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112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     112-51

======================================================================

     DISAPPROVING THE RULE SUBMITTED BY THE FEDERAL COMMUNICATIONS 
   COMMISSION WITH RESPECT TO REGULATING THE INTERNET AND BROADBAND 
                           INDUSTRY PRACTICES

                                _______
                                

 April 1, 2011.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

         Mr. Upton, from the Committee on Energy and Commerce, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                      [To accompany H.J. Res. 37]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the joint resolution (H. J. Res. 37) disapproving the rule 
submitted by the Federal Communications Commission with respect 
to regulating the Internet and broadband industry practices, 
having considered the same, report favorably thereon without 
amendment and recommend that the joint resolution do pass.

                                CONTENTS

                                                                   Page
Legislation......................................................     2
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................    13
Committee Consideration..........................................    13
Committee Votes..................................................    13
Committee Oversight Findings.....................................    15
Statement of General Performance Goals and Objectives............    15
New Budget Authority, Entitlement Authority, and Tax Expenditures    15
Earmarks.........................................................    15
Committee Cost Estimate..........................................    15
Congressional Budget Office Estimate.............................    15
Federal Mandates Statement.......................................    16
Advisory Committee Statement.....................................    16
Applicability to Legislative Branch..............................    16
Section-by-Section Analysis of the Legislation...................    16
Changes in Existing Law Made by the Bill, as Reported............    17
Dissenting Views.................................................    18

                              LEGISLATION

    Resolved by the Senate and House of Representatives of the 
United States of America in Congress assembled, That Congress 
disapproves the rule submitted by the Federal Communications 
Commission relating to the matter of preserving the open 
Internet and broadband industry practices (Report and Order FCC 
10-201, adopted by the Commission on December 21, 2010), and 
such rule shall have no force or effect.

                          PURPOSE AND SUMMARY

    Resolution of disapproval H.J. Res. 37 nullifies the 
``network neutrality'' rules regulating the Internet that the 
Federal Communications Commission adopted Dec. 21, 2010. See In 
re Broadband Industry Practices, WC Docket No. 07-52, Report 
and Order, FCC 10-201 (rel. Dec. 23, 2010). The Committee also 
intends the resolution to prevent the FCC from reimposing the 
same or substantially similar rules through reclassification of 
broadband under Title II of the Communications Act or through 
any other claimed source of direct or ancillary authority. The 
purpose of the resolution is to prevent the harm the rules 
would cause to broadband deployment, innovation, competition, 
and jobs, as well as to stop the FCC from asserting authority 
over the Internet that Congress has not granted it.
    Rep. Greg Walden, chairman of the House Energy and Commerce 
Committee's Subcommittee on Communications and Technology, 
introduced the resolution pursuant to the Congressional Review 
Act, 5 U.S.C. Sec. Sec. 801-08. The CRA allows Congress to 
nullify agency rules by enacting a joint resolution of 
disapproval. See id. at Sec. 801(b)(1). Once Congress enacts 
such a resolution, the agency may not impose the same or 
substantially similar rules unless Congress enacts a new law 
specifically authorizing the agency to do so. See id. at 
Sec. 801(b)(2). Under the CRA, a disapproval resolution 
requires only a simple majority in both chambers of Congress 
and is filibuster-proof in the Senate. See id. at Sec. 802(d).

                  BACKGROUND AND NEED FOR LEGISLATION

    The Internet is open and thriving today thanks to the 
government's historical hands-off approach. As Democrat FCC 
Chairman William Kennard stated in a 1999 speech rebuffing 
calls to force open access, ``[t]he fertile fields of 
innovation across the communications sector and around the 
country are blooming because from the get-go we have taken a 
deregulatory, competitive approach to our communications 
structure--especially the Internet.'' FCC Chairman William 
Kennard, Address at the Federal Communications Bar, Northern 
California Chapter (July 20, 1999), available at http://
www.fcc.gov/Speeches/Kennard/spwek924.html. Indeed, Clinton-era 
Solicitor General Seth Waxman explained in an April 2010 letter 
that:
          [b]roadband Internet access service has never been 
        regulated under Title II. From the advent of the 
        Internet, the Commission has instead treated broadband 
        Internet access as an `information service' without a 
        separate `telecommunications service' component, 
        subject only to the Commission's ancillary authority 
        under Title I.

Letter from Seth P. Waxman, Counsel for the U.S. Telecom Ass'n, 
to FCC Chairman Julius Genachowski 6 (April 28, 2010).
    The Internet started as a 1960s defense agency project 
using phone lines to connect computers at several research 
facilities. Not until the government turned the Internet over 
to the private sector in the 1990s did it become the incredible 
engine for communication and economic growth that it is today.
    The FCC laid the foundation for that growth with its 
Computer Inquiries, where the FCC chose to leave data 
processing services unregulated in light of their widespread 
availability and the lack of economic barriers to market entry. 
The FCC distinguished ``basic services,'' which provide pure 
``transmission capacity for the movement of Information,'' from 
``enhanced services,'' which ``employ computer processing 
applications that act on the format, content, code, protocol, 
or similar aspects of the subscriber's transmitted 
information.'' Basic services would be treated as 
telecommunications services subject to Title II common carrier 
requirements; enhanced services would not. See In re Regulatory 
& Policy Problems Presented by the Interdependence of Computer 
& Communication Services & Facilities (First Computer Inquiry), 
Final Decision, 28 FCC 2d 267 (1971); Amendment of Section 
64.702 of the Commission's Rules and Regulations (Second 
Computer Inquiry), Final Decision, 77 FCC 2d 384 (1980); 
Amendment of Sections 64.702 of the Commission's Rules and 
Regulations (Third Computer Inquiry), Report & Order, 104 FCC 
2d 958 (1986).
    In the pre-broadband era of dial-up service, the FCC did 
require phone companies that provided enhanced services over 
their own telecommunications facilities to make basic 
transmission service available on a nondiscriminatory basis to 
competing enhanced services providers. The FCC did not, 
however, regulate retail provision of enhanced services. Thus, 
the FCC regulated the dial-up telecommunications service a 
phone company provided to connect subscribers to an Internet 
service provider. It did not regulate the Internet access 
service that the phone company or a competing Internet service 
provider offered to connect the subscriber to the Internet. Id.
    Recognizing that this regime was responsible for the 
accelerating growth of data services, Congress codified 
``enhanced services'' as ``information services'' in the 1996 
Telecommunications Act. See 47 U.S.C. 153(20); H.R. Conf. Rep. 
No. 104-458, at 114-15 (1996). It also added section 230 to the 
Communications Act, making it U.S. policy ``to preserve the 
vibrant and competitive free market that presently exists for 
the Internet and other interactive computer services, 
unfettered by Federal or State regulation.'' 47 U.S.C. 
Sec. 230(b)(2).
    Chairman Kennard reaffirmed this approach. During his 
chairmanship, the FCC stated in a 1998 universal service report 
that Internet access service ``offers end users information-
service capabilities inextricably intertwined with data 
transport,'' and so is ``appropriately classed as an 
`information service.''' In re Federal-State Joint Board on 
Universal Service, CC Docket No. 96-45, Report to Congress, FCC 
98-67 at para.80 (rel. April 10, 1998). This culminated in the 
FCC's 2002 ruling under Republican Chairman Michael Powell that 
cable Internet access is an information service, a decision 
upheld by the Supreme Court in 2005. See In re Inquiry 
Concerning High-Speed Access to the Internet Over Cable and 
Other Facilities, GN Docket No. 00-185, Declaratory Ruling, FCC 
02-77 (rel. March 15, 2002), aff'd, Nat'l Cable and Telecom. 
Ass'n v. Brand X Internet Servs., 545 U.S. 967 (2005).
    Thus, despite claims to the contrary, the retail 
availability of Internet access service was never regulated. 
Nor was it ever reclassified from a telecommunications service 
to an information service. It was an information service from 
the start. In light of the Supreme Court ruling and the 
recognition that broadband Internet access service is available 
not just from phone companies but across multiple platforms, in 
2005 FCC Chairman Kevin Martin eliminated the legacy 
requirement that phone companies providing broadband Internet 
access services over their own telecommunications facilities 
make telecommunications transmission available on a 
nondiscriminatory basis to competing Internet access providers. 
See In re Appropriate Framework for Broadband Access to the 
Internet over Wireline Facilities, CC Docket No. 02-33, Report 
and Order, FCC 05-150 (rel. Sept. 23, 2005).
    It is true that it was Chairman Powell, in a February 2004 
speech, that first articulated ``four Internet freedoms''--the 
freedoms of consumers: 1) to access legal content, subject to 
reasonable network management; 2) to run applications that do 
not exceed their service plan limits or harm the network; 3) to 
attach devices that operate within their service plan limits, 
do not harm the network, or enable theft of service; and 4) to 
obtain meaningful information about their service plans. He 
made clear, however, that they were just a ``road map,'' that 
they should apply not just to Internet access providers but to 
``all facets of the industry,'' and that they were meant in 
lieu of regulations. ``[T]he case for government imposed 
regulations regarding the use or provision of broadband 
content, applications and devices is unconvincing 
andspeculative,'' he said. ``Government regulation of the terms and 
conditions of private contracts is the most fundamental intrusion on 
free markets and potentially destructive, particularly where innovation 
and experimentation are hallmarks of an emerging market,'' he 
explained. ``Such interference should be undertaken only where there is 
weighty and extensive evidence of abuse.'' FCC Chairman Michael K. 
Powell, Address at Silicon Flatirons, Univ. of Colo. School of Law 
(Feb. 8, 2004), available at http://hraunfoss.fcc.gov/edocs_public/
attachmatch/DOC-243556A1.pdf.
    Notwithstanding a lack of the extensive evidence that 
Chairman Powell had spoken of, Chairman Martin formally adopted 
the freedoms as four ``principles'' in a September 2005 FCC 
policy statement. See In re Inquiry Concerning High-Speed 
Access to the Internet Over Cable and Other Facilities, GN 
Docket No. 00-185, Policy Statement, FCC 05-151 (rel. Sept. 23, 
2005). He emphasized in a news release when the FCC adopted the 
statement, however, that policy statements ``do not establish 
rules nor are they enforceable documents.'' News Release, FCC 
Adopts Policy Statement (Aug. 5, 2005), available at http://
hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-260435A1.pdf.
    Three years later, he nonetheless sought to enforce the 
principles against Comcast. Comcast had begun noticing that 
network demand by heavy users was impeding the ability of other 
subscribers to use its broadband service. To address the issue, 
Comcast engineers devised a way to intermittently hold traffic 
from peer-to-peer applications so that performance did not 
suffer for the majority of subscribers. Free Press and Public 
Knowledge filed a complaint alleging that Comcast's network 
management techniques were unreasonable and discriminatory. The 
FCC ordered Comcast in August 2008 to cease the network 
management practices. See In re Broadband Industry Practices, 
WC Docket No. 07-52, Memorandum Opinion and Order, FCC 08-183 
(rel. Aug. 20, 2008). Comcast appealed on the grounds that the 
FCC had only issued a policy statement, rather than actually 
adopted network management rules, and lacked the authority to 
enforce such rules in any event.
    By September 2009, Julius Genachowski was FCC chairman and 
had announced plans to codify the principles as rules. See FCC 
Chairman Julius Genachowski, Address at the Brookings 
Institution (Sept. 21, 2009), available at http://
hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-293568A1.pdf. 
The following month, the FCC proposed network neutrality rules, 
alleging the commission had ancillary authority to regulate 
broadband as an information service. See In Re Broadband 
Industry Practices, WC Docket No. 07-52, Notice of Proposed 
Rulemaking, FCC 09-93, at   83 (rel. Oct. 22, 2009).
    In April 2010, however, the D.C. Circuit vacated Chairman 
Martin's attempt to sanction Comcast, ruling that the FCC 
failed to demonstrate it had ancillary authority under Title I 
of the Communications Act to regulate network management. The 
court explained that Title I would only allow such regulation 
if doing so was reasonably ancillary to fulfilling an explicit 
FCC responsibility codified in another section of the 
Communications Act, and that the FCC had failed to show such a 
connection. See Comcast Corp. v. FCC, 600 F.3d 642 (D.C. 2010). 
This called into question the foundation of Chairman 
Genachowski's proposed codification of network neutrality.
    Chairman Genachowski next proposed reclassifying broadband 
Internet access service as a common carrier service so the FCC 
could regulate it under Title II. See FCC Chairman Julius 
Genachowski, ``The Third Way: A Narrowly Tailored Broadband 
Framework'' (May 6, 2010), available at http://
hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-297944A1.pdf. 
The FCC pivoted again, backing away from its reclassification 
approach, when approximately 275 members of the House and 
Senate from both sides of the aisle objected. See, e.g., Letter 
from Rep. Gene Green et al. to FCC Chairman Julius Genachowski 
(May 24, 2010); Letter from Sen. Kay Bailey Hutchison et al. to 
FCC Chairman Julius Genachowski (May 24, 2010); Letter from 
Rep. Joe Barton et al. to FCC Chairman Julius Genachowski (May 
28, 2010).
    The FCC did, nonetheless, still adopt network neutrality 
rules Dec. 21, 2010. The rules allow the FCC: 1) to regulate 
how fixed and mobile broadband carriers disclose their network 
management practices, performance characteristics, and terms of 
service; 2) to regulate how fixed and mobile broadband carriers 
provide access to content, applications, services, and devices; 
3) to determine whether the way fixed broadband providers carry 
network traffic is unreasonably discriminatory; 4) to regulate 
how fixed and mobile broadband carriers charge for carriage of 
traffic; and 5) to determine whether fixed and mobile 
providers' network management techniques are reasonable. See In 
re Broadband Industry Practices, WC Docket No. 07-52, Report 
and Order, FCC 10-201 (rel. Dec. 23, 2010).
    These rules will stifle broadband deployment, innovation, 
and jobs. They ``will sweep broadband ISPs, and potentially the 
entire Internet, into the Big Tent of Regulation,'' according 
to an editorial by Dr. David J. Farber, grandfather of the 
Internet and former FCC chief technologist, and Dr. Gerald R. 
Faulhaber, Professor Emeritus at the University of 
Pennsylvania's Wharton School and former FCC chief economist.
          What does this mean? When the FCC asserts regulatory 
        jurisdiction over an area of telecommunications, the 
        dynamic of the industry changes. No longer are customer 
        needs and desires at the forefront of firms' 
        competitive strategies; rather firms take their 
        competitive battles to the FCC, hoping for a favorable 
        ruling that will translate into a marketplace 
        advantage. Customer needs take second place; regulatory 
        ``rent-seeking'' becomes the rule of the day, and a 
        previously innovative and vibrant industry becomes a 
        creature of government rule-making. Advocates of 
        government-mandated network neutrality have argued this 
        is necessary to permit new and resource-poor innovators 
        to bring their products to market; in fact, it will 
        have exactly the opposite effect: innovators are better 
        at fighting it out in the market with better products 
        rather than fighting it out in front of the FCC with 
        high-priced lawyers; they will lose out.
    Dr. David J. Farber & Dr. Gerald R. Faulhaber, Net 
Neutrality: No One Will Be Satisfied, Everyone Will Complain, 
The Atlantic, Dec. 21, 2010, available at http://
www.theatlantic.com/technology/archive/2010/12/net-neutrality-
no-one-will-be-satisfied-everyone-will-complain/68326/.
    The rules will also threaten broadband deployment and the 
very Internet itself. A bulletin by investment analyst Dr. 
Anna-Maria Kovacs explains why. Under the order, broadband 
providers' traffic management options are restricted, yet they 
are still expected to meet the growing demand for capacity over 
time. Moreover, the broadband companies are prohibited from 
receiving payments from content, application, or service 
providers for the added capacity needed to serve their traffic. 
As a result, the broadband providers would be forced to make 
substantial additional investments at the same time that their 
avenues for recovering their costs are narrowed. This 
jeopardizes the infrastructure upon which the Internet depends. 
The prohibition on content, application, or service providers 
paying broadband providers for priority also prevents new 
entrants from entering into business arrangements that might 
help them compete against web incumbents, which can afford to 
buy or lease capacity from content delivery networks. See Dr. 
Anna-Maria Kovacs, FCC's Open Internet Order--A Financial 
Translation (Dec. 31, 2010). Dr. Kovacs concludes, therefore, 
that:
          [o]ver time, the order represents a direct transfer 
        of wealth from broadband access providers to those 
        whose content rides over the network. That means that 
        it provides those who ride the network with a 
        strategically vital financial weapon to use against 
        [broadband providers] who in many cases are their 
        competitors. To put it another way, it takes all the 
        bargaining power away from the [broadband provider]--
        who is making a very large investment for low returns--
        and giving it to the content provider who is making 
        relatively little or no investment to enable it to 
        access end-users and in some cases is already getting 
        very high returns.

Id. at 7. This is particularly significant, since ``network 
providers make far greater capital investments in the Internet 
ecosystem and create far more and better-paying jobs than 
application and content providers.'' See In re Broadband 
Industry Practices, WC Docket No. 07-52, Reply Comments of 
Communications Workers of America, at ii (filed April 26, 
2010). See also Dr. T. Randolph Beard et al., Phoenix Center 
Policy Bulletin No. 25 (October 2010), available at http://
www.phoenix-center.org/PolicyBulletin/PCPB25Final.pdf.
    The order will hurt smaller providers who can't ``absorb 
the hit'' like the bigger players and send teams of lawyers to 
camp out at the FCC. As BendBroadband CEO Amy Tykeson has 
pointed out:
          The cable industry has invested billions of dollars 
        of private capital to build broadband infrastructure to 
        cover 90% of American homes. Commissioners are looking 
        in the rearview mirror, attempting to regulate the 
        Internet of yesterday absent any market failure. How 
        will companies like BendBroadband be able to compete if 
        we bear the brunt of the regulations while the giants, 
        like Google, Amazon and Netflix, go free? . . . The 
        Chairman has picked winners and losers in this recent 
        effort to impose ``net neutrality'' regulations. These 
        efforts will cost jobs, stall innovation and dampen 
        investment.

Letter from Amy C. Tykeson, CEO, BendBroadband to Rep. Greg 
Walden (Feb. 22, 2011). Dr. Kovacs has pointed out that the 
order ironically will also hurt the very Internet users and web 
companies the FCC claims it is trying to protect. ``More 
universally damaging perhaps is the rules' potential to destroy 
the ability of infrastructure providers to raise capital. That 
would threaten the infrastructure on which both consumers and 
content providers rely.'' Kovacs, FCC's Open Internet Order 3.
    Even larger phone, cable, and wireless companies have 
concerns, notwithstanding the claims of network neutrality 
proponents that the companies support the order. Closer reading 
indicates that the companies are actually damning the rules 
with faint praise. What they are really saying is that bad is 
better than worse, and they would rather live with the order as 
adopted than reclassification under Title II.
    For example, AT&T; CEO Randall Stephenson did say at a Jan. 
12, 2011, Brookings event that ``we've landed at a place where 
we have line of sight. We know what we have. We can commit to 
these 10-year and 15-year horizon investments.'' He also said, 
however, that ``[r]egulation creates uncertainty,'' that ``I 
would be lying if I said I was totally pleased with it,'' and 
that ``we didn't get everything we'd like to have had. I'd like 
to have had no regulation, to be candid, but that wasn't going 
to happen, obviously.'' AT&T; CEO Randall Stephenson, Address at 
the Brookings Institute (Jan. 12, 2010), available at http://
www.c-spanvideo.org/program/297463-1.
    A large cable association wrote in a letter to the House 
Energy and Commerce Committee that while it agreed to the 
order, these rules are ``a solution in search of a problem,'' 
that it ``would much rather see (and believe it would be more 
equitable to have) a light regulatory touch for everyone in the 
Internet ecosystem, than a heavy and counterproductive 
regulatory regime on part or all of the Internet ecosystem,'' 
and that as a result of the order ``there could certainly be an 
adverse economic impact by chilling the willing-
ness to deploy these new services.'' Letter from NCTA CEO 
Kyle McSlarrow to Rep. Fred Upton et al. (March 7, 2011), 
available at http://republicans.energycommerce.house.gov/Media/
file/
Letters/112th/030711McSlarrow.pdf.
    A large wireless association wrote in a similar letter that 
it does ``not believe that net neutrality rules are necessary 
for the wireless industry,'' that by removing the ``specter'' 
of Title II regulation the order provides a level of certainty 
but that some uncertainty over FCC implementation remains, that 
none of its members have indicated they believe the order will 
promote the economy or jobs, and that ``increased regulation 
tends to depress rather than accelerateinvestment.'' Letter 
from CTIA CEO Steve Largent to Rep. Fred Upton et al. (March 7, 2011), 
available at http://republicans.energycommerce.house.gov/ Media/file/
Letters/ 112th/030711Largent.pdf.
    Thus, none of these providers were saying the FCC's rules 
would promote investment and deployment that would not 
otherwise have occurred. What they said was that the FCC 
minimized some of the uncertainty it had itself created by 
threatening network neutrality rules in general, and Title II 
reclassification in particular. This did not stop the FCC, 
however, from selectively editing industry statements to leave 
the impression they were pleased with the order. See Letter 
from Rep. Joe Barton to FCC Chairman Julius Genachowski (Dec. 
3, 2010, available at http://
republicans.energycommerce.house.gov/Media/file/Letters /
12.03.10%20; Letter%20to%20FCC%20Chairman% 20Genachowski.pdf.
    If the Internet is to continue to flourish, especially in 
the face of demands for ever more sophisticated content, 
service, and applications, we must maintain the historical 
hands-off approach. As Chairman Kennard explained in a June 
1999 speech:
    We have to get these pipes built. But how do we do it? We 
let the marketplace do it. If we've learned anything about the 
Internet in government over the last 15 years, it's that it 
thrived quite nicely without the intervention of government. In 
fact, the best decision government ever made with respect to 
the Internet was the decision that the FCC made 15 years ago 
NOT to impose regulation on it. This was not a dodge; it was a 
decision NOT to act. It was intentional restraint born of 
humility. Humility that we can't predict where this market is 
going.
    FCC Chairman William Kennard, Address before the NCTA (June 
15, 1999), available at http://www.fcc.gov/Speeches/ Kennard/
spwek921.html.
    There is no crisis warranting the FCC's departure from that 
hands-off approach. Advocates argue that the FCC must adopt 
network neutrality rules to keep the Internet open and 
innovative. Yet the FCC has failed to demonstrate a market 
failure or provide an economic analysis justifying 
intervention. The FCC even confesses in the order--albeit in 
the footnotes--that it conducted no examination of market 
power. See In re Broadband Industry Practices, WC Docket No. 
07-52, Report and Order, FCC 10-201, at n.49 (rel. Dec. 23, 
2010). In response to a Committee letter asking the FCC to 
identify any economic analysis in the order, the agency pointed 
to paragraphs that do little more than summarize the comments 
of parties and provide conclusory statements. See Letter from 
FCC Chairman Julius Genachowski to Rep. Fred Upton (March 7, 
2010), available at http://
republicans.energycommerce.house.gov/ Media/file/Letters/ 
112th/030711Genachowski.pdf. The order did not conduct the type 
of cost-benefit analysis that President Obama's January 18, 
2011, executive order now calls for and that Chairman 
Genachowski endorsed in an email to his staff. There is no 
serious quantification of an actual problem, let alone of the 
costs the rules would have on the economy.
    The FCC hangs almost its entire case for network neutrality 
rules on Comcast's past attempt to combat network congestion by 
managing peer-to-peer traffic. But Comcast and the peer-to-peer 
community resolved that issue by gathering their engineers and 
developing alternative solutions that advanced traffic 
management techniques to everyone's benefit. No network 
neutrality rules were in place, and the D.C. Circuit overturned 
the FCC's enforcement action because the FCC failed to 
demonstrate it had any authority in the matter. The FCC also 
cites a 2005 case in which Madison River Telephone Company was 
accused of blocking ports used for voice over Internet protocol 
applications. But that case was settled by consent decree. 
Everything else the order discusses is either an 
unsubstantiated allegation or speculation of future harm.
    Opponents of the disapproval resolution say the network 
neutrality order does not regulate the Internet, but instead 
creates minimally intrusive rules of the road that everyone 
agrees with. But if the rules are nonintrusive and universally 
accepted, why does the FCC need to force them on industry? Why 
is the FCC shielding web companies and selectively enforcing 
the rules only against broadband providers? Claims the rules 
don't regulate the Internet also ring false. On-ramps are part 
of the highway. The FCC is micromanaging how services and 
applications flow and the business arrangements broadband 
providers and web companies may enter.
    Opponents of the resolution also claim the rules are needed 
because broadband providers have the incentive and ability to 
favor some Internet content, applications, and web sites. But 
web companies also have an incentive and ability to 
discriminate. Google can influence its search results. See 
Barbara Ortutay and Michael Liedtke, Google Tweaks Search to 
Punish ``Low-Quality'' Sites, Associated Press, available at 
http://news.yahoo.com/s/ap/ 20110225/ap--on--hi--te/ us--tec--
google--search. Nothing prevents Google from favoring 
affiliated or preferred entities. If the FCC has conducted no 
market power analysis and relies on speculation of future harm, 
there is no principled reason to treat companies operating at 
the core of the Internet differently from companies at the 
edge. Instead of promoting competition, such picking of winners 
and losers will stifle the investment needed to perpetuate the 
Internet's phenomenal growth, hurting the economy. We want 
innovation at the edge and the core of the Internet. Engineers, 
entrepreneurs and consumers acting in the marketplace should 
determine how carriers manage their networks and business 
arrangements, not as few as three unelected commissioners.
    Even apart from the harm the network neutrality rules will 
cause, the FCC's underlying theory of authority for the order 
would allow the commission to regulate almost any interstate 
communication service on barely more than a whim and without 
any additional input from Congress. The FCC claims it has 
authority to enact the rules under Section 706 of the 1996 
Telecommunications Act relating to the promotion of advanced 
telecommunications capability, and under Titles II, III, and VI 
of the 1934 Communications Act relating to the promotionof 
voice, audio, and video services. See In re Broadband Industry 
Practices, WC Docket No. 07-52, Report and Order, FCC 10-201, at 
para.para. 117-37 (rel. Dec. 23, 2010). Section 706(a) provides that 
the FCC and state commissions: shall encourage the deployment on a 
reasonable and timely basis of advanced telecommunications capability 
to all Americans (including, in particular, elementary and secondary 
schools and classrooms) by utilizing, in a manner consistent with the 
public interest, convenience, and necessity, price cap regulation, 
regulatory forbearance, measures that promote competition in the local 
telecommunications market, or other regulating methods that remove 
barriers to infrastructure investment.
    47 U.S.C. Sec. 1302(a). Section 706(b) states that the FCC 
``shall take immediate action to accelerate deployment of 
[advanced telecommunications] capability by removing barriers 
to infrastructure investment and by promoting competition in 
the telecommunications market,'' if such capability is not 
``being deployed to all Americans in a reasonable and timely 
fashion.'' Id. at Sec. 1302(b). Title II governs the provision 
of telecommunications services. See id. at 201-76. Title III 
governs the provision of broadcast radio and television 
services and wireless voice services. See id. at Sec. Sec. 301-
399B. Title VI governs the provision of subscription video 
services. See id. at Sec. Sec. 601-653. None of these claims of 
authority are persuasive.
    The FCC's reliance on section 706 flies in the face of its 
own precedent and the section's language. The FCC has held 
``that in light of the statutory language, the framework of the 
1996 Act, its legislative history, and Congress' policy 
objectives, the most logical statutory interpretation is that 
section 706 does not constitute an independent grant of 
authority.'' See In re Deployment of Wireline Servs. Offering 
Advanced Telecom. Capability, CC Docket No. 98-147, Memorandum 
Opinion and Order, FCC 98-188, at para. 77 (rel. Aug. 7, 1998). 
Instead, section 706 directs the FCC to use authority in other 
provisions, including its deregulatory, section 10 forbearance 
authority, to encourage deployment of advanced services. Id.
    Subsections (a) and (b) also focus on ``removing barriers 
to infrastructure investment'' and ``promoting competition in 
the telecommunications market.'' 47 U.S.C. 1302(a), (b). By 
contrast, the FCC's order creates obstacles to infrastructure 
investment by regulating broadband providers, increasing their 
costs, and restricting the ways they may do business, price 
their services, and earn a return on their investments. The 
order also does not focus on competition in the 
telecommunications market. Rather, it tips the scales in favor 
of web-based companies that exist on the edge of the Internet, 
and that are far less involved in infrastructure investment 
than the broadband providers at the core. See Dr. Anna-Maria 
Kovacs, FCC's Open Internet Order--A Financial Translation 
(Dec. 31, 2010).
    Also problematic is the language in subsection (b) about 
accelerating deployment of advanced telecommunications 
capability if such capability is not ``being deployed to all 
Americans in a reasonable and timely fashion.'' While the FCC 
concluded in July 2010 that overall deployment is not occurring 
in a reasonable and timely fashion, see In re Inquiry 
Concerning the Deployment of Advanced Telecom. Capability, GN 
Docket No. 09-137, Sixth Broadband Deployment Report, FCC 10-
129 at para. 2 (rel. July 20, 2010), that conclusion strains 
credulity. Indeed, the FCC's National Broadband Plan reports 
that approximately 95 percent of the country has access to 
broadband, that two-thirds subscribe, and that the number of 
users has skyrocketed to 200 million from 8 million in ten 
years. See Connecting America: The National Broadband Plan, at 
XI, 3, available at http://download.broadband.gov/plan/
national-broadband-plan.pdf.
    The FCC's claim that Titles II, III, and VI authorize the 
network neutrality rules also falls short. These titles allow 
the FCC to regulate traditional voice, audio, and video 
services, not data services. Rather than rely on these titles 
as a direct source of authority, the FCC makes an indirect 
argument. For example, the FCC argues that competition from 
voice over Internet protocol service creates a check on the 
rates, terms and conditions of telecommunications service, that 
promoting VoIP with network neutrality rules therefore promotes 
telecommunications services, and that its network neutrality 
rules therefore fall within its Title II mandate. See In re 
Broadband Industry Practices, WC Docket No. 07-52, Report and 
Order, FCC 10-201, at para.para. 125-26 (rel. Dec. 23, 2010). 
But as discussed above, section 230 makes it the policy of the 
United States ``to preserve the vibrant and competitive free 
market that presently exists for the Internet and other 
interactive computer services, unfettered by Federal or State 
regulation.'' 47 U.S.C. Sec.  230(b)(2). While statements of 
policy do not create statutorily mandated responsibilities, 
they can help delineate the contours of statutory authority. 
Comcast Corp. v. FCC, 600 F.3d 642, 654 (D.C. 2010). In light 
of Congress's statutory pronouncement that Internet regulation 
is disfavored, the FCC's theory of regulation by ``bank shot'' 
under Titles II, III, and VI stretches too far.
    The indirect argument the FCC makes is more akin to an 
ancillary authority argument, even though the FCC's general 
counsel, at a December 3, 2010, briefing for congressional 
staff on the network neutrality order, twice insisted that the 
FCC is making a direct authority argument. At bottom, this is 
little more than an end-run around the D.C. Circuit's April 
2010 ruling in the Comcast case that the FCC failed to show it 
had ancillary authority to regulate network management.
    Opponents of the disapproval resolution argue that it 
strips the FCC of authority to address Internet-related issues, 
including issues related to public safety and piracy. That is 
incorrect. As Senate Majority leader Harry Reid said when the 
Congressional Review Act was adopted, ``[i]f the law that 
authorized the disapproved rule provides broad discretion to 
the issuing agency regarding the substance of such rule, the 
agency may exercise its broad discretion to issue a 
substantially different rule.'' Joint Explanatory Statement of 
House and Senate Sponsors, 142 Cong. Rec. S3683, at S3686 
(daily ed. April 18, 1996). Thus, if the agency has broad 
authority to adopt Internet-related regulations, as the FCC's 
general counsel contends, it can still adopt such regulations. 
It simply cannotreimpose these rules or substantially similar 
ones, whether under its current claims of authority, through a Title II 
reclassification approach, or under some other existing authority. See 
5 U.S.C. Sec. Sec. 801(b)(2). And, of course, if Congress were later to 
decide that the agency should have authority to adopt the same or 
substantially similar rules, it can pass a law granting the FCC such 
authority. Id. If, on the other hand, the FCC does not have broad 
authority to adopt Internet-related regulations, as advocates of the 
disapproval regulation believe, then the FCC never had the statutory 
authority to adopt these rules in the first place. Seen in this 
context, a vote against this disapproval resolution is simply a vote to 
allow the FCC to try to reimpose these same or substantially similar 
rules under a Title II reclassification approach should it lose in 
court under its current claims of authority, as even network neutrality 
advocates concede is likely.
    Some argue that if supporters of the disapproval resolution 
believe the FCC lacks authority to adopt these rules, they 
should have supported Mr. Waxman's attempt last Congress to 
explicitly grant the agency that authority. That draft 
legislation, however, suffered from some of the same flaws as 
the FCC's current rules: it required no finding of market 
failure or market power and selectively targeted broadband 
providers to the exclusion of web companies. See Letter from 
Rep. Henry Waxman to FCC Chairman Julius Genachowski (Dec. 1, 
2010) (attaching copy of draft bill), available at http://
democrats.energycommerce.house.gov/documents/20101201/
Genachowski.FCC.2010.12.1.pdf. It also came so late in the 
Congress as to prevent any realistic debate or consideration, 
and the FCC adopted its rules just weeks later.
    Opponents of the disapproval resolution suggest puzzlement 
over supporters' objection to the rules, pointing to the fact 
that some voted for H.R. 5252 in the 109th Congress, which 
contained network neutrality provisions. Those provisions, 
however, would only have codified the FCC's 2005 policy 
statement, would not have allowed the FCC to adopt these or any 
other substantive network neutrality rules or regulations, 
would have applied to web companies as well as broadband 
providers, and was part of much broader legislation on video 
franchise reform. Moreover, an amendment to that bill by Mr. 
Markey that would have authorized regulations akin to the 
onerous ones at issue here was defeated on the House floor in a 
bipartisan 269-152 vote, with a number of opponents of this 
disapproval resolution voting against the amendment. See Roll 
Call 239 (June 8, 2006), http://clerk.house.gov/evs/2006/
roll239.xml.
    Some opponents of the disapproval resolution also try to 
argue that relying on the expedited process of a resolution of 
disapproval is somehow something other than ``regular order.'' 
This ignores the fact that the disapproval process was created 
through congressional passage of the Congressional Review Act 
and was described at the time by now-Senate Majority Leader 
Harry Reid, one of its authors, as a ``reasonable, sensible 
approach to regulatory reform.'' 141 Cong. Rec. S9644, at S9645 
(daily ed. July 10, 1995). It also ignores the fact that some 
of the critics of this resolution have themselves co-sponsored 
resolutions of disapproval of other FCC regulations. For 
example, Mr. Waxman, Ms. Eshoo, Mr. Markey, Ms. Schakowsky, and 
Mr. Dingell co-sponsored H.J. Res. 72 in 2003 and Mr. Waxman, 
Ms. Eshoo, Mr. Doyle, Ms. Schakowsky, and Ms. Baldwin co-
sponsored H.J. Res. 79 in 2008. Both were resolutions 
disapproving FCC media ownership rules.

                                HEARINGS

    Reps. Henry Waxman and Rick Boucher, then chairmen of the 
House Energy and Commerce Committee and its Subcommittee on 
Communications, Technology and the Internet, respectively, held 
no hearings on network neutrality in the 111th Congress despite 
repeated requests, including at least one formal letter. See 
Letter from Reps. Joe Barton and Cliff Stearns to Reps. Henry 
Waxman and Rick Boucher (June 17, 2010).
    Following the change in majority resulting from the 2010 
midterm elections, the renamed Subcommittee on Communications 
and Technology held two hearings in the 112th Congress on the 
FCC's network neutrality rules regulating the Internet. The 
subcommittee held a hearing Feb. 16, 2011, entitled ``Network 
Neutrality and Internet Regulation: Warranted or More Economic 
Harm than Good?'' The subcommittee received testimony from FCC 
Chairman Julius Genachowski and commissioners Michael J. Copps, 
Robert M. McDowell, Mignon Clyburn, and Meredith Attwell Baker. 
At the request of the minority, the subcommittee postponed a 
markup of the resolution and held a second hearing March 9, 
2011, on H.J. Res. 37. The subcommittee received testimony from 
Robin Chase, CEO, Buzzcar; Tom DeReggi, President, RapidDSL & 
Wireless; Derek Turner, Research Director, Free Press; Jim 
Cicconi, Sr. Exec. Vice President, External and Legislative 
Affairs, AT&T; Prof. Shane Mitchell Greenstein, Kellogg School 
of Management, Northwestern University; and Dr. Anna-Maria 
Kovacs, Strategic Choices.

                        COMMITTEE CONSIDERATION

    On Wednesday, March 9, 2011, the Subcommittee on 
Communications and Technology met in open markup session and 
approved H.J. Res. 37, disapproving the rule submitted by the 
Federal Communications Commission with respect to regulating 
the Internet and broadband industry practices, without 
amendment, by a record vote of 15 yeas and 8 nays. The Full 
Committee met in open markup session on Monday, March 14, 2011, 
and Tuesday, March 15, 2011, and ordered H.J. Res. 37 reported, 
without amendment, by a record vote of 30 yeas and 23 nays.

                            COMMITTEE VOTES

    Clause 3(b) of Rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Upton to order H.J. Res. 37 reported to the 
House, without amendment, was agreed to by a record vote of 30 
yeas and 23 nays.


                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held legislative and 
oversight hearings and made findings that are reflected in this 
report.

         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    The goals of H.J. Res. 37 are to nullify the ``network 
neutrality'' rules regulating the Internet that the FCC adopted 
Dec. 21, 2010. See In re Broadband Industry Practices, WC 
Docket No. 07-52, Report and Order, FCC 10-201 (rel. Dec. 23, 
2010). The Committee also intends the resolution to prevent the 
FCC from reimposing the same or substantially similar rules 
through reclassification of broadband under Title II of the 
Communications Act or any other claimed source of direct or 
ancillary authority. The purpose of the resolution is to 
prevent the harm the rules would cause to broadband deployment, 
innovation, competition, and jobs, as well as to stop the FCC 
from asserting authority over the Internet that Congress has 
not granted it.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.J. 
Res. 37 would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

                                EARMARKS

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI, 
the Committee finds that H.J. Res 37 contains no earmarks, 
limited tax benefits, or limited tariff benefits.

                        COMMITTEE COST ESTIMATE

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    Pursuant to clause 3(c)(3) of Rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                                    March 30, 2011.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.J. Res. 37, a joint 
resolution disapproving the rule submitted by the Federal 
Communications Commission with respect to regulating the 
Internet and broadband industry practices.
    If you wish further details on this estimate, we will be 
pleased to provide them. the CBO staff contact is Susan Willie.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.J. Res. 37--A joint resolution disapproving the rule submitted by the 
        Federal Communications Commission with respect to regulating 
        the Internet and broadband industry practices

    H.J. Res. 37 would disapprove the rule adopted by the 
Federal Communications Commission (FCC) on December 21, 2010, 
that is intended to preserve the Internet as an open network. 
Report and Order FCC 10-201 establishes rules that would bar 
broadband providers from blocking lawful content and 
discriminating in transmitting lawful traffic on the network. 
The rule also would require broadband providers to disclose to 
the public information about network management practices, 
performance, and terms of service.
    H.J. Res. 37 would invoke a legislative process established 
by the Congressional Review Act (Public Law 104-121) to 
disapprove the open Internet rule. If H.J. Res is enacted, the 
published rule would have no force or effect. Based on 
information from the FCC, CBO estimates that voiding this rule 
would have no effect on the budget. Enacting H.J. Res. 37 would 
not affect direct spending or revenues; therefore, pay-as-you-
go procedures do not apply.
    H.J. Res. 37 contains no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
and would improve no costs on state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Susan Willie. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

    The resolution states ``[t]hat Congress disapproves the 
rule submitted by the Federal Communications Commission 
relating to the matter of preserving the open Internet and 
broadband industry practices (Report and Order FCC 10-201, 
adopted by the Commission on December 21, 2010), and such rule 
shall have no force or effect.''

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation does not amend any existing Federal 
statute.

                            DISSENTING VIEWS

    We oppose H.J. Res. 37, a resolution disapproving the rules 
submitted by the Federal Communications Commission (FCC) 
relating to the matter of preserving the open Internet and 
broadband industry practices, as reported. We oppose this 
misguided legislation because it will limit access and 
innovation, undermine job creation, and ultimately harm the 
Internet ecosystem.
The FCC's Light Regulatory Touch to Preserve and Promote an Open 
        Internet
    The FCC has always played a critical role in our nation's 
development and deployment of broadband Internet services. When 
incumbent phone companies began to offer broadband digital 
subscriber line (DSL) services in the late 1990s, it was 
regulated as a ``telecommunications service'' under the 
Telecommunications Act of 1996 (the 1996 Act) subject to Title 
II of the Communications Act of 1934 (the Act), including 
provisions to ensure that those that offer such services do so 
on reasonable and nondiscriminatory terms.
    Proponents of H.J. Res. 37 point to a 1998 FCC report to 
Congress widely known as the ``Stevens Report'' to justify 
their claim that retail availability of Internet access service 
was never regulated. But while the Report stated that Internet 
access service as it was then being offered was an 
``information service,'' this distinction was premised on the 
fact that at the time, 98 percent of all households with 
Internet connections used traditional telephone service to 
``dial-up'' their Internet access service provider. The Report 
thus treated Internet access service as ``information service'' 
because these providers owned no telecommunications facilities. 
When telecommunications companies began to offer their own DSL 
services, the transmission component of their Internet access 
service remained under Title II regulation.
    When the FCC elected to treat cable modem service as an 
``information service'' under Title I of the Act in 2002, then-
FCC Chairman Michael Powell stated that the FCC is ``not left 
powerless to protect the public interest by classifying cable 
modem service as an information service. Congress invested the 
Commission with ample authority under Title I. That provision 
has been invoked consistently by the Commission to guard 
against public interest harms and anti-competitive 
results.''\1\
---------------------------------------------------------------------------
    \1\Statement of Chairman Michael Powell, Inquiry Concerning High-
Speed Access on the Internet Over Cable and Other Facilities; Internet 
Over Cable Declaratory Ruling; Appropriate Regulatory Treatment for 
Broadband Access to the Internet over Cable Facilities, FCC 02-77 
(March 15, 2002).
---------------------------------------------------------------------------
    On December 21, 2010, the FCC issued its Open Internet 
Order incorporating open Internet principles and building upon 
the existing record at the Commission to identify ``the best 
means to achieve our goal of preserving and promoting the open 
Internet.''\2\ It also represented the first attempt by the 
Commission to address the legal authority issues raised by the 
D.C. Circuit in Comcast.
---------------------------------------------------------------------------
    \2\See Federal Communications Commission, Preserving the Open 
Internet, Broadband Industry Practices, Notice of Proposed Rulemaking 
p. 4 (Oct. 22, 2009) (online at http://hraunfoss.fcc.gov/edocs_public/
attachmatch/FCC-09-93A1.pdf).
---------------------------------------------------------------------------
    The FCC's Open Internet Order included a two-page rule that 
imposes limited obligations on broadband Internet service 
providers. The Commission based its authority to promulgate the 
rule on Section 706(a) and (b) of the 1996 Act as well as its 
Title I authority ancillary to explicit authorities granted 
under Titles II, III and VI of the Communications Act.
    First, it imposes a transparency obligation requiring both 
fixed and mobile broadband Internet access service providers to 
``publicly disclose accurate information regarding the network 
management practices, performance, and commercial terms of its 
broadband Internet access services sufficient for consumers to 
make informed choices regarding use of such services'' and for 
content, application, service, and device providers to 
``develop, market, and maintain Internet offerings.''\3\ 
Second, it prohibits fixed broadband providers from blocking 
lawful content, applications, services and devices to ensure 
consumers and innovators continue to have the right to send and 
receive lawful Internet traffic, with mobile broadband service 
providers subjected to a more limited set of prohibitions.\4\ 
Third, the rules ensure the Internet remains a level playing 
field by prohibiting fixed broadband providers from 
unreasonably discriminating in transmitting lawful network 
traffic.\5\ Finally, the framework recognizes the right of 
broadband providers to meaningfully and legitimately manage 
their network and provides flexibility to network providers to 
address congestion or traffic that's harmful to the network.\6\
---------------------------------------------------------------------------
    \3\Id., at 65.
    \4\Id., at 65.
    \5\Id.,
    \6\Id.,
---------------------------------------------------------------------------
    The majority claims that the FCC conducted no market 
analysis and failed to consider the cost-benefit of the rules. 
But the record shows that the FCC reviewed the broadband retail 
market and found that as of December 2009, nearly 70 percent of 
households lived in areas where only one or two wireline or 
fixed wireless firms provided broadband and that about 20 
percent of households are in areas with only one broadband 
provider, making the ability to switch broadband providers 
difficult.\7\ The FCC also pointed to the Department of Justice 
observations that: (1) the wireline broadband market is highly 
concentrated; (2) the prospects for additional wireline 
competition are dim; and (3) extent to which mobile wireless 
offerings will compete with wireline offerings is unknown.\8\ 
Finally, the FCC based its analysis on the existence of a 
``terminating access monopoly,'' finding that a broadband 
provider could force other content or ``edge'' providers to 
``pay inefficiently high fees because that broadband provider 
is typically an edge provider's only option for reaching a 
particular end user,''\9\ thereby acting as a gatekeeper.
---------------------------------------------------------------------------
    \7\Id., at 19.
    \8\Id., at 27.
    \9\Id., at 15.
---------------------------------------------------------------------------
    In considering the cost-benefit of the rules, the FCC found 
that ``we expect the cost of compliance with our prophylactic 
rules to be small, as they incorporate longstanding openness 
principles that are generally in line with current practices 
and with norms endorsed by many broadband providers. 
Conversely, the harm of open Internet violations may be 
substantial, costly, and in some cases potentially 
irreversible.''\10\ Furthermore, the FCC concluded that ``the 
benefits of ensuring Internet openness through enforceable, 
high-level, prophylactic rules outweigh the costs'' because the 
rules are ``carefully calibrated to preserve the benefits of 
the open Internet and increase certainty for all Internet 
stakeholders, with minimum burden on broadband providers.''\11\
---------------------------------------------------------------------------
    \10\Id., at 3.
    \11\Id., at 5.
---------------------------------------------------------------------------
    Consistent with the FCC's ``hands-off' approach to the 
regulation of broadband, the Open Internet Order did not rest 
the Commission's authority on Title II of the Communications 
Act as traditionally applied to common carriers. The majority 
notes that 275 members of Congress weighed in with the FCC in 
opposition to the open Internet rules. In fact, congressional 
concern was largely focused on a proposal to reclassify 
broadband Internet access services under Title II of the 
Communications Act. By electing to proceed under Section 706 
and under Title I of the Act, the FCC did not adopt what turned 
out to be the most controversial aspect of the open Internet 
proceeding. Indeed, the rules adopted by the FCC reflected 
broad consensus amongst stakeholders to codify many of the 
existing practices by broadband providers.

The FCC's Open Internet Order Is a Product of Consensus and Compromise

    Despite efforts to portray the FCC's Open Internet Rules as 
an example of government overreach, the Order has received 
broad support from consumer and public interest groups, 
broadband Internet service providers, labor unions, as well as 
high-tech and edge companies:
     Broadband Providers. Jim Cicconi, AT&T;'s Senior 
Executive Vice President of External and Legislative Affairs, 
testified that the FCC's rules ``landed at a place where [AT&T; 
has] line of sight . . . [AT&T;] can commit to these 10-year and 
15-year horizon investments.''\12\ Similarly, Time Warner Cable 
stated at the time of the Order's release that the rules 
adopted ``appear to reflect a workable balance between 
protecting consumers'' interests and preserving incentives for 
investment and innovation by broadband Internet service 
providers,''\13\ That view was echoed by Kyle McSlarrow of the 
National Cable & Telecommunications Association (NCTA), who 
stated in a letter to Republican leaders of the Committee that 
NCTA supports the FCC order because ``1) it largely codifies 
the status quo practices to which the industry has voluntarily 
committed; 2) it contains helpful clarifying language around 
such issues as what constitutes ``reasonable network 
management;'' 3) it provides greater certainty about our 
ability to manage and invest in our broadband services today 
and those we may deploy in the future; and 4) the alternative 
of Title II regulation . . . presented a stark and much worse 
risk to continued investment and job creation.''\14\
---------------------------------------------------------------------------
    \12\House Committee on Energy and Commerce, Testimony of Sr. Exec. 
Vice President, External and Legislative Affairs, AT&T; Jim Cicconi, 
Hearing on H.J. Res. 37 Disapproving FCC Rules Regulating the Internet, 
112th Cong. (March 9, 2011).
    \13\Jeff Simmermon, FCC Votes on ``Net Neutrality''--Here's Our 
Position, (Dec. 21, 2010) (online at http://www.twcableuntangled.com/
2010/12/fcc-votes-on-net-neutrality-heres-our-position/).
    \14\Letter from Kyle McSlarrow President and CEO National Cable and 
Telecommunications Association to Reps. Fred Upton, Greg Waldon, and 
Lee Terry (March 7, 2011).
---------------------------------------------------------------------------
    High-Tech Sector. The Open Internet Coalition, which 
includes companies such as Amazon, Netflix, Facebook, eBay, and 
Google, stated that the Order ``would provide a degree of 
certainty to all participants in the broadband marketplace and 
help foster an open wireline Internet online ecosystem.''\15\ 
Similarly, the Computer & Communications Industry Association 
(CCIA) and TechNet stated in a letter opposing H.J. Res. 37 
that the FCC rule ``allows flexible network management and does 
nothing to inhibit broadband network deployment, while it 
affirmatively facilitates innovation and investment in new 
online services, content, applications, and access devices by 
providing some minimal assurance they will not be blocked 
arbitararily.''\16\
---------------------------------------------------------------------------
    \15\Open Internet Coalition, Statement on FCC Open Internet Vote 
(Dec. 21, 2010) (online at http://www.openinternetcoalition.com/
index.cfm?objectid=6C430AD4-0D2C-1EOB78C000C296BA163.)
    \16\Computer & Communications Industry Association, Letter re: Open 
Internet (Feb. 14, 2011) (online at http://
democrats.energycommerce.house.gov/sites/default/files/documents/
CCIA%20-%20open%20internet%20letter.pdf).
---------------------------------------------------------------------------
    Public Interest Organizations and Unions. In a joint 
statement, Consumers Union (CU) and Consumer Federation of 
America (CFA) praised the Order for helping to ``resolve the 
current uncertainty in the Internet marketplace'' and that 
while ``unanimity on net neutrality may be impossible . . . 
inaction is unacceptable.'' Mark Cooper, Research Director for 
CFA, further stated that ``[t]he only way to preserve the open 
Internet is for the FCC to immediately put in place a pragmatic 
set of rules that gives teeth to the principles that have 
governed the open Internet since its inception. We need to 
establish facts on the ground and gain practical experience 
with network management in the broadband era . . . the FCC 
appears headed toward the right goal.''\17\ In addition, the 
Communications Workers of America (CWA) supported the Order 
because it ``resolves the issue in a way that protects an Open 
Internet yet provides for incentives for investment, economic 
development and the creation of quality jobs and sustainable 
communities.''\18\
---------------------------------------------------------------------------
    \17\Consumers Union and Consumer Federation of America, Consumers 
Groups Welcome FCC Action on Network Neutrality (Dec. 1, 2010) (online 
at http://www.consumerfed.org/pdfs/
Network%20Neutrality%20News%20Release.pdf).
    \18\See Communications Workers of America, FCC Vote Moves U.S. 
Forward on Broadband (Dec. 21, 2010) (online at http://www.cwa-
union.org/news/entry/cwa_fcc_vote_moves_u.s._forward_on_broadband).
---------------------------------------------------------------------------
    Overall, the Subcommittee received letters from more than 
130 organization, including the AFL-CIO, NAACP, United States 
Conference of Catholic Bishops, American Library Association, 
American Association of Independent Music, Leadership 
Conference on Civil and Human Rights, League of United Latin 
American Citizens, National Organization for Women, Free Press, 
Sierra Club, and United Auto Workers all expressing their 
opposition to H.J. Res. 37.\19\
---------------------------------------------------------------------------
    \19\All the letters could be found at http://
democrats.energycommerce.house.gov/index.php?q=hearing/hearing-on-
network-neutrality-and-internet-regulation-warranted-or-more-economic-
harm-than-g
---------------------------------------------------------------------------

Overturning the Open Internet Order Will Inject New Uncertainty into 
        the Broadband Marketplace, Threatening Investment and Job 
        Creation

    According to Hamilton Consultants, the open Internet 
ecosystem has led to the creation of more than 3 million jobs 
ov e past 15 years. In 2010, the U.S. tech sector grew about 
twice as fast as the U.S. economy.\20\ Since 1995, venture 
capital funds have invested approximately $250 billion in 
industries reliant on the Open Internet, including software, IT 
services, computers and peripherals, media and entertainment, 
as well as networking and equipment.
---------------------------------------------------------------------------
    \20\Hamilton Consultants, Inc. Economic Value of the Advertising-
Supported Internet Ecosystem (June 10, 2009).
---------------------------------------------------------------------------
    Supporters of the Open Internet Order have widely praised 
the FCC action for removing regulatory uncertainty over 
broadband network providers and allowing investment to flow for 
both network operators and edge companies. That view is echoed 
by major Wall Street analysts such as Bank of America/Merrill 
Lynch, which found the rules to be eliminated ``the net 
neutrality regulatory overhang'' from telecom and cable 
stock\21\ as well as analysts from Standard & Poor's, Citi, 
Credit Suisse, Goldman Sachs, Raymond James, and Wells 
Fargo.\22\
---------------------------------------------------------------------------
    \21\Bank of America Merrill Lynch, Turning the page on net 
neutrality (Dec. 21, 2010).
    \22\See Wells Fargo Securities, Telecom Services & Cable Comments: 
FCC Outlines Plan for Open Internet (Net Neutraility), by Jennifer M. 
Fritzsche and Marci L. Ryvicker (12/1/10); Citigroup Global Markets, 
Alert: FCC Likely to Push Forward on a Compromise Solution for Net 
Neutrality Under Title I Instead of Title II, by Michael Rollins and 
Jason B. Bazinet (12/1/10); Credit Suisse, Genachowski's New Net 
Neutrality Framework; Generally Positive for MSOs, by Stefan Anninger 
and Ashton Ngwena (12/1/10); Raymond James, Redefining Success on Net 
Neutrality, by Frank G. Louthan IV, Jason Fraser, and Mike Ciaccia (12/
1/10); Bank of America Merrill Lynch, The OTT Silver Bullet, by Jessica 
Reif Cohen, Ethan Lacy, and Peter Henderson (12/2/10); Goldman Sachs, 
FCC Net Neutrality Rules: A Framework, with a Lot of Wiggle Room, by 
Jason Armstrong, Derek R. Bingham, Ingrid Chung, and Scott Goldman (12/
21/10).
---------------------------------------------------------------------------
    The majority can only point to a single investment analyst 
to support its opposition to the Order--an outlier whose 
perspective contrasts sharply with most investment analysts.
    Contrary to the assertions of the majority, we believe H.J. 
Res. 37, if enacted, would generate new uncertainty into the 
broadband market, hampering investment and job creation.
    First, H.J. Res. 37 would undermine the Internet economy by 
allowing broadband operators to pick and choose winners and 
losers. It would allow broadband network operators to block 
applications, content, and services traveling on their networks 
absent any disclosure to consumers and without legitimate 
network management reasons. The Internet as it exists today 
would never have flourished if network operators were allowed 
to extend their control at the core of the network to the edge 
of the network in a manner that would restrict consumer choice. 
Indeed, economists such as Prof. Shane Greenstein of 
Northwestern University have raised the concern that the lack 
of open Internet rules will increase transaction costs for edge 
providers seeking access online thereby raising costs of 
introducing new products and chilling innovation and 
competition.\23\
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    \23\See House Committee on Energy and Commerce, Testimony of Shane 
Greenstein, Elinor and Wendell Hobbs Professor, Kellogg School of 
Management, Northwestern University, Hearing on H.J. Res. 37 
Disapproving FCC Rules Regulating the Internet, 112th Cong. (March 9, 
2011).
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    Second, broadband providers will continue to experience the 
regulatory uncertainty that the Order sought to minimize. In 
addition to taking away the ``line of sight'' for broadband 
companies to start making investment decisions, it is unclear 
what role, if any, the FCC will assert in this matter. Without 
a clear role for the FCC, broadband providers will have 
difficulty determining the scope of agency action or how the 
agency will address complaints about certain practices. Without 
clear rules of the road and a defined process, uncertainty will 
result.
    Finally, a Resolution of Disapproval under the 
Congressional Review Act (CRA) not only strikes the agency 
rule, it prohibits the agency from going forward with another 
rule that is ``substantially the same'' as the disapproved rule 
without additional congressional authorization. Therefore, H.J. 
Res. 37, if enacted, could prevent the FCC from going forward 
with rules that are substantially similar to the transparency, 
no-blocking, and nondiscrimination provisions approved by the 
agency in December 2010. How the term ``substantially the 
same'' would be interpreted might be subject to a reviewing 
court, and no court has so far opined on the term under the 
CRA. Passage of H.J. Res. 37 could therefore generate 
additional uncertainty for broadband providers, high-tech 
companies and investors, as well as the FCC.

A Resolution of Disapproval Under the CRA Is a Blunt Instrument That 
        Should Be Utilized Rarely

    Successful adoption of a Resolution of Disapproval under 
the CRA would strike downany disapproved rule in its 
entirety.\24\ Therefore, if H.J. Res. 37 is enacted, it would overturn 
all of the provisions included in the Open Internet Order. Despite 
areas of broad agreement on certain aspects of the FCC's rules, such as 
the need for transparency, the prohibition on blocking of lawful 
content, and the right to exercise reasonable network management, the 
CRA would bluntly remove even these consensus measures.
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    \24\See CRS Report RL30116, Congressional Review of Agency 
Rulemaking: An Update and Assessment of the Congressional Review Act 
After a Decade, by Morton Rosenberg.
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    In order to address this problem, Democratic committee 
members attempted to amend H.J. Res. 37 to retain these 
consensus provisions, but these amendments were ruled out of 
order.
    By way of example, during subcommittee and full committee 
markup of H.J. Res. 37, Rep. Doyle attempted to introduce an 
amendment that would preserve the FCC's so-called ``no blocking 
rule''--which simply states that fixed broadband providers may 
not block lawful content, applications, services or non-harmful 
devices and that mobile broadband may not block lawful websites 
or block applications that compete with their voice or video 
telephony services. No blocking of lawful content has been a 
common practice of broadband providers for years. Indeed, as 
early as 2004, then-FCC Chairman Michael Powell gave a speech 
in which he outlined four `Net freedoms. The first freedom was 
that consumers should have access to their choice of legal 
content. Chairman Powell stated at the time that ``consumers 
have come to expect to be able to go where they want on high-
speed connections, and those who have migrated from dial-up 
would presumably object to paying a premium for broadband if 
certain content were blocked.\25\ The principle was reaffirmed 
by FCC's 2005 Internet Policy Statement and incorporated into 
the Communications Opportunity, Promotion, and Enhancement Act 
of 2006 introduced by then-Chairman Joe Barton.\26\
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    \25\Federal Communications Commission, Remarks as Prepared for 
Delivery by Chairman Michael K. Powell at the Silicon Flatirons 
Symposium (Feb. 8, 2004).
    \26\H.R. 5252, 109th Cong. (2006)
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    Another provision of the Open Internet Order that has 
enjoyed broad support from stakeholders is the rule pertaining 
to transparency. During Committee markup, Rep. Matsui attempted 
to offer an amendment that would preserve the portion of the 
Open Internet rule imposing a transparency requirement on 
broadband providers so that consumers and developers can make 
informed choices. The transparency rule requires broadband 
providers to disclose their network management practices, 
performance characteristics and terms and conditions of their 
broadband service to consumers.
    This rule is critical to promoting our Internet economy 
because in order to maximize Internet usage, consumers must 
have the information necessary to make informed choices 
regarding the types and use of broadband service they purchase. 
Transparency also generates trust, which in turn increases 
consumer confidence in broadband provider practices, thereby 
encouraging adoption. Thus a transparency requirement creates a 
so-called ``virtuous cycle'' as increased adoption leads to 
greater investment in broadband infrastructure. A transparency 
rule will also help third parties like edge providers, high-
tech companies, and venture capitalists make informed decisions 
on when and how to embark on innovative projects and 
investments. Through disclosure of necessary technical 
requirements, new and improved online content, applications, 
services, and devices will be created.
    During the Subcommittee's legislative hearing on H.J. Res. 
37, all six witnesses testifying before the subcommittee--
including two witnesses that support the Resolution expressed 
support for the transparency rule adopted by the FCC. Yet Rep. 
Matsui's amendment was ruled out of order. As a result, H.J. 
Res. 37 would eliminate these common sense provisions.

A Resolution of Disapproval Under the CRA Is Not an Appropriate Tool In 
        This Instance

    In the 15 years since the Congessional Review Act has been 
in place, Congress has used it just once to invalidate an 
agency rule.\27\ Although there may be situations in which the 
CRA is appropriate, Committee Democrats objected to the use of 
the CRA in this instance because it is an extraordinary step 
that runs contrary to the Committee's tradition of open debate. 
Democrats urged consideration of this issue under the standard 
process that includes debate and votes on amendments.\28\
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    \27\In March 2001, President Bush signed into law a repeal of 
Clinton Administration regulations that set new workplace ergonomics 
rules to combat repetitive stress injuries.
    \28\The majority originally planned to proceed directly to a 
subcommittee markup of H.J. Res. 37. In response to a request from 
Ranking Members Waxman and Eshoo, however, the majority agreed to hold 
a legislative hearing to examine the implications of H.J. Res 37 and to 
hear from other stakeholders about this topic.
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    On March 7, 2010, Subcommittee Democrats wrote to Chairman 
Upton and Subcommittee Chairman Walden objecting to the process 
for consideration of H.J. Res. 37. The letter, which was signed 
by every Democratic member of the Subcommittee, stated that by 
not allowing votes on any amendments, the majority would be 
departing from the Commitee's tradition of transparency and 
depriving members of their right to offer amendments.\29\
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    \29\Letter from Ranking Member Waxman et al., to Chairman Upton and 
Walden (Mar. 7, 2011) (online at http://
democrats.energycommerce.house.gov/sites/default/files/documents/
Upton.Walden,HJRes.37.2011.3.pdf).
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    During Committee markup of H.J. Res. 37, every amendment 
offered was ruled out of order on germaneness grounds. The 
Energy and Commerce Committee has traditionally managed 
germaneness objections differently. Typically, such objections 
have been raised because either (1) an amendment is not 
relevant to the subject of the measure; or (2) the amendment is 
outside the scope of the Committee's jurisdiction.
    Neither of those circumstances applied to the amendments 
members sought to offer at theSubcommittee and full Committee 
markups. It is within the Committee's jurisdiction to review and 
develop communications policy. And the amendments proposed by members 
focused squarely on the subject of the FCC's Open Internet rule. 
Accordingly, the only basis for Chairman Walden's and Chairman Upton's 
rulings to uphold the point of order was that the amendments did not 
conform to the CRA. Although the CRA provides the basis for denying 
debate and votes on amendments, having this power does not make using 
it right. Instead, the majority should have brought before the 
Committee a regular H.R. bill that overrules the Commission's Order. 
Taking such an approach would not have precluded members from offering 
and debating amendments.\30\
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    \30\Some proponents of H.J. Res. 37 suggest that it is inconsistent 
for several Committee Democrats that have cosponsored CRA resolutions 
in the past to complain about the process being utilized in this 
instance. This is a superficial analysis. Although use of the CRA 
allows for expedited procedures in the Senate, using the CRA does not 
affect timing of such a measure in the House. Moreover, cosponsoring a 
Resolution of Disapproval in a past Congress does not in any way 
suggest that members cannot object to the use of the CRA in different 
circumstances.
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The Majority's Focus on the FCC's Open Internet Rules Has Prevented the 
        Committee From Focusing on Critical Issues

    At this critical juncture in our economic recovery, 
Congress should be focused on the many pressing issues in the 
communications and technology arena.
    Even if this Resolution of Disapproval passes the House of 
Representatives, it still must get through the Senate. After 
that, it will be met with a Presidential veto. The majority 
knows this, but is still willing to waste precious legislative 
time on something that has virtually no chance of success.
    Furthermore, this issue is squarely before the courts. 
Verizon has already filed an appeal in the D.C. Circuit 
challenging the Open Internet Order. The courts will review the 
legal questions raised in the appeal and will decide this 
matter.
    If Republicans want Congress to determine the proper role 
for the FCC, we believe we should work on a legislative 
alternative to the FCC's approach before we simply eliminate 
FCC's ability to adopt basic, common sense rules to protect 
consumers in the broadband market.
    The Committee should instead be focused on efforts to boost 
our economy by making more spectrum available for next-
generation wireless broadband services, ensuring the 
construction of a nationwide broadband network for public 
safety, and updating the Universal Service Fund to provide 
targeted support to communities without broadband. 
Unfortunately, H.J. Res. 37 is a demonstration of misplaced 
priorities and ideological agenda.

                                   Henry A. Waxman, Ranking Member.
                                   Jay Inslee.
                                   Lois Capps.
                                   Anna G. Eshoo.
                                   Mike Doyle.
                                   Jan Schakowsky.
                                   Edward J. Markey.
                                   Donna M. Christensen.
                                   Doris O. Matsui.
                                   Diana DeGette.