States Called Next Battleground on Net Neutrality With Partial FCC DC Circuit Win

The ruling prompted calls for congressional action. "Time to stop kicking this football back and forth between the FCC and the courts," former FCC Chairman Reed Hundt told us. "Congress needs to pass a law. The law should state the basic principles of open access and let the FCC apply the principles if there ever is a serious dispute."

The 186-page docket 18-1051 opinion upheld the net neutrality order, with two exceptions. It said the FCC didn't show legal authority for its pre-emption directive, which would bar states from imposing rules repealed in the order or considered more stringent than the order. It remanded on: the order didn't look implications on public safety, didn't sufficiently explain what reclassification will mean for pole attachment regulations, and inadequately addressed petitioner concerns on Lifeline.

"This is far from over," said Paul Goodman, technology equity director for the Greenlining Institute, who assumes there will be appeals: "It's just a question of who gets to the clerk's office first."

Chairman Ajit Pai and Commissioners Mike O'Rielly and Brendan Carr took a victory lap. Pai said the decision was "a victory for consumers, broadband deployment, and the free and open Internet." He said since the order, residential internet speeds are up and the digital divide has narrowed and that the agency will tackle on remand "the narrow issues that the court identified.” It's "heartening to see a court get most of the decision correct," O'Rielly said.

Mozilla is “considering our next steps in this litigation,” said Vice President-Global Policy, Trust and Security Alan Davidson to reporters. “We are grateful to be part of a broad community that’s pressing for net neutrality protections in the courts. And now that fight will move even more earnestly into the states and to Congress.” Davidson later clarified that Mozilla isn’t ruling out further review of the case: “We’ll be evaluating” what to do over the next few days. “There’s a lot of subtlety to the question of exactly what the right method is,” he said. “There are lots of possibilities -- en banc review, an appeal to the Supreme Court, we’ll be interested in what the government looks like it will do.”

Reasonable Move

The FCC reclassifying broadband as a Title I information service was reasonable, especially looked at in light of the Supreme Court's Brand X that cable ISPs are information services as precedent, the court said. It called "unconvincing" counterarguments by petitioners Mozilla and others that the FCC was unreasonably relying on domain name system provision and caching services for classifying broadband as an information service. It said even though there are third-party DNS providers, that vast majority of internet subscribers use the DNS functionality provided by their ISP meets the bar for it being a functional integration.

The D.C. Circuit said there's "substantial evidence" that reclassifying broadband as an information service is likely to lead to increased ISP investment and output. It dismissed arguments that evolving technology ran contrary to the FCC thought process in classifying mobile broadband as a private mobile service exempt from common carriage treatment. The court said it's relatively easy to toggle between mobile voice and VoIP in a phone call, but "blurring is not erasing." Judges said the agency used a reasonable test for determining mobile broadband doesn't qualify as a service functionally equivalent to mobile voice, which is a commercial mobile service.

The decision is "a victory for U.S. broadband investment and broadband consumers," AT&T said. “The court got it right and affirmed what anyone who has been paying attention to Washington’s net neutrality saga knows to be true: the internet is open, ISPs are investing to bring internet users the content they want, and we remain absolutely opposed to anti-consumer practices like blocking, throttling and anti-competitive paid-prioritization," USTelecom said. It said Congress "must end this regulatory rinse and repeat cycle by passing a strong national framework that applies to all companies, maintains our dynamic and open internet, and sustains our global digital leadership.” Also applauding the decision, NCTA said it won't have much effect on consumers' internet use or on how cable ISPs deliver internet access. It urged Congress to work on "common sense open internet protections."

Throughout the decision, the appellate court said the petitioners were over reading its 2016 USTelecom upholding 2015 reclassification of broadband as a Title II telecom service. It said contrary to petitioners' read of that decision, nothing in it forecloses classifying mobile broadband as a “private mobile service” -- under which it's exempt from common carriage treatment. It said the petitioners misread USTelecom in arguing DNS and caching fall under an exception to information service.

Statehouses

"I would have been more euphoric for something different," former FCC acting chair Mignon Clyburn told us, "but there is light at the end of the tunnel. There is hope at the state level." She would have preferred a federal framework on net neutrality, but now states will have the opportunity to craft regulation based on their needs.

"The venue for assuring a fast, fair and open internet has simply moved from 12th Street to state capitals," emailed former FCC Chair Tom Wheeler, on where the FCC is located. "The fight continues!" He warned that now that the ISPs have convinced the FCC to give them what they want, "they ushered in the court’s limitation on the FCC’s ability to preempt the states."

Former Commissioner Michael Copps told us he hopes more states will pass their own net neutrality laws like California. The decision may put more pressure on the Senate to pass the Save the Internet Act (HR-1644/S-682), Copps said, saying it received wide support among voters. He predicted net neutrality could become a 2020 campaign issue if not addressed sooner at the federal level. Options include appeal from petitioners, state action, or more pressure to approve the Save the Internet Act, he said. "I'm hopeful we'll get the internet right."

The decision "vacates the FCC’s unlawful effort to block states and localities from protecting an open internet for their citizens," Commissioner Jessica Rosenworcel said. "As the FCC revisits its policies in light of the court’s directives, I hope it has the courage to run an open and fair process."

The decision validates states that sought to protect consumers, and "challenges those that haven’t yet acted to think hard about how to protect their citizens," said Commissioner Geoffrey Starks. He said the court showed the FCC ignored key aspects of its mission on public safety and broadband deployment, and "admonishes this commission for its failure to consider the impact of its action in this context on Lifeline."

While net neutrality was litigated, ISPs were on good behavior, not trying to do anything to catch attention, said Yosef Getachew, media and democracy program director at Common Cause. He predicts providers could start throttling of services or could begin charging more to access certain content, such as HD video.

Judges

Applause for the decision from Title II rollback supporters was tempered. While otherwise backing it, the Wireless ISP Association said it "means our members cannot access poles via the Communications Act." It said Congress and the FCC need to tackle that "in a manner which brings all communications players to the table." O'Rielly said vacating pre-emption "seems to misread precedent and ignores the technology’s structure, which cannot be segmented into intrastate portions. Inevitably, this will lead to Commission case-by-case preemption efforts and more litigation.”

That rejection of the pre-emption directive is "troubl[ing]," America's Communications Association said. "It is universally agreed that no one provides broadband Internet access service solely within a state; Internet traffic is inherently interstate, if not global, in reach. The possibility that ISPs will need to deal with multiple state or local regulatory regimes would harm both consumers and providers."

The FCC would need either express or ancillary regulatory authority under the Communications Act to say in the 2018 order that any state or local regulations inconsistent with its deregulatory approach are pre-empted, but "had neither," the court said. Reclassifying broadband as an information service puts broadband outside of Title II jurisdiction, so the pre-emption directive isn't in FCC express statutory authority, it said.

On public safety, FCC arguments are "too little, too late," the court said. The agency argued Verizon changing its throttling practices after accidentally throttling a California fire department during wildfire season shows a light-touch regulatory approach works, but the court said that ignores that harm from blocking and throttling during a public safety emergency is irreparable. The agency "offered, at best, scattered and unreasoned observations" to the argument reclassifying broadband as an information service took it outside the current statutory scheme governing pole attachments, the court said. The D.C. Circuit said the 2018 order made "a straightforward legal error" in ignoring the issue of how reclassification would eliminate the statutory basis for broadband’s inclusion in Lifeline.

Judges had their own issues. Millett had "substantial reservation," and while concurring because the decision follows Brand X precedent, it's potentially "unhinged from the realities of modern broadband service." The salience of DNS and caching as broadband service is questionable today and hanging the legal status of broadband on them "blinks technological reality," she said. Wilkins echoed the sentiment. While key technological aspects underpinning Brand X have since changed, "revisiting Brand X is a task for the Court -- in its wisdom -- not us."

Williams, quoting "Macbeth," challenged his colleagues' argument about state and local pre-emption, saying it in effect means the Title II rollback has no real-world effect. He said it's "uncontested" that the FCC didn't give the agency express pre-emptive authority, but as the high court made clear, a federal agency's authority to pre-empt state law doesn't need to be expressly granted.

“The court made a rational and principled decision regarding an issue that has been driven by emotion and hyperventilation,” wrote Robert McDowell of Cooley: “It is now settled once again that the FCC has the authority to restore the classification of broadband back to its information service status as it always was on a unanimous and bipartisan basis before the 2015 Wheeler order. ... The Internet did not end after the [Pai] order, in fact it got stronger and healthier.”