Judges Affirm FCC Internet Rules, But Supreme Court May Have Last Word

By Josh Long

Two appellate judges in Washington, D.C., on Tuesday upheld Federal Communications Commission open internet rules, but a company with roots dating back to the invention of the telephone indicated the case would be appealed to the U.S. Supreme Court.

The appeals court rejected the broadband industry’s contention that the FCC lacked the authority to reclassify broadband Internet as a telecommunications service under Title II of the Communications Act.

Among many regulations, the FCC’s 2015 Open Internet Order prohibits blocking, throttling or so-called paid prioritization of internet traffic — commonly referred to as Net neutrality. But it was the agency’s reclassification decision that met the strongest resistance from FCC critics based on the argument that treating broadband as a utility would burden the industry and discourage investment.

“Two judges on the court have unfortunately failed to recognize the significant legal failings of the Federal Communications Commission’s decision to regulate the internet as a public utility, leaving in place regulation we believe will replace a consumer-driven internet with a government-run internet, threatening investment and innovation in years to come,” USTelecom President Walter McCormick said.{ad}

FCC Chairman Tom Wheeler and others in favor of the internet rules lauded the decision as a victory for consumers. The review by the U.S. Court of Appeals for the District of Columbia Circuit marked the third time in seven years that the court had examined FCC rules aimed at preserving open access to the Internet. Previous FCC rules had been invalidated wholly or partially by the Washington, D.C.-based appeals court, whose judges are often given the task of reviewing Byzantine regulations.

“After a decade of debate and legal battles, today’s ruling affirms the Commission’s ability to enforce the strongest possible internet protections – both on fixed and mobile networks – that will ensure the internet remains open, now and in the future,” FCC Chairman Tom Wheeler declared.

AT&T indicated the fight wasn’t over.

“We have always expected this issue to be decided by the Supreme Court,” AT&T General Counsel David McAtee said, “and we look forward to participating in that appeal.”

Even if FCC critics eventually file a petition for certiorari with the Supreme Court, the justices still must decide whether to take the case.

Gene Kimmelman, president and CEO of the consumer advocacy group Public Knowledge, expressed hope that the industry and Congress would cease their opposition to the rules, and “turn toward the problem of …

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… ensuring that all Americans have access to broadband that is ‘fast, fair and open.'”

In their 115-page opinion, Circuit Judges David S. Tatel and Sri Srinivasan systematically struck down the arguments of FCC critics who challenged the regulations, including the positions that broadband internet was a so-called information service or that the regulations ran afoul of the First Amendment.

Concluding their opinion, Tatel and Srinivasan wrote, “…nothing about affording indiscriminate access to internet content suggests that the broadband provider agrees with the content an end user happens to access. Because a broadband provider does not – and is not understood by users to – ‘speak’ when providing neutral access to internet content as common carriage, the First Amendment poses no bar to the open internet rules.”

A third judge and senior member of the court, Stephen F. Williams, partially dissented from his colleagues’ decision upholding the FCC’s regulations.

Under Title II of the Communications Act, as Tatel and Srinivasan noted, carriers must offer “just and reasonable” rates, and they are prohibited from engaging in “unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services.” While broadband providers expressed concerns that Title II regulation is burdensome and inappropriate for a competitive marketplace, the FCC exercised its forbearance authority — refraining in its Open Internet Order from applying a number of Title II regulations to broadband service.

In a separate 69-page opinion, Williams not only questioned the rationale behind the FCC’s decision to reclassify broadband as a telecommunications service from an information service, he predicted the move could have negative consequences.

“The ultimate irony of the Commission’s unreasoned patchwork is that, refusing to inquire into competitive conditions, it shunts broadband service onto the legal track suited to natural monopolies,” the judge concluded. “Because that track provides little economic space for new firms seeking market entry or relatively small firms seeking expansion through innovations in business models or in technology, the Commission’s decision has a decent chance of bringing about the conditions under which some (but by no means all) of its actions could be grounded — the prevalence of incurable monopoly.”