As ISPs, both large and small, gear up to sue the FCC over its forthcoming net neutrality order, even strong supporters of net neutrality have begun pointing to potential legal problems with the proposal outlined by FCC chairman Tom Wheeler earlier this month. One of biggest 
potential problems, as far as OTT providers are concerned, was flagged by Free Press policy director Matthew Wood.
As described in the fact sheet distributed by the FCC, the order will treat the “service” ISPs provide to OTT services and other edge providers as a Title II service, just as it does the internet access services ISP’s provide to subscribers, giving the commission the authority to review interconnection agreements between OTT services and ISPs and potentially declare them not to be “just and reasonable” as required by Title II:
For the first time the Commission would have authority to hear complaints and take appropriate enforcement action if necessary, if it determines the interconnection activities of ISPs are not just and reasonable, thus allowing it to address issues that may arise in the exchange of traffic between mass-market broadband providers and edge providers.
As discussed here in a previous post, that provision is the most critical element of the FCC’s order as far as OTT providers are concerned — providing a crucial pillar for the so-called “strong net neutrality” championed by Netflix. In a statement issued shortly after the fact sheet was released, Netflix strongly endorsed the new provision and declared it would have used it to challenge the interconnection fees demanded by Comcast, Verizon and AT&T had the provision been in place at the time Netflix agreed to those deals.
In a letter to the commission dated Feb. 11, however, Free Press’s Wood argues that the purported service ISPs provide to edge providers is unlikely to qualify as a Title II telecommunications service as defined by the Act:
[T]here are legal obstacles to recognizing this construct as a “telecommunications service” as defined in 47 U.S.C. § 153(50) and (53). And there are policy consequences that would be undesirable, to say the least, that could emanate from the creation of such a service and relationship between edge providers and end-users’ broadband Internet access service providers.
On the statutory definition question, as we noted in our earlier letter, services purportedly offered to a “remote” edge provider – when there is no physical connection between that edge provider and the carrier in question – are not services offered “directly” to the edge provider according to any precedent we could find. If there is no physical connection, and thus no obvious “direct” relationship between the carrier and the remote edge provider, it is hard to imagine how the service can qualify as a telecom service under Section 153(53) of the Act. That subsection stipulates that a telecom service must be offered “directly” to the recipient.
Likewise, as we also noted in our letter, even in the rare case where there is a direct interconnection with an edge provider this is likely private carriage. Such arrangements are negotiated on an individual basis with the broadband provider, not offered indiscriminately on a common carrier basis “to the public” under the same definition in subsection (53).
Wood goes on to argue that classifying interconnection arrangements as a Title II service is unnecessary as the consumer protections provided by the rest of the order give the FCC ample authority to police abusive interconnection practices:
In the streaming video context for example, it is the broadband provider’s end-user who causes the marginal cost (if any) of delivering a streaming video. The edge provider does not send a stream to the broadband provider unless the broadband provider’s end-user requests that stream.
Broadband users deserve access to the content, services and applications of their choosing, and they deserve access to such data at the speeds for which those end-users are paying. If the Commission’s rules in this proceeding are intended to prevent broadband Internet access service providers’ blocking, degrading or impairing the delivery of such traffic as sent and received by Internet users, then the rules should clearly prevent the imposition of such access charges – even in the guise of “interconnection fees” – along with other harmful conduct at the interconnection point with a broadband Internet access service provider’s last-mile network.
That may be just the sort of expansive reading of its own authority without clear legal foundation, however, that has gotten the FCC’s two previous attempts to impose net neutrality rules thrown out by the courts.
It’s hard to know how all this will play out at this point. The worst case for OTT providers, however, would be for the court to decide that since interconnection does not qualify as a Title II telecommunication service than the FCC has no authority at all to regulate it.