What to Watch as Court Weighs Fate of Net Neutrality

Here are the main arguments broadband industry lawyers will make Friday to try to kill the FCC’s rules.

Federal Communications Commission Chairman Tom Wheeler listens to FCC commissioners speak prior to a vote on net neutrality on Feb. 26.  (FCC)

Three federal judges will hear arguments Friday in a case that could have far-reaching implications for the future of the Internet.

Lawyers for the Federal Communications Commission will appear before a panel of the D.C. Circuit Court of Appeals to defend their net-neutrality regulations from lawsuits filed by an array of Internet providers and industry associations.

Supporters of the regulations, which require Internet-service providers to treat all traffic equally, argue that they are essential for preserving the Internet as a level playing field where users are free to access whatever content they want. But Republicans and business groups consider them an illegal power grab that will burden broadband providers, ultimately making Internet service slower and more expensive for everyone.

The three judges that will decide the case are Sri Srinivasan, an Obama appointee; Stephen F. Williams, a Reagan appointee; and David Tatel, a Clinton appointee. Tatel will be the most closely watched because he is the most familiar with the FCC’s decade-long saga on Internet regulation. He heard the legal challenges against the FCC’s previous two attempts to protect net neutrality, and he ruled against the agency both times. That record is boosting the confidence of the industry groups, but the FCC and its supporters are betting the third time will be the charm because when the agency wrote the rules, they did so in a matter aimed specifically at addressing Tatel’s previous complaints.

The judges set aside more than two hours for arguments divided up into a few subjects. Those sections are likely a good hint at what the judges believe are the most important legal questions.

Is the Internet a “telecommunications service?”

The first hour of the oral argument will focus on the core legal dispute in the case: whether the Internet is a “telecommunications service” under Title II of the Communications Act. For more than 80 years, the FCC has used that section for broad regulations of telephone companies, including which customers they have to serve and how much they can charge.

In 2002, during the Bush administration, the FCC decided to treat broadband Internet service with a much lighter regulatory touch. The Internet, the FCC said at the time, is really an “information service” mostly outside of the agency’s authority. In 2005, the Supreme Court deferred to the FCC as the expert agency and upheld that classification in a case called Brand X.

Without the sweeping powers of Title II, the FCC had largely handcuffed its own ability to regulate Internet providers. It tried to go after Comcast using only an “Internet Policy Statement,” but got rejected by the D.C. Circuit in 2010. So the agency then enacted formal net-neutrality regulations, but the D.C. Circuit again threw them out in early 2014. Tatel and the other judges ruled that the FCC was trying to treat Internet providers like “common carriers” (essentially, public utilities) without classifying them accordingly under Title II.

Because Title II was considered politically explosive, the FCC at first tried again to write new rules without invoking the controversial section. But after millions of people filed outraged comments and President Obama endorsed the stronger approach, the commission enacted rules earlier this year that classified the Internet as a “telecommunications service” under Title II.

So the main argument from the industry groups is: The FCC had it right the first time. Broadband providers, they argue, are more accurately classified alongside “information services” such as Google and Netflix than unsophisticated phone companies that just transmit calls. “The heart of Internet access is the capability to interact with and manipulate data stored on remote computers by the provider or a third party,” the companies and associations wrote in a joint brief to the court.

But that’s a bizarre way of viewing the service that companies like Comcast actually provide, the FCC and its supporters argue. Even conservative Supreme Court Justice Antonin Scalia wrote in a dissenting opinion in the Brand X case that claiming Internet providers don’t offer telecommunications service is like a pizzeria saying it doesn’t deliver pizza. “No, even though we bring the pizza to your house, we are not actually ‘offering’ you delivery, because the delivery that we provide to our end users is ‘part and parcel’ of our pizzeria-pizza-at-home service and is ‘integral to its other capabilities,’” Scalia wrote (in the voice of the imaginary pizzeria employee).

And the real lesson from the majority opinion in the Brand X case, according to the FCC, is that the courts should defer to the expertise of agencies when the law is ambiguous. And as the expert agency, the FCC argues, it is free to change its mind. So observers will be closely analyzing the questions from the judges Friday to see how willing they are to defer to the FCC.

Did the FCC overreach by including cellular service?

The second block of time will focus on the FCC’s decision to apply the rules equally to Internet access on home computers and mobile devices. CTIA (the cellular industry’s lobbying association) and AT&T argue that Internet connections on smartphones are really a “private mobile service,” which is exempt from Title II.

To try to avoid that problem, the FCC reclassified cellular data as a “commercial mobile service” in its net-neutrality order. Under the Communications Act’s definition, a commercial mobile service has to connect to the public-switched network, which traditionally meant connecting phone numbers. But the FCC also redefined that term to include Internet addresses. The FCC, its lawyers argued, just “exercised its discretion to update the definition of public-switched network to reflect current technology.” In their court brief, the companies shot back: “That is not an update, but a radical reimagining.”

This separate line of legal attack means the court could strike down just the portion of the regulations that apply to cellular carriers. And with consumers increasingly relying on their smartphones—sometimes as their only way of accessing the Internet—that would be a severe blow to net-neutrality supporters.

Do the rules violate free speech?

Net-neutrality rules are critical for protecting free speech, its supporters say. They argue that Internet providers shouldn’t be able to control what people can read, watch, or say online. But some of the companies suing the FCC claim that it is the regulations themselves that actually violate free speech, and the court set aside 20 minutes to examine the issue.

The First Amendment prohibits the government from ordering people or companies to transmit speech they disagree with, according to Randy May, the president of the Free State Foundation, a conservative think tank that opposes the FCC’s regulations. “I think as a constitutional matter, [the Internet providers] would have the right to block access to a homophobic site if they wanted to exercise that freedom or the right to block access to sites that promoted terrorist activities,” May said.

Harold Feld, the senior vice president of Public Knowledge, a consumer advocacy group that supports net neutrality, warned that it would be a “total disaster” if the court ruled that the regulations violate the First Amendment. Not only would that kill net neutrality, but it would also throw into doubt an array of other FCC rules, such as ones aimed at ensuring universal access to telephone and Internet service. But, Feld predicted, the judges are “going to be very reluctant to dig into the constitutional issues.”

No matter how the D.C. Circuit rules, many observers are expecting that this case will ultimately be bound for the Supreme Court.