Net neutrality court case preview: Did FCC mess up by redefining broadband?

Oral arguments in the case against Ajit Pai's net neutrality repeal are scheduled for Friday morning, and net neutrality advocates are confident that they will be victorious. The groups that sued the Federal Communications Commission to reverse the repeal argue that Pai offered insufficient legal justification for deregulating the broadband industry. The Obama-era net neutrality rules, which were upheld in court in 2016, relied on the FCC's Title II authority over telecommunications services. When it eliminated the net neutrality rules, Pai's FCC argued that broadband is not a telecommunications service and that it should be treated instead as a lightly regulated information service. Courts generally give deference to FCC classifications, so Pai's opponents will have the burden of proving that the FCC's reasoning wasn't legally sound. "We are confident the court will vacate the FCC's decision and we look forward to Friday's oral arguments," said Chris Lewis, vice president of advocacy group Public Knowledge, one of dozens of petitioners seeking to overturn the repeal.

Is broadband “telecommunications”?

The oral arguments are scheduled to begin Friday at 9:30am at the US Court of Appeals for the District of Columbia Circuit and should last about three hours. The court provides live audio streams of all oral arguments. The sides have also detailed their arguments in court filings—here's the petitioners' joint brief and the FCC and Department of Justice defense of the repeal. Lewis and other net neutrality proponents spoke to reporters about the upcoming oral arguments in a press conference Wednesday. Under US law, telecommunications is defined as "the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received." The FCC's argument that broadband isn't a telecommunications service doesn't hold up, according to advocacy group Free Press, another petitioner in the case. "As a legal matter, broadband should be classified as a telecommunications service under the Communications Act," Free Press Policy Director (and attorney) Matt Wood said at the press conference. "ISPs send our speech to each other. They don't step in and dictate what we can say or change it in any way." The topic was also addressed by Sen. Edward Markey (D-Mass.), who helped write the Telecommunications Act of 1996, a major update to the Communications Act that contains the definition of telecommunications. "Both the plain language [of the law] and congressional intent make clear that broadband is a telecommunications service," Markey said. "As the House author of the bill I know firsthand what we intended in 1996. Yet Chairman Pai ignored the statute and our intent when the FCC reclassified broadband to an information service and eliminated net neutrality rules." It could be months before the court's three-judge panel issues a decision, and either side could appeal. There was a six-month wait between oral arguments and a ruling in the case that upheld Obama-era rules.

FCC: Broadband is an information service

US law defines an information service as "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications." The FCC/DoJ brief notes that the FCC had classified broadband as an information service under previous administrations before the Obama-era FCC decided that broadband is telecommunications. The government brief argues:

The Commission reasonably classified broadband Internet access as an information service because, among other things, it offers users the "capability" for "'acquiring' and 'retrieving' information" from websites and applications "and 'utilizing' information by interacting with stored data." The Supreme Court held in Brand X that it was reasonable for the Commission to conclude that Internet access is an information service, given that "subscribers can reach third-party Web sites via 'the World Wide Web, and browse their contents, [only] because their [broadband] provider offers the capability for… acquiring, [storing]… retrieving [and] utilizing… information.'" The agency made the same reasonable finding here.

The FCC's opponents argued in their brief that the Brand X decision from 2005 doesn't apply here. Brand X dealt with the question of how consumers perceive broadband provider services, but the business model used by ISPs at the time of Brand X is now "largely extinct," they wrote. Early ISPs "created their own portals and bolted their own add-on information services [such as email] onto their transmission path," the brief noted. But ISPs today serve primarily as a pathway to third-party services. "The question on which the FCC now dwells is entirely different: is a transmission that otherwise meets the definition of 'telecommunications' properly classified as [an] 'information service' based on its 'capability' of facilitating interaction with third-party providers of information services? This question has nothing to do with consumer perception—the subject of Brand X's inquiry," they wrote.

FCC “ignored” investment evidence

The federal Administrative Procedure Act requires the FCC to "show that there are good reasons for the new policy," the 2016 ruling that upheld net neutrality rules said. Net neutrality proponents argue that Pai's FCC didn't provide a compelling policy justification for repeal. Pai's argument for repeal was based almost entirely on his claim that broadband capital spending declined in response to net neutrality rules. Yet Internet providers admitted to investors that the rules did not harm broadband capital spending, and capital investments for some major ISPs fell after Pai's repeal. The FCC "ignored evidence that undercuts its case, which proceeds from the false premise that network investments turn on a dime in reaction to the latest developments in Washington," Lewis said. "The FCC emphasized industry submissions that purported to show that [Title II] reclassification decreased network investment, while ignoring contrary statements from the same industry parties made to their investors." The FCC/DoJ brief argues that "Total capital investment by broadband providers increased each year from 2009 to 2014; began to decrease when the Title II Order was enacted in 2015; and fell again in 2016—even though the economy as a whole continued growing." The FCC/DoJ brief said that Internet providers' statements to investors are "selective quotations," "susceptible to multiple interpretations... and do not address whether these companies would have increased investment in their networks" if net neutrality rules hadn't been adopted. Pai's opponents are also challenging his attempt to preempt state net neutrality laws. The problem with the FCC's preemption argument, according to opponents, is that the FCC is trying to preempt state laws while simultaneously arguing that the FCC itself has no authority to strictly regulate broadband. If the FCC doesn't have authority over broadband, the FCC also lacks authority to preempt state broadband rules, the argument goes. The FCC "claims to preempt state law without having under its own theories any authority to do so," Lewis said. The FCC and DoJ argue that state net neutrality laws violate a "federal policy of nonregulation," and that broadband "is an interstate service that should be subject to uniform regulation."

Repeal’s risk to consumers

The FCC failed to consider how its repeal would increase risks for consumers, said Sarah Morris, deputy director of New America's Open Technology Institute. There's a long history of ISPs interfering with content, she said, pointing to interconnection payment disputes that slowed down Internet access for months at a time before the Obama-era FCC imposed net neutrality rules. Incompas General Counsel Angie Kronenberg said that with net neutrality rules off the books, ISPs "can charge higher prices to their competitors over the Internet, they can slow them down, they can throttle them, they can favor their own programming. These are the things we're fighting for." Things could get worse if the FCC wins in court, because ISPs seem to be on their "best behavior" while the neutrality repeal is still subject to court review, Mozilla COO Denelle Dixon said. Mozilla is the lead petitioner against the FCC in the case against the repeal. Yesterday's press conference also included representatives of the Santa Clara County Fire Department, which suffered throttling at the hands of Verizon while fighting California's largest-ever wildfire last year. "What the Verizon example shows is ISPs will act in their economic interest, disregarding public safety," Santa Clara County Counsel James Williams said. Verizon's throttling of the fire department's "unlimited" data plan wouldn't necessarily have violated net neutrality rules. But the FCC could have evaluated the case under its Title II authority if it hadn't ceded its Title II authority over broadband. "Right now, there is no cop on the beat to assess whether problematic behavior from ISPs is a violation of net neutrality," Morris said. "Under the previous net neutrality regime, we would have been able to have an administrative agency look at the facts [in Santa Clara] and determine whether a violation of the rules occurred. We no longer have that."