FCC Exceptionalism and Supremacy?

Often stepping back to gain perspective and to try and see the forest for the trees, can be highly instructive. However, if one steps back to see the big picture of how this FCC is attempting unilaterally to change U.S. Internet policy, the view is surreal.

• Increasingly, this FCC is becoming an island.
  • It is insisting on self-asserting its exceptionalism and its supremacy over the Internet; and
  • It is ignoring an overwhelming amount of important and contrary input, advice and evidence from Congress, the Courts, DOJ, FTC, past FCCs, industry, and the public.
• Simply, this FCC increasingly appears to view itself as exceptional and as the supreme authority on and over the Internet, unconstrained by Congress, the courts, law, economics, markets, or the public.

Consider the avalanche of input and evidence that the FCC is completely ignoring as it proceeded yesterday with its announced plans to have a preliminary vote June 17th to enable the FCC to officially declare broadband a common carrier regulated service for the first time and to mandate its currently illegal proposed open Internet regulations.

1. Ignoring Congress: A majority of members of Congress now oppose the FCC plan in writing (285 of 535) per the National Journal.

• Specifically, this FCC is ignoring the strong majority of House members (245 of 435) who oppose its Internet policy in writing; see letter from 74 House Democrats and a letter from 171 House Republicans).
• This FCC also is ignoring the “grave concerns” expressed in a letter from John Dingell, Commerce Committee Chairman Emeritus, the most experienced telecom legislator in the House, who states that the FCC likely will lose in court and that Congress, not the FCC, should make Internet policy.
  • Many House members oppose FCC efforts to end run Congress by essentially implementing legislation that was introduced in the House, but never even considered by House subcommittee — the Markey Eshoo bill (HR3458).
• In the Senate, at least the magic number 41, and maybe a majority, oppose the FCC on this too, given the opposition letter from 37 republicans and the fact that over a quarter of House Democrats oppose the FCC on this.

2. Ignoring Courts/Law: It is instructive that the FCC’s is not appealing to the Supreme Court the D.C. Circuit Court of Appeals Comcast decision that ruled that the FCC does not have the legal authority to regulate the Internet. This implies the FCC does not disagree with the court’s legal judgment.

• In its own words, the FCC’s “third way” is a creative way to invent legal authority that doesn’t currently exist and that, in effect, circumvents the normal processes of legal appeal or seeking authority from the Congress.
• At core, if the FCC believes it can invent fundamental legal authority all by itself, for itself, that is in direct contradiction to existing law, the FCC effectively is claiming effectively to have exceptional, supreme, and supra-constitutional powers without limit or constraint.
  • Top appelate experts from both previous Democratic Administrations do not believe the FCC can invent its own legal authority: see former Clinton Administration Solicitor General Seth P. Waxman’s legal analysis here; and Former Carter Administration, Assistant to the Solicitor General, H. Bartow Farr’s III, First Amendment analysis here.
  • The previous Democratic FCC Chairman Bill Kennard, who also served as FCC General Counsel, described in detail why applying Title II to broadband was wrong-headed and unworkable.
  • Longtime FCC expert and former FCC Associate Bureau Chief Barbara Esbin explains in great detail why the FCC can’t invent legal authority this way; see her legal analysis here.
  • The entire broadband sector is unanimous in its detailed legal analysis, based on its collective experience and expertise, that the FCC cannot invent new authority that does not exist in law; see their copiously documented FCC filings here and here.

3. Ignoring Bipartisanship: This FCC is ignoring the fact that all the major decisions that the FCC wants to essentially reverse unilaterally were originally near unanimous bi-partisan congressional votes, i.e. the 1996 Telecom Act and the repeated extensions of the Internet Tax Moratorium, and unanimous (5-0) FCC broadband information services decisions: cable modems (2002); DSL (2005), BPL (2006) and wireless broadband (2007).

• House Democrat Gene Green said the letter from 74 House Democrats “clearly shows it is not a partisan issue. A large number of Democrats have reservations about such a significant regulatory shift and the impacts it will have on jobs and investments.”
• Moreover, the two Republican FCC Commissioners, Robert McDowell and Meridith Atwell Baker oppose the FCC’s “third way” as contrary to law, existing successful FCC policy/precedent, and destructive to investment and jobs.

4. Ignoring the DOJ: This FCC has also ignored the finding of the Federal Government’s expert agency in assessing competition, the DOJ Antitrust Division, which rejected the FCC’s market failure thesis, making it very difficult for the FCC to argue persuasively in court that the competitive facts have changed sufficiently to warrant a wholesale reversal of U.S. Internet policy.

5. Ignoring the FTC: There has been amazingly little public discussion that the FCC’s proposed “third way” would be a big power/authority grab from the FTC.

• Section 5 of the FTC’s legal authority includes a common carrier exemption, meaning if the FCC declares broadband to be a common carrier for the first time, the FCC would effectively seize oversight authority over broadband providers from the FTC.
  • This implies a serious rebuke of the FTC’s competence from the FCC.
• Most importantly, under the Constitution and law, Congress decides which congressionally-created entities have what legal authority over whom — not the FCC.

6. Ignoring Economic Impacts: The FCC is ignoring overwhelming evidence and analysis that the FCC declaring broadband to be regulated for the first time — after years of business model evolution, innovation, and hundreds of billions of dollars in infrastructure investment — would be exceptionally disruptive and destructive to the sector and to the U.S. economy at large.

• See leading economic, investment and job impact analyses: here, here, here, here, here, here, and here.

7. Ignoring the Public: An overwhelming number of newspaper editorials around the country have opposed the FCC on this, e.g. The Washington Post, Chicago Tribune, Denver Post, Detroit News, Arizona Republic, etc.

• Moreover, a national poll by Rasmussen found that 53% of Americans do not want the FCC to regulate the Internet, 27% do, and 19% are undecided.

In sum, the evidence above is overwhelming that this FCC may think it knows best, but Congress, the courts, the DOJ, the FTC, the market and the public think it does not.

• The evidence shows this FCC is exceptional only in its delusion that it should, or does, have supreme unconstrained authority over the Internet.

 

Spiraling Privacy Scandals Becoming Googlegate?

Google’s long-time cavalier approach to privacy and security are catching up to the company as its latest wardriving privacy scandal, appears to be spiraling out of the control of Google’s legendary PR machine.

First, the House Energy and Commerce Committee sent Google a tough investigative letter on its wanton wardriving of the U.S. The most problematic question for Google got to the root of Google’s privacy scandals: “What is Google’s process to ensure that data collection associated with new products and services offered by the company is adequately controlled?” This line of inquiry makes it clear this is not just a probe of this privacy incident, but of Google’s systemic weaknesses in internal/management controls concerning privacy.

• (The step-up of the Committee’s investigation of Google, also could be seen as an implicit vote of little confidence in the Federal Trade Commission’s interest in enforcing the law against politically-connected Google, given that the FTC has largely ignored repeated serious privacy complaints (here, here, & here) against Google, and given that the FTC just approved a Google-AdMob transaction despite concluding the acquisition “raised serious antitrust issues” and eliminated “head-to-head competition” between “the two leading mobile advertising networks.“)

Second, privacy watchdog EPIC sent a letter to the FCC this week urging the FCC to launch an investigation into Google’s wanton wardriving as a secret systematic violation of American wiretap laws.

• (This issue could be a litmus test of whether this FCC will seriously investigate real violations of law that actually have harmed Americans by FCC policy-ally Google, or whether they will only investigate and act on potential problems facing Google.)

Third, investigations of Google’s wanton wardriving continue to cascade internationally, see: Germany (criminal), Canada, France, Italy, Spain, New Zealand, etc.

Fourth, a second consumer class action law suit has been filed in the U.S. against Google in Massachusetts, adding to the one from consumers in Oregon and Washington.

Fifth, Consumer Watchdog has written a letter urging state Attorneys General to investigate the “WiSpy” scandal.

This issue is obviously spiraling out of the control of Google’s normal teflon PR operation.

What makes this a serious, and a potential “Googlegate” scandal, is that so many serious people are asking serious questions about what did people know and when did they know it. As any Washington observer knows, people get in more trouble for the cover-up than for the original infraction. People intutitively have found Google’s “simple mistake” defense patently unbelievable given that Google professes to be the best finder and organizer of information in the world, and given that supposedly no one other than the original code writer was aware of this wardriving capability that occurred in over 30 countries over a period of three years. Everyone knows that someone at Google knew something, and that fact is being whitewashed or covered-up. Why? How high did the discussion of how to publicly handle this go? It probably will take a court subpoena or a civil investigative demand from the Government to get to the bottom of this spiraling scandal.

In sum, the reason Google is stonewalling and trying to change the subject is that they know they collect a whole lot more private information on Americans and others than they have ever disclosed. Google is terrified that investigators will look beyond StreetView and discover the mind-bogglingly detailed digital dossiers Google has assembled on Internet users with out their meaningful permission or authorization. See my one-pager on “What Private Information Google collects” to better understand why Google wants to shut down any in-depth probe into Google’s privacy practices.

Lastly, if Google is true to its past PR form, Google could start demonizing Governments for investigating Google’s privacy breach, implying that Government’s can’t be trusted with the private information Google illegally collected.

• Don’t be surprised if Google tries to re-spin this problem like it did against China, implying that Google is the only “real” friend of “Internet freedom” and Internet users… and only Google is unafraid to stand up to big bad Governments who want to get access to consumers private information in any Google investigation.
• Also don’t be surprised if Google reminds everyone ad nauseum that it was the only company that stood up to the DOJ when it tried to subpoena private information in a child pornography FBI investigation — and that private information is safer in the hands of Google than in Governments.
• Moreover, it will be interesting to see if Google shifts its PR effort to claiming to be the victim of Government intrusion, when they were the ones that effectively wiretapped and illegally recorded Internet traffic from hundreds of millions of Internet users in over 30 countries.
• I hope I am wrong, but if Google reverts to its regular PR pattern — expect them to politically demonize their investigators/accusers and plead sainthood to the press/public.

 

Google’s Selective Accounting of its Economic Impact

 

FOR IMMEDIATE RELEASE  

May 25, 2010

Contact: Scott Cleland

703-217-2407 

 

 

Google’s U.S. Economic Impact Analysis is a Misleading Accounting Gimmick:

“Google’s economic analysis includes all the benefits, but not all the costs”

 

 

WASHINGTON – Scott Cleland, Chairman of Netcompetition.org, released the following statement regarding Google’s release of “Google’s U.S. Economic Impact” report.  

 

• “Google employs selective and misleading accounting gimmicks in calculating its “total” U.S. economic impact, by including all the benefits, but not all the costs of its economic impact on the U.S. economy, competition, and American workers.”
• “Google’s PR sleight-of-hand totally ignores the destruction of revenues and jobs Google causes by abusing its market power to force content wholesale prices down to near zero for newspapers via Google News, for programmers via YouTube’s mass copyright infringement, and for authors and publishers via Google Books mass copyright infringement, to name only the most prominent Google value and job destruction examples.”
• “A real useful number would involve honest accounting of Google’s net total economic impact on the U.S. economy, competition, and jobs, all benefits minus all costs. Any honest accounting would be much smaller than the selective and inflated PR number that Google is trumpeting.”

 

The link to Google’s U.S. Economic Impact Analysis is here: http://googleblog.blogspot.com/2010/05/googles-us-economic-impact.html

 

NetCompetition.org is a pro-competition e-forum representing broadband interests. See www.netcompetition.org.

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Congress tells FCC reclassification is above their paygrade

Seventy-four House Democrats and thirty-seven Senate Republicans wrote letters (here, here) to the FCC today that essentially told the FCC that their announced plans to deem broadband a common carrier service are over-reaching and out-of-bounds.

• In Washington-speak, the letters communicated that the FCC is trying to decide an issue that is “above their paygrade” to decide.

In turn, these letters appear to have prompted the Chairmen of the FCC’s House and Senate authorizing committees and subcommittees to announce today that they will hold meetings with key stakeholders to discuss updating the Communications Act legislatively — another strong message to the FCC that Congress makes communications policy, not unelected commissioners at the FCC.

The clear political message to the FCC here is that they have wrongly put the cart before the horse, and that they must seek a “solid bi-partisan political foundation” for U.S. broadband policy… before they can achieve their desired “solid legal foundation” for the FCC.

• Rep. Gene Green (TX) clearly explained the political significance of the House letter from 74 House Democrats to the FCC in his press release:
  • “This letter clearly shows it is not a partisan issue. A large number of Democrats have reservations about such a significant regulatory shift and the impacts it will have on jobs and investments.”

If the FCC respects Congress and understands its authority comes from Congress, the U.S. Constitution and the rule of law, not a simple FCC majority, the FCC will postpone its plans: to deem broadband a common carrier service and to implement its proposed Open Internet regulations — until Congress grants it the express authority to do so.

The lesson here is that successful communications policy comes from doing the right thing in the right way — meaning the FCC must respect the appropriate constitutional, legislative, legal and adminstrative processes that every other independent regulatory agency must respect.

Process matters. Process works. Process produces legitimacy, predictability, and ultimately success for the American people.

 

NetCompetition.org Press Release on FCC wireless report which advances FCC de-competition policy

 

FOR IMMEDIATE RELEASE

May 20, 2010  

Contact: Scott Cleland

703-217-2407 

 

Scott Cleland, Chairman NetCompetition.org, on FCC Wireless Report:

• “FCC advances its new de-competition policy in its new wireless assessment”

 WASHINGTON – Scott Cleland, Chairman of Netcompetition.org, released the following statement regarding the Federal Communication Commission’s new assessment that the U.S. wireless industry is no longer “effectively competitive.”

•  “The FCC’s political finding that the most competitive wireless market in the world is no longer “effectively competitive” is part of a broader FCC de-competition policy to discredit competition as the vehicle for best serving consumers in order to politically justify and promote more FCC regulation and control of the Internet.”
• “The problems with the FCC’s new de-competition policy are many in that it depends on: gerrymandering the segmentation of markets to reach the desired pre-determined non-competitive conclusions; ignoring copious independent facts to the contrary; thwarting the law, official policy, and FCC precedents; and assuming legal authority the FCC simply does not have.”  
• “The 1996 Telecom Act says it best: “promote competition and reduce regulation” and “preserve the competitive free market… Internet… unfettered by Federal or State regulation.”    

 NetCompetition.org is a pro-competition e-forum representing broadband interests. See www.netcompetition.org.

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