JANICE D. SCHAKOWSKY 2367 RAYBURN HOUSE OFFICE BUILDING Telephone: 202-225-2111 9TH DISTRICT, ILLINOIS Fax: 202-226-6890 TTY: 202-224-3901 COMMITTEE ON ENERGY AND COMMERCE Ranking Member, Digital Commerce 5533 N. BROADWAY, SUITE 2 and Consumer Protection Qlnugr.cnn nf tq.c luit.ch §tat.en CHICAGO, IL 60640 Health 1074 Telephone : 773-506-7100 Oversight and Investigations 1!1oune of lleprenentatiuen Fax: 773-506-9202 1852 JOHNS DRIVE COMMITTEE ON THE BUDGET lll1Jasqt11gtn11 1 fil(!l 20515-lJOg GLENVIEW, IL 60025 Telephone: 84 7-328-3409 CHIEF DEPUTY WHIP Fax: 847-328-3425 December 12, 2017 Chairman Ajit Pai Federal Communications Commission 445 12th Street SW Washington, DC 20554 Dear Chairman Pai: I request that you delay a vote on the Draft "Restoring Internet Freedom" Order (Draft Order), WC Docket No. 17-108, on the December Open Meeting Agenda of the Federal Communications Commission (FCC). Despite your insistence that the Federal Trade Commission (FTC) has the ability and authority to enforce net neutrality violations, both its ability and authority are limited. I serve as Ranking Member of the Digital Commerce and Consumer Protection Subcommittee of the House Energy and Commerce Committee, which oversees the FTC. I am well aware of its strengths and weaknesses. While I am a strong supporter of the FTC's work on competition and consumer protection, given the limitations of the Commission, the open Internet may not be fully protected. Unlike the FCC, which is able to create rules of the road for broadband providers, the FTC's hands are tied when it comes to rulemaking. Therefore, the FTC's oversight would be limited to bringing actions against broadband providers after they have committed unfair methods of competition or unfair or deceptive acts. Even when it can bring enforcement actions, the FTC cannot impose fines against broadband providers that engage in discriminatory conduct upon their first violation. The FTC is limited to entering cease-and-desist orders. Only violations of those orders result in fines. As we have seen repeatedly, the threat ofreal consequences- such as strong financial penalties - is the only effective deterrent. Moreover, the FTC currently lacks the technical expertise for network management. Unlike the FCC, the FTC does not have engineers on staff. It could take years for the Commission to investigate a complaint and obtain an order for, say, discriminating against a rival company. In the meantime, competition will suffer and consumers will lose out. Even beyond those regulatory and enforcement limitations, it is not even clear if the FTC has any authority over most broadband providers. AT&T Mobility's challenge to the FTC's jurisdiction over non-common carrier activities of telecommunications carriers in FTC v. AT&T Mobility is pending en bane review in the Ninth Circuit Court of Appeals. Last year, a three­ judge panel of the Court held that, under the common carrier exemption, the FTC has no enforcement authority over any entity that is classified as a common carrier. WEBSITE : http://www schakowsky house gov PRINTED ON RECYCLED PAPER E-MAIL: jan.schakowsky@mail house.gov ®~11 Most broadband providers are also traditional common carriers. If the Ninth Circuit again finds in favor of AT&T - regardless of what the Draft Order says or whether it is adopted - most broadband providers will still be exempt from the authority of the FTC under the Federal Trade Commission Act's common carrier exemption. Instead of simply shifting oversight and enforcement from the FCC to the FTC as you suggest, the Draft Order could thrust broadband providers into a regulatory blackhole - not subject to any federal oversight at all and leaving consumers unprotected. In fact, the FCC made this exact point in its amicus curiae brief in support of the FTC, asserting: If the en bane Court were to adopt AT&T's position that the FTC Act's common-carrier exception is "status-based" rather than "activity-based," contrary to the reasoned analysis of the district court below, the fact that AT&T provides traditional common-carrier voice telephone service could potentially immunize the company from any FTC oversight of its noncommon-carrier offerings, even when the FCC lacks authority over those offerings-creating a potentially substantial regulatory gap where neither the FTC nor the FCC has regulatory authority. 1 Rushing forward with your Draft Order at this time, without considering the relevant facts, is not prudent decision-making. If the so-called "Restoring Internet Freedom" item is passed, the ability to protect the open Internet will be severely diminished if not eliminated altogether. For these reasons, I fear the Draft Order fails to appreciate the ramifications of the FCC abdicating its role as the expert federal agency overseeing telecommunications. At a minimum, the FCC must conduct a more searching review of its competencies and that of the FTC. As you have noted, a process of hearings and thorough study is necessary to ensure the Commission has a robust record on which to base its decision.2 I strongly oppose this item in its entirety. But at best, this issue is not yet ripe for consideration until FTC v. AT&T Mobility is finally resolved. Sincerely, ~~ chakowsky '~ ............~·ng Member ubcommittee on Digital Commerce and Consumer Protection 1 Brief of the Federal Communications Commission as Amicus Curiae in Support of Plaintiff-Appellee, FTC v. AT&T Mobility, LLC., No. 15-16585 (9th Cir. May 30, 2017). 2 Federal Communications Commission, Protecting and Promoting the Open Internet, Notice of Proposed Rulemaking, GN Docket No. 14-28, FCC 14-61, Statement of Commissioner Ajit V. Pai at 96-97 (rel. May 15, 2014).