When the Federal Communications Commission published its massive 400-page network neutrality ruling last year, everyone knew the fight wasn't over. Almost immediately, broadband providers filed lawsuits, arguing that the agency’s ambitious rules far exceeded the FCC’s authority.
And there was a real threat that the courts could undo the agency's work. Twice before — once in 2010 and again in 2014 — the courts had found the rules illegal and ordered the FCC to go back to the drawing board. And the agency's new rules are more ambitious than those past efforts, which left ample room for a hostile court to find fault.
The DC Circuit Court heard arguments in the case last December and published its ruling on Tuesday. The ruling represents a total victory for the FCC and its chair, Tom Wheeler. It also represents a victory for President Barack Obama, who named Wheeler to lead the FCC and has championed Wheeler’s approach to network neutrality.
The court systematically rejected the legal arguments thrown against Wheeler’s network neutrality rules, leaving in place the most sweeping regulation of broadband internet access in more than a decade.
The ruling could still be appealed to a broader panel of DC Circuit judges or to the United States Supreme Court. Still, after a decade of legal limbo, the FCC is finally within striking distance of having its rules accepted by the courts. Not only that, but the court’s ruling makes it clear that the FCC has broad authority to regulate broadband internet access, which means we could see even more aggressive FCC action on this front in the future.
Every challenge to the FCC’s rules fell flat
If you followed the big network neutrality debate in 2014 and early 2015, you likely encountered a seemingly endless list of legal problems with the FCC’s approach. Critics seemed to find fault with every aspect of the FCC’s rules, arguing that the agency had exceeded the authority granted to it by Congress, failed to follow standard procedures in enacting the rules, and even violated the Constitution.
Indeed, these concerns were a major reason that the FCC’s final order was 400 pages long. The agency knew that big broadband providers and their allies would throw every legal argument they could think of at the rules to try to destroy them. So it went to great length to explain and justify its every decision.
That diligence paid off. The court’s majority (the panel voted 2 to 1) examined a long list of arguments against the regulations and found each and every one of them to be without merit.
A lot of opponents’ arguments focused on allegations that the FCC had failed to follow proper procedures in enacting the new regulations. The law requires an agency to give clear notice of proposed rules and give the public time to comment on them. Challengers argued that the FCC failed to do this because its final regulation differed in significant ways from its original proposal.
But this argument proved to have a big problem: While critics claimed they hadn’t had sufficient opportunity to comment on the FCC’s decisions, the record told a different story. During the FCC’s comment period, network neutrality opponents filed extensive comments addressing exactly the issues that challengers subsequently complained they hadn’t had an opportunity to address.
The ruling means expanded FCC authority to regulate broadband markets
The crucial legal issue in the case was whether the FCC had the power to apply a legal framework originally designed for monopoly telephone providers to the internet. When Congress passed the Telecommunications Act of 1996, it drew a distinction between "telecommunications services," which provide the capability to move information from one place to another, and "information services" that allow users to store, access, and manipulate information.
The reasoning here was simple: Telecommunications services have a tendency toward monopoly (local phone service is a telecommunications service, for example), so Congress wanted the FCC to have broader authority to regulate them in the public interest. In contrast, online services were a more competitive market and a market that was still in its infancy, so Congress wanted to shield it from excessive FCC regulation.
When broadband service emerged in the late 1990s, many people assumed it would be classified as a telecommunications service, and that’s how the early DSL-based broadband services provided by telephone companies were regulated. But under the George W. Bush administration, the FCC changed its approach and started classifying broadband as an information service — a move that freed it from most regulations.
The Supreme Court upheld this approach in 2005 in a 6-3 decision. The three dissenting justices argued that the statute required the FCC to keep broadband under the more regulated legal framework. But the six-justice majority found that the law was ambiguous and therefore the FCC could decide how to regulate it.
In 2015, the FCC decided to switch back to regulating broadband as a telecommunications service, a move that expands its authority over these services. But critics now argued that this move was illegal — that the law not only allowed the FCC to treat broadband as an information services but required it to do so. Significantly, neither side in the Supreme Court’s landmark 2005 ruling went this far.
Their main argument was that many internet service providers bundled online services like email access and web hosting along with basic broadband service. If you sign up for Verizon broadband service, for example, you might get a Verizon.net email address. Everyone agrees that email is an information service, and big telecommunications companies argued that the FCC should treat the entire bundle — including broadband connectivity — as an information service.
But the DC Circuit majority wasn’t convinced. Following the Supreme Court’s precedent, the judges ruled that it’s up to the FCC to decide how to regulate broadband service. The decision to treat it as an information service from 2005 to 2015 was allowed under the statute. So was its decision to treat it as a telecommunications service today.
That might sound fairly arcane — and it is — but it also has big implications for the future of internet regulation. The reason the FCC has faced such an uphill battle regulating the internet over the past decade is that the agency was trying to protect the open internet while maintaining the highly restrictive "information service" classification. The courts found that the rules governing information services simply didn't allow the kinds of regulations the FCC wanted to impose.
But the laws governing telecommunications services are different, and far more favorable to FCC authority. At the time of the 1996 Telecommunications Act, the breakup of the old AT&T monopoly was only 12 years in the past — Congress wanted to make sure the FCC had the authority to deal with those kinds of monopolies in the future. So Congress gave the FCC broad authority to regulate telecommunications services to promote competition and protect users.
That means the FCC now has a new, broader set of tools to regulate big broadband providers like Comcast and Verizon. If Hillary Clinton captures the White House this fall, we could see an activist FCC aggressively enforcing Wheeler's rules over the next four years — or even expanding on them. And even if Donald Trump takes the White House and his FCC reverses Wheeler’s rules, the door will be open for stronger regulations under more liberal administrations in the future.
Correction: The 2005 Brand X Supreme Court decision was decided 6-3, not 5-4 as I originally stated.