Tariffing Internet Termination : Pricing Implications of Classifying Broadband as a Title II Telecommunications Service

The Federal Communications Commission is coming under intense political pressure to reclassify broadband Internet access as a common carrier telecommunications service under Title II of the Communications Act. Yet, almost no attention has been directed at the fine details of how reclassification will be implemented. Relying on the plain terms of the FCC's governing statute, current case law, and the Commission's own precedent, we examine such details in this paper and conclude the following: First, reclassification would turn edge providers into “customers” of Broadband Service Providers (“BSPs”), and this new “carrier-to-customer” relationship (as opposed to a “carrier-to-carrier” relationship) would require all BSPs to create, and then tariff, a termination service for Internet content under Section 203 of the Communications Act. Because a tariffed rate cannot be set arbitrarily, and since a service cannot be generally tariffed at a price of zero, reclassification would require all edge providers (not their carriers) — as customers of the BSP — to make direct payments to the BSPs for termination services. Second, as competition is the basis for Section 10 forbearance, the Commission is precluded from setting aside tariffing because it has labeled all Broadband Service Providers as “terminating monopolists.” As such, the agency has boxed itself in for mandatory tariffing under Title II