D.C. Circuit Upholds FCC Open Internet Order

June 14, 2016–In a split decision, the U.S. Court of Appeals for the District of Columbia Circuit today rejected challenges to the FCC’s 2015 open Internet order, upholding the Commission’s decision to reclassify broadband Internet access services (BIAS), including mobile broadband services, as telecommunications services subject to common carrier regulation under Title II of the Communications Act, as well as the order’s bright-line rules against blocking, throttling, and paid prioritization, its “general conduct rule,” and its enhanced transparency rule.

The court also rejected challenges from pro–net neutrality parties that argued the FCC had improperly forborne from applying some provisions of Title II to BIAS providers. 

 In an opinion released this morning in “U.S. Telecom Association v. FCC” (consolidated cases beginning at 15-1063), Circuit Judges David S. Tatel and Sri Srinivasan wrote that the FCC’s conclusions about consumer perception—that users perceive BIAS as a service that “transmits messages unadulterated by computer processing” and “that consumers perceive broadband service as a standalone offering and as providing telecommunications”—“justify the Commission’s decision to reclassify broadband as a telecommunications service.”

They also rejected USTelecom’s arguments that the FCC provided insufficient notice that it was considering Title II reclassification, noting that the notice of proposed rulemaking “‘expressly asked for comments’ on whether the Commission should reclassify broadband.”  It said that USTelecom’s “second [procedural complaint—that the NPRM failed to provide a meaningful opportunity to comment on the Commission’s reliance on consumer perception—is equally without merit. In Brand X, the Supreme Court explained that classification under the Communications Act turns on ‘what the consumer perceives to be the . . . finished product.’ 545 U.S. at 990. Given this, and given that the NPRM expressly stated that the Commission was considering reclassifying broadband as a telecommunications service, interested parties could ‘comment meaningfully’ on the possibility that the Commission would follow Brand X and look to consumer perception.”

In rejecting USTelecom’s challenge related to the Act’s telecom management exception, the D.C. Circuit also cited the Supreme Court’s 2005 “NCTA v. Brand X” decision as stating that “the Commission would need to conclude that the telecommunications component of broadband was ‘functionally separate’ from the information services component.”

The court rejected USTelecom’s challenge asserting a failure by the FCC to conduct an adequate Final Regulatory Flexibility Analysis, saying that such a challenge should have first been raised in a petition for reconsideration, and that “USTelecom failed to do so.”

In a separate opinion concurring in part and dissenting in part, Senior Circuit Judge Stephen Williams said that the FCC’s reclassification decision “fails for want of reasoned decisionmaking. (a) Its assessment of broadband providers’ reliance on the now-abandoned classification disregards the record, in violation of its obligation under F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009). Furthermore, the Commission relied on explanations contrary to the record before it and failed to consider issues critical to its conclusion. Motor Vehicles Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). (b) To the extent that the Commission relied on changed factual circumstances, its assertions of change are weak at best and linked to the Commission’s change of policy by only the barest of threads. (c) To the extent that the Commission justified the switch on the basis of new policy perceptions, its explanation of the policy is watery thin and self-contradictory.”

Judge Williams also suggested that the FCC’s forbearance decision is inconsistent with the reclassification decision, saying the agency in the latter “invokes something very like market power” by BIAS providers while declining to take a position on that issue in its forbearance decision. —Lynn Stanton, lynn.stanton@wolterskluwer.com

Courtesy TRDaily