Paid Prioritization Emerging as Possible Sticking Point in Hill Open Internet Debate

Many lawmakers seem to believe FCC Chairman Ajit Pai will take initial action to dismantle parts of the agency's order, though Pai hasn't laid out a precise strategy and the agency didn’t comment Monday. Senate Commerce Committee Chairman John Thune, R-S.D., is pushing for bipartisan negotiation, which quietly began in the past two weeks with ranking member Bill Nelson, D-Fla. (see 1702030044). Nelson cautioned no deal would happen overnight. Blackburn and House Communications Subcommittee ranking member Mike Doyle, D-Pa., told us they will watch Pai’s actions before moving on legislative negotiation (see 1702070074).

“If we can get some agreement on some of the stuff, we’ll probably move on an independent track from the House,” Thune said in an interview. “We’re interested in what they’re doing and what they’re thinking. But you know, the initial proposal we had did ban paid prioritization. And we’ll see what the FCC does, too. I think they will probably key off whatever action they take to roll back some things. I think that’s probably what’s going to get the Democrats interested.”

Negotiation this Congress, much like in 2015, may take place only within the Senate. Thune joined at 2015’s start with Rep. Greg Walden, R-Ore., Blackburn’s predecessor as Communications Subcommittee chief, now chairing the full Commerce Committee, and former Commerce Committee Chairman Fred Upton, R-Mich., on draft legislation. It proposed to codify net neutrality rules including a ban on paid prioritization deals in exchange for limiting FCC use of Title II on broadband and on its Telecom Act Section 706 powers. That proposal fell short for Democrats such as Rep. Anna Eshoo, D-Calif., former Communications Subcommittee ranking member, and Blackburn’s latest comments suggest the draft bill falls short for her, too. Walden and House Majority Leader Kevin McCarthy, R-Calif., mentioned reviving the draft this year (see 1702010051). But Blackburn, who previously sponsored the Internet Freedom Act to nullify the FCC rules, didn’t express an appetite for legislation until after Pai acts.

Blackburn seems to be stepping back from the provisions of the earlier GOP draft, which doesn't bode well for a grand compromise, a House Democratic staffer told us. House Democrats already were dissatisfied with the earlier draft’s provisions, the staffer said, pointing to the objections that Amazon made during a 2015 hearing and the lack of what they considered real teeth to the protections. The staffer expects lawmakers to eye the FCC itself and Pai’s steps, and that grassroots support for the order would hopefully play a role in maintaining protections.

GOP Tensions

Tensions existed among some Republicans even when the GOP draft first circulated.

Rep. John Shimkus, R-Ill., a senior Commerce member, backed Walden and Upton but made a point of saying he was a “paid prioritization guy." Some right-leaning telecom observers also expressed discomfort with any ban on paid prioritization, including Free State Foundation President Randolph May and Phoenix Center President Larry Spiwak during last Wednesday’s Telecom Act anniversary event hosted by Digital Liberty. Democrats such as Sen. Patrick Leahy, D-Vt., and Rep. Doris Matsui, D-Calif., long judged a prioritization ban necessary. Shimkus calls himself a paid prioritization guy due to telemedicine and distance learning, his spokesman told us Monday, citing a 2015 opinion piece Shimkus wrote for Roll Call. “His concern is basically that without the ability for local broadband providers to prioritize that type of traffic, rural Americans could lose or be denied access to those kinds of services,” the spokesman said.

“Blackburn's comments are dangerous for the economy and could have a chilling effect on investment in online startups,” said New America Open Technology Institute Policy Counsel Josh Stager. “Allowing ISPs to create fast lanes for the highest bidder will only raise consumer prices and shut out small businesses from the online marketplace. We have solid rules in place right now that give investors confidence in the future of the internet economy. If there's one thing investors hate, it's uncertainty -- and that's exactly what Congresswoman Blackburn is creating with these reckless comments.”

One telecom industry official doesn't foresee legislative movement soon due to the other issues occupying lawmakers and consensus to cede the first move to the agency. The official sees prioritization as a sticking point but thinks the chambers could resolve any differences over whether to include a ban if senators came to an agreement otherwise. Pending litigation also is a wild card, the official said.

Doyle's Focus

Democrats show little desire to give any ground despite their voiced fears on Pai’s actions to come.

Legislation is “going to have to carry a lot of the elements of the order that sits there right now,” Doyle said in an interview. “We don’t see any rush or need to change this.” Zero rating became a concern for Doyle in recent years. He said at hearings he sees zero rating as a potential open internet transgression, but Blackburn and Walden this year affirmed in a statement that they consider zero rating innovative and legally permissible. “If we’re going to have a discussion about a possible legislative compromise, all of that has to be at the table,” Doyle said when asked whether zero rating would need to be a part of legislative negotiation. “I think both sides realize the only way to get buy-in from both parties, it’s going to be a bill where we’re going to get some things they want and they’re going to get some things they want.”

Sen. Ed Markey, D-Mass., a Commerce member, led public interest groups and Democratic senators last week in a news conference promising a grassroots fight over the order. He repeatedly declined to support legislative negotiation and said he knew of no substitute for the order's Title II protections. Sen. Maria Cantwell, D-Wash., also told us this year she sees little promise in legislating with Republicans. Markey is using his campaign website to solicit petition backers to stop President Donald “Trump’s attack on net neutrality,” the petition said: “We, the undersigned, demand that President Trump and the FCC respect and reaffirm net neutrality rules.” Fight for the Future is also soliciting backers to write to Congress and the agency.

“He’s not agitating to be on the team here right now, but we’ll see,” Thune said of Markey. “I think that there are some Democrats who are interested in legislating.”

“Democrats should have taken the deal Republicans offered them two years ago,” TechFreedom President Berin Szoka said. “Having refused even to negotiate, they can hardly be surprised that Republicans are less willing to compromise now.” He and his colleagues “always thought that a categorical ban on paid prioritization would hurt consumers, and that all the concerns raised about paid prioritization could be addressed through a more flexible approach,” he said. “Videogame players, for example, are clearly worse off if they can't get prioritization for their traffic. ... And economics 101 will tell you that banning payment for a service means you get less of it -- or none at all.” He advised policing paid prioritization on a case-by-case basis, with a rebuttable presumption against certain kinds of deals. “This is probably where legislation will wind up -- if it happens,” said Szoka, who had long advocated for the certainty of a compromise bill.

“Congress has now explicitly asked the FCC to play its open internet hand first,” wrote Information Technology and Innovation Foundation analyst Doug Brake in an opinion piece for Morning Consult, citing Blackburn’s pushback against immediate legislative negotiation. Brake urged patience for a Pai strategy on the topic and questioned the rhetoric among net neutrality defenders: “I fear instead of a balanced discussion, the forthcoming net neutrality fracas will exceed even the toxic highs of 2014.”

“Reasonable discrimination, differentiation, blocking, priority service, curation, etc. are necessary tools used by every single organization in America to derive benefit for users,” Media Freedom President Mike Wendy said Monday in a blog post. He questioned rhetoric of Sen. Richard Blumenthal, D-Conn., a Commerce member, at Markey’s event: “It is in the interest of people like Senator Blumenthal to conflate positive economic discrimination with negative societal discrimination. He knows they are not the same. But it sure drives headlines and campaign support.”