Amazon on FCC's 'Third Way:' 'It's not about regulating the Internet'

We've always known that the Internet has evolved since 1996 (whose laws were based to some degree on the world circa 1978) to something that current US telecommunications law doesn't adequately describe. The whole court debate over whether the Federal Communications Commission could legally address how Comcast manages its network traffic wasn't really about whether it should, but rather whether current law designates that it can.

Up until yesterday, the two choices before the FCC were whether the broadband system it wants to regulate is more like a telephone (Title II) or a teletype (Title I). For years, its leaders argued that Title I of the Telecommunications Act, amended in 1996, was more fitting, making the case that since broadband services were usually piggy-backed over communications services anyway, its ancillary authority to protect information services could be attributed to its primary authority to protect communications services. In a decision very, very likely to survive judicial review, the DC Circuit said that's wrong.

Last month, some policy advocates including the Open Internet Coalition's Markham Erickson said rather hopefully that the DC Circuit's decision wasn't the end of the world -- that Title II still exists, and all the FCC needed to do was effectively say the Internet is more like telephony now. What the Commission chose to do instead was something else, an option made more urgent by the probable fact that Congress may never create a third legal option in our lifetimes: It will try to declare that broadband Internet is "like" something described in Title II, with a large number of exceptions. And to the degree that the FCC is willing to accept, or "forbear," those exceptions, that will only render its regulatory approach to the Internet a "lighter touch."

At least, that's the argument as of Thursday, May 6.

As of now, the leaders of the OIC and at least some of its members are at least copacetic, though not exactly excited, about the FCC's move. In a press conference assembled by the OIC yesterday, Paul Misener, Vice President of Public Policy at Amazon, expressed a generally positive sentiment about the FCC decision. However, in so doing, Misener also affirmed a new reality that is a blow to net neutrality proponents everywhere: The exceptions that the FCC must forbear will prevent it from addressing one form of net neutrality, the regulation of network traffic management.

"This is a great way to move forward. The process had been a little bit stalled for awhile on these questions of legal authority," said Misener. "Essentially the bottom line here is that the Commission does have the authority to maintain the status quo for consumers. It's not about regulating the Internet, that's for certain. It's got consumer protection, as it always has. And we do believe the Third Way is a well-balanced and reasoned approach."

"Importantly though, although this is really good for consumers and innovation, it's not a defeat for network operators," Misener added, mindful perhaps of the fact that many forget Amazon has become not just a leading retailer but a major network operator in the cloud services field. "We certainly look forward to working with the FCC and network operators to develop balanced rules that protect consumers and innovation, but also provide certainty to the network operators."

During the press conference, Betanews asked the three lawyers on the OIC's panel what specific sections of Title II the FCC could declare itself fit to regulate, that would still permit it to maintain some hint of control over net neutrality.

"Under the Title I ancillary authority, I think there's some truth that no one really knew the extent of the FCC's authority, how far it reached, under that theory," responded the OIC Executive Director Markham Erickson. "We now know from the DC Circuit that it doesn't go very far, that their authority is very circumspect. Moving the transmission component into several provisions of Title II clearly allows the FCC to have a statutory mandate to regulate certain portions of broadband access providers' activities, which is the transmission."

This is the very heart of the argument: For the FCC to accomplish its new goal, outlined yesterday, it cannot merely pick apart the pieces of Title II which apply to broadband as we know it today. It must also divide the Internet itself into those layers that appear to apply to Title II. From an engineering standpoint, the Internet has (among other things) a transport layer that designates how signals get from host to host by way of routers (TCP/IP), and an application layer upon which the various functions of the Internet (e-mail, HTTP, messaging) take place. What Erickson suggests here is that the FCC should apply portions of Title II to the transport layer only. But then he reasons that, since you can't have "transmission" without the transport layer, there may yet be a way to address the "activities" of network operators -- their choices when providing services -- by way of regulating the foundation layer beneath them.

Erickson left open the original question of which parts of Title II should apply to those parts of the Internet that the FCC should manage. So when we asked the question a second time, at first we were met with silence. Then we asked the question a third time.

"This whole conversation is about the Commission's legal authority, not the ultimate rules," Amazon's Misener finally responded. "So when we get to the point of actually debating, discussing how to approach consumer protections via net neutrality, I really hope we can engage the network operators more directly in a way that becomes collaborative. This is a lot of discussion about the legal authority, and certainly the Comcast decision puts the issue of legal authority squarely before the Commission. So Chairman [Julius] Genachowski had to address it, and he's addressed it in a great way, we think. But now let's get on with the business of coming to reasonable rules."

Linda Kinney, Vice President for Law and Regulation at Dish Network, went one step further than Erickson by explaining how the newly proposed regulatory framework would apply only to the transport layer and the management practices of service providers, but not to the application layer and the practices of content providers.

"The idea is that, if you're asking would they also regulate other types of providers like Akamai or Netflix or others, those folks would not have the transmission component -- the facility that goes into the house, particularly on the last mile which is where a lot of the congestion exists," Kinney told Betanews. "So under a Title II theory, where they are just focused on [Sections] 201 and 202 -- the non-discrimination standard -- and focused on the facility, which is really the focus of Title II, historically, more of the transmission layer -- the plan is not to regulate other types of providers."

If Akamai and Netflix are on that list, then wouldn't BitTorrent also be on that list? "Yes, those would be the application layers, not the physical facility or transmission layer," Kinney responded.

The technical description of the "Third Way" proposal outlined yesterday by FCC General Counsel Austin Schlick (PDF available here) actually did not mention layering at all. Schlick did, however, mention the two sections Kinney referred to, among others: "Applying sections 201, 202, and 208 to broadband access service would hold broadband access providers to standards they agree should be met and would address the specific problem that sparked the Comcast case -- secret interference with subscribers' lawful Internet transmissions. Applying a few other sections of Title II would allow the Commission to address other recognized issues as well."

The keyword there could be "transmissions," with an unspoken reliance upon folks continuing to confuse the notion of "transmission" with "transport." Although neither the OIC nor its members were speaking on behalf of the FCC, what they appear to be advising net neutrality proponents is that a leap of faith is still possible -- a connection of the dots, albeit with very long lines, that takes a circuitous route between what the Internet is not, what the FCC is not, what service providers do not do...and what Congress still refuses to do.