"Why do we have regulation of telecommunications?" writes Eli Noam, a finance and economics expert, a Columbia professor, smack in the middle of addressing the future of those very regulatory policies. Ok, I thought, here we go. Give me a nice concise summation of why we need them: "To some it is merely an exercise in capture and rent-seeking by powerful interest groups. To others, it is based on underlying public policy goals, including restriction of market power, free flow of information across the economy and society, and technological innovation." Oh, rent-seeking. I've already given my thoughts on the anti-regulation libertarians. "There is truth in both views, and they are not mutually exclusive."1 I am surprised. I find at this moment that I have been absorbing the Tim Wu school of thought, wherein nation-state government is an imperfect but necessary backbone upon which the Net is built. I realize that perhaps I have become overly dismissive of standpoints which decry government regulation as unfair/uncalled for. I decide to listen:
"[R]egulators and courts instituted a variety of regulatory policies, such as universal service with rate subsidies, common carriage, interconnection rules, quality standards, and limited carrier liability. But in a system of system integrators, the traditional forms of regulation may be outdated. New thinking is needed about which forms of regulation will remain, as well as what new regulatory issues may arise in the new environment."2
Ok, let's back up. Before we head into how regulations might change, what are they now? What about that (2008) ruling in which the FCC was told to back off of Comcast? How about the FCC winning this past month's Verizon case? My answers have come primarily from 2 articles by the aforementioned Eli Noam, and the organization PublicKnowledge. I also dipped into a somewhat mysterious article titled "Putting network interconnection on track - Industry Trend or Event" looking into interconnectivity. It' was very helpful to me, but I cannot seem to find out more about Robert Pommer or even where this was originally published in 2001. Finally, I came across a very coherent and useful blog by a guy who has been posting about Net Neutrality since 2007.
COMMON vs. CONTRACT carriers. --> It matters because the communications act of 1934, updated in 1996, grants the FCC authority to regulate common carrier communications. Broadband was classified as an information service in 2005, and information services are outside the scope of Title II regulation. How does the court determine one versus the other? Here are "important factors" that Eli Noam uses to distinguish the two in another piece of his on the matter.
Common
- service is regular
- customers are not readily predictable and are changeable,
- the carrier solicits business from the general public, for example by advertising
- law and regulations define the responsibilities of the parties.
Contract
- service may be occasional
- the clientele is identifiable and stable,
- carriers solicit business on a targeted and individualized basis
- contracts define parties' responsibilities. 3
"Precursors to common carriage go back to the Roman Empire and the legal obligations of shipowners, innkeepers and stable keepers." Eli Noam shows that the concept of common carriage is not new. "In England early common law placed certain duties on businesses which were considered 'public callings.' Common or public occupations included those of bakers, brewers, cab drivers, ferrymen, innkeepers, millers, smiths, surgeons, tailors and wharfingers. 'Common' in that context meant 'open to serving the general public' or 'general.'"4 He also explains that the English common law followed, like much else, into the American legal system and was applied to trains + transportation --> telecommunications.
To explain why we bother to distinguish and regulate a common carrier in the first place, Eli Noam makes a list delineating the rationale behind common carriage. I am not going to list them all, you can read them for yourself. I am going to pick a few of the reasons to designate & regulate common carriers under US law which I find to be less lawyer-speak-y and potentially useful here. First, (or no. 2 on his list) there is what he calls "assurance of essential services." This one is interesting because as far as being a rationale for common carriers, it's completely circular: "Telephones, for example, started out as a specialized service for a few users; its essentiality is as much the result of its broad use as the other way around."5 The second (no. 7) interesting point it "facilitation of competition," meaning that common carriers cannot discriminate against anyone willing and able to pay the set rate (and who doesn't present an unreasonable high risk, e.g. no fireworks through the USPS), so they cannot block a competitor from using their services. "MCI could reach end users over AT&T's local networks rather than having to first build local distribution facilities."6 Third (and final, no. 8): interconnectivity. As I understand this one, it has to do with standardization and maybe AT&T's arguments over network attachments (wherein the FCC's rulings gives users "the right to use non-harmful network attachments or applications, and give[s] innovators the corresponding freedom to supply them7). Here is where the "Putting Network Interconnection On Track" article was illustrative; it relates the troubles of interconnectivity on the net with the railroad system:
Railroads solved their problems by combining technological advances with improved business practices. In the US, standard gauge track spacing was implemented and enabled common transport across North America. To further facilitate interchange, operating agreements were forged between the railroads covering the sharing of roiling stock and the switching of cars between rail lines, spelling out reciprocal payments and penalties involved in the movement of people and goods along the transportation networks. Industry groups including the Union Internationale des Chemins de Fer (International Union of Railways) in Europe, and the Association of American Railroads in North America were established to set standards for railway cars to facilitate the interconnection.8
Do these divisions and rationales fit the Net? It would seem so. Though Eli Noam goes on to prove in a somewhat complex manner that current regulatory policies and limits are ill prepared to answer the challenges today, still he believes that the principles behind common carriage should be preserved: "The reason for common carriage generally, whether in transportation or communications, is to foster infrastructure and reduce transaction costs. As such, it is similar to other societal arrangements to encourage economic transactions, by devices such as legal tender status for currency, negotiable instruments in commercial transactions, and limited liability for corporations. Thus, even if common carriage erodes, its neutrality principles will remain important, and may survive in other regulatory forms."9
PublicKnowledge of course agrees--protection of what Noam called "free flow of information across the economy and society" is central to their organization. They state that. "as new technologies have been developed—from railroads to the telegraph, then to telephony and now broadband—this time-tested principle of common carriage has been applied. Like due process, trespass, and the right to habeas corpus, common carriage is an old legal principle that is vital today. Commenters are therefore wrong to suggest that Title II, and the classification of broadband access as a common carriage service, is somehow "outdated." On the contrary, the survival of common carriage over so many years is an indication of its vitality."10
So how 'bout that Comcast ruling? If you are not familiar, the FCC ordered Comcast to disclose and then change its practice of blocking Bittorrent over its network. Comcast fought back, arguing that the FCC lacked authority over it, as an information service, not a telecommunications service. This is where "Title II" comes in. Title II of the Communications Act gives the FCC the authority to regulate telecommunications services. Well, the FCC came back pleading "ancilliary authority." This means that non-discrimination rules provide essential support to the principles that the FCC enforces, and doing away with them for broadband seriously undermines the FCC's ability to regulate those services that do fall under its direct authority. Very good, however: the FCC claimed ancilliary authority in relation to its own "policy statements" rather than specific, point by point "expressed delegations of power."11 They fought a sloppy fight and Comcast won.
Since then, this past 2010 actually, the FCC has begun moves to re-reclassify broadband under Title II as a telecommunications service. I found a bit in the blog I refered to earlier which speaks to that reclassification from a perspective that is NOT invested in the economics or law of telecommunications: "Perhaps the reason that so many people are concerned about this [2008 Comcast ruling] ruling and the issue of Net Neutrality in general, is because the internet is used more for communications than for accessing information. Like the dial tone for the 20th century, access to the internet is the fundamental baseline for communications in the 21st century."12
This is where the new Verizon suits come in, but as this has already become quite long, I will hold off for now and continue the story in the near future…
Then, to follow: Systems Integration & Eli's argument about new regulatory challenges.
1 Eli Noam, "From the Network of Networks to the System of Systems: An End of History in Telecommunications Regulation?," Regulation Magazine Vol. 16, No. 2, Spring 1993 < http://www.cato.org/pubs/regulation/regv16n2/v16n2.html >
2Ibid
3 Eli Noam, "Beyond Liberalization II: The Impending Doom of Common Carriage" Telecommunications Policy, 1994 Vol. 18, 435-452
4 Ibid
5 Ibid
6 Ibid
7 Tim Wu, "Network Neutrality, Broadband Discrimination" Journal of Telecommunications and High Technology Law, Vol. 2, p. 141, 2003
8 Robert Pommer, "Putting network interconnection on track - Industry Trend or Event" March, 2001 < http://findarticles.com/p/articles/mi_m0TLC/is_3_35/ai_72297422/ >
9 Eli Noam, "Beyond Liberalization II: The Impending Doom of Common Carriage" Telecommunications Policy, 1994 Vol. 18, 435-452
10 < http://www.publicknowledge.org/third-way-broadband-authority-reply-comments >
11 < http://www.publicknowledge.org/node/2989 > publicknowledge.org has tons of resources regarding the issue of net neutrality (among other things). They tend to be level headed and clear in their arguments, as well.
12 < http://iptablog.org/2010/04/07/comcast-and-the.html >
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