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Net Neutrality Ruling: Legal Avenue for Revival in Place, Political Will Lacking
January 15, 2014
Thomas Mennecke
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At this moment, an ISP could open their traffic throttle software, click the filter input field, enter "*.torrent", and wipe out nearly all .torrent traffic with 100% legal justification. That's because the FCC's hard fought net neutrality rules, which promulgated " disclosure, anti-blocking, and anti-discrimination requirements" on broadband ISPs (Internet Service Providers), have been vacated from the Open Internet Order. As the court points out in its ruling, the FCC used the Open Internet Order in response to Comcast's alleged throttling of BitTorrent traffic, a practice that now exceeds the authority of the FCC.

So what does this mean, the entire net neutrality rule is dead?

No. The Open Internet Order had three components - disclosure, anti-blocking, and anti-discrimination. The court did not vacate the disclosure rule, which requires fixed and mobile broadband providers to "publicly disclose accurate information regarding the network management practices, performance, and commercial terms of [their] broadband Internet access services."

However, the requirement that broadband providers charge or provide service everyone equally, whether that entity uses 5 bits of traffic a year or uses 30% of all internet traffic at a given moment, is dead.

OK, so what's this I hear that the FCC overstepped it authority?

The bottom line is this: The 1996 Telecommunications Act classifies two types of carriers, telecommunications carriers which provides basic service, and enhanced service which provides information services (such as ISPs). Basic service (such as your landline telephone company, for those who still use that) are subject to common carrier regulations. Enhanced providers, such as broadband providers Comcast and Verizon, are not subject to regulation. By placing the duty of a common carrier on an enhanced service provider, it allowed the FCC to regulate a telecommunications entity that was beyond its jurisdiction.


The duty of a common carrier is to “furnish . . . communication service upon reasonable request,” engage in no “unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services,” and charge “just and reasonable” rates."

The Court of Appeals had a problem with this language because it imposes a requirement on broadband providers nearly identical to that of a basic service provider. Since the Open Internet Act creates this duty, it is in effect reclassifying an enhanced service as a basic service provider and subjecting them to rules reserved for basic services.

OK, so they made a rule that reclassified an ISP broadband provider, what's the big deal?

The big deal is that broadband providers were already classified as enhanced service providers, which we know are not subject to common carrier regulations. One does not simply reclassify an entire phylum of telecommunications entities without procedural rules in place to ensure a transparent and fair transition. The problem is the FCC did not do this. They simply came up with a rule that sidestepped an entire procedural hurdle. And that hurdle is substantial. If the FCC wants to regulate broadband providers subject to common carrier regulations, they will have to reclassify them legally.

That sounds like there is some room here for the FCC to reestablish Net Neutrality...

From a legal perspective, there is. The Court of Appeals left the door open for the FCC to do so. However, it's not an easy or straightforward process from a political perspective and will require the FCC to do a lot of legal work to sort out their issues.

The problem is reclassifying broadband ISPs such as Comcast and Verizon as basic providers. These ISPs have just spent the last decade fighting against Net Neutrality, and they are not going to stand by and watch as the FCC changes its rules. The rulemaking process is transparent and permits public input, which is code for massive corporate lobbying.

What's this I hear about 706(a) and 706(b)?

These two sections are the FCC's source of authority in the Communications Act. This is actually a significant legal win for the FCC in that respect. The broadband providers tried to argue that the FCC has no source of authority for net neutrality, but the court disagreed. However, another problem is the FCC previously ruled against itself that 706(a) is not a source of authority. However, 706(b) doesn't have this restraint and grants the FCC nearly the same language as 706(a): "The Commission “shall take immediate action . . . by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.”

So does this mean the FCC could ground Net Neutrality in 706(b)?

The language of the Court of Appeals said that 706(b) is "limited, as it is, both by the boundaries of the Commission’s subject matter jurisdiction and the requirement that any regulation be tailored to the specific statutory goal of accelerating broadband deployment. In other words, the FCC can regulate broadband providers so long as the purpose behind whatever regulation promoted by the FCC is designed to "accelerate broadband deployment."

What does that mean? The FCC could reverse itself on 706(a), but it seems 706(b) is already adequate. Also, expect the limits of these sections to be the next court battle, if the FCC actually tries to revive Net Neutrality.

Did the court invalidate the reasoning or theory behind Net Neutrality?

No, and this is another big win for the FCC. Verizon tried to argue that the FCC's policy of anti-blocking, anti-discrimination and disclosure were beyond the scope of authority granted to it under the Communications Act. However, the Court of Appeals found that the FCC's rational behind the Open Internet Policy was legally sound (was not arbitrary or capricious):

"Here the Commission reached its “policy conclusion” by emphasizing, among other things, (1) the absence of evidence that similar restrictions of broadband providers had discouraged infrastructure investment, and (2) the strength of the effect on broadband investment that it anticipated from edge-provider innovation, which would benefit both from the preservation of the “virtuous circle of innovation” created by the Internet’s openness and the increased certainty in that openness engendered by the Commission’s rules. Open Internet Order. In so doing, the Commission has offered “a rational connection between the facts found and the choice made."

Is there anything really scary that comes from this decision?
Yes, check out the language on page 52:

"More important, the Open Internet Order imposes this very duty on broadband providers: given the Open Internet Order’s anti-blocking and anti-discrimination requirements, if Amazon were now to make a request for service, Comcast must comply. That is, Comcast must now “furnish . . . communication service upon reasonable request therefor."

The logical corollary of that statement is that since the anti-blocking and anti-discrimination requirements of the Open Internet Order is dead, an ISP can block Amazon at will, and without any legal recourse whatsoever from any blocked entity.

So the FCC can just go back to the drawing board and grit their way through the next iteration of Net Neutrality?

Not so fast. Thomas Wheeler, Chairman of the FCC is not the biggest fan of net neutrality. However, he does seem to like the general idea behind net neutrality, as pointed out recently by the Washington Post. However, Wheeler also doesn't appear to be in any hurry to reclassify broadband providers either, according to the Wall Street Journal. And without reclassification, there can be no regulation.

The FCC will probably not force the broad and sweeping policy behind net neutrality, as evidenced by Wheeler's press statement on the issue, in which he gave this halfhearted prospect regarding appeal, "We will consider all available options, including those for appeal, to ensure that these networks on which the Internet depends continue to provide a free and open platform for innovation and expression, and operate in the interest of all Americans."

No doubt a negotiated solution is part of that option package. Perhaps the FCC will instead promote a new rule that limits their reach, but can still influence broadband providers on a smaller scale. And what that scale is may be yet more grounds for litigation.

A brave new internet world begins.

You can read the 81 page decision here.

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