FCC's Title II Rules Gets Day in Court

The FCC's second attempt at network neutrality rules got a thorough going-over in lengthy oral arguments in the U.S. Court of Appeals for the District of Columbia. But so did ISP's and others' litany of challenges to various parts of those new rules, most notably for cable operators reclassification under Title II.

The judges seemed to be equal opportunity probers.

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.

As a packed courthouse and overflow room (with video and audio) looked on, the judges probed that and other 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.

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

Notable lines of questioning included Tatel's probing of ISP arguments that the FCC could not reclassify Inernet access as an information service--he asked why the Supreme Court decision in Brand X should not be read to give the FCC that authority. The response from the 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 just dispense with it.

FCC General Counsel John Salet, who argued the case, countered that ISP service was transmission, and the DNS and caching they did was 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 arguably the same importance) when used in a medical device.

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

Judge Williams seemed clearly to have an issue with the FCC's ban on paid prioritization. He said that ban could wind up sweeping up harmless conduct, and seemed perturbed that the FCC had not responded to those who suggested there were less regulatory ways to achieve the same goal.

"The rigorous questioning on multiple elements of the Order exposed many holes in how it was crafted, "said one cable source in the courtroom. "The FCC didn’t have good answers on the proper notification issues that were raised which could mean the entire Order is in trouble. The FCC especially fared poorly on interconnection and mobile broadband arguments.

Veteran public interest attorney Andrew Schwartzman, who was in the gallery, did not agree, "I think it went pretty well for the FCC," he said. "The Court clearly had more problems with the application of Title II, but the point that seemed most interesting to the Court - notice - is one which wouldn't be fatal to the FCC.  If the Court were to reverse on that, the FCC could conduct a new proceeding and do the same thing in the end."

An attorney representing FCC supporters agreed that the FCC could have some problems with its argument for extending the rules to mobile broadband, He also recognized the pushback from the judges on the FCC's inclusion of interconnection issues under Title II while not reclassifying interconnection as a Title II service.

But he also said he was more optimistic about the fixed broadband reclassification argument.

One rule challenger came away suggesting the FCC had a high bar.

“The Oral Argument in the Appeal of the Open Internet Order illustrated the magnitude of legal hurdles facing Chairman Tom Wheeler's designation as Internet referee," Said Daniel Berninger, VoIP pioneer, who challenged the FCC's ban on paid prioritization.  "The panel of Judges Tatel, Srinivasan, and Williams heard descriptions of six separate and independent flaws in this third attempt to regulate the Internet. The time constraints makes definitive conclusions impossible, but the questions from the judges suggest trouble on multiple fronts and a fatal "third strike" against FCC Internet regulation plans.”

Among those in the courtroom for argument were National Cable & Telecommunications Association President Michael Powell and CTIA President Meredith Attwell Baker.

“We are heartened that the Court today held a serious and rigorous examination on the legality and merits of the FCC’s decision to subject the Internet to public utility-style regulation," said Powell in a statement following the hearing. "We have said repeatedly that this appeal is not about preserving an open Internet; it is about the FCC’s unnecessary and unlawful action to reclassify broadband Internet service as a common carrier.  As today’s argument made clear, because of the complexity and potential patchwork outcome of the legal process, the best solution is for Congress to enshrine important net neutrality protections into law and eliminate the negative consequences and continuing uncertainty caused by the FCC’s decision to put the modern Internet under an antiquated regulatory regime.”

A court decision, if Congress does not beat them to it, could come down as early as the end of first quarter 2016.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.