Northwest Indian Law & Business Advisor : Northwest Indian & Tribal Lawyer & Attorney : Williams Kastner Law Firm : Tacoma, Seattle, Portland

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On November 17, 2011, the Senate Committee on Indian Affairs is conducting an oversight hearing to discuss the future of tribal Internet gaming. There are several witnesses from government regulatory agencies, tribal governments and gaming associations, and the gaming industry who will offer testimony regarding the use of the Internet to serve tribal gaming operations in the future. The Internet is a largely unregulated medium which has seen increased use by commercial interests to conduct business operations and exchanges. Recently, in the case of Comcast v. FCC, the federal Court has held that the FCC lacks the ability under the FCC’s ancillary authority in the Communications Act, to regulate Internet Service Providers like Comcast. In the Comcast case, the FCC attempted to prevent Comcast from using network management operations which allegedly excluded non-Comcast applications from its Internet network. Comcast challenged the assertion of FCC authority in regard to regulating the Internet under the Communications Act. Prior to this case, the FCC classified the Internet as an informational service as opposed to a common carrier like a traditional telephone company. Under the Communications Act and FCC regulations, a common carrier is subject to a wider range of FCC regulation than is an informational service. The decision by the Court in Comcast upheld the classification of the Internet as an informational service and as a result, the Court determined that the FCC had no authority to regulate the Internet, such that it could impose punitive action against an Internet Service Provider such as Comcast.

On a similar front, states are generally allowed a minimal role in regulation of the Internet. States are permitted to regulate the Internet only so far as the action to be regulated occurs entirely within the state and the action does not involve interstate commerce. Thus, many tribes are not subject to state regulatory jurisdiction when it comes to the Internet. A question which may be raised as a part of the discussion about to occur in the Senate this week should involve the ability of the states to regulate gaming if it occurs over the Internet on an Indian Reservation or gaming facility. The push to regulate Internet gaming may also raise questions about the Communications Act and whether it will have to be amended to allow federal agencies an expanded role in regulating the Internet. There are no Internet Service Providers who appear to be testifying at the upcoming Senate hearing and it would likely be prudent at some point to include them in future discussions. After all, it is the Internet Service Providers who will provide gaming operations with the connectivity to the Internet, service the Internet connections to ensure reliability and speed, and most importantly, provide the necessary Internet security to prevent cyber attacks or the loss of customer personally identifiable information.
 

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In July 2011, the Department of Defense (DOD) announced a broad strategy for operating within cyberspace. The DOD cyberspace strategy now recognizes that cyberspace is another platform that will play host to warfare and that the warrior in this battlefield may not have to utilize an expensive, gigantic system to deliver a devastating blow to critical infrastructure. While the high level of devastation to critical infrastructure may increase in today’s attack, the small-scale technologies behind these attacks may have an impact which is disproportionate to their size. In its strategy, the DOD has acknowledged that DOD and Defense Industrial Base networks suffered cyber attacks and that information and systems were compromised as a result. The DOD also acknowledged that there may be malicious code or activities on DOD systems which have not yet been detected and thus, pose a national security risk to sensitive and classified networks in both the government and private sectors.

The strategy announced by the DOD is squarely focused upon five strategic initiatives that may provide opportunities to tribal businesses, tribal entrepreneurs and tribal members interested in a career in cyber security. In particular, Strategic Initiative 3 calls for the DOD to partner with other agencies and tribal governments to ensure a whole-of-government approach to cyber security. Under Strategic Initiative 5, the DOD recognizes and embraces that it will have to develop small businesses, entrepreneurs and people to pursue new technology and innovations in cyber security and defense. With the large number of attacks to DOD systems, the DOD remains focused upon building and leveraging the technological prowess of the public and private sectors through investments in people, research and technology. The Section 8a program may be an avenue for tribal businesses and entrepreneurs to explore this emerging national security industry sector. The tribal governmental and educational sectors may be able to direct the investment of DOD resources to the development of tribal people who will be the next generation of cyber warriors protecting our nation’s critical infrastructure from a catastrophic attack.
 

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Nationally, the internet and communications infrastructure is an essential tool for ensuring the reliability of our emergency services to coordinate efforts, our financial system to complete transactions, and our economy to maintain business operations. Disruption to this infrastructure would wreak havoc on our population and require a monumental commitment of resources to recover from disruptive effects. Currently, the Department of Homeland Security is largely responsible for protective and responsive actions to cyber threats that face the Federal Executive Branch civilian networks. The authorities which outline the DHS role and responsibility for cyber security are in the Homeland Security Act of 2002 and the Federal Information Security Management Act of 2002. Homeland Security Presidential Directives (HSPD) further focus DHS’s role. HSPD 7 compels DHS to operate a central point for coordination of cyber security across federal departments and agencies, state and local governments, and the private sector. In response to HSPD 7, DHS created the U.S. Computer Emergency Readiness Team (US-CERT) to serve as the central point for responding, reporting, and analyzing cyber security issues.

The funding of DHS cyber security initiatives is risk driven and not threat driven, as stated by DHS Secretary Napolitano at a recent hearing before the subcommittee of the House Committee on Appropriations regarding DHS Appropriations for 2010. In that hearing, tribal cyber security issues were discussed and Congressman Steven Kirk asked whether there was any specific threat or risk information for cyber attacks related to tribal governments. Secretary Napolitano acknowledged that she did not have a specific report detailing the cyber threats which confronts tribal governments. Herein lies the challenge for Indian country: there is a constant threat of attacks to internet and communications systems, which tribal governments, businesses, and people utilize every day. However, there is no specific report or centralized point where the threat or the attack by cyber warriors is catalogued, categorized, and compiled. The $15 million set aside in the DHS 2010 appropriations bill may not be enough to manage the threat and it may not be geared toward truly protecting against the attacks to critical tribal infrastructure. It is not clear whether or not US-CERT has even provided access to its services by tribal governments who largely partner with other governments including the federal government when it comes to preparedness and response actions under HSPDs.

The time is now to develop the capacity and the expertise in tribal communities to identify, manage, respond, and recover from cyber attacks. The price of not doing so could result in the next cyber attack being launched from tribal computers or servers without the knowledge that hackers have hijacked tribal resources to carry out these attacks. The risk is there and it should be addressed at some level without creating a new bureaucracy to oust existing DHS or tribal government agencies who may be in a prime position to implement the EINSTEIN and its progeny into tribal systems. Tribes must be included in the National Infrastructure Protection Plan and the related Sector-Specific Plans when it comes to protection of the internet and communications systems.
 

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Federal Communications Commission Chairman Julius Genachowski, recently conducted meetings with many industry and advocacy groups regarding the pending reclassification of the Internet for regulatory purposes under the Communications Act of 1934. It is likely that these meetings were in response to the recent decision in Comcast v. FCC, where the FCC was found to lack ancillary jurisdiction to regulate the network management actions of an internet service provider. The FCC asserted it possessed the ability to regulate the Internet based upon its ancillary jurisdiction. Therefore, the FCC could require Comcast to grant it the authority regarding the creation of Comcast network management policies so as not to impede access to the Internet by non-Comcast applications. The D.C. Court of Appeals determined the FCC lacked the ancillary jurisdiction to regulate the Internet because the FCC assertion was based solely upon policy statements contained within the Communications Act of 1934 and not specific statutory power contained within the Act. The ruling rejected the FCC’s claim to have authority to regulate the Internet through policy pronouncements and specific congressional approval contained within legislation. FCC network neutrality policy after the Comcast decision was found to be without support or authority.

It is likely that Chairman Genachowski’s meetings were intended to predict political climate which might result if the FCC pursues a reclassification of the Internet. Currently, the Internet is classified as an information service as opposed to a common carrier. Common carriers, are subject to more detailed regulation when it comes to topics such as rates charged for utilizing the communication system, universal service, accessibility, and other network management issues.

It is uncertain if Native American Tribes or Tribally owned telecommunications companies have been included in Chairman Genachowski meetings. Although the policy and legal discussion will still be sent back to Congress for consideration before the FCC can proceed with the reclassification of the Internet, the initial salvo has already begun in important Senate and House Committees. In mid-June, a letter sent from Senator Dorgan to Senator Inouye expressed concern that someone may seek to attach a rider to the 2010 appropriations measure which would severely restrict the FCC’s authority when it comes to network neutrality. In the letter, Dorgan specifically states that the FCC “must move forward to ensure solid legal footing” for policies which reform universal service to support broadband and connectivity to Native Americans on tribal lands among other issues. Tribal interests in the future of the Internet have already been sidelined in favor of large corporate interests because large businesses have established platforms which now control access to the internet, which has become an important part of daily life. Tribal governments and tribally owned telecommunications companies should be focused upon engaging with both the FCC and Congress on the future of the Internet and Network Neutrality.
 

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On June 28, President Obama signed an executive memorandum which commits the government to expand the amount of broadband spectrum available for wireless communications. This follows on the release of the National Broadband Plan by the Federal Communications Commission and the Department of Commerce earlier this spring. The Plan will serve as the basis for the continued development and expansion of wireless communications. The F.C.C. issued action items within the National Broadband Plan which calls for the availability of 500 MHz of spectrum for broadband use within the next ten years. Approximately 300 MHz of the 500 MHz is in the high value spectrum between 225 MHz and 3.7 GHz where mobile use is prevalent. The time frame for making the high value spectrum available for commercial use is within the next five years.

Tribal economies are becoming increasingly dependent upon access to wireless communications such as cellular phones and wireless internet connectionsfor daily business operations. Greater access to broadband spectrum will be essential in providing more avenues for business transactions and economic growth. Wireless communication and internet service providers profit from broadband spectrum as it determines the rates which they can impose upon customers.

Currently, the National Broadband Plan allows for the creation of a Native Nations Broadband Task Force, Office of Native American Affairs, and an increase in mobile communication opportunities within tribal communities. Both this Plan and the Communications Act lack a clear and defined strategy to develop broadband capabilities within tribal communities. One way for tribal entities to increase their bidding power is by utilizing the Tribal Lands Bidding Credits available to them. This tool grants significant discounts to companies bidding on radio spectrum who will be providing improved telecommunications. Without more credits, however, the level of broadband penetration within tribal communities will likely fall by the wayside similar to the manner in which telephone service failed to reach a majority of Native American people. Tribal governments and tribal entrepreneurs have an opportunity here to persuade Congress to adopt tribal prerogatives when it comes to the development and expansion of broadband. The Plan will inevitably be considered by Congress in the near future and tribal broadband advocates should be in a position to influence future legislation. It may be advantageous for tribal governments and tribal entrepreneurs to advance the position that the F.C.C. should make certain spectrum available for sole source bidding by tribal governments and small and disadvantaged business concerns. This position would be similar to preferences in contracting awarded under the Section 8a program.

While consultation with the F.C.C. regarding the Plan is an aspirational goal, the compressed time frame for the auctioning of high value spectrum will force tribal governments and tribal entrepreneurs to bid on spectrum without the F.C.C. having had ample time to develop a clear and defined policy under the Plan for Native Americans. When it comes to the regulation of broadband and net neutrality, tribes should be wary of the F.C.C. overreaching its regulatory authority. In the Comcast v. F.C.C. decision, the court of appeals held that the F.C.C. lacked the ancillary jurisdiction to regulate and impose punitive measures upon an internet service provider when it engages in network management over internet communications. Therefore, logic dictates that tribal governments and tribal entrepreneurs are the most informed and best suited advocates for the use of broadband spectrum within tribal communities.
 

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In a recent decision from the U.S. Court of Appeals for the District of Columbia, the Court held that the Federal Communications Commission lacked the statutory authority under section 4(i) of the Communications Act of 1934 to regulate an Internet service provider’s actions regarding its network.  The case was initiated by the Comcast Corporation to challenge the validity of an adverse order issued to it by the FCC in response to Comcast’s interference with its subscribers’ use of peer-to-peer networking.  The FCC order was based upon its assumption of ancillary jurisdiction over the issue under section 4(i) and its determination that Comcast’s action violated the FCC’s internet policy statement adopted in 2005.  The Court of Appeals overturned the FCC’s assumption of ancillary jurisdiction over Comcast’s interference with its subscribers’ use of peer-to-peer networking applications because the Court held that the FCC lacked the specific delegated powers under the Communications Act of 1934 to regulate an information service provider.  Thus, the FCC internet policy statement did not, in and of itself, confer any authority to the FCC that could be tied directly back to a specific provision in the Communications Act of 1934.  The clear impact of the decision places doubt upon the FCC’s ability to prescribe net neutrality rules and enforce them on Internet service providers such as Comcast when they restrict access to their network.
 
The recent decision has led to reservations about  the ability of the FCC to complete its activities associated with the development of a national broadband plan, which was unveiled earlier this year.  In its  national broadband plan, the FCC has created specific recommendations for Congressional consideration when developing national telecommunications and Internet systems.  The plan represents a determined shift by the FCC away from traditional wire transmittal methods to the wireless broadband spectrum.  Because the plan focuses on broadband as the medium for future Internet systems and applications, the FCC has specifically recommended in Chapter 4 of the plan that Congress consider enacting policies which spur broadband competition and innovation policy.  The Comcast decision should do little to deter continued dialogue on the national broadband plan, but it clearly places pressure upon Congress to review the future development of the Internet and to determine what regulatory authority it will allow the FCC to pursue when ensuring open access to the Internet by users and applications.  While the effort to adopt a national broadband plan is not dead, a major lobbying battle will likely ensue as those for and against net neutrality will have a new forum to debate its provisions. 

There are other areas of the national broadband plan that industry groups, internet service providers, schools, tribal governments, hospitals, and entrepreneurs should be reviewing to create their legislative agendas when Congress convenes to take up the legislation that is likely to follow in the wake of the FCC’s recommendations for policy action.  The Law, Legislative and Government Affairs Practice  Group at Williams Kastner can assist you in formulating and submitting your legislative agenda to members of Congress for inclusion into legislation when the debate on the future of the Internet and wireless broadband communications begins on Capitol Hill.

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While many tribal consumers have a vast array of opportunities to access the seemingly unlimited information on the Internet, many Indian consumers still do not have access to traditional telephone lines for dial-up Internet connection. The gap in access results from the remote location of Indian reservations, and the high cost of running line to homes and businesses there. Broadband services and applications present a solution that could bridge this connectivity gap in Indian Country.

A Wall Street study recently cited by the FCC in a report on wireless broadband access found that consumers increasingly rely upon wireless devices and applications to access the Internet to complete commercial transactions and gaming activities. Tribal governments and entrepreneurs and Indian Country’s other capital investors should focus on developing wireless broadband access on reservations in order to reach tribal consumers and further inject commerce into tribal markets. Indian Country most certainly has the land base, population and energy resources needed to positively impact the Internet network and become a member of the Internet Protocol for transmission of data via the Internet.

One area that should be developed in Indian Country are mesh and edge networks, otherwise known as server farms, which store content for access by end users. The stored content and deployment of high speed fiber optic links connecting various servers to a central database will prevent congestion at choke points in the Internet. This allows the end user to access content and information at faster and more reliable speeds. Server farm projects could be developed using a mixture of tribal, private and federal Recovery Act funding. Tribal entities that become Internet service providers (or “ISPs”) should also explore setting fees for use of the Internet network based upon tiered access. Tiered access would allow a flat fee for a certain level of Internet traffic per month, but impose additional fees for access to extra bandwidth needed to transmit higher volumes of data over the Internet.

The network neutrality debate happening before the FCC is also key for Indian Country. The FCC regulates ISPs as informational service providers, not common carriers. As the FCC has ancillary authority to regulate ISPs, market forces impose conditions, rates and terms upon ISPs’ delivery of Internet access to end users. While an open market should encourage tribal development of ISPs, there are open questions regarding the extent, nature and scope of state regulatory authority of ISPs operating within Indian Country. The federal Communications Act reinforces the view that states have an important and preeminent role in regulating intrastate communications. I fear that if the FCC decides that ISPs are common carriers, rather than informational service providers, such may inadvertently cause state regulation over Tribal ISP transactions occurring on tribal lands within a particular state. Tribal advocates must focus on the net neutrality debate insofar as state, and thus tribal, regulatory authority over Internet communications are concerned.

In sum, Indian Country and potential tribal ISPs can and should seek to influence federal policy by or through advocating for tax incentives to develop broadband capabilities in underserved reservation areas; establishing partnerships with current ISPs to take advantage of Internet-related business opportunities; and pronouncing a clear position on net neutrality and related regulatory issues to the FCC and other policymakers.