FCC safe harbor gift to telcos is a pirate’s dream

by Steve Blum • , , ,

The Federal Communications Commission’s sure-to-be-approved draft decision stripping broadband service of common carrier classification could create an island of legal immunity for Internet service providers. At least some of them.

It’s kind of like Pirates of the Caribbean. Not the Disney movie, the real pirates. The ones who looted and murdered their way to riches, and returned to safe havens far beyond the reach of law or civilisation.

The draft removes the FCC from any meaningful broadband oversight role, and preempts states from trying to pick up any of the slack, real or imagined. The job of policing Internet service provider conduct is the left to the Federal Trade Commission, which, according to the draft, is the “the nation’s premier consumer protection agency”.

Except the FTC, like the FCC, is limited to what the law allows it to do. And the law – the FTC Act – says it can penalise most business that engage in “unfair or deceptive acts or practices”, but not all. Specific types of companies that are regulated elsewhere in the federal bureaucracy, such as common carriers, are exempt from FTC authority.

Incumbent telcos, including AT&T and Frontier Communications can claim that exemption because plain old telephone service falls under common carrier rules, even if broadband doesn’t (although their complicated corporate structure of interlocking companies, created in part to dodge common carrier obligations, could complicate things). The same is true for mobile phone companies. Cable companies, though, are a different kind of legal beast and might not have that perk.

According to a 2016 federal appeals court ruling, the FTC can’t touch telecoms companies that are reckoned to be common carriers, even when their sins involve a non-common carrier service, like broadband was and will be again. As the unanimous decision by the three-judge panel put it, the common carrier exemption is “status-based” and not “activity-based”. If telcos can’t be held accountable for anything by the FTC and the FCC won’t police otherwise illegal behavior when it involves broadband service, then they can do as they please without worrying about consequences.

The decision by the three judges was appealed and is on hold for now. If it is eventually upheld then the FCC’s deference to the FTC is, in reality, abdication of responsibility.