SECTION 10 Forbearance and the FCC's New Era of Internet Regulation.

• Author: Meyer, John

1. INTRODUCTION

   Today, individuals exist in an age of nearly ubiquitous access to knowledge at the tips of our fingers. Computers, tablets, phones, and other electronic devices are connected to a sprawling network of information that generate roughly 7.5 million terabytes of data each day; that network is the Internet. (1)

   In the United States alone as of 2018, there were roughly 275 million internet users. (2) With such widespread usage of a technology that accounts for over $400 billion and rising worth of sales annually, it is no wonder that regulation of Internet service providers is such a hotly debated topic. (3) Within the past two decades the Federal Communications Commission (FCC), the governmental agency in charge of telecommunications in the United States, (4) has grappled with how best to deal with this rapidly growing and important industry, and how to regulate Internet service providers. (5) Between shifting administrations the FCC has flipped in recent years between two drastically different policies regarding the regulation of Internet Service Providers (ISPs). (6)

   In early 2018 the FCC, citing principles enumerated in the Communications Act of 1934, (7) stated that it was repealing the Open Internet Act of 2015, (8) which contained various consumer protection provisions and "rejec[ed] government control of the Internet." (9) In the new Order the FCC reclassified broadband carriers from a "telecommunications carrier" (10) which subjects the Internet Service Provider to governance as a "telecommunications carrier" or "common carrier" (11) under Title II of the Communications Act of 1934, (12) to Title I regulation as "information services". (13)

   This shifted the regulatory power over Internet Service Providers from the FCC's ex-ante powers under Title II common carrier regulations, (14) to the FTC's ex-post regulatory powers under Title I provisions. (15) In this highly controversial move the FCC has not only abdicated the prior authority it had occupied for the duration of the Open Internet Order, (16) but stated expressly its intent to preempt the states for any and all regulations touching broadband carriers contrary to the FCC's new deregulatory stance. (17)

   Much writing has focused on the merits of the decision to reclassify internet access as a Title I service. This note focuses on the FCC's preemption policy anchored in 47 USC [section] 160, otherwise known as the forbearance clause. When citing its authority to preempt the states, the FCC cited to the "impossibility exemption" wherein the FCC is allowed to regulate when interstate and intrastate components of the FCC's asserted regulation cannot be separated, (18) the Communication Act's stated "longstanding non-federal policy of non-regulation for information services.", (19) and the Communications Act's forbearance clause. (20) While in the past the forbearance clause has been utilized by the commission to relax regulation on carriers bound by Title II rules, (21) the new Order states quite clearly that the FCC views this section as granting that the "... Commission forbearance determinations expressly preempt any contrary state regulatory efforts" even for those companies regulated under Title I. (22)

   In the wake of this regulatory upheaval, various states in an attempt to protect their citizens from economically predatory behavior such as blocking, throttling, and paid prioritization by broadband providers have implemented policies mimicking regulations similar to those in the Open Internet Act and clearly in contrast to the current FCC regulatory scheme. (23) In light of such contention this paper seeks to outline the relevant discussion surrounding the FCC's ability to preempt the states by utilizing the forbearance provision of the Communications Act.

   Though the D.C. Circuit has recently ruled on the legality of this blanket preemption and found it wanting, the decision was split. (24) As the decision spent little time analyzing and weighing Section 160(e), (25) and as the little spent on it was split, this note attempts to broaden the discussion and provide a more comprehensive backdrop and rationale as to the FCC's attempted blanket preemption.

   This note will proceed in four parts. Part II of this note will examine the history of the forbearance clause and review a brief history of the regulation of broadband carriers. Part III will discuss and analyze the attempted use of the forbearance clause in light of the Order Restoring Internet Freedom. Part IV of this note will discuss 47 USC [section] 160's inapplicability to entities regulated under Title I.

2. SECTION 10: THE FORBEARANCE CLAUSE

   1. Section 10's Creation

      Section 10 of the Telecommunications Act of 1996 is an interesting tool in the FCC's arsenal of enforcement mechanisms, especially when coupled with broadband providers. With the original passage of the Communications Act of 1934, the Federal Communications Commission lacked any formal ability to forbear from any of the regulations mandated for different services by the statute. (26) The original baseline distinction for services the Commission drew was that there were different regulations for wireline and cable services. (27) Wireline services were subject to common carrier regulations under Title II of the Communications Act, while cable services were exempt from the more restrictive common carrier guidelines and governed under Title IV of the Act. (28)

      As years passed, the FCC encountered issues within the telecommunications market. While Courts have allowed agencies the ability to not enforce certain regulations under their administrative discretion, there are boundaries as to how much each agency can refrain. (29) While decisions "committed to agency discretion" are not judicially reviewable, (30) those not committed by law or statute are presumptively judicially reviewable. (31) After the FCC unsuccessfully attempted to weave around the restrictions they were bound to impose, (32) Congress realized that the Commission required more latitude in their authority and thereupon commenced in creating the Telecommunications Act of 1996, which in relevant part gave the Commission the "authority to forbear from enforcing provisions of the Act as well as its own regulations." (33)

      While agencies have traditionally been allowed to modify and alter their rules and regulations consistent with the Acts that create them via rulemaking, the ability to entirely refrain, or waive, enforcement of statutory mandates without a formal process is less common. (34) Such waivers have been popularly classified as one of two types; "Big Waiver" and "Little Waiver". (35) "Little Waiver" can be defined as "the power to merely 'modify' or 'tinker' with a statute through the lifting of limited aspects of a requirement contained within it in order to handle an unusual application". (36) Whereas "Big Waiver" can be defined as "the broad, open-ended grant of administrative discretion to make policy judgments". (37)

      Waivers of varying sizes are granted in increasing amounts in today's administrative field for a variety of reasons. Most prominently such waivers are championed to provide an agency quicker tools to respond to issues that Congress faces, provides agency expertise on issues that Congress or the courts might lack, and even for purposes of political insulation. (38) Following this same rationale, Congress' grant of forbearance power under Section 10 of the Telecommunications Act should be classified as a "Big Waiver". Such latitude of discretion and prominent power was granted due to the difficulty of dealing with a medium that advanced as rapidly as telecommunications services, and in the desire to create an expert body to regulate such an advanced and complex field. This difficulty, and the underlying goal of the Telecommunications Act of 1996 to "introduce competition to local telephone markets", (39) made forbearance a logical option for the agency's future. Particularly noteworthy was Congress' repeated recognition of the value that forbearance possessed to monitor and maintain competition within a growing and rapidly advancing market. (40)

      The language of Section 10 begins in relevant part that "the Commission shall forbear from applying any regulation or any provision of this Act to a telecommunications carrier or telecommunications service..." if the Commission determines that enforcement is not necessary to ensure 1) reasonable pricing 2) consumer protection and 3) is consistent with the public interest. (41) After a telecommunications carrier has successfully petitioned for forbearance, or the Commission has determined upon its own volition to forbear, the States are thereafter barred from enforcing any portion of the Communications Act the Commission is deemed to forbear upon on the forborne carrier or its ilk. (42) Notably, this provision only refers to telecommunications carriers as opposed to any other designated carrier. (43)

      Echoing this desired regulatory flexibility, congressional deregulatory preferences, and pro-competitive underpinnings of the Telecommunications Act, subsection (b) follows:

      Competitive effect to be weighed. In making the determination under subsection (a)(3), the Commission shall consider whether forbearance from enforcing the provision or regulation will promote competitive market conditions, including the extent to which such forbearance will enhance competition among providers of telecommunications services. If the Commission determines that such forbearance will promote competition among providers of telecommunications services, that determination may be the basis for a Commission finding that forbearance is in the public interest. (44) Thus, should the Commission find that forbearance on any telecommunications carrier is consistent with the public interest, and is in favor of establishing a competitive market, they may forbear from enforcing their regulations. Once the Commission...