Petitioners Ask DC Circuit to Revisit Ruling Backing FCC on Net Neutrality, Title II

FCC Chairman Tom Wheeler said it was "no surprise that the big dogs" challenged the 2-1 ruling by a D.C. Circuit panel (see 1606140023). "We are confident that the full court will agree with the panel’s affirmation of the FCC’s clear authority to enact its strong Open Internet rules, the reasoned decision-making upon which they are based, and the adequacy of the record from which they were developed,” his statement said.

USTelecom and CenturyLink said the FCC had delegated to itself the power to "micromanage" the internet by reclassifying broadband as a telecom service subject to common carrier regulation under Title II of the Communications Act. The panel's ruling gives the FCC sweeping authority over "our nation's most dynamic and significant sector," becoming the "Department of the Internet," their petition said, citing a description in Commissioner Ajit Pai's dissent.

The panel "disregarded extensive evidence -- including the FCC’s own contemporaneous recognition -- that, in passing the 1996 [Telecom] Act, Congress codified pre-1996 regulatory and judicial decisions that barred public-utility regulation of Internet access," USTelecom and CenturyLink said. The panel also "misread" the Supreme Court's 2005 Brand X ruling as authorizing the FCC "to treat internet access service as nothing more than pure transmission," they said. "En banc review is necessary to ensure that a largely unaccountable agency does not obtain significant legislative and judicial power that Congress never delegated to it."

NCTA and ACA said the FCC order "flouts bedrock administrative law requirements." The commission for years "correctly" declined to regulate broadband internet access providers as common carriers, but then "abruptly abandoned that policy" by reclassifying broadband under Title II," their petition said. "The FCC’s decision transgressed fundamental boundaries on agency action," they said, citing various Supreme Court decisions, including the recent Encino Motorcars ruling (see 1606200054).

"Despite claiming that '[c]hanged factual circumstances' warranted a new approach, the FCC never identified any real, relevant change, offering only demonstrably false assertions of new facts.The FCC admitted, moreover, that new facts did not matter, 'clarify[ing] that,' even if the facts 'had not changed,' it would have reclassified anyway," the cable groups said. The panel ruling upholding the FCC "eviscerates" core Administrative Procedure Act requirements, they said. "This dilution of the APA’s standards by the Court that reviews more agency action than any other will embolden this agency and others to ignore these constraints in the future."

Mobile Broadband Different

The panel decision was especially wrong on mobile broadband, said CTIA's petition. CTIA said it supports the general arguments against broadband reclassification, “but reclassification of mobile broadband service was unlawful for a second, independent reason.” Congress specifically forbade the FCC from imposing common-carrier status on mobile broadband in Section 332 of the Communications Act, CTIA said.

Leading up to the net neutrality order, “the FCC consistently held that mobile broadband cannot be subjected to common-carrier regulations because it does not interconnect with the public switched network,” CTIA said. “That is, a consumer with a mobile broadband connection for her iPad cannot call a landline phone, or vice versa; to do that, she must sign up for a separate service, with a different provider, that bridges the gap between the two networks.”

All that changed with the order, CTIA said. “A bare majority of the FCC cast aside this longstanding and correct interpretation of Section 332, claiming vast authority to regulate every wireless device with an Internet Protocol address,” the wireless association said. The FCC in the order essentially said “tens of billions of IP-enabled devices, with tens of billions more to come in the next few decades,” from connected cars to TVs to smart thermostats, “all supposedly exist on the same, single, unified network that also services wired and wireless telephones.”

The court should rehear the case en banc because it's so important, CTIA said. “The FCC has claimed, for the first time, the authority to regulate comprehensively one of the most important communication systems in human history,” CTIA said. “Few final rules of any federal administrative agency have ever had so much potential to affect the lives of so many Americans.”

AT&T also challenged the mobile broadband decision. "In allowing common carrier regulation of mobile broadband under Title III, the panel relied on its threshold decision that broadband Internet access may be classified as a telecommunications service under Title II," AT&T's petition (in Pacer) said. "In the majority’s view, further classifying mobile broadband as a 'commercial mobile service' under Title III, subject to common carrier regulation, 'assures consistent regulatory treatment' for fixed and mobile broadband services. But if such 'regulatory consistency' is relevant in construing provisions in different Communications Act titles, it supports excluding both fixed and mobile services from common carrier regulation because Title III expressly precludes such regulation for the latter. The majority cited no sound basis for avoiding that Title III conclusion. It expressly declined to rely on the FCC’s main rationale on appeal, instead adopting an alternative rationale the FCC had floated in the Order. But that alternative is itself so unpersuasive that the FCC had abandoned it on appeal."

The D.C. Circuit’s decision is “more of a stretch” on mobile broadband than in other areas, agreed Randolph May, president of the Free State Foundation. “In order to achieve its desired result, the commission majority abruptly abandoned the agency’s previously adopted consistent interpretation of Section 332 and it did so by engaging in a tortured reading of the statutory term ‘public switched network.’ Whether under Chevron or some other standard, this part of the D.C. Circuit’s decision should test the limits of deference to the FCC’s interpretations of the Communications Act. Either en banc, or failing that, at the Supreme Court, the panel’s decision should be reversed.”

“A lot of people were pretty surprised by the way the FCC ran the table in June” in the court’s decision, said Doug Brake, telecom policy analyst at the Information Technology and Innovation Foundation. “Especially surprising was that reclassification on mobile stuck,” Brake said. “This is the court that previously said the FCC was statutorily barred from applying common carriage to mobile broadband. … This was the longstanding interpretation of 332 and at oral argument all three judges were rightly skeptical of the FCC's creative maneuvers to rope mobile in.”

But Matt Wood, Free Press policy director, said CTIA’s arguments don’t hold up. “CTIA's left-over arguments are just as ridiculous upon reheating as they were when first cooked up,” Wood told us. “Its complaints about the actions of a 'bare majority' are just plain laughable. Another term for bare majority is plain old majority, and that was more than good enough for the FCC and the court of appeals too.” CTIA clings to definitions crafted for taxi dispatch radios in the 1990s, Wood said. “CTIA wants to maintain the fiction that a $100 billion industry serving hundreds of millions of customers is not a commercial service. The DC Circuit panel was wise to defer to the FCC's rejection of such nonsense. The FCC hasn’t claimed any authority for the first time, as CTIA imagines. The agency simply decided, rightly on the law, to treat mobile broadband like the communications system it is.”

“The FCC’s reclassification of mobile broadband under Title II violated the essential rationale for net neutrality,” said Richard Bennett, free-market blogger and network architect. Since Columbia Law School professor Tim Wu defined net neutrality in 2002, “it has been understood to be a regulatory tool that should only be applied in broadband markets that aren’t disciplined by competition,” Bennett said. “Since the typical U.S. mobile broadband market contains five, six, or more competitors, net neutrality reduces the benefits that consumers get from competition. Mobile net neutrality is simply regulation for its own sake.”

Alamo, Intervenor Petitions

Alamo Broadband disputed the decision upholding the order on First Amendment grounds. The panel "erred because the rules strip broadband providers of their First Amendment right to exercise discretion about whether and how to carry internet traffic over their networks," its petition (in Pacer) said. The panel’s "rationale would allow the government to not only order the blocking of internet content it deems objectionable, but could also be used to try to strip other media -- cable operators, broadcasters, and new media conduits -- of First Amendment protection by declaring them to be common carriers." Alamo Broadband also challenged the panel decision affirming the FCC's broadband regulatory authority under Section 706 of the Telecommunications Act, which was originally upheld in a 2014 Verizon v. FCC ruling.

Tech Freedom and others said the panel ruling "runs squarely contrary" to King v. Burwell, "in which the Supreme Court said courts mustn't give Chevron deference to an agency on 'a question of deep ‘economic and political significance’ that is central to [a] statutory scheme' unless Congress expressly directed it to do so." The case also "presents issues of extraordinary importance," said their petition being prepared for filing. "The FCC is seeking to subject all broadband Internet access service to common carrier regulation—a step unprecedented in the history of the Internet." Cari.net, Jeff Pulver, Scott Banister, Charles Giancarlo, Wendell Brown and David Frankel joined the petition.