FCC Title II Rollback Plan Sparks Mixed Legal Views on Transparency, Pre-emption, FTC Role

An FCC draft order to undo Title II net neutrality appears legally strong, said some attorneys on a Phoenix Center panel, but another questioned aspects. Chairman Ajit Pai's draft to restore a less-regulatory Communications Act Title I broadband framework has precedent, deference and investment arguments in its favor, said Tom Navin, a Wiley Rein attorney and ex-Wireline Bureau chief. At around the same time Tuesday, a pro-Title II panel was held (see 1712050057).

Draft transparency rules and pre-emption of states and localities are on shaky ground, said Chris Wright, Harris Wiltshire lawyer and ex-FCC general counsel. He and Jon Nuechterlein, a Sidley Austin attorney and ex-FTC general counsel, debated whether FTC broadband consumer protection would raise new uncertainties. The practitioners spoke only for themselves.

Maintaining "America's leadership in the wireless world ... will be my focus," said David Redl in his first speech as NTIA administrator. He said the agency will seek to manage spectrum efficiently, promote rural broadband, and address cybersecurity and internet governance. It will be a challenge to free up more spectrum for 5G to meet growing wireless demand while ensuring federal agencies can perform their missions, he said. Private sector deployment and light-touch regulation are key, though sometimes government has to be "proactive" to help foster next-generation technology, he said.

FCC "movement" toward creating a new economics office is likely in early 2018, said Wayne Leighton, chief of the Office of Strategic Planning and Analysis, on another panel. The new office will allow economists to ask questions "early and consistently" in proceedings, and provide better advice to commissioners, he said.

Attorneys agreed the Supreme Court is unlikely to review pending appeals of USTelecom rulings by the U.S. Court of Appeals for the D.C. Circuit upholding the 2015 net neutrality order, assuming the current commission reverses Title II classification. Odds are extremely low the justices will grant cert, said Wright. Angela Giancarlo, a Mayer Brown lawyer and ex-aide to then-Commissioner Robert McDowell, seriously doubted the justices will review the appeals. The high court is "unlikely to grant plenary review on the merits," said Nuechterlein, who also is a former FCC and DOJ official.

Nuechterlein said it's unclear what would happen to the D.C. Circuit rulings if the FCC rolls back Title II regulation. Wright doubted a suggestion the justices will respond by granting cert on USTelecom, vacating the rulings and remanding them, or by holding the case in abeyance. Nuechterlein said the high court might vacate the rulings as moot, doubting a remand.

Pai's draft should be "celebrated" for seeking to return policy to where it was before the "detour and frolic" with Title II, Navin said. He said the plan has "so much precedent" on its side and also should benefit from judicial deference. It's easy to understand Pai's investment arguments, he said: the more broadband is regulated, the less deployment. Wireless executives looking at spending tens of billions of dollars to build 5G networks competing with wireline broadband will want to know that government won't regulate pricing, he said. Giancarlo called the 2015 order an "outlier" from previous ones, and credited the draft with being "dispassionate" and comprehensive: "They've covered all of the bases." The draft "was rather passionate" the previous order was wrong, quipped Wright.

Wright doubted the draft's sections 218 and 257 justifications for the transparency rule. He said the D.C. Circuit in 2014's Verizon upheld the transparency rule because the FCC cited Telecom Act Section 706 authority, but the draft eschewed that authority. Navin said FCC Title I authority over interstate communications made it "probable" the draft's consumer disclosure requirements pass muster. Giancarlo said 706 authority wasn't needed, given Title I authority. Navin said 706 had a "deregulatory thrust" and Nuechterlein suggested it provided a possible basis for some "limited" regulation. Nuechterlein said there's "a good case" for a legislative solution but the politics are difficult because many parties benefit from the dispute.

Wright said the 9th Circuit's willingness to grant en banc review in AT&T Mobility is "usually a pretty good sign" the court has doubts about a panel opinion, which ruled the FTC is barred from overseeing the noncommon-carrier activities of common carriers. "So maybe this problem doesn't arise," he said, referring to critics' arguments Pai's draft relies on questionable FTC broadband consumer oversight.

Even if FTC broadband authority is upheld, its "unfair practices" standard could create new uncertainties for ISPs, Wright said. Nuechterlein said "longstanding" FTC precedents for that standard provide more predictability than the FCC's 2015 internet conduct standard. He said the trade commission also has a statutory requirement that effectively requires a cost-benefit analysis.

Wright said there's a "good chance" a court will overturn FCC pre-emption of state and local actions that conflict with its deregulatory federal policy. He noted the draft cites a Section 230(b) federal declaration in its analysis (among other justifications) but later calls that provision "hortatory" (paragraph 280). The agency can't pre-empt if it lacks jurisdiction, he said. Others recognized there are arguments for and against FCC pre-emption, with Navin calling it a "close question." Giancarlo said the draft may still be modified.