In a major victory for the Federal Communications Commission (“FCC” or “Commission”) a three-judge panel of the United States Court of Appeals for the District of Columbia (“DC Circuit”) upheld the Commission’s 2015 Open Internet Order1 (“2015 Open Internet Order” or “Rule”).2 The Open Internet Order, released in March of last year, represents a groundbreaking change in the legal status of mobile and wireline broadband internet providers.
Between 2002 and 2007, the FCC issued a series of orders classifying wireline broadband internet as an information service.3 This classification did not exempt wireline internet from all regulation by the Commission, but did spare such providers from regulation as common carriers under Title II of the 1934 Communications Act, as amended (“Communications Act”).4,5 Title II regulation was developed to regulate old-fashioned voice telephone service.6 It gives the Commission extensive regulatory authority over the covered entities and requires those entities to provide service at regulated rates and terms of service.7 Similarly, in 2007, the Commission classified mobile broadband as a “private mobile service” not subject to Title II common carrier regulation.8 In the 2015 Open Internet Order, the FCC reclassified wireline broadband internet as “telecommunications service,” and reclassified mobile broadband service as “commercial mobile service”, thus making each a common carriage service subject to full regulation under Title II.9
Although the reclassification of broadband potentially opens the door for extensive regulation of internet service, the Commission, broadly forbore from applying most Title II provisions to broadband service providers. The Commission applied only a scattering of provisions to internet service.10 These provisions center around five rules. Of these, three are so-called bright-line rules: (1) no blocking; (2) no throttling; and (3) no paid prioritization.11 The anti-blocking and anti-throttling rules prohibit broadband providers from blocking or slowing traffic.12 The anti-paid-prioritization rule prohibits providers from preferring certain traffic over other traffic in exchange either for money or to benefit an affiliated company.13 In addition, the Commission adopted the General Conduct Rule, which prohibits broadband providers from “unreasonably” interfering with the transmission of content; and, the Commission updated its already-established transparency rule, which requires broadband internet providers to disclose certain information about the services they offer.14 For more about the 2015 Open Internet Order, see our client update from last year: FCC Shifts Net Neutrality into High Gear.
In its June 14, 2016 opinion, the DC Circuit upheld the Rule against a variety of challenges. The court rejected challenges to the reclassification of the services and to the Commission’s decisions regarding what Title II provisions to apply, and which not to apply. The court also rejected a First Amendment challenge.
The court found the FCC’s “virtuous circle” theory persuasive. According to the Commission, internet openness spurs investment and development by edge-providers (such as Netflix and Google), which leads to increased demand by end-users, which leads to increased investment by service providers in the network, which, in turn, leads to more innovation and development by edge-providers. The FCC took the position that the “virtuous circle” was fueled by an open-internet environment, in which end-users are able to reach the edge-user content they prefer without interference by service providers. The court accepted the FCC’s conclusion that regulation is necessary to ensure internet openness and keep the virtuous circle turning.15
The DC Circuit also embraced the FCC’s decision to apply a “light-touch” Title II regime by forbearing from applying most of Title II’s provisions. Dissenting Judge Williams argued that the Commission’s extensive forbearance “highlight[ed] the dodgy character” of the Commission’s reasons for reclassifying broadband service.16 The majority rejected these arguments, emphasizing that the Communications Act requires forbearance when the Commission determines that application of a provision is unnecessary to ensure just and reasonable service or protect customers and that forbearance is consistent with the public interest.17 Thus, the court took the position that the extensive forbearance fits into the statutory scheme.
The next steps for opponents of the rule would be to petition for an en banc rehearing by all eleven DC Circuit judges or to petition for writ of certiorari to the United States Supreme Court. Because the DC Circuit has discretion to deny requests for rehearing and the Supreme Court is similarly not required to take on the case, this may be the end of the road for opponents of the Rule.
1 In the Matter of Protecting and Promoting the Open Internet, GN Docket No. 14-28, Report and Order on Remand, Declaratory Ruling, and Order, FCC 15-24 (2015), available at https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-24A1_Rcd.pdf (“Open Internet Order”).
2U.S. Telecom Ass’n v. FCC, No. 15-1063, slip op. (June 14, 2006), available at: https://www.cadc.uscourts.gov/internet/opinions.nsf/3F95E49183E6F8AF85257FD200505A3A/$file/15-1063-1619173.pdf.
3See U.S. Telecom at *13-15.
447 U.S.C. § 151 et seq.
5See U.S. Telecom at *19 (describing how in Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014), the court had upheld certain regulations on broadband providers but rejected others because they were unlawful without reclassification).
6Id. at *10-12 (describing legislative history leading to the designation of Title II as the regulatory scheme for telecommunications services such as telephone).
747 U.S.C. § 201(a)-(b).
8U.S. Telecom at *55, 58.
9Open Internet Order at ¶¶ 29, 48.
10Id. at ¶ 5.
11Id. at ¶¶ 14-19.
14U.S. Telecom at *21.
15Id. at *17.
16Id. at *59.
17Id. at *41, *82-83.