D.C. Circuit Upholds Open Internet Order
June 16, 2016
On June 14, 2016, the United States Court of Appeals for the D.C. Circuit upheld the Federal Communications Commission’s (“FCC” or “Commission”) 2015 Open Internet Order which reclassified broadband Internet access service as a telecommunications service under Title II of the Communications Act. The Court’s order was the third in a series of decisions reviewing the FCC’s attempts to regulate broadband Internet access service.
In the D.C. Circuit’s first decision, Comcast Corp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010), the Court held that the Commission had failed to cite any statutory authority justifying its attempt to compel a broadband provider to adhere to certain open Internet practices. In response, the FCC relied on section 706 of the Telecommunications Act of 1996 to issue an order imposing transparency, antiblocking, and anti-discrimination requirements on broadband service providers. In a second opinion, Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014), the D.C. Circuit held that section 706 gives the Commission authority to enact open Internet rules. Nonetheless, the D.C. Circuit vacated the FCC’s anti-blocking and anti-discrimination provisions because the Commission had chosen to classify broadband service as an information service under the Communications Act of 1934, which expressly prohibits the Commission from applying common carrier regulations to such services. The Commission then promulgated the order at issue in the D.C. Circuit’s most recent decision—the 2015 Open Internet Order—in which it reclassified broadband service as a telecommunications service, subject to common carrier regulation under Title II of the Communications Act. The Commission also exercised its statutory authority to forbear from applying many of Title II’s provisions to broadband Internet access service—many of those, including Sections 251 and 252, benefiting competitive carriers.
In upholding the Commission’s latest order, the Court cited extensively to the Supreme Court’s 2005 ruling in the Brand X case, which had previously found that the Commission had discretion under the Telecommunications Act to classify a service as either an information service or a telecommunications service. The Brand X Court further noted that the FCC could base such a classification on the end user’s perspective with respect to a particular service. In the majority opinion, the Court concluded that the Commission had properly based its decision on evidence in the record that consumers perceive broadband service both as a standalone offering and as providing telecommunications.
In addition, the Court also upheld the FCC’s reclassification of mobile broadband as a commercial mobile service against a challenge by CTIA and AT&T. These petitioners had argued that, pursuant to the terms of the statute, mobile broadband must be treated as a private mobile service and therefore cannot be subject to common carrier regulation. The Court, however, rejected this argument and found that “the Commission’s reclassification of mobile broadband as a commercial mobile service is reasonable and supported by the record.”
In contrast, Judge Stephen Williams provided a lengthy dissent in which he argued the FCC’s order should be vacated. Judge Williams’ dissent relied in part on the arguments presented by Eckert Seamans on behalf of several clients, in which we had challenged the broad forbearance from Title II regulation in the Open Internet Order. With respect to the Commission’s decision to forbear from number of regulations that benefit competitive providers, Judge Williams agreed with Eckert Seamans’ positions. He noted that “while a finding that the broadband market was generally competitive would, under Commission precedent, amply justify its forbearance decisions, here again the Commission refuses to take that position” because “[d]oing so would obviously undermine its decision to reclassify broadband under Title II” by severely weakening one of the Commission’s primary justifications for its reclassification—its assertions regarding the lack of competition in the broadband market. Judge Williams further predicted that “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.”
Competitive providers should be particularly interested in this decision and the potential for a further appeal given the Commission’s decision to forbear from the regulatory obligations that most directly support competition in the broadband Internet access market. If you have any additional questions regarding the above or if you have any questions with respect to Eckert Seamans’ filings in this proceeding, please contact Rob Gastner at (202) 659-6674.
This Utilities and Telecommunications Alert is intended to keep readers current on matters affecting businesses and is not legal advice.