CBIT filed the following reply comments in the FCC’s net neutrality proceeding. You can download them HERE.
The Communications Act of 1934 (the “Act”) was adopted in an environment where there was no significant competition among telephone networks. The absence of competitive alternatives raised significant concerns that the telephone monopoly would charge unreasonable rates or engage in unreasonable discrimination. Congress chose to constrain this monopoly through Title II of the Act, which requires that common carriers provide service at just and reasonable rates subject without unjust or unreasonable discrimination.
In the monopoly era, the “centerpiece” of the Title II regulatory scheme was the tariff filing requirement in § 203, which requires that common carriers file their rates with the Federal Communications Commission (FCC) and charge only the filed rate. The ‘filed rate doctrine’ “forbids a regulated entity to charge rates for its services other than those properly filed with the appropriate federal regulatory authority.” Once a filed rate is approved by the governing regulatory agency, it is reasonable per se and cannot be challenged in court.
Much of Title II and the Act’s procedural and administrative provisions “are premised upon” this tariff filing requirement. Once the FCC began permitting new entry into telephone markets in the late 1960s and early 1970s, however, it discovered that the costs of tariff filings outweigh their benefits in markets that are subject to competition.
The FCC’s greatest challenge over the last three decades has been the adaptation of a regulatory scheme premised on anticompetitive tariff filings to competitive markets. This challenge has been greatest with respect to the Internet. The history of Internet regulation is riddled with ‘temporary’ exceptions that never ended, anti-competitive arbitrage schemes, and judicial remands. The still indeterminate regulatory status of voice-over-Internet-protocol (VoIP) is a continuing reminder of the difficulty in regulating services that use Internet Protocol (IP) under the Title II.
Attempting to reclassify broadband Internet access as a ‘telecommunications service’ subject to Title II would likely make an already difficult challenge significantly more difficult. Reclassification would be legally suspect and would almost certainly be subject to a strong challenge in court. The plain language of the Communications Act and regulatory history make clear that the term ‘telecommunications’ refers only to transmissions that are interconnected with the public switched network (PSTN), and does not apply to transmissions over broadband Internet access facilities (e.g., xDSL and cable modem). The Act defines ‘telecommunications’ as a (1) transmission (not facilities), (2) between or among points specified by the user, (3) of information of the user’s choosing, (3) with no change in the form or content of the information sent and received. Broadband Internet access services do not meet all four elements of the definition of ‘telecommunications’: (1) there are no defined points for transmissions over the broadband Internet, (2) broadband Internet access services do not limit the transmission of information to that specified by the user; and (3) broadband Internet access services introduce changes in the form and content of the information sent and received throughout the transmission. Read More
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