Verizon: Net Neutrality Litigation Not a Foregone Conclusion

By Josh Long

Twice in recent years, federal appeals judges in Washington, D.C., have overturned Federal Communications Commission regulations aimed at policing the practices of Internet service providers.

Conventional wisdom holds that future Net neutrality regulations adopted by the FCC will face a legal challenge because someone will be unsatisfied, either consumer groups that have been pressing the agency to reclassify Internet service, or the ISPs who have been advocating for a more light-handed approach.

A Verizon executive on Tuesday claimed the chances of another court battle would be greatly reduced if the FCC relied upon its authority under a provision of the Telecommunications Act of 1996: Section 706. In January, a federal appeals court overturned rules that were aimed to prevent discrimination against Internet content.

The panel of judges found the FCC could invoke its authority under Section 706 to regulate Internet traffic — but for the fact that it had decided to exempt broadband providers from so-called common carrier regulations. Although the Telecommunications Act of 1996 subjects telecommunications carriers to Title II common carrier regulations, the FCC decided to treat broadband providers as information service providers that were exempt from Title II, the court explained.

The FCC is now considering whether to ban so-called paid prioritization agreements, in which content providers such as Netflix would negotiate with ISPs for fast or preferential access to their customers over other websites. The large ISPs and trade associations have acknowledged the FCC has authority to ban such agreements under Section 706, Randal Milch, Verizon’s general counsel, said in a blog.

The debate has been whether the FCC should, and has the authority to, reclassify Internet service as a Title II telecommunications service.

Verizon, AT&T and other ISPs are opposed to the latter scenario, arguing that such a reclassification would impose burdens on the industry and reflect a monopoly utility era that was vanquished long ago by the forces of competition. Should the FCC reclassify the Internet as a Title II service, “the ISPs, and perhaps some in the tech industry, will have no choice but to fight the sudden reversal of two decades of settled law,” Milch wrote.

The Wall Street Journal reported last week that the FCC is mulling over a hybrid model that would separate broadband service into two distinct services, including a retail service and a separate one that would subject arrangements between ISPs and content providers to greater regulatory oversight.

Although such a hybrid approach may reflect a middle ground to mollify the concerns of ISPs and proponents who are advocating for strong Net neutrality protections, Milch didn’t express confidence in it. 

“Here the FCC has opened itself to credible challenges by all parties. Again, by departing from the safe harbor of Section 706, the FCC will face strong challenges on the partial move to Title II from those investing in networks,” Milch wrote. “And because the FCC will have to describe why the partial move was necessary, it will open itself to challenge by the utility regulation camp about why a wholesale move to Title II wasn’t equally necessary.”

The hybrid approach hasn’t resonated with consumer groups that have been pushing for strong protections to ensure equal access to the Internet.

Craig Allen, president and CEO of Free Press, referred to the idea as a “Frankenstein approach.”

“The FCC has already tried twice before to invent new classifications on the fly instead of clear rules grounded in the law. And twice their efforts have been rejected,” Allen said last week in a statement. “This flimsy fabrication will be no different.”

The FCC’s Net neutrality proceeding has garnered a record 3.9 million comments, demonstrating widespread interest in the role of communications regulators to police the Internet.