TR Daily FCC Gains More Restoring Internet Freedom Order Legal Support
Friday, October 19, 2018

FCC Gains More Restoring Internet Freedom Order Legal Support

Several more parties have added their names to the list of those filing amicus briefs with the U.S. Court of Appeals for the District of Columbia Circuit supporting the FCC against legal challenges to the agency’s 2017 restoring Internet freedom (RIF) order, including three states.

The 2017 RIF order overturned nearly all of the provisions of the open Internet order adopted by a Democratic-controlled Commission, including the classification of broadband Internet access service (BIAS) as a telecommunications service subject to common carrier regulation under Title II of the Communications Act; the classification of mobile broadband as a commercial mobile service subject to Title II regulation; bright-line conduct rules against blocking, throttling, and paid prioritization; and the Internet general conduct standard.

The RIF order left in place transparency requirements of the 2015 order and imposed specific transparency requirements on Internet service providers, directing them to disclose if they engage in blocking, throttling, paid prioritization, or prioritization of affiliate content or services.

The RIF order also stated that BIAS is an interstate service and preempted state actions that conflict with the federal regime for ISPs (TR Daily, Dec. 14, 2017).

Non-governmental entities that have challenged the RIF order in consolidated cases beginning at “Mozilla Corp. et al. v. FCC and United States of America” (case 18-1051) — including telecom and tech sector companies and trade groups, purchasers of BIAS, and public interest groups — have argued that the FCC misinterpreted the statute in its regulatory reclassification of BIAS, and that “the FCC’s failure to consider the evidence, abandonment of the open Internet rules, and denial of motions to introduce additional evidence, violates the Administrative Procedure Act or is otherwise contrary to law” (TR Daily, Aug. 21).

Twenty-two state attorneys general and various other state and local government entities that have also challenged the RIF order have said that the preemption of state laws that impose net neutrality protections violates the Communications Act of 1934, as amended, which established “a system of dual state and federal regulation” (TR Daily, Aug. 21).

The states of Texas, Arkansas, and Nebraska filed a joined amicus brief arguing that just as the courts upheld numerous regulatory decisions by the Obama administration that reversed Bush administration orders, so too should the court reject lawsuits against the Trump administration. The FCC is an independent agency and not part of the executive branch.

Federal agencies should not have to “jump through extra procedural hopes” when they are “reversing course from a previous administration,” the states said. “Decisionmakers can reconsider the same data and come to a different conclusion resulting in another interpretation and decision. … All that is required of the agency is proper procedural implementation of the new position and a reasoned explanation for its decision, not additional procedure.”

The states argued that the petitioners “ask the court to hold the FCC’s decision to a higher standard” than allowed by the APA.

“So long as an agency acts within its realm of authority, its decision to alter a policy decision — or even reverse course — is not subject to a special, enhanced standard of review,” the states said, adding, “Critically, courts are not to impose substantive judgments on the contested issue and may only review those policy shifts narrowly for fidelity to APA procedures — even when reliance interests are at issue."

The FCC’s RIF decision was within the scope of the APA and guidelines established by Supreme Court rulings, the states contended.

“Here, the [FCC] engaged in reasoned decision making by repealing the recently-enacted guidance from the FCC that classified broadband Internet service providers (ISPs) under Title II (telecommunications service), rather than Title I (information service), of the Telecommunications Act — the so-called ‘Net Neutrality’ rules. … The policy being repealed, in place since 2015, offered threats to investment and creative problem solving within the ISP community; those rules had also sought to regulate private business activity as a public utility. The new Administration, both to address these specific policy concerns as well as cut back on regulatory red tape in general, rescinded the prior guidance and returned ISPs to Title I, the state they were in before 2015.”

The failure of many legal challenges to Obama administration-era changes supports the courts rejecting legal challenges to changes imposed during the Trump administration, the states said, pointing to the RIF order and numerous other challenges.

“Even setting aside the Supreme Court’s explicit approval to treat ISPs as an information service, [in the Supreme Court’s 2005 decision in ‘Brand X’], the decision to reclassify Internet data under Title I rather than Title II aligns with the multitude of cases upholding shifts in agency policy based on the party residing in the White House,” the states said. “Because the FCC engaged in reasoned decision making and provided an explanation for its policy shift, its Order rescinding so-called 'Net Neutrality' must be upheld.”

In its amicus brief supporting the FCC order, the Information Technology and Innovation Foundation (ITIF) argued that it does not think that “BIAS should be treated as a utility simply because consumers increasingly view broadband Internet access as critical. Utility-style regulation could undermine the rapid advance of broadband technology that continues to transform the online business models, service offerings, and technologies that consumers have come to expect. In nations with sufficient inter-modal competition, like the United States, ITIF strongly favors reliance on market forces, backed up with antitrust-informed, light-touch regulation to engender investment, innovation, and ever-improving consumer welfare.”

Ultimately, the group said, Congress should “resolve the dispute over open Internet issues through bipartisan federal legislation in order to end the regulatory uncertainty resulting from repeated reversals of policy at the FCC.”

Until that happens, ITIF said the classification of BIAS as a Title I information service “promotes broadband investment and innovation that ultimately benefit consumers.”

There were “strong public policy justifications” that supported the FCC order, the group said, arguing that the “temporary Title II classification of broadband providers depressed investment. This decline likely arose from the uncertainty created by the FCC’s sweeping change to the fundamental regulatory structure for BIAS in 2015, combined with concern about a potential slide into even more onerous common carrier regulations, including price controls which the FCC could have, but chose not to impose” in its 2015 order.

ITIF estimated there was a 2% to 3% decrease in broadband investment following the 2015 order.

“This investment decline may, of course, have been due to a multiplicity of factors, and the more important, if more difficult to answer, policy question is what investment would have been 'but for' the imposition of Title II,” ITIF said. “Nevertheless, this rare decline in U.S. broadband investment, which was unprecedented outside of a recession, provides strong support for the policy correction set out in the RIF Order.”

The FCC’s 2015 order also “unnecessarily stifled innovation” because it “likely undermined the ability of BIAS providers to compete and differentiate their services generally,” the group said.

ITIF also stated that the RIF Order’s preemption of “inconsistent state-level regulation is sound public policy and necessary to ensure that the benefits of the RIF Order’s light touch regulatory framework – i.e., increased investment and innovation — accrue to consumers.” The FCC relied upon “ample policy justifications” to support its RIF Order that returned BIAS regulation to a Title I information service status, ITIF said.

Among other things, the group said, the Title II provisions give the FCC wide authority and were meant to deal with monopoly telephone service and to later facilitate competition in the telephony market.

“But these conditions do not exist in the BIAS market today,” ITIF said. “And while the FCC’s Title II Order did not impose such draconian price control requirements on BIAS providers, Title II classification opened the door to heavy-handed interventions in future rulemakings. It is reasonable to believe such a weighty Sword of Damocles would depress long-term infrastructure investment.”

Tech Knowledge said in its amicus brief that there is “substantial record evidence” supporting the FCC’s RIF order, and “no evidence” to support the notion that ISPs have engaged in “unreasonable acts” that have had “any negative impact” on edge services or consumers.

“The central justification for net neutrality rules relies on a novel and tenuous proposition: that broadband providers that lack market power and are subject to competitive market forces still somehow retain the incentive and ability to harm edge providers (regardless of those providers’ own market power) and consumers,” Tech Knowledge said. “Given the absence of credible economic or legal theories to support this position, proponents of ‘net neutrality’ regulation have relied heavily on sparse anecdotal evidence of allegedly unreasonable acts to justify the imposition of prescriptive rules. At the end of the day, however, their anecdotes do not withstand scrutiny.”

The Georgetown University Center for Business and Public Policy, joined by nine economists and scholars, also filed a brief supporting the FCC’s RIF Order.

They rejected the claim by those appealing the order that the FCC did not take into account the appropriate costs and benefits of maintaining the legal aspects of a Title II telecommunications service.

In addition to AT&T, Inc., announcing that it would “pause” broadband investment in light of the FCC’s 2015 restoring internet freedom Order, eight of the 12 largest U.S. ISPs decreased their domestic broadband capital expenditures by 5.6% in 2016 compared to 2014 when the Title II classification was not in effect, Georgetown and the others said.

In another amicus brief, Christopher Yoo, a professor of law, communication, and computer & information science and the founding director of the Center for Technology, Innovation and Competition at the University of Pennsylvania, said, “Brand X made clear that the fact that classifying BIAS as an information service may represent a change from past practice does not affect the applicable standard” for evaluating the classification of BIAS. He also said that the FCC adequately explained why it decided to reclassified BIAS.

Mr. Yoo also said that because of technical considerations, “preemption of state regulation is more justified for the Internet than for any other communications service.”- Jeff Williams


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