By Nate Scherer and Steve Pociask, American Consumer Institute
Amidst the many problems with the Federal Communication Commission’s (FCC) proposed Title II net neutrality regulations, one of the most alarming relates to Section 214 of the Communications Act and how the provision would impact internet service providers’ (ISPs) ability to build out networks.
Despite the FCC proposing to forbear from 26 Title II provisions of the Communications Act, the Commission has chosen to include Section 214 provisions because of its role in “national security.” Not only is such reasoning flawed because other agencies already have this responsibility, but the consequences of applying Section 214 to ISPs could be enormous, as providers would have to jump through numerous new regulatory hoops each time they seek to make even basic changes to service offerings or build infrastructure.
At the heart of the problem is Section 214, which stipulates that carriers must obtain a certificate of convenience from the FCC before they are permitted to build, operate, acquire, improve, or extend any communication line. Similarly, carriers are required to obtain a certificate from the FCC before rolling out a new service or discontinuing any service, regardless of whether that service is antiquated or provides redundant coverage.
These “Mother May I” certificates must state that the action in question must not adversely affect “present nor future public convenience and necessity.” Any carrier that is found to violate these requirements is subject to a daily fine.
Traditionally, Section 214 has not been applied to broadband providers, as the 1930s-era Communications Act was originally designed to address Ma Bell’s monopoly on telephone services. Today’s broadband market is vastly more competitive than the telephone market of nearly 100 years ago and does not require stripping broadband providers of their Title I classification.
It is also worth noting that the FCC’s 2015 Open Internet Order did not impose such regulatory requirements, making the current net neutrality proposal even more sweeping than the previous version. The FCC justifies this change by arguing that it needs all the tools at its disposal to address the evolving nature of threats to national security and public safety. The Commission believes the broad domestic and international scope of Section 214 would allow it to stop bad foreign actors from operating in the U.S. broadband market.
Yet, the FCC already possesses broad power to shut down bad actors deemed to be security threats and it wields it frequently. For instance, in 2022, the FCC invoked Section 214 to revoke China Unicom’s legal authority to do business in the United States, arguing that the company was “subject to exploitation, influence, and control by the Chinese government.” The Commission used the same legal authority to take action against China Telecom in 2021.
In addition, Congress has already tasked other government agencies with national security and public safety expertise. For instance, the Department of the Treasury’s Committee on Foreign Investment in the United States is already tasked with reviewing foreign investments in the U.S. broadband sector. Likewise, the Department of Justice’s Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector is actively involved with assisting the FCC in reviewing foreign participation in the U.S. telecommunications sector and deciding whether an applicant poses a threat to U.S. interests. Subjecting American ISPs to new Section 214 requirements would not improve the U.S. security landscape, but it could discourage future investment and market innovation.
Because of the agency’s slow deliberating public process, by the time the FCC could take any formal actions, ISPs would have already dealt with millions of cyberattacks on their networks. Requiring ISPs to seek the FCC’s permission each time they want to make changes to their service offerings would be extremely time consuming and dangerous, and it would only serve to delay upgrades needed to close the digital divide. If an ISP chooses to upgrade its copper-based Digital Subscriber Line technology to speedier fiber services, it would need to get permission or operate costly duplicative networks.
The reality is that the broadband market has operated just fine without Section 214 being applied to ISPs. There is no credible evidence that consumers have been harmed because of the FCC lacking Title II authority in this area. How exactly would national security and safety benefit from requiring that ISPs first obtain “Mother May I” permissions to provide faster service tiers, extend infrastructure, and upgrade services?
It would be a mistake to extend the Communication Act’s Section 214 to ISPs and turn a dynamic competitive broadband market into the likes of Ma Bell.
Nate Scherer and Steve Pociask are with the American Consumer Institute. Steve previously served as the chair of the FCC’s Consumer Advisory Committee. For more information about the Institute, visit us at www.TheAmericanConsumer.Org.