Net Neutrality Appeal Expected To Be Much Broader Than Challenge to 2010 Order

USTelecom last week became the first of the major trade associations to challenge the FCC’s net neutrality rules (see 1503230066), but challenges by CTIA and NCTA also are expected, industry officials said. USTelecom is expected to file an additional appeal after the order is published in the Federal Register, which is when the other major trade groups also are expected to file. Net neutrality opponents say there are good reasons the 2015 order, which reclassifies broadband as a common carrier service, will be more broadly challenged than the 2010 order.

CTIA has launched a continuing attack on the order, issuing a series of blog posts. In the latest, Jot Carpenter, vice president-government affairs, on Monday questioned the FCC finding that wireless broadband can be reclassified under Title II of the Communications Act. “The Open Internet Order departs from this shared understanding, concluding -- contrary to more than two decades of its own precedent -- that mobile broadband is a CMRS service, and places mobile broadband under Title II’s thumb for the first time,” Carpenter wrote. “To do so, the FCC took a relatively straightforward statute and its own implementing regulations, and insisted on a startling and byzantine reversal.”

CTIA dug out a 2011 blog post by FCC Chairman Tom Wheeler, before he was chairman, in which Wheeler argued that common carrier regulation is “unavailable in the wireless arena, because Section 332 of the Communications prohibits its imposition on wireless carriers.”

CTIA is almost certain to appeal because of the major wireless issues raised by the order, said Berin Szoka, president of TechFreedom, and other industry observers. But CTIA also faces potential bumps in the road to an appeal, some observers said. Free Press Policy Director Matt Wood questioned how CTIA could appeal when two of its biggest members, Sprint and T-Mobile, don’t oppose the order. “In theory at least, if not in practice, it's still supposed to represent the interest of companies like Sprint and T-Mobile, who've actually said they either support or can live with the rules and the Title II framework too,” Wood said of CTIA. The second complication for CTIA is that new General Counsel Tom Power worked for the White House when it pushed the FCC to reclassify broadband, industry officials noted.

NCTA also is expected to appeal, though that's less certain than for USTelecom and CTIA, industry observers said. NCTA President Michael Powell, former chairman of the FCC, was highly critical of the order in a Feb. 27 piece he wrote for CNET. “I support Net neutrality, but that is not what the FCC just did,” Powell said. “In the short term, the Internet will not work differently. But the price we will pay over time for this radical shift in regulation will be severe.”

Wood said it’s no mystery why there's much broader opposition this time around, especially since the 2010 rules were negotiated with the big ISPs. “The 2010 rules barely protected wireless users at all,” he said. “They also rested solely on the weaker Title I legal authority, which ultimately was shot down by the D.C. Circuit. Is it any wonder they were more popular with the cable and wireless industries?” Wheeler “finally put the public interest first this time, instead of negotiating the rules first with the very same companies they're meant to protect against,” Wood said.

​The February order is much more complex than the 2010 order, said former FCC commissioner Robert McDowell, now at Wiley Rein. “For starters, it is much longer. Additionally, it crosses the Title II classification Rubicon. That's a major shift in the administrative law tectonic plates and is sure to create legal friction we can't even imagine today. Furthermore, the order applies up to 21 sections of Title II. Their combined appellate history amounts to 1,545 court cases and 11,898 FCC decisions. For an appellate lawyer, what's not to like?"

The 2015 order is more troublesome and has a broader reach than the 2010 order, said Richard Bennett of the American Enterprise Institute. Former chairman Julius Genachowski included the proposed rules in the 2010 NPRM, so commenters knew what to criticize, Bennett said. “Not only did Wheeler fail to disclose proposed rules, his NPRM suggested a completely different direction than the one the actual rules took,” he said. “The 2015 order also fails to offer an agency analysis of the harms it seeks to prevent, essentially outsourcing the analysis to friendly commenters. Any set of rules that bans non-existent practices ‘prophylactically’ needs to offer a serious technical and economic rationale lest it be seen as arbitrary. The rules adopted by the FCC this year fail this test entirely.”

“Chairman Wheeler’s general policy has been to include specific rebuttable presumptions in NPRMs while asking for input on other approaches as well," an FCC spokesperson said in response to Bennett. "That process was followed in the open Internet proceeding, and nearly four million commenters provided feedback."

Many saw the 2010 rules as “a workable compromise, but industry opposition to Title II is near universal, save a handful of companies focused on other issues,” said Doug Brake, telecom policy analyst at the Information Technology & Innovation Foundation. Brake said it seems clear the challenges last week by USTelecom and wireless ISP Alamo were “premature and filed simply as a precaution for venue selection.”

On Monday, the U.S. Judicial Panel on Multidistrict Litigation said the U.S. Court of Appeals for the D.C. Circuit was selected by lottery to hear the initial appeals of the order. The FCC likely will seek dismissal of the appeals, said Andrew Schwartzman, senior counsel at the Georgetown Law Institute for Public Representation.

The battle will be broader and harder fought this time around, agreed Fred Campbell, executive director of the Center for Boundless Innovation in Technology and former chief of the FCC Wireless Bureau. If the 2010 order was a sailboat, the February order is the Titanic, Campbell said. “The 2010 order largely codified existing industry practices and contained few surprises,” he said. “Had the FCC simply adopted the 706 approach suggested by the court, it would have been on relatively solid legal ground and might have avoided serious litigation.”

The appeals will raise both process and substantive issues, predicted Randolph May, president of the Free State Foundation and a former FCC associate general counsel. There are “serious questions” of whether the agency complied with the Administrative Procedure Act, he said. “On the substantive side, I'm sure the lawfulness of the reclassification and forbearance actions will be challenged on several different grounds,” he said. “Subjecting wireless providers, with their own unique circumstances and legal status, to the Title II regime will be challenged as beyond the commission's authority and arbitrary and capricious. I would like to see some entity challenge the commission's overly expansive interpretation of its authority under Section 706 and its First Amendment interpretation, but I'm not as certain of challenges on these bases."

Szoka said an injunction or stay from a court appears much more likely this time than while the 2010 rules were under appeal. “The FCC could lose on any number of issues, but I think there's a good chance they'll lose on the threshold question of notice” because of the commission’s decision not to issue a revised NPRM, Szoka said.

The FCC approved the order Feb. 26 on a 3-2 vote (see 1502260043). On Friday, Wheeler said the rules are comparable to an insurance policy on the future of the Internet (see 1503270044). Verizon, rather than any of the trade groups, successfully challenged most parts of the 2010 order in the D.C. Circuit.