Internet Freedom, Broadband Promotion, and Consumer Protection Act of 2011

Floor Speech

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I rise today to introduce legislation that will preserve the free and open Internet that has led to the growth of broadband.

The broadband Internet is integral to U.S. job creation, economic growth, education, civic engagement, and innovation.

The network design principles fostering the development of the broadband Internet to date, an end-to-end design, layered architecture, and open standards, promotes innovation at the edge of the network and gives end users choice and control of their online activities.

These network design principles have led to the network neutrality of the Internet, where there are no paid-for premium fast lanes and best-effort slow lanes.

Today, broadband providers have access to technology and an economic incentive to favor their own or affiliated services, content, and applications; and discriminate against other providers of services content, and applications.

If our Nation is to achieve the ambitious broadband goals put forward in the National Broadband Plan, the U.S. needs a clear Federal policy that preserves the historically free and open nature of the Internet.

The policy must apply to all broadband Internet access service providers regardless of the means by which they reach the end user.

As you know, the FCC released its net neutrality rules last fall.

I consider the Commission's actions to be completely within the bounds of its authority.

The Chevron deference courts give agencies is rather broad.

A quick read of the 2005 U.S. Supreme Court's Brand X decision tells you all you need to know.

Former FCC Chairman Powell was very creative in his approach to deregulating broadband over cable modem in 2002.

As you remember, one of the most conservative justices on the Supreme Court, Justice Scalia, voted against the FCC action saying more or less that what Chairman Powell did was an overreach.

Even so, the final decision was six to three in favor of the FCC. That is how broad the Chevron deference is.

And because of the meticulous way Chairman Genachowski conducted the Commission's process, in the end, I am confident the court system will uphold its actions.

My issue with the Commission's net neutrality rules is that I do not think the Chairman was bold enough.

The Commission should have issued one set of rules that covered broadband delivered over wireline, wireless, or some combination of the two. Everyone realizes that the future of broadband is wireless. And with the rollout of 4-G wireless services, that future is with us now.

The Commission should not have kept open the door for any pay-for-priority schemes. It will lead to a tiered Internet, where broadband Internet service providers have the incentive to create artificial bandwidth shortages to maximize profits, rather than invest in new capacity.

The Commission also needed to get the definitions of broadband and reasonable network management right. One was too broad and one too narrow. The wording in definitions is negotiated over fiercely because, if not crafted properly, it can lead to loopholes that severely undercut the effectiveness of the rules.

More fundamentally, the Commission should have reclassified broadband Internet access into Title II of the communications act and forebear from regulation all of the elements more appropriate to Title I. It would have taken the Commission a lot more time and resources, but getting net neutrality right is that important, because this is the foundation that all broadband rules and regulations will be built on going forward.

It is surprising that as weak as these rules are they have stirred up so much vitriol.

I know this body will be taking up this matter another day.

My legislation puts in statute strong net neutrality protections, takes steps to promote broadband adoption, and provides consumer protection for broadband end users.

First I want to acknowledge the leadership of our former colleague Senator Dorgan on this issue.

The bill builds on what we started working together on last fall.

It also borrows some of the good ideas of Mr. Markey and Ms. Eshoo in the House.

At a high level my legislation creates a new section in Title II of the Communications Act that codifies the six new neutrality principles in the FCC's November 2009 notice of proposed rulemaking for preserving the open Internet.

My legislation adds a few things to the FCC's list. For example, my legislation also prohibits broadband operators from requiring content, service, or application providers from paying for prioritized delivery of their IP packets; more commonly referred to as pay-for priority. It also requires broadband providers to interconnect with middle-mile broadband providers on just and reasonable terms and conditions.

All of this is subject to reasonable network management as defined. And it applies to all broadband Internet platforms--wireline and wireless.

My legislation takes several steps to promote the adoption of broadband, steps such as requiring broadband providers to provide service upon reasonable request by an end user; and requiring broadband providers to offer standalone broadband at reasonable rates, terms and conditions.

My legislation increases consumer protections because all charges, practices, classifications, regulations, for and in connection with the broadband Internet access service must be just and reasonable.

My legislation directs the FCC to come up with enforcement mechanisms. End users, who include individuals, businesses of all sizes, non-for-profit organization, and others, can file a complaint either at the FCC or at a U.S. District Court, but not both. Additionally, State Attorneys General can file on behalf of their residents and seek either to enforce the act or to seek civil penalties.

My legislation supports continued broadband investment, innovation, and jobs.

Let me explain.

First innovation. With the Internet's end-to-end design, innovation is at the edge of the network in the hands of the end users. New ideas for online content, application, and services do not need the permission of the centralized network operator to become successful. Without net neutrality protections, I foresee situations arising that will chill innovation.

For example, if a broadband provider has a partnership with company A to provide end users a certain on-line service, and new company B comes up with a better value proposition for providing that same on-line service, how many believe that the broadband provider will allow company B get access to its end users with the same bandwidth or quality-of-service assurances, particularly if Company A gives a portion of its revenues from that on-line service to the broadband provider.

Experience has taught me that the most promising path to developing an innovation into a new on-line product or service is hard to predict, if one can do it at all. If broadband Internet access service provider end up on the critical path for successful commercialization of on-line innovations, the path to success will be all the much harder. The language in my bill tries to prevent these types of situations from happening.

This leads to my second point, the chilling of investment without effective net neutrality rules.

Take the situation where an early stage online company is seeking venture capital investments. The first question any responsible VC will ask is whether the following list of large broadband providers are on-board with the online product or service. Because if there is a situation, as in my example on innovation, where the large broadband provider has a partnership with the early stage companies' entrenched competitor, it is going to be difficult, if not impossible to raise funds. Basically, the blessing of broadband providers will become essential to obtaining VC investment of any magnitude. How to get large broadband

providers on board will become a key part of every business plan. Broadband providers would then become gatekeepers to online innovation and investment.

Broadband investment can also be chilled a second way. The logical extension of pay-for-priority is a tiered Internet with premium fast lanes and best effort slow lanes. With a tiered Internet, it becomes more profitable to create an artificial bandwidth shortage rather than in investing to increase broadband capacity of the local network.

The reason is that it is easier to adjust pricing policies than forecast the optimum level of investment and be able to finance it at favorable rates. Recall the Internet bubble about a decade ago. That is why I believe that if pay-for-priority exists, it will ultimately lead to a lower level of broadband investment that would occur otherwise.

I agree with the need for broadband providers to upgrade the quality of their network and increase the available bandwidth to meet the anticipated market demand. If end users want more bandwidth or quality-of-service assurances they should be willing to pay for it. It is that simple. I have no issue with allowing broadband providers explore different pricing options for consumers. My bill doesn't prevent that.

Third jobs. Since the advent of the broadband age, there have been more high-value-added, high-paying jobs created by companies operating at the edge of the network than companies at the center of the network. And because of chilled investment and other restrictions, without net neutrality rules, I believe we will experience a lower rate of growth of broadband-enabled jobs.

Let me close by saying that I bring a unique perspective to the policy discussion over net neutrality by virtue of working in the tech industry during the dial-up age and early years of broadband.

To put things in perspective, the ideas and language that became the Telecommunications Act of 1996 was coming together around the time Netscape 1.0 was being introduced commercially.

Whether intentionally or unintentionally, that 1996 Telecom Act accelerated the roll out of broadband, even though the word Internet appeared less then one dozen times. It set the wheels in motion by allowing local competition to the offspring of Ma Bell, allowing telecom companies to offer video programming, and allowing cable companies to offer telecom service.

Cable companies responded to this competitive threat, and that from the satellite TV companies due to the Satellite Home Viewing Act, by making infrastructure investments that allowed them to offer new broadband service over cable modem.

Competitive Local Exchange Carriers, taking advantage of their new ability to line share and access unbundled network elements, also saw the competitive benefits of offering broadband service.

The traditional telecom companies, well, at the time they seemed focused on trying to reassemble Ma Bell and having us all buy an extra, dedicated landline or two for dial up service.

Eventually, the competitive pressure did drive them to make the necessary investment to offer broadband.

The business models for delivering broadband Internet access differed than that of dial-up. In their heyday, ISPs such as AOL, CompuServe, and Prodigy did not own their own infrastructure; they leased telecom transmission capacity from third parties telecom companies. With broadband, for a number of reasons, there came the much greater vertical integration of the ISP and transmission capacity.

Looking back, broadband over cable modem flourished under Title II through 2002, until the FCC deregulated it. Similarly, broadband over landlines flourished under Title II through 2005, until Chairman Martin's deregulated it in the wake of the Brand X decision.

As Senator Dorgan used to say, having broadband under Title II ensured that there was a broadband cop on the beat.

If there were functioning local markets for broadband services, consumers would have true choices, and I might think differently about the need for legislation. Unfortunately end users in most communities have a limited number of choices at best when it comes to broadband Internet access services.

At its most basic, that is why we need to return that broadband cop to the beat. My bill will do that, and do that without regulating the Internet.

It will achieve the regulatory certainty industry seems to clamoring for by having the net neutrality protection in statute rather than left to agency rule and the politics of each succeeding administration.

I don't claim that this bill is a perfect bill. It lays down a marker for where we should start the discussion.

Given the complexity of the Internet ecosystem, any legislation will have to be worked through by the Commerce Committee. There are always details, details, and more details with respect to business models and usage cases that need to be considered. For these reasons I recognize that the Commission will need some flexibility in implementing the statute and I believe my language will provide them with just enough.

My bill will preserve an open and free Internet, allow for broadband's continued growth, and the economic growth and jobs that it will create.

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