacity to third parties, and at regulated rates, pass First Amendment muster. The Free State Foundation said definitely not.

That came in comments to the commission Monday (July 22) , which in June agreed unanimously to tweak its leaked access rules but in an item that also asked for further input--the two commission Democrats cast partial dissents from this part--on whether the rules should stay on the books at all given the First Amendment impact on cable speakers and the "dramatic changes in technology and the marketplace for the distribution of programming [that] cast substantial doubt on the constitutional foundation for our leased access rules."

Related: FCC Casts Doubt on Constitutionality of Leased Access

Free State has no doubt the rules are built on a foundation--of video scarcity--that has turned to sand.

"Cable operators' channel lineup selections, tier placements, and other video programming decisions are editorial activities and forms of constitutionally protected speech. But under the Commission's rules, cable operators lose editorial control over any video programming on the channel capacity they are required to lease for video programming not of their choosing," said Free State, echoing an argument cable operators have made and the FCC's Republican majority are receptive to. "Moreover, rate controls on leased channel capacity also undermine cable operators’ editorial rights by restricting what they can charge for content they may not want to carry."

And while cable regs like leased access have been justified by cries of video "bottleneck," FSF suggests video distribution is now a firehose of choice. As a result, it said, the rules can't be justified and the FCC should stop enforcing them. 

The FCC order made it clear, in the part from which the FCC's Democrats dissented, that the FCC is skeptical that the rules can pass constitutional muster, laying it out in a summation that was music to the ears of cable operators long arguing that leased access and other must-carry mandates impinge on cable's editorial discretion.

"The changes in the video marketplace...call into question whether our leased access rules are consistent with the First Amendment," the order said. "Specifically, while the leased access rules were originally justified as safeguarding competition and diversity in the face of cable operators’ monopoly power, the growth in available platforms to distribute programming seems to have eroded this justification.

"We agree that dramatic changes in technology and the marketplace for the distribution of programming cast substantial doubt on the constitutional foundation for our leased access rules. We recognize that we rejected similar constitutional arguments in the 2008 Leased Access Order, which we vacate today [the order is looking ahead to a June 6 vote].

"Our analysis has changed because the facts have changed: The growth in alternative outlets for programmers—particularly on the internet—has exploded in the decade since the adoption of the 2008 Leased Access Order. Given this proliferation of new distribution platforms, we now find that the First Amendment concerns raised by commenters provide additional reason to interpret the statutory obligations of Section 612 in a manner that reduces burdens on the speech of cable operators."

WASHINGTON — The Free State Foundation has come out in support of secondary-market deals for C-band spectrum as a way to clear some or all of the band for 5G. 

The Federal Communications Commission is committed to freeing up spectrum in the band, used for satellite program delivery by broadcasters and cable operators, but has been collecting input on just how to do it. 

The C-Band Alliance, comprising the major satellite carriers licensed to use the C-band, has proposed a secondary market auction, rather than an FCC auction, saying that is the best and fastest way to free up the most spectrum. Free State, a Rockville, Maryland-based nonpartisan think tank promoting free market-oriented policies, generally likes the cut of that free-market jib.  

"We believe that, at the end of the day, the tradeoffs involved in such a free market-oriented approach will enhance overall consumer welfare and reduce overall societal costs by maximizing the efficient use of this valuable mid-band spectrum," wrote Free State president Randolph May and visiting fellow Gregory Vogt. 

May and Vogt said they recognize the FCC will have to work through some "nontrivial" issues related to that approach — "the amount of spectrum in the C-band to be reallocated, the legal basis for the market-based approach, and whether a portion of the sale proceeds should be contributed to the federal government" (as the C-Band Alliance has proposed). But they also said that "by maximizing overall consumer welfare and reducing overall societal costs, it comports with the public interest." That should be the FCC's policy objective, they said.  

FCC chairman Ajit Pai has also acknowledged the repurposing is, well, complicated. But he did tell Congress recently that he hopes to have something ready by the fall.  

Separately, legislation has been drafted by House Democrats that would require an FCC auction, plus a hefty contribution to the Treasury ($10 billion) to help close the rural digital divide.  

Cable operators and competitive carriers also have a proposal that would include an FCC auction, as well as possible payouts to cable and broadcasters as well as satellite companies.  

The C-band is the kind of midband spectrum — the sweet spot for 5G — that the FCC is under pressure to start clearing in greater abundance. President Donald Trump has directed his administration to come up with a new national spectrum policy plan with the goal of winning the race to 5G. 

CBA has dubbed its private auction FUEL (Flexible Use and Efficient Licensing) and says it would be a sealed-bid auction for "packages" of spectrum, private but overseen by the FCC, which could put conditions on the licenses if it chose. (The FCC has its own FAST (Facilitate America’s Superiority in 5G Technology) plan for getting spectrum into the hands of wireless broadband companies). 

The CBA auction was designed by Auctionomics, which has worked with the FCC on its spectrum auctions. 

The latest twist in the net neutrality debate has prompted a renewed interest in regulatory federalism. Opponents of the Federal Communications Commission’s Restoring Internet Freedom Order (RIF Order) have turned to state governor’s mansions and legislatures, seeking to restore at the state level regulatory restrictions that the commission repealed at the federal level. To date, six states have adopted executive orders and four have passed statutes that purport to impose net neutrality mandates on broadband providers.

Most commentary on state net neutrality has focused on whether the RIF Order preempts these state-level initiatives. But there is a second, less-often-discussed limitation on state power to regulate broadband network management practices: the Dormant Commerce Clause.

The Dormant Commerce Clause doctrine prevents states from imposing undue burdens on interstate commerce. Previous courts have relied on this doctrine to limit state attempts to regulate online conduct. The Internet is a national (indeed, global) network, meaning that state attempts to regulate the flow of traffic on that network are likely to have extraterritorial effects that burden interstate commerce. As a result, claims these rules contravene the Dormant Commerce Clause could well prove a difficult obstacle for state attempts to resurrect net neutrality restrictions.

Regulations Without Borders

Like early state attempts to regulate online conduct, state-level network traffic management regulations are susceptible to a Dormant Commerce Clause challenge. The Internet is a national (indeed, global) network, meaning that attempts to regulate the flow of traffic on that network are likely to have extraterritorial effects. If state net neutrality rules survive a pre-emption analysis, states should be ready for the claim that such regulations unreasonably burden interstate commerce and, therefore, contravene the Dormant Commerce Clause doctrine.

The party challenging the law bears the burden of showing the impact on interstate commerce. As an initial matter, it is not clear that the existing state-level net neutrality initiatives are limited to in-state conduct. For example, Vermont’s executive order prevents state agencies from contracting for broadband service unless the broadband provider certifies that it does not “engage in paid prioritization … to any Internet customer.” Similarly, Hawaii requires agencies to contract only with providers that “demonstrate and contractually agree to support and practice net neutrality principles where all Internet traffic is treated equally.”

Facially, these restrictions can be read to apply not only to contracts with in-state consumers, but with all consumers nationwide (or indeed worldwide). But even if the court construes these restrictions to apply only to contracts with in-state consumers, such regulations can disrupt the orderly flow of interstate traffic. Permissible network management practices would differ from state to state, depending on whether and how each state chose to regulate. Even if all states adopted facially identical statutes, fragmentation is likely to occur over time as 50 different sovereigns may reasonably disagree on enforcement. For example, what constitutes “reasonable network management” may differ from state to state.

Broadband providers are thus left with two alternatives: operate a nationwide network that meets the standards of the most stringent state — meaning that state’s law burdens out-of-state communications that would otherwise be legal — or Balkanize the network and make the delivery of network traffic less efficient, which burdens the delivery of out-of-state communications.

Of course, there is also a political dimension to states’ willingness to take net neutrality actions.

To the extent that the residents of states such as Vermont and California feel more strongly in favor of net neutrality protections than consumers in other parts of the country, the states’ willingness to enact a rule, risk a federal pre-emption challenge and expend public time and resources on enforcement keeps the political issue alive and signals the strength of their interest to national lawmakers, influencing the national debate. In this sense, it is perhaps unsurprising that the primary catalysts of state net neutrality rules are not state public utility commissioners, but governors and state legislators. They are directly elected by their constituents and, therefore, are well placed to read their constituents’ preferences and communicate them nationally.

A Check on States’ Power

But the Dormant Commerce Clause doctrine checks this political activism, to make sure that these states’ efforts to register their discontent with federal policy do not unduly burden residents of other states whose preferences differ.

It is difficult to predict in advance how courts may resolve Dormant Commerce Clause claims in this context, given the need to develop a robust record of the burdens and benefits of particular state laws and executive actions. But at a minimum, one can say that the various state initiatives are susceptible to a Dormant Commerce Clause challenge.

The FCC is correct that broadband is an inherently interstate service and that traffic management practices are best determined by a national regulator to control the spillover effects that would otherwise occur with state-level action. For states that insist upon taking that power into their own hands, pre-emption of state net neutrality laws or executive orders will be the first obstacle, and this is where the battle has been joined thus far. But even if the state actions survive a pre-emption challenge, the Dormant Commerce Clause doctrine will be yet another gauntlet that must be overcome in their quest to undermine the Restoring Internet Freedom Order.

Daniel A. Lyons, a professor of law at Boston College Law School, is a member of the Free State Foundation’s board of academic advisers.

"All of our infrastructures are starting to look very similar," said NCTA executive VP James Assey during the first panel discussion of the Free State Foundation's 11th annual telecom policy forum in Washington (agenda) on Tuesday (March 26). His remark set the stage for much the day's perspective -- if not for total consensus -- throughout the day as industry and academic experts plus federal officials examined the need for new regulatory policies in an era of converging technologies, competing platform players and urgent privacy and security demands.

Assey also said that current conditions, including the emerging role of 5G wireless technology, augur the need to revise "Title VI" (rules in the 1984 Cable Communications Policy Act) that may no longer be valid.

"That type of hybrid architecture requires greater similarity" in policies, Assey said. "Any future approach to spectrum needs more coordination. Congress could speed that change."

Expanding his remarks to include the growing presence of platforms -- that is, non-telecom providers, such as Google and Apple -- Assey insisted that, "We're very confident in our path...and on keeping focused."

Fellow panelist Kathleen Ham, senior VP, government affairs at T-Mobile USA, endorsed Assey's view.

"We're at a crossroads," she said. "There's definitely a convergence going between cable and wireless," and in a predictable puff about the next generation wireless service, she added, "We don't know what 5G will bring, but it's going to be good." She acknowledged that new competitive policy-making should be part of the legislative agenda.

Further supporting the need to prepare for the shifting environment, Verizon senior VP Kathleen Grillo focused on her "concern" about state laws on platform accountability as well as rules on privacy and issues such as 5G tower siting that are "confusing for consumers." She stressed that such complications underscore the "value of a national framework."

An FSF panel of academic experts further set the stage for new policies, which also happened to be the subtitle for FSF's seminar: "Getting Law and Policy Right."

"The distinction between the web and the edge are becoming indistinct," said University of Pennsylvania Law Professor Christopher Yoo, noting that it is "harder to justify net neutrality," and proposing that a future evaluation will involve "device neutrality."

FCC's O'Rielly and FTC's Simons Weigh In

FCC commissioner Michael O'Rielly agreed that the policy "structure should be changed."

"How we define the marketplace is so important in the video space," he said, emphasizing that this is no longer "just about cable, broadcast or satellite.

"Many of the FAANGs are fighting for the same space," O'Rielly said, using the popular acronym for Facebook, Apple, Amazon, Netflix and Google. "The silos we've lived with for so long are no longer appropriate. We have to take that to the legislature. Title VI no longer makes any sense."

In an on-stage dialogue with former Congressman (and retired Verizon lobbyist) Tom Tauke, O'Rielly also said that he is not "squeamish" about pre-empting state or local regulations on issues such as wireless tower siting or other factors.

"Absolutely not," he said. "Wireless spectrum does not respect [local] boundaries. The internet is interstate in nature, and I'm willing to preempt" whatever is necessary.

Federal Trade Commission chairman Joseph Simons, in the concluding keynote of the FSF program, focused on paid prioritization and the FTC's newly launched data handling review of internet service providers, which was unveiled that day.

"Paid prioritization is a type of price discrimination, which is ubiquitous in the economy" and not illegal, Simons said. He cited loyalty cards, coupons, senior discounts and frequent shopper deals as comparable legal price preferences.

But he warned that the FTC "could take action against ISPs if they block applications without adequately disclosing those practices or mislead[ing] consumers about what applications they block or how."

"Our consumer protection authority could also apply to throttling," Simons added. "We would consider whether the alleged throttling had countervailing benefits, and whether there were reasonable steps consumers could have taken to avoid it."

Simons also joined the call to seek more direction from Congress on how to handle privacy and data security issues.

"I have urged Congress to enact legislation that would give the FTC three tools," he told the FSF audience, citing civil penalties for privacy and data security violations; targeted rulemaking authority involving technological developments; and jurisdiction over nonprofits and common carriers.

"The process of enacting federal privacy legislation will involve difficult policy tradeoffs that I believe are appropriately left to Congress," Simons said.

As for its latest enforcement of ISP privacy practices, he said the focus will be on how ISPs are collecting, using, combining and disclosing personal information about consumers that they collect via fixed and mobile internet, advertising platforms and analytical services.

Simon's remarks summarized an underlying theme of the FSF conference: the growing recognition that converging technologies and overlapping services require a new approach to regulatory policies.

Free State Foundation president Randolph May blogged this week that the FCC should move with dispatch to free up 5.9 GHz band and L-band spectrum for next gen communications.

The 5.9 GHz band was allocated for short-range vehicle-to-vehicle (V2V) communications, but those have been slow to pan out and are likely to be mooted by app-based systems that do not require that spectrum. 

ISPs have been pushing the FCC to at least let them share the band with auto makers, but now they and many at the FCC are talking about freeing up some or all of the band for WiFi use.

May also suggests the FCC should grant the application of Ligado Network's (formerly LightSquared) application to use "fallow" L-band spectrum for its hybrid satellite/mobile broadband network.

May said moving forward on repurposing both bands "holds the promise, if resolved in a timely manner, of making spectrum available that can be used to meet the growing demand for wireless services and for what the memorandum calls the 'burgeoning Internet of Things.'

He also pointed to President Trump's recent directive on a new spectrum strategy and said he hoped that would spur FCC action. But May also gave the FCC and its opposite number in terms of federal spectrum, the National Telecommunications & Information Administration, props for its efforts to date to free up more spectrum: "NTIA and the FCC are to be commended for their efforts during the last two years to make more spectrum
available to enable the offering of innovative new services," he said. 

Ligado says it is "awaiting FCC review of its terrestrial authorizations in L-Band and is working with equipment vendors to select 5G suppliers."Back when it was LigthSquared, a half dozen years ago, the company failed to gain FCC clearance to launch its network due to interference concerns.

The Free State Foundation, a free-market think tank, put some reverse spin on Shakespeare, succinctly counting the ways in which Title II is unloved.

"The Title II Order was a fatefully misguided act of regulatory aggression leveled at a dynamic broadband Internet marketplace, and it must be reversed," Free State said in comments strongly backing the FCC proposal to reverse the Title II reclassification of internet service providers as common carriers.

Initial comments on the Title II order were due Monday (July 17).

Free State called the FCC Title II order (1) unwise; (2) unnecessary; (3) unjustified; and (4) unsound.

IT also called on the FCC to rectify the situation "without delay" and "remedy the demonstrable harm that misguided foray into overzealous Internet regulation has caused."

That would be by rescinding the Title II telecom classification and returning to the light-touch regime under an information services classification.

Free State argued that Title II has depressed investment, that there is no market power or consumer harm justification for the FCC's imposition of utility regs on IPs, and that once the FCC has rolled back Title II, both Justice and the Federal Trade Commission will have the authority to address an anticompetitive concerns about ISP practices.

Free State also said the FCC lacks direct statutory authority to regulate ISP practices, but if the FCC concludes it needs to have some regulatory oversight under ancillary authority, it should permit paid prioritization, unless it is demonstrably anticompetitive, and should regulate access under a commercial reasonableness standard on a case-by-case basis, rather than the current bright-line rules against blocking, throttling.

That standard should require findings of both market power and consumer harm, it said, taking a page from antitrust enforcement.

As to paid prioritization, "Consumers stand to benefit from novel services providing Quality-of-Service guarantees that depend upon paid priority arrangements between broadband ISPs and edge providers."

FCC chair Ajit Pai offered details about why his proposed FCC Office of Economics and Data would provide "critical functions" for the agency, and he insisted on Wednesday (May 31) that he does not have "any pre-ordained position" on the paid-prioritization elements in his plan to undo the Open Internet rules.

Pai repeated his view that the agency's 2015 net-neutrality regulations "are curtailing investment in infrastructure," especially affecting "small operators [who] are prevented from getting financing."

In wide-ranging remarks at the Free State Foundation's Ninth Annual Telecom Policy Conference, Pai also affirmed his stance on the ongoing broadband privacy issue, saying, "The regulatory framework should be consistent. ... The core principles [are] in sections of the Act."

Earlier at the FSF event, Comcast senior executive vice president David Cohen revealed that Comcast reduced its "capital spend by $2.5 billion over a three year period" because of the uncertainty triggered by the current Open Internet rules. Cohen chastised groups such as FreePress and the Internet Association, which claimed that the FCC ruling has had no effect on capital investment.

"Title II was raised in every conversation" at Comcast about capital budgets, Cohen said, characterizing it as "a rate-regulation policy." He said that in some cases, the rules "delayed launch of services for 18 months."

Related: Videos From the Free State Foundation's Ninth Annual Telecom Policy Conference (via C-SPAN)

Most of the day's speakers fulfilled the anti-regulatory mission of the right-leaning FSF program's title: "New Directions for Communications Policy: Less Regulation, More Investment and Innovation." The assault continued through the final speaker, Duke University economics professor Michelle Connolly, who declared that unless Congress stops regulatory over-reach, "there is a 100% probability of someone making a regulatory grab."

Connolly warned that the current deregulatory approach at the FCC "may only last as long as Pai's chairmanship" and that future "random rules" would slow innovation.

Meredith Baker, president/CEO of CTIA: The Wireless Association, emphasized the need "to get policy right" as the FCC addresses 5G (fifth-generation) wireless services. She said her industry needs broadband policies that will support the expected $275 billion pricetag for building the new networks, including doubling the number of small cell towers for pervasive 5G delivery.

"We won the race in 4G, we need to do it in 5G too," Baker said, adding that preparing for spectrum auctions that will be involved in long-term 5G deployment "takes a lot of time and planning. We really need a long time in advance."

Pai 'Hopeful' on ISP Rules
During his on-stage conversation with FSF president Randolph May, Pai contended that there is "a lot of agreement" among Internet service providers and the FCC about how ISP practices could be governed under Title I. He said he's "hopeful that the agency can craft appropriate policies," noting that "consumers have uniform expectations" about protections they receive no matter what Internet services they use.

As for spectrum policy, Pai said, "Consumers are demanding a faster, better level of connectivity" and noted that on the local level, delivering such service should be a "cooperative effort."

May opened the session by asking Pai if he brought his "weed whacker," a reference to Pai's December speech at another FSF event where he used the metaphor to describe his deregulatory approach. May cited a recent article by MCN's John Eggerton that said the phrase had "gained cultural currency within and beyond communications circles."

Pai simply said, "It's best to move on."

Pai spent considerable time describing his efforts on process reform at the FCC, calling the initial results "significant" for reducing the burden on the Commission's staff. He said that the "front-loaded" three-week advance notice for open meeting agenda items has eliminated the "problematic" challenges of 11th-hour marathons on the night before Commission meetings.

Pai characterized his plan to establish an Office of Economics and Data within the FCC as "one of the most critical factors" on his agenda.

"I want us to be data driven, to have all Commission economists in one place ... to encourage more collaboration on big picture issues," Pai said. He pointed out that since 2012, "we've had zero economic working papers," indicating that the growing complexity of FCC decisions requires greater financial and economic analyses.

Cohen Seeks Regulatory Rationale
At the panel session entitled "Challenges and Opportunities Ahead," Comcast's Cohen acknowledged the value of FCC policy on topics such as net neutrality; but he emphasized that "the light touch until the past five years" was a better approach, insisting that the "No. 1 priority for our company and our industry" is to keep the U.S. on the leading edge.

"It is crucial to adopt policies to continue private investment," Cohen said.

"We can support net-neutrality rules but you don't have to do it under Title II," he added. "We can make a lot of progress if we focus on policies [such as] universal broadband deployment and adoption."

Citing the approach of former FCC chair Julius Genachowski (the Obama administration's first chair), Cohen said, "Strong, legally enforceable net-neutrality rules should meet a number of standards." He criticized the current rules, pointing in particular to the "general conduct" section, which he called a "catch-all" and "double-edged sword" that "perpetuates contention" and could be used to attack zero-rating rules, among other things.

"The purpose [of regulation] is to end the game of regulatory ping-pong," Cohen said.

On Oct. 27, the Federal Communications Commission adopted a Report and Order purporting to “protect the privacy of customers of broadband and other telecommunications services." The rules require consumers to affirmatively opt-in before Internet-service providers (ISPs) can collect "customer proprietary information," which applies to information that the ISP "acquires in connection with its provision of telecommunications service."

For example, if a consumer who subscribes to Comcast chooses not to opt in, it appears Comcast cannot collect information regarding that consumer's Amazon purchases because the data would be acquired through the Comcast-provided Internet connection. However, Comcast will be able to purchase that consumer's Amazon information either directly from Amazon or perhaps from the consumer's operating system and/or Web browser. In other words, ISPs are allowed to purchase consumer information from edge providers, which are not subject to the FCC regulations, even though the edge providers have greater access to consumer information than ISPs.

FCC commissioner Michael O'Rielly discussed this important issue during his dissent: “[A]ll that the FCC has really done is raise the transaction costs. The FCC, in its typical nanny state fashion, seems to assume that consumers prefer an opt-in regime. But when consumers find out the end result is that they may have to pay more for heightened privacy rules that they never asked for, I doubt they will be grateful that the FCC intervened on their behalf. Indeed, this is a grandiose attempt to enact legacy talking points into rules so that commission leadership can pat itself on the back while consumers receive no actual, practical protections.

“Because the FCC's regulations with the opt-in default are not imposed on edge providers, such as Google, these platforms will continue to collect massive amounts of consumer information," O'Rielly continued. "As FSF scholars stated in their comments, due to encryption technologies, edge providers have a greater access to consumer information than ISPs. In order to provide targeted benefits, such as zero-rated services, to consumers who choose not to opt in, ISPs will have to purchase information from edge providers or other Internet companies.”

As commissioner O'Rielly discussed, because ISPs need consumer information in order to offer targeted benefits, these regulations simply raise the costs for ISPs to engage in online advertising, zero-rated programming or other targeted consumer offerings. Consumers who choose not to opt in will be confused because edge providers will continue to collect their information and sell it to ISPs. And it's likely ISPs will increase the price of broadband service to cover the costs of purchasing consumer data from edge providers.

The FCC order also envisions case-by-case investigations of "pay-for-privacy" practices. ISPs will be less likely to charge different prices to consumers with different privacy preferences. For example, consumers who choose not to opt in but who still want to receive targeted offerings should end up paying more than those who choose to opt in because ISPs need to purchase consumer information on their behalf. However, the FCC's investigation likely will chill any efforts by ISPs to offer differentiated pricing based on consumer privacy preferences. Therefore, if ISPs want to offset the increase in regulatory costs, the FCC's investigation is more likely than not to force providers to raise broadband prices for all consumers, not a subset.

With its new regulations, the FCC claims to "protect consumer choice" and "toughen pay-for-privacy safeguards." But by expanding the definition of "customer proprietary information" to include non-sensitive information, the effect of the FCC order will be to impose higher prices for all broadband consumers without actually creating more choices. Instead of a fraction of consumers paying for privacy, all consumers are harmed by the likely result that the FCC's new regulations will lead to higher broadband prices.

Michael J. Horney is a research associate at the Free State Foundation.

WASHINGTON — The Federal Communications Commission won a big victory in a federal appeals court with a ruling that the agency had sufficiently justified its Title II-based approach to network-neutrality rules. But the last chapter has yet to be written in the years-long legal battle.

Internet-service providers have vowed to continue the fight, either by appealing the three-judge panel decision to the full U.S. Court of Appeals for the D.C. Circuit, or by going straight to the U.S. Supreme Court.

Some interested parties huddled with reporters after the decision to talk about the implications of the court’s call and prospects on appeal.

POTENTIAL LINES OF APPEAL

Network-neutrality detractors seemed to agree that the FCC’s decision to reclassify wireless under Title II of the Communications Act might be fruitful ground for appeal, given the distinctions the FCC had previously drawn between wired and wireless, though they were not handicapping prospects for success.

Another possibility at the Supreme Court, said Russ Hanser, partner at Wilkinson Barker Knauer, was what might be a nascent doctrine at the Supreme Court regarding reviews of particularly important agency decisions, in which agencies have “reshaped” the statutory authority bestowed by Congress.

Attorney Andrew Schwartzman, who supports the Title II-based rules, wasn’t buying that argument. He called “fanciful” the suggestion the Supreme Court wants to cut back on traditional deference by suggesting some cases are “too big” for Congress to have meant to delegate its authority.

“The Supreme Court has already said [in the Brand X case upholding the FCC’s previous definition of Internet access as an information service] that the reclassification issue was properly delegated to the FCC,” Schwartzman said. “I doubt that there is any other statute in the last few decades which so clearly delegated so much to the FCC for decision.”

Hanser cited a case involving the Affordable Care Act (aka Obamacare), in which the Supreme Court said in cases of such national importance, the court’s traditional deference to agency decisions might be more limited. That calls into question how much discretion agencies have, he said.

When Congress gave FCC forbearance authority, Hanser added, most people saw that as a deregulatory move. “There seems to be something strange to use it to vastly expand regulation, just not as far as it otherwise would have been expanded,” he said.

He would not be surprised if appeals of the rules to the Supreme Court focused on how much authority agencies have to create regimes different from the ones anticipated in the statute, he said.

Seth Cooper of free-market think tank Free State Foundation thinks the FCC’s general-conduct standard is another weak spot in the court decision.

“The D.C. Circuit’s light-touch review of a heavy-handed regulatory order offered an unsatisfying analysis of the general conduct standard, too eagerly downplaying its vagueness,” Cooper said in a blog post.

Cooper said the vagueness issue should be brought up on appeal, but an as-applied challenge could also be the legal vehicle to challenge the network-neutrality rules. If the FCC was to make a ruling based on the general-conduct standard — by disallowing zero-rating plans, for instance — an as-applied challenge to that decision could be a way to get a fuller vetting than the D.C. Circuit provided.

LOW ODDS ON REVERSAL

Schwartzman was not shy about offering up odds on an appeal, saying the chances for reversal are “close to zero.”

Given that the dissenter in the case — Judge Stephen F. Williams would have remanded the decision back to the FCC — was focused not on the agency’s power to reclassify (which the court upheld), but on how the FCC applied the law, the “core legal issue” is not in play, Schwartzman pointed out.

The only reason to seek rehearing is a tactical one to put off going to the Supreme Court until there is a ninth justice in place, Schwartzman said.

As to the Supreme Court, Schwartzman said there is no split in the circuit for it to resolve, and “it has already said that the central provision is ambiguous, and even Judge Williams agreed that the FCC has the power to reclassify. The only other issues in the case are garden variety administrative law statutory questions of no interest to the Supreme Court plus a nearly frivolous First Amendment question.”

The "interplay" of three pending FCC issues -- the "unlocked" set-top box proposal, privacy rules and "the ultimate resolution of  net neutrality -- is impeding cable industry development and improperly putting "a government imprimatur on the notion of competition," NCTA president/CEO Michael Powell said March 23 at the Free State Foundation’s Eighth Annual Telecom Policy Conference.

Expanding his criticism of several FCC initiatives, Powell cited the agency's "biases [towards] the development of tech companies" that "makes it possible for tech companies to invade our traditional areas" but prohibits cable firms from moving in  their direction. 

He singled out the recent privacy proposal that would affect Internet Service Providers (including cable operators) in different ways than it would impact content or application suppliers.

"Privacy is not controversial; it is the hypocritical inconsistency that is controversial," Powell said.  "You cannot describe that data collection and monetization is the justification for this level of rules while ignoring the fact that [similar actions] take place on every other platform that consumers use."

Powell challenged the FCC to find a way to differentiate "between the value of privacy and personalization" without taking a heavy-handed approach.

He also slammed the set-top box proceeding, saying that it "perfectly encapsulates government intervention."

"You cannot find one soul who doesn't recognize that there is no market that is shifting more than video delivery," Powell emphasized.  He said cable has lost 50% of its market share to new entrants, referring to telco TV and over-the-top operators. "This market is on fire."  He called the FCC's STB plan a "rent transfer" decision and an "unrestrained violation" of its role.

"All costs will be borne by customers," Powell said. He pointed out that the proposal will take at least five years to implement, "by which time the market will have changed."  The commission should not "pick winners and losers," Powell said.

His criticisms came during a panel of association executives discussing "Hot-Topic Communications Issues," part of a day-long program that included FCC commissioners Michael O'Rielly and Mignon Clyburn plus Federal Trade Commission member Maureen Ohlhausen. FSF's intent was to explore "the FCC and the rule of law," although many of the speakers focused on perceived abuses of power.

Even FCC general counsel Jonathan Sallet, in a conversation with FSF president Randolph May that was centered on procedural processes at the commission, conceded that "more direct conversations between commissioners would be a very helpful step."  Sallet, who recommended changes to sunshine laws "so that commissioners can deliberate," acknowledged that the FCC could use more input on many topics it is reviewing.

"Sometimes we know issues are in flux and we need to know more," he said.

Right-leaning FSF's agenda began with politicized rhetoric when keynoter Rep. Marsha Blackburn (R-Tenn.)  lambasted the FCC and singled out chairman Tom Wheeler as "a bull in a china shop."  Blackburn, vice chair of the House Energy and Commerce Committee and a member of its Communications and Technology Subcommittee, characterized the FCC staff as having "failed to exercise regulatory humility," citing its recent effort to oversee privacy, which she said is the FTC's responsibility.

"The FCC does not have the necessary expertise to oversee privacy," she said.  "It is arguing for a solution that is one-sided and focused only on one part of the Internet ecosystem."  

Blackburn also plowed into the issues of unlocked set-top boxes and municipal broadband, citing that Memphis "is $27 million in the hole" from its flirtation with such plans, and "the list of failures goes on and on."

"It's the government's job is to create an environment that encourages competition, not to create a system where the government is the competition," she said. "If the state decides to create broadband networks, so be it, but "the FCC has no right" to butt in.

As for the open STB issue -- which she referred to under the old "All-Vid" name -- Blackburn said, "Nashville content creators are absolutely baffled by what the FCC is trying to do." She contended that the FCC plan would encourage theft and could create conflict between FCC policy and business contracts between content producers and carriers.

"It has created a tremendous amount of confusion," Blackburn said.

"The FCC's decision-making has frustrated content makers, the telecom industry and policy makers," she concluded, emphasizing that telecom "has thrived under light-touch regulation."

Diplomatic Commissioners

FSF's May sought to explore possibilities for less politicization and more "collegiality" among FCC commissioners during his "fireside chat" with O'Rielly and Clyburn, with a series of "can't we all just get along" questions.  Both officials initially tried to be cordial.

O'Rielly: "I get along with my colleagues very well. ... I try not to let one issue color my feelings about the next one."

Clyburn: "My compass is serving the public interest. We're not in a vacuum." 

And then they got into specifics, where political polarization quickly emerged.  They disagreed on the STB plan.

"Words have meaning," O'Rielly said about the chairman's perception that software is part of the STB revision. "When Congress wrote 'equipment,' it didn't mean 'software.'"  The direction toward applications and software has nothing to do with the statute and is "problematic," he added.

Clyburn insisted that "Congress envisioned a robust marketplace...whatever the interface is."  She said that the plan is focused on "whether this is a non-competitive marketplace."

Similarly, on the privacy issue, O'Rielly pointed out that "our expertise, the number of people at the FCC working on privacy is small, compared with expertise at the FTC."  Clyburn said she doesn't use the word "duplicate" but rather focuses on "context," considering the two agencies' efforts "complementary."

"We work together to insure that expectations are met," Clyburn said.

And again when discussing the Open Internet situation, she emphasized "flexibility and innovation," while O'Rielly insisted, "You can never have certainty when you have no structure." 

"That's what the chairman created under the 'net neutrality rule," O'Rielly said.

They also sparred over proposals for "lifeline" services.  O'Rielly said he prefers "a hard budget rather than a [percentage] cap," while Clyburn insisted that the plan "removed duplicates, put in discipline and [provided] a lot of accountability."

The panel of association executives, which included (in addition to NCTA's Powell) CTIA president/CEO Meredith Baker; U.S. Telecom Association president/CEO Walter McCormick; NARUC general counsel Brad Ramsay; and Nicol Turner-Lee, VP of the Multicultural, Media, Telecom and Internet Council, continued the blast of the FCC rulemakings and its process.

Regarding muni cable, Ramsey said, "The FCC is telling the state what to do." He predicted if the Sixth Circuit appeals court in Cincinnati, which is reviewing challenges by Tennessee and North Carolina to the FCC's muni cable ruling, sides with the FCC,  the case is likely to go to the Supreme Court and it will be reversed.

McCormick focused on FCC decisions that are "slowing investment in the industry. "

"We've seen that in every year since the recession, there were increase in broadband investment up until Title II," he said, referring to the FCC's 2014 ruling to regulate broadband.  McCormick said that annual investment growth for the industry dropped from 9% to almost nothing, contending that the privacy issue has further muddied the financial market's view of telecom. He criticized FCC policies as thwarting "the full development of the telecom industry."

The CTIA's Baker focused on 5G (fifth generation) wireless as a "life-changing technology," calling it the "high-speed spectrum frontier." She emphasized the Internet of Things opportunities.

Most of the panelists were also critical of President Obama's intervention in the net -neutrality decision rulemaking which led to the now-contested Title II decision.

"It sets a bad precedent," Powell said. "Future administrations will use it as a precedent.  We might as well have a Secretary of Communications."

At an afternoon session wrapping up the "rule of law" theme, AT&T senior VP Robert Quinn promoted the value of a revision of the Communications Act.

"We have to go back to the drawing board," he said. "The Act really doesn't contemplate the kinds of things we're doing differently with the Internet.  We compete with everyone."

FSF's May said that this year's event was the best-attended conference in its eight years.

Washington continued to wait with collective bated breath, for the FCC to circulate its order expected still to be approval with conditions, and a federal court's decision on the FCC's net neutrality rules, but it looks like they will have to wait until at least next week.

According to multiple sources, the Charter/TWC item is still with the lawyers and won't be circulated until at least next week.

The U.S. Court of Appeals for the District of Columbia is not on any timetable for releasing its opinion. but it has been almost four months since oral argument (Dec. 4) in ISPs challenge to the FCC's Open Internet order, and many court watchers, including FCC chairman Tom Wheeler, were looking for a decision by the end of this month.

The court released only one case Friday morning--it usually posts them online at a little after 10 a.m.--and it was not net neutrality.

The Free State Foundation has named a D.C. all-star lineup of speakers for its eighth annual Telecom Policy Conference March 23 at the National Press Club including FCC and FTC commissioners, top FCC officials and National Cable & Telecommunications Association President Michael Powell.

The speakers are Meredith Baker, president and CEO, CTIA-The Wireless Association; FCC Commissioner and former chair Mignon Clyburn; Seth Cooper, senior fellow, Free State Foundation; Randolph May, president, Free State Foundation; Walter McCormick, president,

USTelecom; FTC commissioner Maureen Ohlhausen; FCC Commissioner Michael O'Rielly; Michael Powell; Robert Quinn, SVP, federal regulatory, AT&T; Jonathan Sallet, general counsel, FCC; Nicol Turner-Lee, VP and chief research and policy officer, Multicultural Media, Telecom and Internet Council (MMTC); and Philip Verveer, senior counsel, FCC.

Among the topics teed up for discussion are the FCC's Title II-based Open Internet order appeal, video competition (the FCC is launching an inquiry this month into independent programmers' access to distribution channels), and universal service and Lifeline Reform (FCC Chairman Tom wheeler signaled this week that should be coming soon).

A downpour of TV content is forecast for this week on the 10th anniversary of Hurricane Katrina and the devastation it unleashed on the Gulf Coast region in general and on New Orleans in particular.

In 2005, cable networks were among the first outlets to show the images of the stunning destruction to property and people’s lives in the days following the storm. Other specials through the years, such as HBO’s Emmy-winning When the Levees Broke: A Requiem in Four Acts, helped chronicle the effects on life on the Gulf Coast in the immediate aftermath of the storm.

This week The Weather Channel is leading the charge with a week of Katrina-themed content, including Katrina 2065, a special that looks at likely scenarios that could take place if Katrina hit 50 years from now. On Friday, Aug. 28, TWC will air a special report, Katrina: 10 Years Later, with Al Roker and Stephanie Abrams.

Also that Friday, TV One will look at the plight of education in New Orleans a decade after Katrina as part of its daily News One Now morning news series hosted by Roland Martin.

BET on Aug. 26 will premiere a news special, Katrina 10 Years Later: Through Hell in High Water, that will chronicle the lives of a diverse group of people who survived Katrina.

On the cable news network front, CNN will debut on Aug. 24 Katrina: The Storm That Never Stopped, in which network anchor Anderson Cooper travels back to the Gulf Coast and looks to reconnect with those residents and people he spoke with a decade ago following the storm.

On the digital front, offerings will include six-part documentary series New Orleans, Here & Now, from Time Inc. and Rampante, debuting Aug. 27 on Time.com and other platforms. It’s about six people living in New Orleans 10 years after Hurricane Katrina and is the first original premium video product from Time. Weather.com on Aug. 25 will stream nine hours of continuous highlights from 2005 Katrina coverage, starting at the same time as the 2005 coverage began and featuring clips from The Weather Channel.

And in real life (apart from TV), FYI has teamed with the affordable housing non-profit Make It Right to build a solar-powered new tiny home in New Orleans for a middle school teacher. On Aug. 28, they will host a house-warming event at the new 469-square-foot domicile in New Orleans’s Lower Ninth Ward, including Tiny House Nation host John Weisbarth.

— R. Thomas Umstead

Think Tank to FCC: Charter-TWC Deal Should Sail Through

Free-market think tank The Free State Foundation has released a paper outlining the benefits to consumers and broadband of a Charter Communications-Time Warner Cable merger.

Free State senior fellow Seth Cooper said the purpose is not to endorse or oppose the deal, but instead to outline the key considerations the Federal Communications Commission should be, well, considering. But Cooper clearly likes the cut of the deal’s jib and suggests it deserves fairly smooth sailing through the FCC and DOJ deal-vetting process.

He said the potential downsides for consumers appear minimal, and maybe nonexistent, and drew a distinction between this proposed merger and Comcast’s earlier play for TWC, abandoned after the Justice Department and the FCC agreed it should not go through.

Concerns about program withholding or broadband domination don’t apply to a Charter- TWC deal, Cooper said (though he does not concede they should have deep-sixed the earlier deal, either). “Whereas Comcast-TWC would have resulted in a nationwide broadband consumer subscription market share of about 30%, Charter-TWC would result in a nationwide broadband market share of about 21%. And those are numbers for wireline broadband only. The broadband market is much bigger: 43% of all broadband connections are now mobile, with next-generation wireless networks increasingly offering consumers three or more competitive mobile video viewing options.”

In any event, he said, the FCC should not look at “static” indicators like market share or concentration, but instead view the deal in the light of free-market dynamism, a light in which the deal looks good for consumer welfare, he said.

Cooper also called for a swift review, which may already be a bridge too far. The FCC at press time had yet to launch the comment cycle or start the informal shot clock on the deal, as it is still mulling the issue of how to treat third-party access to confidential information submitted by the parties involved.

— John Eggerton

Minority whip Steve Scalise (R-La.) has joined the lineup of policymakers at the Free State Foundation's annual telecom conference March 19 at the National Press Club in Washington.

He will participate in the Q&A with Free State Foundation president Randolph May.

Already on the program are keynoter Greg Walden (R-Ore.), chairman of the House Communications Subcommittee, Senate Communications Subcommittee chairman Deb Fischer (R-Neb.) and Federal Communications Commission commissioners Mignon Clyburn, Ajit Pai and Michael O'Rielly.

Issues up for discussion include net neutrality, a Communications Act rewrite, pre-emption of municipal broadband laws and FCC reform.

The FCC should stick with a consumer cost-benefit analysis when deciding on the Comcast/Time Warner Cable merger, and that analysis will show that no consumer will lose a choice among providers since the two companies do not compete head to head in providing broadband or traditional video programming.

That was the message from free market think tank The Free State Foundation in comments to the FCC, whose initial comment deadline on the proposed deal is Monday (Aug. 25).

Free State says it is neither endorsing nor opposing the deal — though it finds a lot to like in the deal and not much arguing against it. Rather, it advises the FCC to stick to an economic impact analysis of whether the deal will hurt or harm consumers.

That, says the group, means the FCC "must disregard pleas for it to reject Comcast/TWC out of hand based on appeals to emotional incredulity or irrelevant "big is bad" sloganeering."

It also means "'[standing] firm against calls made - under the guise of protecting competition - to impose conditions on the merger in order to protect market rivals from the competitive process."

As a venture capitalist, FCC Chairman Tom Wheeler suggested deal conditions could morph into rules of more generally applicability, but as chairman has endorsed deal-specific reviews and remedies.

"Further, the Commission must reject dragging out its review process and thereby making itself even more susceptible to political pressures having little or nothing to with the potential consumer welfare benefits of the proposed transaction," says Free State.

Free State sees a number of potential upsides to the deal, including accelerating the transition from analog to digital cable, faster broadband speeds to more people, boosting enterprise (business services) competition, and expanding wireless backhaul infrastructure.

And if the FCC finds some argument for harm, says the think tank, it should require evidence of actual or likely consumer harm before "even considering" blocking or conditioning the merger.

To check out the full comments, click here.