FCC’s Open Internet Order Gets Its Day in Court

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The Federal Communications Commission’s latest attempt at network neutrality rules got a thorough review in lengthy oral arguments in the US Court of Appeals for the District of Columbia. But so did Internet service providers' and others' litany of challenges to various parts of those new rules, most notably for reclassification of broadband access service under Title II. The judges seemed to be equal opportunity probers. Questions from the panel of judges, during four rounds of arguments, gave hints to which way each judge is leaning. The crux of the case is meant to answer the questions: Did Congress give deference to the FCC to choose how Internet service should be classified, and is the FCC’s decision to change course now justified?

Judge David Tatel, who has written opinions overturning a pair of prior net neutrality cases, was the most closely watched judge. Many expect him to write the decision in this case. Early in the arguments, he suggested the court should take its lead from a prior Supreme Court case — known as Brand X — that found the FCC had discretion to choose the classification of Internet service. "Doesn't that have to be our starting point?" he asked lawyers who are challenging the FCC's rules. That could be a sign of hope for the FCC, which reads the Brand X case as giving it the authority to make its own decision — and to change its mind — because the underlying law is ambiguous. ISPs say Internet service in not analogous to other common carriers, such as voice service, because Internet providers do not only provide the pipes that transmit data, they also provide storage and processing capabilities that allow people to search the Web. Many interpreted Tatel's opinion in 2014 that struck down previous rules as a roadmap for writing pared back rules without reclassifying. Judge Tatel at one point asked the FCC the "reason for abandoning that approach." Critics have pointed to pressure from the Obama administration. "I couldn't find it in the order," Tatel said. FCC General Counsel John Salet, who argued the case, said the FCC had concluded that bright-line rules were needed to prevent ISPs from threatening the virtuous circle. He argued that broadband service is transmission, and the NDS and caching they did was to manage that telecom service, rather than being a separate information element. He said those functions had to be looked at in context, arguing that the same screw used to put together furniture did not have the same function (or arguably the same importance) when used in a medical device.

Judge Sri Srinivasan, an Obama appointee, said at a certain "level of generality" it seems like the FCC was following the Supreme Court's lead, but he agreed that the agency took one extra step. He said that extra step to reclassify access to the entire Web will be key.

Senior Judge Stephen Williams, a Reagan appointee, seemed most resistant to the FCC's argument. At one point he got into a long back and forth with the FCC over paid prioritization, one of the commission’s key prohibitions. The FCC barred Internet service providers from creating fast lanes for their own web content or for content of other sites willing to pay extra. Judge Williams said he found that some of those agreements could be "utterly reasonable" and said the commission could have narrowed the rule to gets its desired effect. He said that ban could wind up sweeping up harmless conduct, and seemed perturbed that the FCC had not responded to those who suggested there were less regulatory ways to achieve the same goal. He specifically pointed to traffic that is "time sensitive" such as a video live stream, which could be reasonably prioritized. He used the analogy of a railroad charging extra money for a railcar that also includes refrigeration.

The court addressed a slate of other secondary issues, including whether the FCC was right to apply the net neutrality rules to mobile broadband. Another topic was the FCC's regulation of deals at the point of interconnection — where a backbone Internet provider routes traffic to a company such as Comcast, which in turn sends the traffic down the last mile to customers. The judges did not seem convinced by a short series of First Amendment arguments made against the rules. The mobile broadband section of the argument focused most heavily on the FCC procedures and notice given to stakeholders. Critics argue that stakeholders were not in the loop about the definitional changes the FCC made ahead of time, in violation of the Administrative Procedures Act. The FCC shot back that it is not required to provide the granular type of notice meant "for a second grader."

Public Knowledge, as part of a broad coalition of intervenors, presented oral arguments defending the FCC’s rules. Specifically, PK opposes US Telecom’s challenge to the FCC’s net neutrality rules reclassifying broadband Internet as a telecommunications service. Kevin Russell delivered the arguments on behalf of Public Knowledge, Free Press and Open Technology Institute. After the hearing he said, "As you would expect, the judges asked some probing questions on several discrete topics, such as interconnection, paid prioritization, and mobile. However, the carriers who are challenging the FCC's rules ultimately have a weak case for the issues at large. The attorneys representing the FCC, intervenors, and the public interest did an excellent job explaining why the carriers' challenge must fail and why the FCC's action was lawful. Ultimately, what is at stake here is whether cable and broadband providers like Comcast are allowed to manipulate their customers’ access to lawful content of their choice, fundamentally distorting the Internet as we know it.”

Consumers Union submitted an amicus brief in favor of the rules. The brief cites Consumer Reports’ national surveys that demonstrate strong support for net neutrality rules. A June 2014 CR survey found that 58% of consumers agreed that “the government should not allow Internet service providers to charge companies to deliver their content with greater priority than other companies”; only 16% thought it was a good idea.

Veteran public interest attorney Andrew Schwartzman, who listened to the day’s proceeding, said, "I think it went pretty well for the FCC," he said. "The Court clearly had more problems with the application of Title II, but the point that seemed most interesting to the Court - notice - is one which wouldn't be fatal to the FCC. If the Court were to reverse on that, the FCC could conduct a new proceeding and do the same thing in the end."

Gene Kimmelman, President and CEO Public Knowledge, said the hearing was notable because while he has “heard many arguments of the commission before the court where they’ve been ripped apart,” this time “they were given sound support for using reclassification, which was the critical point.”

Hear the proceedings -- Part I and Part II

FCC's Title II Rules Gets Day in Court (B&C) Appeals court goes four rounds over net neutrality rules (The Hill) Public Knowledge Defends Net Neutrality Rules in D.C. Circuit (Public Knowledge) Open Internet Champions Make the Case for Net Neutrality Before the U.S. Court of Appeals (Free Press) Consumers Union Highlights Need for Open Internet as Net Neutrality Case is Heard (Consumers Union) USTelecom Argues Against FCC Regulation of Internet (USTelecom) Press statement (NCTA) Net neutrality just went to court. Here’s how it did. (Washington Post) In Net Neutrality Hearing, Judge Signals Comfort With F.C.C.’s Defense (NYTimes) FCC’s Net Neutrality Rules Undergo Scrutiny in Court (Morning Consult)