Court Upholds FCC’s Net Neutrality Rules

Image courtesy of Steve

More than two years after the U.S. Court of Appeals for the D.C. Circuit sided with Verizon against the FCC over the original “net neutrality” rules, that same court today has ruled in favor of the FCC’s revised rules that regulate broadband internet access as a necessary utility, instead of as a luxury.

Oral arguments for this case, filed nominally by trade group USTelecom, AT&T, and tiny Texas-based service provider Alamo Broadband, took place way back in Dec. 2015, with attorneys for both the FCC and the telecom industry arguing about a few core issues before Circuit Judges Sri Srinivasan and David Tatel and Senior Circuit Judge Stephen F. Williams.

We explained them in depth at the time, but in general the questions being asked were:
1. Does broadband meet the standard to be classified (reclassified) as a Title II telecommunications service?
2. Did the FCC follow correct procedures in choosing to rewrite the rule?
3. Did the FCC follow correct procedures in including mobile data under the rule?
4. Did the FCC violate ISPs First Amendment rights in crafting the rule?

The majority of the three-judge panel today ruled in favor of the FCC on all points [PDF].

When the court first gutted the 2010 neutrality rules, the judges empathized with neutrality supporters that the lack of such guidelines — which bar broadband ISPs from blocking, slowing down, or prioritizing internet access to any particular site or content provider — posed “a threat to Internet openness and could act in ways that would ultimately inhibit the speed and extent of future broadband deployment.”

However, because the FCC had previously made the shortsighted decision to classify broadband as a lightly regulated information service instead of as a Title II telecommunications service — like landline phones — the Commission lacked the authority to actually enforce the rules in the 2010 neutrality order.

Thus, when the FCC went back to the drawing board in 2015, it took the controversial step of reclassifying broadband as Title II; a move that the appeals court today says was justified.

“In the Order, the Commission concluded that consumers perceive broadband service both as a standalone offering and as providing telecommunications,” reads the opinion. “These conclusions about consumer perception find extensive support in the record and together justify the Commission’s decision to reclassify broadband as a telecommunications service.”

“US Telecom makes several arguments in support of its contrary position that broadband is unambiguously an information service,” writes the court in denying review of the neutrality rules. “None persuades us.”

The telecom industry had argued, among other things, that they are providing much more than just telecommunications and should therefore not be regulated the same way that a landline phone service is.

While ISPs do offer things like email accounts and other add-on applications to users, the court sided with the FCC’s contention that these services go largely unused when compared to similar products available from third parties.

After all, notes the court, what’s the point of having an email address from your ISP if you can’t take that address with you when you move to an area not served by your ISP?

Additionally, explains the court, “broadband providers focus their advertising on the speed of transmission,” which indicates that the primary purpose for a broadband service is not to provide ISP-owned add-ons, but to connect users to third-party content.

“For example, RCN brags that its service is ‘ideal for watching Netflix,’ and Verizon touts its service as ‘work[ing] well for uploading and sharing videos on YouTube,'” writes the court, which found that none of the telecom industry’s arguments against reclassification had merit.

Ultimately, the court asked the question “do broadband providers make a standalone offering of telecommunications?” and found that “US Telecom’s argument fails to provide an unambiguous answer to that question.”

USTelecom also pointed to the so-called “safe harbor” protection of Communications Decency Act, which limits the liability of website, hosting companies, and certain other internet businesses from troublesome content published by third parties. The trade group argued that this statute uses the phrase “information service” to describe “interactive computer services.” Thus, per USTelecom, broadband is an information service and not a piece of vital Title II telecom infrastructure.

Once again, the court agreed with the FCC that Congress was not likely trying to “settle the regulatory status of broadband Internet access services in such an oblique and indirect manner” in a law written 20 years ago.

Finally, USTelecom argued that the FCC lacked statutory authority to enact the neutrality rules because various members of Congress had tried and failed to pass legislation that would do something similar.

However, the court counters that the failure of Congress to pass a bill does not mean that a regulatory agency — acting within its statutory authority — can not draft rules that do the same thing as the failed legislation.

“Congress’s failure to enact legislation… d[oes] not preclude analogous rulemaking,” writes the court, quoting its own 1984 ruling in Advanced Micro Devices v. Civil Aeronautics Board. “In that case, as here, the relevant question was whether the agency had statutory authority to promulgate its regulations, and, as we explained, ‘congressional inaction or congressional action short of the enactment of positive law… is often entitled to no weight’ in answering that question.”

Regarding the industry’s complaints that the FCC violated procedural steps in issuing the 2015 Open Internet Order — the actual order that reclassified broadband and re-established the neutrality rules — the court also disagreed.

USTelecom argued that the FCC violated federal law because the initial Notice of Proposed Rulemaking for the Order said that the Commission would be relying on its authority under Section 706 of the Telecommunications Act — which directs the FCC to encourage broadband deployment — as the statutory basis for the new rules.

However, the court notes that the FCC explicitly stated in the NPRM that it was seeking comment on the possibility of Title II reclassification, thus satisfying the standard under federal law.

Also, because the FCC had made it clear in the NPRM that reclassification was a possibility, the court said that USTelecom’s argument that the industry was not given enough time to comment on the rules was also without merit.

In a statement following this morning’s ruling, FCC Chair Tom Wheeler applauds the outcome:

“Today’s ruling is a victory for consumers and innovators who deserve unfettered access to the entire web, and it ensures the internet remains a platform for unparalleled innovation, free expression and economic growth. 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.”

Yet this legal battle is likely not over. In a statement released after the ruling, AT&T made it clear that it plans to take this issue up the ladder.

“We have always expected for this issue to be decided by the Supreme Court, and we look forward to participating in that appeal,” reads a dispatch from the Death Star.

Likewise, USTelecom President Walter McCormick sounds less than happy in his statement.

“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-driver [sic] internet with a government-run internet, threatening investment and innovation in years to come,” writes McCormick. “Our industry strongly supports open internet principles and the FCC’s order is wholly unnecessary to keeping the internet open. We will continue to work toward policies that facilitate America’s broadband leadership, are reviewing the court’s decision, and will be evaluating all of our legal options.”

While AT&T and USTelecom appear to be stewing over the news, our colleagues at Consumers Union applaud this morning’s ruling.

“This is a big win for consumers. The court upheld what net neutrality advocates have said since the beginning: the FCC has the clear authority to ensure that the Internet remains free and open for consumers,” explains George Slover, senior policy counsel for Consumers Union. “While we are thrilled about today’s victory, we know that opponents will keep up the fight in Congress and the courts, and we’ll keep fighting alongside the millions of consumers who have spoken out for net neutrality.”

Also happy with the ruling? President Barack Obama, who urged the FCC to reclassify broadband in 2014 while the Commission was still mulling over rules.

“Today’s ruling is a victory for the open, fair, and free Internet as we know it today – one that remains open to innovation and economic growth, without service providers serving as paid gatekeepers,” the White House said in a statement.

“It is also a victory for the millions of Americans who made their voices heard in support of a free and fair Internet, with countless others speaking out on social media, petitioning their government, and standing up for what they believe.

“For almost a century, our law has recognized that companies who connect you to the world have special obligations not to exploit the monopoly they enjoy over access in and out of your home or business. For most of the Internet’s existence, net neutrality has been the norm, and for most of the President’s term in office, the FCC has implemented rules to enforce it — with no significant burden on Internet Service Providers. Unsurprisingly, today’s ruling affirms those basic realities, and recognizes that an Open Internet is essential for preserving an environment that encourages new investment in the network, new online services and content, and everything else that makes up the Internet as we now know it.

“That is why the President has so strongly supported net neutrality since he was a Senator, and continues to work every day to protect the Internet ecosystem: because it remains one of the greatest gifts our economy — and our society — has ever known.”