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D.C. Gears Up for Net Neutrality Challenge, Take II

Policymakers, pundits and stakeholders of all stripes are gearing up for Friday's oral argument on the FCC's new Open Internet rules, which include reclassifying ISPs as common carriers under some Title II regs.

The same court remanded the FCC's first attempt to write net neutrality rules and the FCC's Democrats argue the new rules are responsive to that remand. ISPs and other opponents disagree. At stake is how much authority the FCC has over ISPs' business, including its interconnection agreements, and, potentially, pricing and service offerings.

ISPs also say that Title II rules discourage investment and innovation, while the FCC majority says it does just the opposite.

Sen. Ed Markey's office was reminding reporters Thursday that the Senator had teamed with Rep. Anna Eshoo (D-Calif.) on an amicus brief in support of the FCC and its arguments.

"The FCC has done precisely what Congress intended the Commission to do – classify broadband Internet access service according to its best understanding of the technology of the day, and how consumers use that technology. In light of the FCC’s findings – findings which are amply supported by evidence – this Court should uphold the FCC’s reasonable reclassification order," the legislators said.

Both had urged the FCC to reclassify ISPs under Title II to insure strong net neutrality rules were on the books.

“We’re confident the FCC’s ruling will stand up in court because the agency chose the correct legal path to protect the rights Congress gave to Internet users," agreed Matt Wood, policy director of Free Press, whose lawyers will be arguing for advocacy groups backing the rules. "That path — using the agency’s Title II authority — was clearly delineated by the same U.S. Court of Appeals when it considered earlier rules that were rooted in weak legal theories."   

The U.S. Court of Appeals for the D.C. Circuit is hearing various challenges from ISPs and others to the rules, including that the rules were not tough enough.  Actually it is a three-judge panel comprising Judges David Tatel (he was on the panel that rejected the previous net neutrality rules), Sri Srinivasan, and Senior Judge Stephen Williams. Total argument time is two hours.

Elsewhere on the Title II preparation front, the Free State Foundation, a free-market think tank that opposes the reclassification, issued a handy guide to the issues in play, which include whether reclassifications exceeds the FCC's authority, whether the reclassification was arbitrary and capricious, whether the FCC violated administrative procedures by not providing adequate notice it was going the Title II route, and whether it is empowered to interconnection agreements.

National Cable & Telecommunications Association president Michael Powell, said of NCTA's challenge to the Open Internet order back in April when it was filed, that its purpose was simply to "restore the national policy that Congress squarely set out that the Internet was to evolve unfettered by state and federal regulation."

He said Congress had created distinct regulatory approaches to networks to achieve that, making phone service more heavily regulated-as a Title II telecommunications service—due to "a century of monopoly dominance by one phone company and its progeny." The FCC could then deregulate that market as it became more competitive.

He said Congress created another regulatory regime on the other side to govern more "modern, dynamic and innovative networks," subjected to light, if any regulation, under its information services definition. He said it was clear what Congress wanted, and that the services ISPs provide are information, not telecom. He said the FCC order did "serious violence" to that regulatory scheme by rewriting an act of Congress, which the FCC is not allowed to do.

“The FCC overreached beyond its authority when it classified the Internet as a utility," said former Republican FCC Commissioner Robert McDowell in advance of the arguments Friday. "This is especially true in regard to wireless broadband, which Congress explicitly prohibited the FCC from reclassifying as a utility." McDowell did not support the network neutrality rules when he was a commissioner. "Because the FCC is likely to lose in court for a third time, all parties to this dispute should work together, in good faith, with Congress to forge a workable consensus."

The court challenge to the rules could take upwards of a year if this D.C. panel's decision is appealed to full court and/or the Supreme Court. "Telecom Investors remain wary that the Court of Appeals decision will not be the last word and are looking for ways to hedge their money," says Adonis Hoffman, chairman of Business in the Public Interest and former chief of staff to FCC commissioner Mignon Clyburn, one of the three yes votes for Title II. "There is a recognition that the FCC will be grappling with net neutrality well into the next calendar year, and perhaps the next Administration."

In the meantime, talk continues on both sides of the aisle that Congress could step in to clarify the FCC's authority to impose rules against blocking, throttling and paid prioritization, which ISPs have said they could abide by, without resorting to Title II.

There are also potential riders teed up for FCC appropriations bills that could block or limit implementation of Title II reclassification, which went into effect June 12, though those are likely poison pills for passage given the President's vocal support for reclassification.