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Thursday, February 11, 2010

 
Welcome to the Wide World of Title II Regulation Google!
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Google has announced that it will construct an ultra-high speed "experimental fiber network" to provide wholesale connectivity services on an "open access" basis to Internet content, applications, and services providers. Google states:

We're planning to build and test ultra high-speed broadband networks in a small number of trial locations across the United States. We'll deliver Internet speeds more than 100 times faster than what most Americans have access to today with 1 gigabit per second, fiber-to-the-home connections. We plan to offer service at a competitive price to at least 50,000 and potentially up to 500,000 people...
We'll operate an "open access" network, giving users the choice of multiple service providers. And consistent with our past advocacy, we'll manage our network in an open, non-discriminatory and transparent way.

From this description, it appears that GoogleNet will be setting up shop as a wireline telecommunications common carrier, consistent with the option provided by the Federal Communications Commission in its 2005 Wireline Broadband Internet Access Order. Welcome to the wide world of Title II regulation Google! Of course, with the added burdens of Title II regulation comes the very important benefit of protection for Google's ability to engage in just and reasonable discrimination in the provision of its connectivity service. Other broadband Internet service providers may not be so lucky under the FCC's proposed net neutrality rules. This is a clever move by Google, and it will be very interesting to see how its experiment works out.

The Communications Act of 1934 defines the common carrier provision of telecommunications service in terms that seem to fit Google's planned service offering quite nicely. As a consequence, all the provisions of Title II that impose duties on those who provide common carrier services would automatically apply, unless Google were to seek regulatory forbearance from some of its provisions under 47 U.S.C. § 10.

Consistent with the statutory definitions, Google may be engaged "as a common carrier for hire" under 47 U.S.C. § 3(10) by virtue of its provision for hire to the public of a transmission service providing "communications by wire." In notoriously circular fashion, the Act defines a "common carrier" as "any person engaged as a common carrier, for hire, in interstate or foreign communications by wire or radio or in interstate or foreign radio transmission of energy." "Wire communication" and "communication by wire," are defined interchangeably in 47 U.S.C. § 3(52) to mean "the transmission of writing, signs, signals, pictures, and sounds of all kinds by aid of wire, cable, or other like connection between the points of origin and reception of such transmission, including all instrumentalities, facilities, apparatus, and services (among other things, the receipt, forwarding, and delivery of communications) incidental to such transmission." These notoriously vague statutory definitions must be supplemented by reference to the "NARUC I" test for who is a common carrier. Under NARUC I, the key determinant of a common carrier is "the characteristic of holding oneself out to serve indiscriminately" to the public, or one who offers services that are "effectively available directly to the public for a fee." A common carrier need not serve the entire public to fit this definition, it need only hold itself out to provide service "to the clientele one is suited to serve" and the company must not make individualized decisions, in particular cases, whether and on what terms to deal. The manner and terms by which the carrier approaches and deals with its customers is key.

A second prerequisite to common carrier status addressed in NARUC II, and based on the FCC's application of the common carrier concept to the provision of communications, is "that the system be such that customers 'transmit intelligence of their own design and choosing.'"

The Telecommunications Act of 1996 added a complementary set of definitions using "telecommunications" terminology that the D.C. Circuit in Virgin Islands Telephone Corp. v. FCC found clarify, rather than alter, the statutory definition of a common carrier. "Telecommunications service" is defined 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 facilities used," pursuant to 47 U.S.C. § 3(46). "Telecommunications" is defined as "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 or received," in 47 U.S.C. § 3(43). In other words, "telecommunications" is a pure transmission offering that can be provided on either a common carrier or private carrier basis. These definitions have been interpreted by the FCC to be essentially a way of restating the dividing line between common carrier and private carrier services consistent with the tests articulated in the NARUC decisions.

In sum, to the extent Google holds itself indiscriminately out to supply over GoogleNet, for a fee, a pure "open access" wire transmission service to Internet content, applications, and services providers, it would appear to have the characteristics of a statutory "common carrier" under NARUC I and NARUC II, as well as a "telecommunications carrier" under the definitions added by the 1996 Act.

This analysis is confirmed by statements from Google official Minnie Ingersoll in an online interview posted on Giga Om:

GigaOM: By getting into the ISP business Google will expose itself to new regulations. What are the expectations there for you?
Ingersoll: We expect to be regulated in the same way as anyone else is regulated. We don't plan a video or voice offering. Our fiber to the home is strictly an IP data pipe. We will be governed by the regulations that apply there and are not seeking special treatment.

Happily for Google, the other communications services that it provides may remain protected from common carrier treatment by virtue of the definition of a "telecommunications carrier," in section 47 U.S.C. § 3(44), which is defined as "any provider of telecommunications services" except "aggregators" of such services. Section 47 U.S.C. § 3(44) further provides that a "telecommunications carrier shall be treated as a common carrier under this Act only to the extent that it is engaged in providing telecommunications services..." The statute thus permits one to be a common carrier for some, but not all, services offered to the public.

An added benefit to Google in providing telecommunications service on a common carrier basis is that it will be subject to the more permissive prohibition against only "unjust and unreasonable" discrimination contained in Title II, 47 U.S.C. § 202(a), whereas non-common carrier providers of broadband Internet access service will be subject to a strict nondiscrimination prohibition under the network neutrality rules that the FCC proposes to adopt in its "Open Internet" rule making.

And that is one of the great things about America: any company can wake up and decide on its own to be a common carrier (although the converse is not necessarily true). A company might be willing to accept common carrier status and its consequent economic regulation in exchange for a monopoly franchise, or simply because it fits the business model for the service it wishes to provide. Common carrier status has many burdens, but it has many benefits as well.

The government, however, should not force a common carrier business model on those providers who wish to provide service on other terms and conditions of service under today's market conditions. The FCC, the Federal Trade Commission, National Telecommunications and Information Administration, and the Department of Justice have all found that the broadband marketplace is not marked by monopoly conditions today, and does not appear to be developing in that direction -- a conclusion underscored by Google's own announced market entry.

NetworkWorld reports that by constructing its own fiber network, Google "is trying to push its vision for how the Internet as a whole should operate." I wish the company all the success in the world with GoogleNet. Business model experimentation and new entry to the broadband Internet service provider market like this should be encouraged. If this "open access" common carrier network proves to be a viable business model that attracts both customers and followers, it will be a fabulous addition to the domestic Internet ecosystem. But this vision should not be turned into unnecessary government mandates for other Internet network operators who are similarly trying to experiment with their business models in this brave new digital world.

posted by Barbara Esbin @ 11:01 AM | Broadband , Internet , Regulation , The FCC , Wireline

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Comments

First, Title II is not different than the NN rules + reasonable network management and managed services.

Second, all of the pro-NN forces have *always* preferred Title II for broadband ISPs.

Third, the notion that common carriage is a response to monopoly is belied by history. You might argue that natural monopoly tendencies are the best justification, but theories that bailors ought to have special obligations are ancient in the common law.

Posted by: jhn at February 11, 2010 11:40 PM

I should say that the ones who thought about it preferred Title II. It's kind of arcane. But the opponents of Brand X latched onto NN as the next best thing.

Posted by: jhn at February 11, 2010 11:42 PM

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