Just days before the Federal Communications Commission was set to finalize its controversial net-neutrality regulations, Google scrambled to lobby for a last-minute tweak. In a series of phone calls, which were later disclosed in a regulatory filing, three Google lawyers pressed top FCC officials to retool the legal authority underlying an important part of the regulations. The FCC agreed to the change and enacted the sweeping new Internet regulations on Feb. 26.
At the time, Google’s request seemed like an arcane footnote in the much-broader fight over net neutrality. But now, more than nine months later, that tiny tweak is causing big headaches for the FCC in federal court.
Last Friday, the three judges on a panel of the D.C. Circuit Court of Appeals grilled Jonathan Sallet, the FCC’s general counsel, on the legal classification that Google requested. Peter Keisler, the lawyer for the cable and telecom companies suing to repeal the regulations, also focused a portion of his argument on the issue.
The dispute doesn’t threaten to cripple the core of the FCC’s net-neutrality rules, which require Internet providers to treat all traffic equally. But the late change could lead the court to throw out the FCC’s authority over traffic congestion at the back end of the Internet. That would be a major blow to companies such as Netflix, which have complained that Internet providers are extorting them by demanding payments to relieve congestion at interconnection points. That congestion can lead to grainy video quality and lengthy buffering times, Netflix says.
“It looks as if the commission is in trouble on interconnection,” said Randolph May, the president of the Free State Foundation, a conservative think tank that opposes the FCC’s rules. “To the extent that Google is responsible [for the change] … I think it does present a problem for the commission.”
The purpose of net neutrality is to ensure that Internet providers such as Comcast and AT&T can’t act as “gatekeepers” and control what online content people can access or which websites succeed. The FCC first enacted net-neutrality rules in 2010, but the D.C. Circuit struck them down in 2014. The problem, the court said at the time, was that the agency was trying to treat Internet providers like “common carriers” (essentially, public utilities) without classifying them accordingly. So in the new rules, the FCC classified Internet providers as common carriers, granting itself the same broad powers over the Internet that it already used to regulate traditional phone companies.
In their 2014 decision, the judges described the Internet in two halves: there’s the front-end service, where Internet providers offer Web access to customers; and there’s the back-end service, where the Internet providers pick up and deliver traffic for Web companies.
That’s not how the FCC originally viewed the Internet, but in the new rules, the agency’s lawyers tried to bend over backwards to appease the D.C. Circuit judges. In an initial draft of the regulations, the FCC would have defined the Internet as two halves and classified both as common-carrier services.
Google, at least publicly, was fine with the customer-facing half getting regulated like a utility. But at the last minute, the Web giant urged the FCC not to impose utility-style regulation on the relationships between Web companies and Internet providers.
“This supposed additional service does not exist,” Austin Schlick, a Google lawyer (and a former FCC general counsel) wrote in the regulatory filing summarizing his phone calls with agency officials. (Google declined to comment for this story, although the company has previously emphasized its support for net neutrality.)
Web companies do sometimes negotiate with Internet providers to ensure there’s no congestion as they exchange traffic, but that doesn’t mean Internet providers offer Web companies a distinct service that needs a special legal classification, Schlick argued. Defining the Internet in two halves “could do serious, long-term harm to the virtuous circle of Internet innovation,” he warned.
Although he acknowledged that the FCC appeared to be crafting its rules to try to address the court’s concerns, he urged the agency not to “assume that the D.C. Circuit’s prior view will be the last word in future litigation.” The Supreme Court, he noted, may view the Internet differently.
Google wasn’t the only group to argue against the theory of a two-sided Internet. Free Press, a liberal advocacy group and staunch net-neutrality supporter, made the same case in the days before the FCC issued the new regulations. Democratic FCC Commissioner Mignon Clyburn agreed and asked Chairman Tom Wheeler to make the change.
But Keisler, the broadband industry’s lawyer, argued in court Friday that failing to classify the back end of the Internet as a utility leaves the agency without authority to police interconnection congestion. “That’s like the Cheshire Cat. The body disappeared—the whole legal rationale was suddenly gone in a matter of days. But the smile was still there—the assertion of jurisdiction over our interconnection arrangements. And with the body removed, there really was no basis for this at all,” he said.
And the judges didn’t seem to appreciate the FCC ignoring their court’s interpretation of the Internet as including two services. Judge Stephen Williams called the FCC’s legal theory “totally anomalous,” while Judge Sri Srinivasan asked how the FCC could overcome the “obstacle” of the court’s previous ruling. The FCC's Sallet responded that interconnection issues are just "derivative" of the Internet access provided to consumers, which is now classified as a utility.
Matt Wood, the policy director of Free Press who made the same argument as Google, said he doesn’t regret asking the FCC to tweak its rules. “I would pay more attention to the answers than the questions,” he said in an interview. “I think [the FCC lawyers] answered them well.”