On Tuesday, June 14, 2016, the Court of Appeals for the DC Circuit released its long-awaited opinion in U.S. Telecom Association v. FCC, upholding the FCC’s 2015 Open Internet Order by a 2-1 vote. On petition for review, the petitioners challenged the FCC’s reclassification of broadband service as a Title II common carriers, reclassification of mobile broadband service, the ban on paid prioritization and the General Conduct Rule, and also argued that the net neutrality rules violate the First Amendment. The DC Circuit found against each of these challenges and denied the petitions for review.
The FCC’s 2015 Open Internet Order set forth rules governing net neutrality, ensuring that Internet providers cannot create “fast lanes” and “slow lanes” by reclassifying broadband under Title II of the Communications Act while also relying on the FCC’s authority under Section 706 of the Telecommunications Act. In its accompanying report, the FCC noted the importance of net neutrality, including for specific communities:
Open Internet rules benefit investors, innovators, and end users by providing more certainty to each regarding broadband providers’ behavior, and helping to ensure the market is conducive to optimal use of the Internet. Open Internet rules are also critical for ensuring that people living and working in rural areas can take advantage of the substantial benefits that the open Internet has to offer. In minority communities where many individuals’ only Internet connection may be through a mobile device, robust open Internet rules help make sure these communities are not negatively impacted by harmful broadband provider conduct. Such rules additionally provide essential safeguards to ensure that the Internet flourishes as a platform for education and research.
The DC Circuit opinion begins with history of the FCC’s Order, including the DC Circuit’s 2014 Verizon opinion in which it vacated the FCC’s 2010 Open Internet Order anti-discrimination and anti-blocking rules as impermissible because they subjected broadband providers to common carrier treatment. Prior to the FCC’s Open Internet Order reclassifying broadband providers, the Internet was classified as an information service, exempt from common carriage rules. However, the court notes that in Verizon, “we upheld the Commission’s conclusion that section 706 provides it authority to promulgate open internet rules” and “the Commission’s ‘finding that Internet openness fosters . . . edge provider innovation . . . was . . . reasonable and grounded in substantial evidence’ and that the Commission had ‘more than adequately supported and explained its conclusion that edge-provider innovation leads to the expansion and improvement of broadband infrastructure.” In its 2014 opinion, the DC cCircuit recognized that absent rules governing net neutrality “broadband providers represent a threat to Internet openness and could act in ways that would ultimately inhibit the speed and extent of future broadband deployment.”
The DC Circuit also lays out its role in reviewing the FCC’s decision, noting that it “is a limited one . . . to ensure that an agency has acted ‘within the limits of [Congress’s] delegation’ of authority and that its action is not ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.” The court’s role is not to make policy judgments.
Turning to the facts of the present case, the Court first upholds the FCC’s reclassification under Title II pointing out the evidence that “consumers use broadband principally to access third-party content, not email and other add-on applications.” The Internet is marketed to consumers as a conduit for transmission of data as a standalone service rather than for particular add-on services. The DC Circuit then quickly rejects the petitioners’ procedural arguments that the FCC did not provide adequate notice that it was considering reclassification (among other issues), pointing directly to the FCC’s Notice of Proposed Rulemaking (NPRM) calling for comment on this issue.
With respect to the substantive arguments regarding Title II reclassification, the DC Circuit points out that consumer perception of the service is key:
when interpreting this provision in Brand X, the Supreme Court held that classification of broadband turns on consumer perception . . . Nothing in Brand X suggests that an examination of market power or competition in the market is a prerequisite to classifying broadband . . . citing the Commission’s economic findings as additional support for its approach is a far cry from requiring the Commission to find market power.
Additionally, the DC Circuit notes that the FCC’s judgment that any impact its Open Internet Order will have on broadband investment are outweighed by the positive effects of the “virtuous circle,” is given “particularly deferential review, as long as they are reasonable” because it is a predictive judgment under the FCC’s field of discretion and expertise.
Similarly, the DC Circuit upholds the FCC’s decision to reclassify mobile broadband, pointing out the FCC’s finding of the ubiquity and widespread use of mobile broadband. In addition,
Avoiding that statutory contradiction not only assures consistent regulatory treatment of mobile broadband across Titles II and III, but it also assures consistent regulatory treatment of mobile broadband and fixed broadband, in furtherance of the Commission’s objective that “[b]roadband users should be able to expect that they will be entitled to the same Internet openness protections no matter what technology they use to access the Internet.” 2015 Open Internet Order, 30 FCC Rcd. at 5638 ¶ 92. When consumers use a mobile device (such as a tablet or smartphone) to access the internet, they may establish a connection either through mobile broadband or through a Wi-Fi connection at home, in the office, or at an airport or coffee shop. Such Wi-Fi connections originate from a landline broadband connection, which is now a telecommunications service regulated as a common carrier under Title II. If a consumer loses her Wi-Fi connection for some reason while accessing the internet—including, for instance, if she walks out the front door of her house, and thus out of Wi-Fi range—her device could switch automatically from a Wi-Fi connection to a mobile broadband connection. If mobile broadband were classified as a private mobile service, her ongoing session would no longer be subject to common carrier treatment. In that sense, her mobile device could be subject to entirely different regulatory rules depending on how it happens to be connected to the internet at any particular moment—which could change from one minute to the next, potentially even without her awareness.
After upholding the FCC’s decision to reclassify broadband Internet service, the DC Circuit turned to challenges against the ban on paid-prioritization and the FCC’s General Conduct Rule.
With respect to the ban on paid-prioritization, the Court points out (and the challenger conceded) that the FCC “grounded the rules in ‘multiple complementary sources of legal authority’–not only Titles II and III, but also section 706 of the Telecommunications Act of 1996.” The DC Circuit again points to its 2014 Verizon decision in which it upheld the FCC’s broad authority to implement rules under Section 706. The Court states “as we held in Verizon and reaffirm today, the Commission’s section 706 authority extends to rules ‘governing broadband providers’ treatment of internet traffic’–including the anti-paid-prioritization rule–in reliance on the virtuous cycle theory.” The Court also finds that the ban on paid-prioritization “is geared to promoting the effective deployment of new telecommunications technologies such as broadband [and] . . . is entirely consistent with the Act’s objectives.”
Turning to the General Conduct Rule, the DC Circuit notes that
The Commission adopted the General Conduct Rule based on a determination that the three bright-line rules— barring blocking, throttling, and paid prioritization—were, on their own, insufficient “to protect the open nature of the Internet.” Id. at 5659–60 ¶¶ 135–36. Because “there may exist other current or future practices that cause the type of harms [the] rules are intended to address,” the Commission thought it “necessary” to establish a more general, no-unreasonable interference/disadvantage standard. Id. The standard is designed to be flexible so as to address unforeseen practices and prevent circumvention of the bright-line rules. The Commission will evaluate conduct under the General Conduct Rule on a case-by-case basis, taking into account a “non-exhaustive” list of seven factors.
The court finds that the rule is not impermissibly vague because it did not seek to retroactively enforce a new policy and the FCC provides a mechanism for advisory opinions. The due process concerns are satisfied provided that the regulations “are sufficiently specific that a reasonably prudent person, familiar with the conditions the regulations are meant to address and the objectives the regulations are meant to achieve, would have fair warning.” The FCC not only set forth seven factors to guide determination of what constitutes unreasonable interference with, or disadvantaging of, end-user or edge provider access, but also a description of how each factor would be interpreted and applied.
The Court also points out that overly specific rules could be harmful:
Given that “we can never expect mathematical certainty from our language,” those sorts of descriptions suffice to provide fair warning as to the type of conduct prohibited by the General Conduct Rule. Grayned v. City of Rockford, 408 U.S. 104, 110 (1972). To be sure, as a multifactor standard applied on a case-by-case basis, a certain degree of uncertainty inheres in the structure of the General Conduct Rule. But a regulation is not impermissibly vague because it is “marked by flexibility and reasonable breadth, rather than meticulous specificity.” Id. (internal quotation marks omitted). Fair notice in these circumstances demands “no more than a reasonable degree of certainty.” Throckmorton v. National Transportation Safety Board, 963 F.2d 441, 444 (D.C. Cir. 1992) (internal quotation marks omitted). We are mindful, moreover, that “by requiring regulations to be too specific courts would be opening up large loopholes allowing conduct which should be regulated to escape regulation.” Freeman, 108 F.3d at 362 (alterations and internal quotation marks omitted). That concern is particularly acute here, because of the speed with which broadband technology continues to evolve. The dynamic market conditions and rapid pace of technological development give rise to pronounced concerns about ready circumvention of particularized regulatory restrictions. The flexible approach adopted by the General Conduct Rule aims to address that concern in a field in which “specific regulations cannot begin to cover all of the infinite variety of conditions.” Id. (alteration and internal quotation marks omitted).
Finally, the Court rejects the arguments that the Open Internet Order violates a broadband provider’s First Amendment rights because “Common carriers have long been subject to nondiscrimination and equal access obligations akin to those imposed by the rules without raising any First Amendment question. The obligations affect a common carrier’s neutral transmission of others’ speech, not a carrier’s communication of its own message.” Furthermore:
The absence of any First Amendment concern in the context of common carriers rests on the understanding that such entities, insofar as they are subject to equal access mandates, merely facilitate the transmission of the speech of others rather than engage in speech in their own right.
. . .
Of course, insofar as a broadband provider might offer its own content—such as a news or weather site—separate from its internet access service, the provider would receive the same protection under the First Amendment as other producers of internet content. But the challenged rules apply only to the provision of internet access as common carriage, as to which equal access and nondiscrimination mandates present no First Amendment problem.
ARL, together with three other library associations, filed an amicus brief in September 2015 supporting the FCC’s net neutrality rules, pointing out the importance for libraries and higher education:
As broadband subscribers, providers of Internet access points to patrons, and providers of digital content and services, libraries rely on the open character of the Internet to achieve their missions of providing equitable access to information, enhancing education and promoting life-long learning, supporting democracy and informed citizenry, and protecting intellectual freedom.
Today’s decision is an important win for libraries and higher education, particularly with respect to the upholding of the ban on paid prioritization and the General Conduct rule. Without bright-line rules banning paid prioritization, libraries and other institutions serving the public interest may not be able to pay extra fees for enhanced transmission of their content. Prioritization risks that network operators would give priority to entertainment or other commercial content over education, civic engagement, access to information or other services. Additionally, the General Conduct Rule is a necessary tool to ensure that the Internet remains open and neutral. The General Conduct Rule protects against future harms, including those made possible by technological innovations and advances.