Earlier this month, Verizon and Google announced an agreement on the vexing issue of net neutrality. The agreement has been criticized by net neutrality advocates for allegedly permitting a “private Internet,” and for excluding wireless services, among other things. Until recently, the provisions in the Verizon-Google “Legislative Framework” that radically alter FCC enforcement have been overlooked.

Four elements of the Legislative Framework are described in detail in this post. These elements would restrict the tools available to the FCC and would raise the standard for FCC fines. In addition, one provision strips the Federal Trade Commission of any potential jurisdiction over broadband Internet access service.

Limiting the FCC to Case by Case Enforcement. First, Verizon and Google propose that the FCC “would enforce the consumer protection and nondiscrimination requirements through case-by-case enforcement, but would have no rulemaking authority with respect to those provisions.” This provision would significantly alter enforcement practice today -- where it is well settled that, absent explicit statutory instruction, an agency may choose whether to enforce through adjudication or through rulemaking. Verizon and Google propose that in this instance rulemaking authority be denied.

Substituting Private Arbitration of Disputes. Verizon and Google also propose that another entity assume the FCC’s primary role in adjudicating alleged violations. Specifically, Verizon and Google propose that parties be “encouraged” to use “non-governmental dispute resolution processes established by independent, widely-recognized Internet community governance initiatives,” with the FCC granting “appropriate deference” to such opinions. Verizon and Google don’t say that parties will be forced to use this alternative, but the clear hope is that the primary enforcement capability will be shifted away from the FCC to this private group. It is not clear whether Verizon and Google contend that the private group will have more expertise than the FCC, that it is quicker or less expensive than FCC formal complaints, or that some other reason makes this desirable.

“Knowing Violation” Standard of Liability. The Verizon-Google proposal preserves FCC forfeiture authority, but it appears to substitute a stricter standard than applies to other forfeitures. Under the Verizon-Google proposal, the FCC could impose fines for “knowing violations” of the consumer protection and nondiscrimination standards. This contrasts with Section 503’s current standard of “willful and repeated” violations. The FCC has interpreted the “willful” standard to require only that the party knew it was committing the act (or omission), not that it had any intent to violate the Communications Act.

Exclusive FCC authority. Verizon and Google propose that the FCC have “exclusive authority to oversee broadband Internet access service.” This provision apparently would preempt any jurisdiction by the Federal Trade Commission, which has asserted that it may apply its consumer protection standards to information services (which include Internet access services). But it is not clear what the FCC’s “oversight” authority encompasses, since all regulatory authorities would be precluded from “regulating” broadband Internet access services.

Until last Thursday, these provisions seemed to be overlooked in the proposal. However, two FCC Commissioners made comments at the “Future of the Internet” hearing in Minnesota sponsored by the Free Press Foundation. Commissioner Clyburn declared that “any proposal that favors the FCC being stripped of the rulemaking authority regarding consumer protection and non-discrimination requirements, and any proposal that would advocate that no agency will have authority over Internet access would be impossible for me to embrace.” Commissioner Copps expressed similar concerns, warning that the Verizon-Google proposal “would eliminate any meaningful, effective FCC oversight of the open Internet [including] such critically-important responsibilities as the setting of standards and the swift resolution of controversies.” I’m sure we will see more discussion of these proposals as we move forward in this debate.

Overlooked Elements of the Verizon-Google Net Neutrality Proposal