RATIONALES FOR AND AGAINST REGULATORY INVOLVEMENT IN RESOLVING INTERNET INTERCONNECTION DISPUTES

TABLE OF CONTENTS INTRODUCTION I. FOUR PHASES IN THE DEVELOPMENT OF THE INTERNET ECOSYSTEM A. Phase 1: Incubation B. Phase 2: Privatization C. Phase 3: Commercialization D. Phase 4: Diversification II. THE LEVEL 3-COMCAST DISPUTE III. THE CABLEVISION-FOX DISPUTE IV. DOES THE FCC HAVE JURISDICTION TO RESOLVE INTERNET CLOUD DISPUTES? A. Rationales Favoring FCC Intervention 1. Ancillary Jurisdiction 2. Titles I, III, and VI of the Communications Act B. Rationales Opposing FCC Intervention V. WHAT SHOULD THE FCC DO? A. Case Law Supporting FCC Authority To Resolve Interconnection Complaints 1. Must Carry/Retransmission Consent and Other Types of Mandatory Content Access 2. Madison River 3. Data Roaming 4. Pole Attachments 5. Truth in Billing, Avoiding Bill Shock, and Sanctions for Deliberate Overcharges CONCLUSION INTRODUCTION Internet Service Providers (ISPs) provide end users with access to and from the Internet cloud. (1) In addition to providing the first and last mile carriage of traffic, (2) ISPs secure upstream access to sources of content via lines leased from telecommunications service providers and also via other ISPs typically on a paid (transit), or barter (peering) (3) basis. Because a single ISP typically operates in two separate segments of traffic routing, downstream to subscribers and upstream to other carriers, the terms and conditions of network interconnection and the degree of marketplace competition can vary greatly. In this two-sided market, (4) ISPs typically have many transit and peering opportunities upstream to content providers, but downstream the ISP may face limited competition from other ventures providing so-called first- and last-mile broadband Internet access. Regardless of the scope of retail Internet access competition, consumers usually select only one ISP to handle all traffic requirements. (5) The variability of competitiveness in the market for upstream and downstream Internet access has motivated some stakeholders to claim that national regulatory authorities, such as the Federal Communications Commission (FCC), (6) should intervene to remedy market failures and existing or potential anticompetitive practices. The so-called Network Neutrality (7) debate has focused largely on the potential for ISPs serving end users to favor affiliates in the delivery of content to subscribers, or to offer priority content delivery to any content provider, subscriber, or both willing to pay a surcharge. (8) The Network Neutrality debate primarily addresses the potential for anticompetitive practices to harm consumers, but the debate occasionally also addresses the potential for ISPs to favor or disadvantage specific content sources. (9) Advocates for regulatory intervention note that end users have limited broadband access options, (10) but generally the marketplace for long-haul carriage of Internet traffic operates more competitively. Notwithstanding such upstream competition, content and software applications eventually route through a single retail ISP to end users. Recently a long-haul carrier, Level 3, sought FCC intervention to resolve a traffic dispute with Comcast. (11) Level 3 had contracted with Netflix to serve as a primary distributor of online movies, thereby substantially increasing the volume of traffic that Level 3 needs retail ISPs like Comcast to deliver to their subscribers. (12) In response to the increase in terminating traffic generated by Level 3, Comcast imposed a surcharge. Level 3 objected to being singled out for a surcharge, asserting that Comcast had installed an Internet tollbooth for only certain traffic that happens to compete with Comcast's pay-per-view cable television service. Another interconnection dispute raising Network Neutrality questions occurred when Cablevision, a provider of both broadband Internet access and cable television services, could not meet a deadline for extending a retransmission consent agreement with the Fox Broadcasting Company to continue carrying content on Cablevision's New York systems. …