Lex 8256: The Law in Cyberspace Seminar

The Internet and federal communications regulation

In order to "make available, so far as possible, to all the people of the United States a rapid, efficient, nationwide and world-wide wire and radio communications service with adequate facilities at reasonable charges," federal law gives the Federal Communications Commission (FCC) the job of regulating "all interstate and foreign communication by wire or radio . . . which originates and/or is received within the United States." 47 U.S.C. §§ 151, 152. The job of the FCC is intimately tied up with the Internet, because the movement of packets from one Internet-connected computer to another is "interstate or foreign communication by wire or radio." So in that very broad sense, the Federal Communications Commission has jurisdiction over the Internet.
 

The FCC's jurisdiction isn't free-floating, though. The governing statute -- the Communications Act of 1934, as amended -- gives the agency authority to do specific things in specific situations to specific actors. In particular, if an entity is engaged in the provision of "telecommunications" to the public for a fee, it is subject to the obligations set out in Title II of the Communications Act. If it is engaged in "broadcasting," then it is subject to certain of the obligations set out in Title III of the Act. If it is a "cable system," then it is subject to the obligations of Title VI.
 

Title II (which was derived from the Interstate Commerce Act of 1887), imposes obligations on folks who provide interstate "telecommunications." That term covers ordinary telephone service, as well as other services in which a company moves a customer's information from point A to point B. It doesn't matter whether the company uses wires, terrestrial wireless or satellites to transmit the information. A company providing telecommunications to the public for a fee is referred to as a "communications common carrier" or a "telecommunications carrier," and is potentially subject to a whole bunch of regulatory obligations, including rate regulation, rules designed to protect customer privacy, and various taxes and tax-like obligations. In practice, the FCC has found ways to avoid imposing many of these obligations in competitive markets. Title II also imposes special obligations on incumbent local telephone companies, and on Bell telephone companies in particular. A firm is exempt from all of these requirements to the extent it is providing an "information service" (that is, a service involving not only the transport of information, but also its manipulation or the provision of new information. Lexis and Westlaw are information services.)
 

Title III (which was derived from the Radio Act of 1927) imposes obligations on all folks who engage in "radio transmission," which is to say, any form of communication over the airwaves. For the most part, folks engaging in radio transmission need a license from the FCC. In addition, Title III imposes some special obligations on firms engaging in "broadcasting." That term covers ordinary over-the-air radio and TV (together with any other communications over the airwaves "intended to be received by the public"); it does not, however, cover DBS. Historically, the FCC has granted broadcast licenses only after an extensive public-interest inquiry, although recent trends and legislation have made the licensing process more mechanical. The statute bars "indecent" broadcast programming.
 

Title VI (the Cable Communications Policy Act of 1984, as amended) imposes obligations on "cable operators." It structures the relationships between cable operators and local governments, and sets out a bunch of cable-operator obligations including the obligation to carry public-access channels and local TV signals.
 

The FCC plainly has authority to regulate the telephone or cable systems that your packets traverse in order to get from your home to the Internet. [This is important. One of the most important components in the Internet's growth in the U.S. was the FCC's decision that ISPs need not pay per-minute "access charges" for their connections to local telephone networks. Increasingly, though, these issues are getting more complicated. Imagine a bunch of friends, each signing on to his or her ISP and surfing on over to yahoo.com. One uses a dialup connection, over ordinary phone lines. One has a cable modem, so that her packets travel over cable television plant. A third uses a Ricochet wireless modem. A fourth has a subscription with DirectPC, and gets his downloads via a satellite dish. Each of these connections is subject to a different regulatory regime. To the extent that the user is doing the same thing in each case (and doesn't care much about the underlying transmission medium, except insofar as it gives him a faster or slower connect speed), it's not obvious that treating them differently makes a lot of sense.]
 

I want to focus here on a different issue, though: What authority does (or should) the FCC have over communication using the Internet? To what extent should the FCC be able to assert regulatory authority on the ground that the service is "really" broadcasting, or telecommunications, or whatever? With respect to each form of Internet communication, it makes sense to ask two questions.

1. Broadcasting

The Communications Act defines "broadcasting" as the "dissemination of radio communications intended to be received by the public, directly or by the intermediary of relay stations" and "radio communication" as "transmission by radio . . ." 47 U.S.C. § 153(6), (33). The Act imposes specific obligations on commercial broadcasters -- for example, they are required to sell advertising time to any candidates for federal office. Id. § 312(a)(7). More generally, the contours of modern U.S. broadcast regulation were set in Red Lion Broadcasting Co. v. FCC (1969), in which the Supreme Court upheld the FCC's "fairness doctrine," which required licensees to cover controversial issues of public importance and provide a reasonable opportunity for the presentation of opposing points of view. (You needn't read it.)  The FCC has since repealed the fairness doctrine, but it adheres to the position that broadcasters have a generalized, enforceable obligation to serve the "public interest."

    Check out NPR Online, and listen to the news for a minute. (Look over on the left-hand side of the page.)  Take a look at RadioTower.com, which lists over a thousand "radio stations" available on the Web, or RadioJump!.  Some of these stations are conventional radio stations that make their content available on the Web as well as over the air, but others are Internet only:  They sound like the others, except that there's no radio station.  Rather, the content provider is making the content available only over the Net.  Look at Pandora, if you haven't already; how would you classify it?

    Now spend a little time at Yahoo TV, or take a look at Katie Couric at CBS i-Video.

    Is this "broadcasting," under the statutory definition? (Hint: How is the transmission getting from the content creator to you?) If this isn't "broadcasting," then it follows that the "real" radio stations you can hear over the Web are subject to a completely different regulatory regime from the Internet-only stations. Should they be? What if, five or ten years from now, more people listened to "radio stations" over the Internet than over the air? How would it be appropriate for the FCC (or Congress) to react?

    It's hard to push video over an ordinary dialup phone line, and the picture isn't very big or very high-def, but the situation is better if you have access via cable modem or DSL.  With an even fatter pipe into the home, the picture quality could be better still. What would be the consequences if, ten or fifteen years from now, more people watched television over the Internet than over the air? How would it be appropriate for the FCC to react?

    Come to think of it, if you're watching television over the Internet, should your ISP be considered a cable operator? (The answer under the 1996 Telecommunications Act is no.  Should it be?)

    As it turns out, the major legal obstacle to Internet broadcasting has come not from communications law, but from copyright law.  You'll hear about this from Bruce on October 30.

2. Telecommunications

Check out Skype. As its website indicates, one of the things you can do with an Internet connection is real-time voice transmission (that is, telephony).  That fact, though, raises the same definitional issues we grapple with in the broadcast context. Should IP telephony be subject to the same elaborate regulatory regime as traditional telephony? Put another way, should the transmission of IP packets between Internet-linked computers be considered "telecommunications," triggering Communications Act requirements?   And if there is regulation to be done, who should do it?  Read pages 1-36 of a paper I wrote discussing the definitional problem.   Next, read the FCC's order in Vonage Holdings Corp., 19 FCC Rcd. 22404 (2004).  Finally, read paras. 1-55 of E911 Requirements For IP-Enabled Service Providers, 20 F.C.C.R. 10245 (2005).

    The paper I just had you read asks whether IP telephony providers should contribute to the Universal Service Fund.  The FCC finally answered that question this past June, concluding that providers of "interconnected" IP telephony providers, as defined in the E911 order, should be required to make Universal Service Fund contributions.  Without regard to whether such firms provided "telecommunications services," the agency concluded, it had power to order them to contribute.  The opinion (which you need not read) is Universal Service Contribution Methodology, FCC 06-94 (rel. June 27, 2006).
 

3. The big picture

When the Internet came along, a great deal of attention was paid to the question of what sort of medium this was. Was the Internet best analogized to print? broadcasting? cable television? Telephony? The difficulty is that to some extent, the Internet is all of these things. Any form of communication can be translated into digital form -- into a stream of ones and zeros -- and carried as packet-switched information over the Internet. The network is indifferent to the nature of the information being carried over it; all that is sorted out by the computers plugged into the edges of the system. The network carries video, voice and text on the same terms: the difference lies only in the applications the user runs. This has the potential to make hash of a legal system that -- until now -- sorted video into one regulatory box, voice into a second, and print into a third.  

What should the legal system do in response?