LAS VEGAS—In a one-on-one discussion with Consumer Electronics Association (CEA) President Gary Shapiro, Federal Communications Commission (FCC) Chairman Tom Wheeler implied that Title II of the Communications Act will be the basis for new net neutrality rules governing the broadband industry. Title II lets the FCC regulate telecommunications providers as common carriers, and President Obama urged the commission to use Title II to impose net neutrality rules that ban blocking, throttling, and paid prioritization.

ISPs have strongly resisted being subject to Title II, fearing that it could lead to rate regulation and other onerous provisions that apply to the traditional telephone network, which is also regulated under Title II.

In thinking about how to regulate broadband, Wheeler told Shapiro on Wednesday that the FCC considered two sides. ”First you want to make sure that innovators have access to open Internet. The other [side] is that you have to create an environment to provide sufficient incentives to ISPs who want to invest and build out.”

Previous approaches that relied on other FCC authority had to impose a "commercially reasonable" test on whether ISP behavior was appropriate, "and it became obvious that commercially reasonable could be interpreted as what is reasonable for the ISPs, not what is reasonable for consumers or innovators," Wheeler said. "And that's the wrong question and the wrong answer because the issue here is how do we make sure that consumers and innovators have open access to networks. That led us to a more robust investigation of the well established concept of just and reasonable, which is a Title II concept. And as I said, Title II has always been something that was on the table. So last summer we began investigating various approaches using title II as a way to get to just and reasonable because it has the best protections."

Wheeler seemed to dismiss the "hybrid" Title II idea he floated several months ago and embrace Obama's more direct approach.

Big ISPs were vocally against the FCC’s ideas and the president’s statements, but Wheeler said that opposition was mostly just talk. “After the president said what he said about Title II, we still had a record bidding for spectrum from ISPs and continued announcements about new gigabit plants going out," he said.

”What's interesting also is that other ISPs, smaller ISPs, like the rural carriers, competitive ISPs, have all come in and said, 'we like Title II, we hope you’ll do Title II,'" Wheeler added.

”Have they read Title II?” Shapiro quipped.

Web companies shouldn't be able to buy priority network access, Wheeler says

Wheeler went in to a little more depth about the upcoming proposed rules, which he says will be circulated within the Commission on February 5 and voted on on February 26. The chairman—who formerly led cable and wireless industry trade groups—said that in the '90s he worked on the industry side as the FCC crafted section 332 of the Communications Act dealing with mobile services and he implied that the section informed the way the FCC has structured the proposed rules.

“It just so happens that 20 years ago I was the guy that negotiated on behalf of the wireless industry to establish Section 332," Wheeler said.

“Section 332 says that wireless should be regulated under Title II as a common carrier, except that the FCC is instructed to forbear from onerous provisions and inappropriate provisions of Title II, except for section 201 and 202, which is just and reasonable, and Section 208, which is consumer protection," he added.

Sections 201, 202, and 208 include requirements for reasonable rates and practices, a prohibition against unjust or unreasonable discrimination in rates and practices, and the establishment of a complaint process. Wireless voice—but not data—is regulated under Title II. The FCC could reclassify both fixed and wireless broadband as Title II if it so chooses.

”So I say to myself, 'ok there is a way to do Title II right, and sure there are many ways to do Title II that would thwart investment, but there are other ways to do Title II,'” Wheeler told Shapiro on stage. “We ought to take a look at how that fits together with consumer protection.”

Wheeler urged listeners to look at the wireless industry under Title II to see how the FCC might enforce it. “There is no need to file tariffs, there is no need to file all these informational activities,” Wheeler said. “The problem we had at that time [in the 90’s] was the wireless industry was having to go before state commissions to change rates.” Having the FCC approve all rate changes, Wheeler seemed to imply, is not what he wants. Obama has also said the FCC should not impose rate regulation.

”We’re gonna have rules that say—we're going to propose rules that say, 'no blocking, no throttling, no paid prioritization,' and that there is a yardstick against which behavior should be measured, and that yardstick was 'just and reasonable,'" he said.

After Wheeler's extensive comments on Title II, Shapiro summed up, saying, "what I heard you say is, without totally confirming it, is you're going down the Title II path, [and] that the wireless model is a good model, and the wireless model said forbear by law except for a couple of sections." Wheeler did not dispute that assessment.

Wheeler also said the commission's rules against paid prioritization won't ban all forms of prioritization. For example, he said that as a federal official he is able to get priority access to networks during national emergencies. "There are instances where priority makes a whole heck of a lot of sense," he said. "We’ve recognized that there are some instances where prioritization makes sense but there are many other instances where you come in and can buy your way into a better position because you have deep pockets or whatever that we may want to look askance at."