FCC’s Net Neutrality Rules Undergo Scrutiny in Court

The third time may not be the charm for the Federal Communications Commission and its net neutrality rules. A three-judge panel of Stephen F. Williams, David S. Tatel, and Sri Srinivasan are presiding over a legal challenge that came with three grueling hours of oral argument on Friday.

The case, US Telecom Association vs. FCC, is being heard in the U.S. Court of Appeals for the D.C. Circuit.

The judges grilled lawyers defending the FCC’s authority to regulate the Internet at one of the year’s highest-profile tech cases. Observers said the judges’ scrutiny could spell trouble for the most stringent Internet regulations to date.

“It may wind up as a unanimous decision” to overturn the rule, said Stuart Brotman, said a nonresident senior fellow in the Center for Technology Innovation at the Brookings Institution in an interview after the argument.

“I think Williams will vote to reverse. Judge Tatel could be tipped over, as there were a number of comments he made, and Judge Srinivasan could be tipped,” he posited.

Industry broadband providers are pitted against the FCC in a case that will decide if the agency has the power to classify broadband providers as common carriers, as they do for phone companies, and then regulate them.

Judge Tatel knows the issues well, as he wrote the decision in 2014 that repealed the FCC’s previous attempt at Internet regulation. The decision was 2-1 in the same appeals court that heard Friday’s arguments. The other two judges are new to the case.

In the previous case, Verizon vs. FCC, the court ruled that the FCC couldn’t regulate Internet service providers as common carriers because it had previously regulated them under Title I, as information services. In its latest net neutrality rules, the FCC reclassified broadband providers under Title II as common carriers.

The core of the case hinges on a few aspects of this reclassification. Did the FCC have the authority to reclassify broadband providers as common carriers? Did the agency show enough work in the reclassification? Is the Internet an information service? Or is it a telecommunications service that should fall under Title II?

Judge Tatel, the author of the Verizon ruling, pressed the FCC lawyers Friday about why the regulators switched gears from the agency’s previous claims of regulatory authority. “The Commission seemed headed to regulating through [Section] 706 [of the Telecommunications Act],” he said. “What’s the policy explanation for abandoning that decision?”

The defendants said agency officials had change of heart after examining what the Internet does for consumers and how it has changed throughout the years.

Brotman saw a different dynamic at play. He saw a judge upset that the FCC rejected a clear path toward Internet regulation that he had laid out in the Verizon case. In that case, Tatel left the door open for regulation under Section 706 of the law, which governs “Advanced Telecommunications Initiatives.”

“Judge Tatel was quite pointed. He basically was pressing the FCC asking, ‘Why didn’t you follow what I said in implementing 706 and see what happens there? What you did was reject my advice and went to Title II,’” Brotman said.

The FCC has argued that Tatel’s Verizon ruling gave regulators a “green light” to reclassify broadband providers as common carriers. Observers said Tatel, in particular, didn’t seem to be buying it.

“The sharp questions from Judges Tatel and Williams make clear the FCC’s classification of broadband Internet access as a common carrier likely pushes beyond the boundaries of the agency’s deference,” said Doug Brake of the Information Technology and Innovation Foundation in a statement following the argument. “Title II broadband classification is the FCC’s latest attempt at jurisdictional improvisation that appears likely to fall in court yet again.”

Robert McDowell, a Republican FCC Commissioner from 2006 to 2013, also thinks the agency is likely to lose again. “The FCC overreached beyond its authority when it classified the Internet as a utility,” he said in a statement. “This is especially true in regard to wireless broadband, which Congress explicitly prohibited the FCC from reclassifying as a utility. …I believe the court is highly likely to overturn this misguided FCC decision.”

Open Internet advocates see the situation differently. “The judges showed they are clearly aware of the importance of a common regulatory framework for Internet access, since consumers on smartphones and tablets increasingly move back and forth between wireline or wireless connections,” said Michael Calabrese, director of the Wireless Future Program at the Open Technology Institute.

When interviewed in August, Marvin Ammori, a leading net neutrality proponent and a scholar, said he was not worried about the FCC’s prospects in defending its reclassification. “It will be super easy to defend in court,” he told Morning Consult. “They just need to clarify why they changed their mind. They don’t even need to explain if one is better than the other.”

Ammori, from the Stanford Law School Center for Internet and Society, is working for Tumblr as an intervenor in the case supporting the FCC.

“I think we have a good shot” at winning, Ammori said at the time.

But the plaintiffs gave the judges plenty to work with if they want to overturn the rule. They laid out a three-pronged argument for why the Internet is an information service and not a common carrier. The plaintiffs showed that the FCC, the Justice Department, and Congress, through the 1996 Telecommunications Act, all had previously labeled the Internet as an information service.

“I think the plaintiffs were very strong and very persuasive in sketching out this three-legged stool,” Brotman said. “I think the argument that will probably prevail is that, essentially, there was no ambiguity that the Internet is an information service. …Legally, if there’s no ambiguity, the FCC has no justification for changing its mind.”

The plaintiffs also brought into question the FCC’s justification that the Internet is a part of a big common carrier network comprised of both phone and Internet networks. Calling it a “Frankenstein’s monster network,” they claimed it didn’t make sense that a network made up of North American phone numbers and IP addresses were part of the same interconnected system.

Judge Tatel pressed the FCC to explain how someone with a regular phone (without smartphone capabilities) could be a part of this massive network. The FCC’s lawyers maintained that it was intended to be an either/or definition. A person could be a part of the same network both through Internet and/or phone connection.

“What [Tatel] was trying to do is illustrate that these are two separate networks, that they don’t interconnect,” Brotman said. He added that the definition of “network,” although in the weeds, is “very important” to the case. It could decide whether the FCC correctly reclassified what that network actually is.

Morning Consult