Open Internet Oral Argument—Still Need a Bill

February 1, 2019

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After some uncertainty over whether the shutdown would force a delay, the DC Circuit Court heard oral arguments Friday morning in what will be at least the fourth major case in the net neutrality saga. The back and forth touched numerous distinct legal questions, some of which are downright absurd in their scholastic hairsplitting. The narrow, technical legal distinctions highlight just how dated the Communication Act is, with its last major update now almost 23 years old. Something as important as open Internet policy deserves a clear and contemporary articulation from Congress that settles the issue once and for all.

A three-judge panel, composed of Judges Patricia Millett, Stephen Williams, and Robert Wilkins, heard from a series of lawyers, with the main defense of the Restoring Internet Freedom Order reclassification made by FCC general counsel Tom Johnson and the primary petitioners represented by Pantelis Michalopoulos, partner at Steptoe & Johnson. Numerous other lawyers argued specific issues or interests of intervenors. In fact, the court granted a request for an unusually long argument, giving a total of 150 minutes divided among seven different lawyers.

Oral argument can be somewhat helpful in predicting which way a case will come out, but it is always hard to tell. Judges could be simply seeking clarification with what seems a sharp line of questions, and the decision could turn on something unrelated. That said, it seems fair to say Judge Millett was looking for arguments that would be most beneficial to the petitioners arguing against the Restoring Internet Freedom Order and had a lot of pointed questions for the FCC. Judge Williams, on the other hand, was quite skeptical of the petitioners’ arguments and offered help in clarifying the FCC’s position at times. Judge Wilkins seems to be the swing vote that could determine some of the smaller issues.

The big question of the case—and all net neutrality cases—is the classification of broadband. In the Restoring Internet Freedom Order, the FCC reclassified broadband as an “information service” under Title I of the Communications Act, reversing the 2016’s Open Internet Order which classified broadband as a Title II service that can be subjected to more expansive common carrier obligations. The FCC likely has the upper hand on this question.

For the most part, this is a fairly straightforward case of statutory interpretation where the agency is afforded Chevron deference in interpreting its authority. Chevron, probably the most cited precedent in administrative law, lays out a two-step framework. In step one, the court examines the statute to determine if Congress was clear. If it is unambiguous, then the court applies that interpretation. If, however, the court finds that the law in question is unclear, then it is a “step two” question and the agency gets a fairly wide degree of deference in deciding how to regulate under the statute.

There is simply no getting around Brand X—the most direct Supreme Court opinion on the classification issue. Although that case was not directly dealing with network neutrality rules, it is clear precedent that the statute is ambiguous as to whether broadband is an information service or a telecommunication service, and that the FCC can reasonably determine it is best understood as an information service.

What is more, the recent USTA decision reinforced that the FCC receives deference on the classification issue. There the FCC was heading in the other direction—classifying broadband as a Title II service—but the important point is that it was its decision to do so, and the court wasn’t going to second guess.

Michalopoulos did his best to dazzle the court with colorful analogies in an attempt to convince the court that the FCC’s reclassification was unreasonable. He claimed the FCC’s reasoning was like a surrealist painting that shows a pipe and says, “this is not a pipe,” or asking the sun to rotate about the moon and the earth, or like playing Hamlet without the prince. But it did not seem the court was buying it. Michalopoulos himself appeared to realize the judges were not willing to deviate from a traditional Chevron analysis and made a pivot to other, more technical arguments.

The petitioners also argued that the FCC did not provide sufficient analysis that competition, antitrust enforcement, and transparency would provide a backstop against any potential bad actors. I would be surprised if this argument won the day, as the FCC did quite a bit of analysis supporting their decision. Also, the most consequential decision the FCC made was simply that it lacked statutory authority to act, and there is no reason to expect the FCC is required to make a thorough antitrust analysis when it is a regulatory agency.

The most frustrating exchanges were the arguments around public safety. Intervenors supporting the petitioners argued that rollback of strict net neutrality rules uniquely impacts public safety in ways the FCC did not sufficiently consider. This is absurd. First of all, there is no reason to fear that the absence of net neutrality rules would negatively impact any public safety communications whatsoever. The FCC continues to oversee public safety systems and emergency alerts. First responders use different enterprise services for communications. No carrier would intentionally block communications that potentially implicate public safety, and any prioritization regime would have an unnoticeable effect on general, open “best-effort” traffic.

It is a disappointing misunderstanding of the reality of these tools that twists prioritization into potentially harming public safety. If anything, public safety communications routinely benefit from prioritization. FirstNet, the public-private partnership designed to deploy a nationwide public safety broadband network, explicitly prioritizes first responder traffic over other commercial communications. There are no real net neutrality concerns here, and no real reason the FCC would have to provide a separate, special analysis for public safety.

Another major focus of the argument revolved around the transparency requirement, and the legal authority the FCC used to impose it (47 USC § 257). Without getting into too much detail, although much has been made of this line of argument by the punditocracy, I don’t see questions around the FCC’s legal hook for transparency bringing down the whole classification order. Despite a statutory change to the hook for transparency, 257(a) remains on the books, the statute put a similar authority in a different place, there is a savings clause saying not intended to change commission’s authority, and the transparency requirement is likely severable.

The petitioners succeeded, at least, at putting quite a number of arguments in front of the judges. While it seems to me that controlling Supreme Court precedent—Brand X—makes this a fairly straightforward case, there are plenty of threads that could potentially unravel. While Williams seemed firmly in the FCC’s corner, if Judges Millett and Wilkins agree on a technicality, this case could conceivably go to the petitioners. But in any event, the fundamental framework for regulating broadband should not turn on arbitrary and scholastic interpretations or technicalities. There is real room for bipartisan, compromise legislation that saves the FCC from having to improvise with a statute written for technologies of the 20th Century. The Internet deserves a deliberate, thoughtful piece of legislation—not years of continual back and forth depending on which party is in power or which three-judge panel is selected.