Deja vu all over again: questions and a few suggestions on how the FCC can lawfully regulate Internet access.

• Author: Frieden, Rob
• Position: III. The Variable Burdens of Appellate Review for FCC Regulations C. Re-Regulation through V. Conclusion, with footnotes, p. 354-376

3. Re-Regulation

   The FCC reclassification of broadband Internet access from a largely unregulated information service to a significantly regulated telecommunications service has the effect of reversing the Commission's prior decision not to regulate Internet access. The Commission will bear an extraordinarily high burden to prove the lawfulness of its decision, because re-regulation runs counter to prevailing economic and political doctrine supporting less government intervention, particularly in the telecommunications marketplace where technological innovations have the potential to support more competition in some segments even as it can favor market concentration in others. (130) Opponents of network neutrality and other types of muscular FCC regulatory oversight claim that such intervention harms the national interest, generates regulatory uncertainty, reduces incentives for investment, stifles innovation and offers a remedy where no problem exists. (131)

   While Congress forces the FCC to interpret and apply statutory definitions, such as telecommunications and information service, the Commission unilaterally decided that these classifications are mutually exclusive. (132) Nothing in the Telecommunications Act, or case precedent requires the FCC to establish an absolute dichotomy and shoe horn any existing or new Internet service into one category or the other. (133) In the telecommunications marketplace, ventures embrace converging technologies and markets and offer consumers an inventory of services that fall within the telecommunications service and information service classifications while others combine the two. (134)

   Even the District of Columbia Circuit, which handled both prior appeals of FCC network neutrality orders, accepts the reality that convergence forecloses a bright line distinction between what the FCC can lawfully regulate and what it cannot:

   [E]ven if a regulatory regime is not so distinct from common carriage as to render it inconsistent with common carrier status, that hardly means it is so fundamentally common carriage as to render it inconsistent with private carrier status. In other words, common carriage is not all or nothing--there is a gray area in which although a given regulation might be applied to common carriers, the obligations imposed are not common carriage per se." (135) By assuming the obligation to make an either/or determination of regulatory status, the FCC limited itself to binary decision-making when it could no longer avoid having to make the call. (136) It could declare Internet access an information service and abandon statutory authority to regulate, regardless of changed circumstances. Alternatively it could declare Internet access a telecommunications service as it did when initially assigning Digital Subscriber Line access to the telecommunications service category. (137) On grounds that it should avoid creating regulatory asymmetry, the FCC opted to treat all forms of broadband Internet access as information services, including DSL, which it reclassified. (138)

   Having classified all forms of broadband Internet access as information services, the FCC voluntarily relinquished the option of applying just about all regulatory safeguards, even if it came to realize that self-regulation would not suffice. The FCC received complaints detailing instances where unregulated ISPs appeared to operate in ways that harmed both competitors and consumers. Rather than acknowledge its mistake in eliminating the option of applying any common carrier nondiscrimination requirement, the Commission embarked on a twice-failed strategy of devising regulatory safeguards designed to achieve the same outcomes as common carrier oversight without reclassifying them and expressly regulating under Title II regulations.

   In Comcast v. FCC, the District of Columbia Circuit rejected the FCC's attempts as unlawful. (139) The court first held that the FCC could not sanction Comcast for using software to disable peer-to-peer file sharing by subscribers, even though the company did not need to remedy congestion and had financial incentives to prevent subscribers from sharing movies it might otherwise lease on a pay per view basis. (140) The court then held that the FCC had no express statutory authority to impose network neutrality obligations on information service providers, nor could the Commission assert ancillary jurisdiction based on its duty to ensure that new technologies do not adversely impact regulated services. (141)

   When reviewing the FCC's second attempt to establish jurisdiction over ISPs, the District of Columbia Circuit again rejected common-carrier style rules, mandating nondiscrimination and prohibiting traffic blocking. (142) However, the court agreed with the FCC that it could impose non-common carrier rules based on the FCC's reading of Section 706 of the Communications Act, (143) which authorizes the Commission to promote nationwide access to advanced telecommunications services such as the Internet. (144)

   Now, rather than find a way to achieve non-common carrier regulatory safeguards, the FCC has opted to reclassify broadband Internet access as common carriage. (145) The Commission could have bolstered its defense on appeal had it acknowledged its two prior classification mistakes: (1) its belief that anything Internet-related must be treated as either an information service or a telecommunications service and (2) its determination that all Internet broadband access fits squarely within the information service category.

   Instead, the FCC offers multiple and conflicting justifications. At various points within the 2015 Open Internet Order, the Commission appears to use the ancillary jurisdiction rationale, as least insofar as considering its statutory instructions to be ambiguous and therefore open to its expert interpretation. (146) In other places, the FCC has no problem using the statutory classifications to categorize broadband Internet access solely as common carriage. (147) By doing so, rather than bolstering the weight and rationale of its argument, the FCC offers conflicting, inconsistent, and not complementary justifications.

   4. WHETHER AND HOW THE FCC CAN DEFEND THE 2015 OPEN INTERNET ORDER

   By opting to reclassify broadband Internet access as common carriage, the FCC has imposed upon itself a challenging burden in securing judicial affirmance. Had the Commission opted solely to impose non-common carrier regulations, it would have enhanced the odds of affirmance by using less muscular regulation that did not necessitate reclassifying broadband Internet access as a telecommunications service. Arguably the FCC could have achieved its public policy goals by combining enhanced transparency requirements on ISPs with a complaint-resolution process for addressing problems as they arise. Additionally, the Commission could have bolstered its link to statutory authority by emphasizing its jurisdiction based on Section 706, Title III for wireless broadband, and the incremental extension of private carrier oversight, as recommended by the District of Columbia Circuit. (148) By seeking to maintain a bright line distinction between telecommunications services and information services, with ISPs reassigned to the former category, the FCC substantially added to its appellate woes. Ostensibly to remove uncertainty, the Commission opted to convert any and all types of broadband Internet access as telecommunications services, a category that links a new generation of technology and service with legacy technologies and services much more akin to public utility, monopoly service such as voice telephony. Additionally, the Commission muddied the logic and consistency of its legal rationale by offering multiple and contradicting tracks of case precedent. (149)

1. Extensive Reliance on Chevron Deference to Interpret Statutory Ambiguity

   The 2015 Open Internet Order heavily relies on case law endorsing flexibility in regulatory agencies' interpretations and subsequent reinterpretations of their statutory authority. (150) Because it previously was unsuccessful in asserting ancillary jurisdiction over information services, (151) the FCC instead opted to rely on repeated assertions of statutory ambiguity to achieve its new goal of justifying the reclassification of broadband Internet access as a telecommunications service. (152) The FCC emphasizes how ambiguous statutory definitions in the Communications Act, (153) and even in the meaning of common words like "offer," (154) "just," "unjust," "reasonable," "unreasonable," (155) "necessary," (156) and "points specified by the user," (157) justify its reclassification of broadband Internet access.

   The FCC heavily relies on the Chevron deference to support its reclassification of broadband Internet access from an information service to a telecommunications service. (158) While agency expertise is owed no deference "if the intent of Congress is clear," (159) courts should defer to reasonable exercises of regulatory agency expertise "if the statute is silent or ambiguous with respect to the specific issue, [...] [provided] the agency's answer is based on a permissible construction of the statute." (160)

   The 2015 Open Internet Order also heavily relies on the Supreme Court's application of Chevron Doctrine in Brand X, (161) where the Court affirmed the Commission's decision to classify cable modem Internet access as an information service:

   In Chevron, this Court held that ambiguities in statutes within an agency's jurisdiction to administer are delegations of authority to the agency to fill the statutory gap in reasonable fashion. Filling these gaps, the Court explained, involves difficult policy choices that agencies are better equipped to make than courts. If a statute is ambiguous, and the implementing agency's construction is reasonable, Chevron requires a federal court to accept the agency's construction of the statute, even if the...