Title II: Too Close to Call

No clear outcome apparent as judges hear net-neutrality case
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WASHINGTON — Within the marbled walls of a federal courtroom, three judges of the U.S. Court of Appeals for the D.C. Circuit probed both sides of an issue that may have sweeping implications for the future of the Internet: How much power should the government wield over the most powerful communication platform on the planet?

The Federal Communications Commission said it must regulate Internet access, even perceived potential broadband access threats, because Internet-service providers have the incentive and ability to harm competitors and consumers’ access to websites, a point the agency’s general counsel made clear to the court.

To prevent that from happening, the FCC said it needs bright-line rules — against blocking, degrading and paid prioritization, and a general-conduct rule — as well as the muscle of common-carrier regulations under Title II of the Communications Act — to support those outright bans.

ISPs and their allies said the FCC shifted gears after the White House signaled it wanted Title II and created rules, without sufficient notice, based on a reclassification of Internet access as a common-carrier telecommunications service, which it cannot justify.

Unless Congress follows through on promises to produce bipartisan legislation establishing the FCC’s authority for those bright-line rules without resorting to the common-carrier reclassification, the courts (perhaps ultimately the Supreme Court) could decide whether the FCC can regulate the Internet in the interests of promoting broadband.

These and other related issues were debated in a packed courtroom with an overflow audience accommodated in a separate room. The crowd was treated to an oral argument in which the judges seemed to be equal opportunity probers.

Unlike the oral argument in the first Open Internet order challenge, this one was much tougher to read, though there were signs that the FCC might have a tough time getting interconnections included under its reclassification of ISPs under Title II, and extending that to mobile as well as fixed broadband.

Presiding over the grilling this time around were Judge David Tatel (he was on the panel, and wrote the opinion, that rejected the previous net-neutrality rules), Judge Sri Srinivasan and Senior Judge Stephen Williams.

Before the argument, a friend of the FCC’s court argument predicted that the outcome would be sufficiently ambiguous for both sides to be able to claim some victories, and that appeared to be the case.

“Sometimes you walk out of an oral argument with a pretty good sense of which way the decision is going to go,” Randolph May, president of free-market think tank The Free State Foundation, said. “After witnessing the entire three-hour argument, to my mind, this was not one of those cases.”

The judges probed a host of complicated issues, including whether the FCC could extend its reclassification to mobile broadband, whether it had violated the First Amendment rights of ISPs, whether it had provided sufficient notice of its changes, whether it could include interconnection agreements under the Title II regime and whether its ban on paid prioritization passed judicial muster.

Notable lines of questioning included Tatel’s probing of ISP arguments that the FCC could not reclassify Internet access as an information service. Tatel asked why the Supreme Court decision in Brand X should not be read to give the FCC that authority. The response from ISP attorney Peter Keisler was that the judges in Brand X never posited that there was no element of information service, so the FCC could not dispense with it.

FCC general counsel John Sallet, who argued the case, countered that ISP service was transmission, and the DNS and caching ISPs do is to manage that telecom service, rather than being a separate information element. He said those functions had to be looked at in context, arguing that the same screw used to put together furniture did not have the same function (or importance) when used in a medical device.

Tatel also spent some time trying to get Sallet to explain why the FCC had changed gears from a defense based on Section 706 of the Telecommunications Act to Title II, saying the facts clearly hadn’t changed. Sallet said the FCC had concluded that bright-line rules were needed to prevent ISPs from threatening the virtuous circle.

Those looking to read the tea leaves will have some time to stir the pot. A decision would likely come in late first quarter or early second quarter of 2016, said one attorney experienced in awaiting the court’s rulings.

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