FCC Should Learn Its Limits

6/14/2010 3:58 AM Eastern

A hallmark of the explosive
growth of the Internet
over the past two decades has
been the lack of federal regulation.
Last fall, the Federal
Communications Commission
(FCC) announced its intent
to begin regulating broadband
Internet access service
— in essence, to become the
nation’s Internet traffic cop.

Since then the FCC has been
searching unsuccessfully for a
source of statutory authority to
pass its so-called “net neutrality”
rules. The stakes are enormous
for the FCC, as well as for Internet
service providers.

In April the U.S. Court of
Appeals for the D.C. Circuit in
the Comcast case shot down
the FCC’s attempt to assert socalled
“ancillary jurisdiction”
over broadband Internet access
under Title I of the Communications
Act. The court found
the agency’s efforts “flatly inconsistent”
with existing Supreme
Court precedent and
with Congress’s own intent in
several respects.

Instead of accepting Comcast,
the FCC has doubled down on its
efforts to regulate broadband
Internet access. The chairman’s
new plan is to attempt
to reclassify Internet service
providers as common carriers
and regulate Internet access
under Title II of the Communications
Act, which authorizes
public utility-style regulation,
in addition to continuing to assert
ancillary jurisdiction over
such services under Title I.

Far from shoring up the FCC’s
authority to regulate the Internet,
the chairman’s new plan
only raises new problems.

Less than five years ago in the
Brand X case, the FCC successfully
defended, all the way to
the Supreme Court, its interpretation
that Internet service providers
are “information service
providers” — and not common
carriers subject to regulation
under Title II of the Act. And
that’s consistent with the fact
that the FCC has never classified any kind of Internet access
service as a telecommunications
service subject to full-blown Title
II regulation.

In making its case, the FCC told
the Supreme Court that a contrary
regime “would lead to a dramatic
expansion of the scope of Title II’s
common carrier regulations,” and
that this would be “impossible to
square with the deregulatory purposes
of the Telecommunications
Act of 1996.” The agency also explained
that broadband Internet
services “thrived” under the FCC’s
“hands-off ” regulatory approach
and that the regulatory burdens
that associated with commoncarrier
status would result in
higher prices and discourage investment
in infrastructure.

While broad, agency discretion
is not unbounded.
As the Supreme Court recognized
last year, when an
agency changes course it cannot
simply disregard its prior
statements or f indings. Important
reliance interests are
at stake, especially given the
investment in the infrastructure
necessary for broadband
Internet access.

In attempting to regulate
broadband Internet access as a
common-carrier service — just
like the phone lines under Ma
Bell — the FCC will have to account
for its prior findings on
why Internet service providers
are not common carriers.

The courts ought to greet
the FCC’s newfound assertion
of authority over Internet access
under Title II with no less
skepticism than they did its unbounded
assertion of ancillary
jurisdiction under Title I. Indeed,
given that the FCC’s recent
Title II about-face has been
proposed as a transparent attempt
to side-step the Comcast
decision, the courts should be
especially reluctant to embrace
the agency’s latest Internet
power grab.

Instead of tying itself into
knots trying to conceive a jurisdictional
basis for regulating
broadband Internet access,
the FCC would do well to recognize
its own inherent limits. The
constitution vests “all” legislative
authority in the Congress,
and all administrative agencies
have only the rule-making authority
that is delegated to them
by the Congress.

The problem for the FCC is
that Congress has not authorized
the FCC to regulate broadband
Internet access. Several
bills have been introduced to
give the agency that authority.
But none has passed. Instead,
Congress has repeatedly sought
to ensure a free market for Internet
services “unfettered by
federal or state regulation.”

As the FCC itself often touts,
the Internet has transformed
American life and the nation’s
economy. Especially given the
interests at stake, it is not too
much to demand that the FCC
ask Congress for express authority
to regulate broadband Internet

Of course the problem with
asking for permission is that
you don’t always get it. But in
the Supreme Court’s words,
an agency “literally has no
power to act — unless and
until Congress confers power
upon it.”

Gregory Garre is the chair of the
Supreme Court and appellate
practice at Latham & Watkins
LLP. In 2008-2009, he served as
the 44th Solicitor General of the
United States.
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