1996 Telecom Act affords FCC clear, unambiguous authority for Title II rulemaking

Investor owned telephone and cable companies and their trade associations hope the courts will put the U.S. Federal Communications Commission’s recently issued Open Internet rulemaking on ice, slated to become effective July 22. They believe their case has been strengthened by the U.S. Supreme Court’s recent ruling in Loper Bright Enterprises v. Raimondo that held the courts and not executive branch agencies must interpret the legislative intent of a statute when it’s unclear or ambiguous under the Administrative Procedures Act.

They hope to convince the courts the FCC lacked authority to issue the rulemaking classifying Internet protocol-based services -- advanced telecommunications – as a common carrier telecom utility service under Title II of the Communications Act. The rationale is the agency previously relied upon the now disapproved Chevron doctrine that accorded administrative agencies authority to issue rules based on their interpretation of the legislative intent of a statute that’s unclear or ambiguous. Or which fails to confer clear rulemaking authority to an agency.

That would conceivably bolster their case if the underlying statute here – the 1996 Telecom Act – was unclear or ambiguous or failed to grant the FCC authority for its rules. The problem is doesn't meet any of these tests. It clearly defines telecommunications as “the transmission, between or among points specified by the user, of information of the user’s choosing without change in the form or content of the information as sent and received.”

Sending an email certainly would meet the definition. So would posting to a website or social media site. The transmitted content isn’t changed; it’s communicated over the Internet to one or more parties.

In so providing this telecommunications service, the Act states providers “shall be treated as a common carrier” (i.e. a utility under Title II of the Communications Act) and further authorizes the FCC to “determine whether the provision of fixed and mobile satellite service shall be treated as common carriage.” That’s a pretty clear and unambiguous grant of authority for the FCC’s rulemaking.

The Act also clearly brings providers of advanced telecommunications providers within the scope of the Open Internet rulemaking, defining telecommunications service as “the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used.’’

AT&T’s suggestion that edge content providers contribute to funding universal service calls for new paradigm of U.S. advanced telecom

AT&T wants to see edge content providers contribute to the cost of connecting all Americans to advanced telecommunications infrastructure. It’s a company cudgel first wielded two decades ago by then AT&T chief Ed Whitacre. Whitacre was famously quoted as saying these providers should not be able to “ride my pipes” for free.

“The seven largest and most profitable companies in the world built their franchises on the internet and the infrastructure we provide,” noted current AT&T CEO John Stankey in remarks this week to the USTelecom’s Leadership Summit posted at AT&T’s policy blog. “They stand to benefit handsomely from every home that is incrementally connected to our networks. I doubt there is anyone in this room who wouldn’t gladly swap places with the return profiles of Google, Meta, Apple and others.” Stankey continued:

“These companies make money offering today’s equivalent of yesterday’s universal voice service. Why shouldn’t they participate in ensuring affordable and equitable access to the services of today that are just as indispensable as the phone lines of yesteryear?”

Stankey however raises a broader policy issue of how universal service is to be attained and specifically the high cost of the ownership, financing, and operation of its infrastructure in the digital IP era as it was for copper cable delivered analog voice telephone service in the previous century. There is no clear, long term policy in place to do so. Policymakers have instead resorted an aspirational policy of throwing money at the challenge in a Pinata policy of competitive, one off grants, each with separate funding sources and eligibility rules, a situation decried by Stankey:

“By splitting the funding across many departments, we’ve got all these agencies examining the same problem… but they’re looking at it through the wrong end of the telescope. So what’s the solution? Streamline the design. Align agencies, widen the aperture, and focus on the larger problem we all want to solve.”

In his remarks, Stankey criticized policymakers who “have prioritized outcome-based regulatory approaches and political expedience at the expense of effective market-based capital allocation.” This goes the heart of public policy to attain universal service. By definition, universal service is a measurable outcome. Policymakers are thus right to set that as the public policy goal. But over the past three decades, the market-based scheme has been unable to reach it because the goal of universal service is misaligned with the needs of investor owned companies that own the great majority of advanced telecommunications infrastructure. 

Their mission is not to modernize the twisted pair copper that reached nearly every American doorstep in the 20th century to fiber. Rather, it’s to generate relatively rapid return on investment and generous utility dividends shareholders have received for many decades from the assured revenue stream of voice telephone service. Consequently, areas where population density and household income are not seen as good risks and sufficiently profitable are passed by. This despite billions in subsidies and trillions of dollars of investment by investor owned companies like AT&T, another long running company talking point.

Suggesting content providers contribute to the cost of creating near ubiquitous fiber as author Susan Crawford envisioned in her 2019 book Fiber: The Coming Tech Revolution—and Why America Might Miss It also suggests a wholesale reorganization is needed. One that recognizes that advanced telecommunications calls for a new paradigm providing more optimal alignment of goals, incentives, resources and rewards for Crawford’s vision to be realized.

The present misalignment generates way too much adversity, frictional costs, and posturing and protectionism instead of good public policy benefiting all Americans versus making winners of some and losers of others.

AT&T chief: BEAD goal should be universal service -- but not "devolve" to universal FTTP

AT&T CEO John Stankey said the goal of the Broadband Equity, Access, and Deployment (BEAD) Program should be universal service, leveraging $42.5 billion in tax dollar subsidies appropriated in the Infrastructure Investment and Jobs Act of 2021(IIJA) to attract private investment to attain it.

But while universal landline service was achieved for copper delivered voice telephone service in the 20th century, the program goal should not be to modernize it with fiber for the 21st as prioritized by the BEAD Notice Of Funding Opportunity (NOFO) as the best and highest use of public funds. “A project that will rely entirely on fiber-optic technology to each end-user premises will ensure that the network built by the project can easily scale speeds over time to meet the evolving connectivity needs of households and businesses and support the deployment of 5G, successor wireless technologies, and other advanced services,” a footnote in the NOFO states.

However in remarks delivered at the USTelecom’s Leadership Summit this week posted at AT&T’s policy blog, Stankey argues the program “shouldn’t devolve into building fiber to every home, which would exhaust funding before every American is connected.” Stankey also lamented the state of U.S. telecom policy. “I’ve probably been around too long, but in all my years I don’t know that I recall a time when we seemed more adrift confronting the big telecom policy issues.”