Opponents Question Net Neutrality Legal Authority
Though senior FCC officials told reporters the legal authority behind the draft net neutrality order Chairman Tom Wheeler was due to have circulated Thursday was based on a triple-barreled approach, Communications Act Title II opponents maintained that it faces several legal hurdles. They cited the agency’s assertion that the nature of broadband has changed since it was classified as a Section 706 information service as one example.
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TechFreedom President Berin Szoka and International Center for Law and Economics Executive Director Geoffrey Manne predicted the draft order would fail in court, if approved by the commission as expected. Free State Foundation President Randolph May put the odds of the order’s survival after legal scrutiny at “just 50/50.” Agency officials, like those at Wednesday’s media briefing outlining the draft, expressed confidence it would survive an expected court challenge. The arguments on both sides give some indication of the issues likely to be raised in a court appeal, telecom attorneys said.
The draft order responds to the January 2014 U.S. Court of Appeals for the D.C. Circuit decision that threw out much of the commission’s 2010 open Internet rules, the officials told reporters. Broadband retail services, the relationship between broadband and edge providers, and wireless services are all proposed to be reclassified under Title II, the officials said, dealing with the court’s concern the rules treated broadband providers as common carriers, even though the commission has said they weren't. As a backup, officials said the draft order also is based on the agency’s Section 706 authority. In a third line of defense, the draft order also specifies that the relationship between broadband providers and edge providers also comes under Title II, also in response to questions the court raised in its ruling, the officials said.
In justifying the agency’s change of heart in classifying broadband, a senior official said much has changed since broadband was classified as a bundled information service. Consumers no longer look at the broadband services, including email or Web browsing, as a single bundled service, said the official. They're primarily interested in access to the Internet, which makes broadband a Title II telecom service, said the official. “Look at how broadband is advertised today. Do carriers ever say that they have the best email client? Of course not. They advertise speed and carriage, period,” said Free Press Policy Director Matt Wood.
Broadband providers would shoot down that justification “fairly easily by showing they essentially have the same set of offerings as there were 10 years ago,” Szoka said. Szoka and Manne, during a call with reporters, cited the problem of the draft order’s proposed forbearance from eight Title II sections as part of a modernized Title II approach (see 1502040052). Congress’ intent in giving forbearance authority was to let the commission lighten regulation, Szoka and Manne said. They said the draft order would violate that intent by being used as part of adding regulatory burdens on broadband providers through reclassification.
The forbearance aspect of the draft order faces "serious legal hurdles,” May said. The FCC will have to make a claim in the same order about the need to toughen its authority under Title II while forbearing from regulations -- arguments “that are directly at odds with one another,” he said.
The argument may not be a strong one, said a cable attorney whose clients oppose Title II. The FCC “will be given ample leeway to forbear to preserve the deregulatory status quo. It’s not a slam dunk but the court is likely to defer to the commission’s judgment on the lack of necessity for most Title II provisions,” the attorney said. An agency official told us Thursday that based on how broadband is offered, it's a Title II telecom service. Since it's a telecom service, the agency is following Congress’ mandate to forbear from unnecessary regulations, said the official.
An AT&T spokesman pointed to Vice President-Federal Regulatory Hank Hultquist’s Feb. 2 blog post, which questioned whether the nature of broadband has changed from an information service to a telecommunications service. Reclassifying all broadband providers also runs into legal issues, Hultquist argued, because the agency has to “make particularized findings” about the “offerings of individual carriers.” The agency “cannot mandate that a service be offered on a common carrier basis without, at a minimum, a finding that a particular provider has market power in a particular geographic market," he said. "Needless to say the FCC has engaged in no analysis of market power on a geographic market basis.”
The legal authority laid out by the agency is “nothing new,” said Cinnamon Mueller cable lawyer Barbara Esbin, who represents the American Cable Association and is a former associate Media Bureau chief. The FCC doesn’t have enough of a policy or legal basis to meet the “heavy burden” that “arriving at the opposite conclusion” of broadband’s classification isn’t “arbitrary or capricious,” ACA said in a letter to the commission.
Because the FCC until Wednesday didn't specify from which sections it wanted to forbear, the commission may run into problems with Administrative Procedure Act notice requirements, said May. It's troubling for the order that “arguably consumers' perceptions of the nature of Internet access have not changed since the Brand X decision," he said: President Barack "Obama's active intervention has cast the FCC's action in a light in which the courts may not accord the usual deference."