Net Neutrality Order Based on Politics, not Reasoned Deliberation, Industry Groups Tell DC Circuit

The main industry brief on the net neutrality order alleges the FCC majority, under Chairman Tom Wheeler, made a political decision in February when it opted to impose enhanced net neutrality rules on industry and reclassify broadband as a common carrier service. The brief was filed Thursday at the U.S. Court of Appeals for the D.C. Circuit by some of the top players in communications, including USTelecom, CTIA, NCTA, AT&T and CenturyLink, though CTIA and AT&T only join the section on wireless. The American Cable Association and the Wireless ISP Association also joined the brief.

“The Order is not the culmination of a thoughtful and deliberate process,” the industry brief asserts. “It is the output of an agency determined (or pressured) to reach a particular result and visibly struggling to devise a post hoc justification for contradicting Congress’s pronouncements, the agency’s own longstanding policy, and real-world facts.” The order is “a sweeping bureaucratic power grab by a self-appointed ‘Department of the Internet,’” the brief asserts: It's “unlawful, arbitrary, and the product of improper procedures” and must be vacated.

Under the court's schedule, the FCC and the Department of Justice are to respond by Sept. 14, reply briefs from petitioners are due Oct. 5 and final briefs incorporating an appendix are due Oct. 13 (see 1506290029). The briefs are here. Oral argument isn't expected until at least 45 days after briefing closes. Industry lawyers said it won’t be clear until fall which judges will hear the case. The identity of the panel is usually revealed a month or so before oral argument, said Andrew Schwartzman of the Georgetown University Law Center Institute for Public Representation.

The main industry brief traces the history of Internet regulation, through the Telecommunications Act of 1996 and the D.C. Circuit's 2010 Comcast ruling and 2014 Verizon ruling on the 2010 net neutrality order, both lost by the FCC at least in part. Last year, the FCC again sought to impose net neutrality rules, the brief notes. The initial NPRM included only “a few paragraphs … on whether the FCC should reclassify broadband under Title II” of the Communications Act and less on reclassifying mobile broadband, the industry filers argue. Then politics intervened, the brief said. “After the White House held months of private meetings with interest groups pushing for Title II reclassification of broadband Internet access and the President publicly lobbied the FCC for that outcome, the FCC abruptly changed course,” the brief said. “Without seeking further comment, the FCC issued a decision, by a 3-2 vote, that ‘differs dramatically from the proposal [it] put out for comment.’”

The resulting order was also sweeping in scope, the brief said. “The Order does not merely reclassify a last-mile transmission service from an end user to the broadband provider’s facilities,” it said. “It reclassifies the entire retail Internet access service as a telecommunications service.” Wheeler has argued that the order isn't extreme and forbears from imposing most parts of Title II on ISPs (see 1501070054). Although this is true to some extent, “massive new regulation of broadband Internet access service remains,” the brief argues. “The FCC leaves in place the heart of Title II, including its most consequential provisions.” The order does much more than just imposing net neutrality rules, the brief asserts. “For example, §§ 201 and 202 govern all rates, terms, and practices of telecommunications service providers, and § 222 imposes restrictions on access to customer data.”

The brief is particularly scathing in its analysis of how the rules are imposed on wireless. “To retrofit the FCC’s desired outcome to the statute, the Order rewrites numerous regulations and principles that have long governed mobile broadband,” the brief said. “Those changes cannot be justified by the FCC’s political judgments that mobile broadband’s very success necessitates its regulation as a public utility or that reclassification of fixed broadband compels a parallel framework for mobile.”

The brief also said the Internet conduct standard the FCC imposes is unlawfully vague. “It uses broad, undefined terms such as ‘interfere’ and ‘disadvantage,’ and provides only a non-exclusive list of equally unclear and incommensurable ‘factors’ that the agency will apply in some indeterminate way,” the brief said. “Those standards do not provide the clarity required to prevent arbitrary decisionmaking and to inform parties what conduct will subject them to enforcement.”

The brief argues that the FCC doesn't deserve Chevron​ deference for its decisions in the net neutrality order. Chevron established the Supreme Court doctrine that if a reviewing court deems a statutory provision “ambiguous” and the agency's interpretation “reasonable,” an agency's interpretation is to be given “controlling weight.” The brief also says the order violates the Administrative Procedure Act: “In flagrant contravention of the APA, the FCC jettisons its prior factual findings and policy without any reasoned explanation and without identifying any new facts that could support its about-face. In the process, it willfully ignores the hundreds of billions of dollars invested in reliance on the prior policy -- implausibly denying that such reliance even exists.”

First Amendment Challenge Filed

Alamo Broadband, a small broadband provider, and Daniel Berninger, an Internet entrepreneur, as expected, challenged the order on First Amendment grounds (see 1507020021). “Broadband providers are speakers because they engage in speech, and they exercise the same editorial discretion as cable television operators in deciding which speech to transmit,” their brief asserts. “The rules are subject to strict scrutiny because they compel providers to carry all speech, including political speech with which providers disagree, and because the rules discriminate among speakers on the Internet.”

The rules “strip” ISPs of “control over which speech they transmit and how they transmit it,” the Alamo brief said. “The rules also compel the carriage of others’ speech, including speech with which broadband providers disagree.” The Chevron doctrine doesn't apply in the USTelecom case, the brief said. Recent Supreme Court decisions “compel de novo review because Internet regulation ‘involves decisions of great economic and political significance,’” they argue.

Full Service Network, a Pennsylvania-based reseller, also filed its brief challenging the order. But unlike the other appellants, Full Service argues that the FCC wrongly forbears too broadly in the order. The court should order the FCC to “uphold the classification of broadband Internet access service as required by statute,” apply the statutory definitions in the Telecom act to broadband Internet access service and vacate the FCC’s exclusion of “facilities based VoIP service” from broadband Internet access service, the brief said. “As this Court has previously said, ‘the FCC cannot abandon the legislative scheme because it thinks it has a better idea,’” Full Service said. “That is precisely what the FCC is attempting to do again in the Order.” Competitive providers Sage Telecommunications, Telscape Communications and TruConnect Mobile also signed on to the brief.

Free Press slammed the main industry arguments, in a news release. The filings “contain more of the same flimsy legal arguments broadband providers have been putting forth for more than a decade,” Policy Director Matt Wood said. “As we always have, Free Press will continue to expose such spurious and unsubstantiated claims, defend the rights of Internet users and uphold the FCC’s decision at last to ground open Internet protections in established and essential law.”

CTIA President Meredith Baker said nothing less than the U.S.’s global leadership of the mobile industry is at stake as the court takes up the February order. “There is no question: wireless is different,” Baker said. “Due to the technical realities of wireless networks, providers must be able to manage usage so that all consumers have the highest quality experience.”