FCC Lacks 'Clear' Authority on Title II Broadband Regulations, ISPs Tell 6th Circuit

The FCC "must point to clear congressional authorization" before claiming it can reclassify broadband as a Title II telecom service under the Communications Act, a coalition of industry groups told the 6th U.S. Circuit Court of Appeals in its challenge of the commission's net neutrality rules. The court granted a temporary stay of the rules earlier this month (see 2408010066). The petitioners -- ACA Connects, CTIA, NCTA, USTelecom, the Wireless ISP Association and several state telecom associations -- said in their opening brief filed late Monday (docket 24-7000) that the "best reading of the federal communications laws forecloses the commission’s reclassification."

"The order is only the latest jolt in a decade of regulatory whiplash for ISPs," the petitioners said, arguing that broadband is not a telecom service but instead an "information service." Treating broadband as a common-carrier service "would also make a mess of the structure of the Communications Act" and "set the stage for serious First Amendment concerns," they said. Consumers "access websites, post on social media, or store photos in the cloud," using broadband, the groups argued, not to "send IP data packets to and from servers."

Citing the major questions doctrine, the coalition said that Congress "did not empower the commission to regulate ISPs like public utilities." The FCC's justification that the rules are needed to regulate areas like geopolitical risk is "outside its typical orbit," it said: "The best reading of the 1996 Act is that broadband is an information service." The FCC imposed "a vague general conduct standard under which it can police behavior and even indirectly set prices" with its order, the coalition warned, adding the commission "cannot forbear its way out of the reality that public-utility regulation of broadband is a paradigmatic" question of "vast economic and political significance."

ISPs make business decisions "in response to market forces," the groups said. Under Title II, the FCC has "sweeping authority over nearly every aspect of internet access," including the "power to dictate" just and reasonable prices or forbid any practices that it finds "unjust or unreasonable." The "significance of internet access to American consumers and businesses far exceeds any price tag."

The groups in the coalition questioned the FCC's reasoning that Title II regulation was necessary to address national security threats. "Indeed, bipartisan experts have confirmed that the commission’s concerns are better left to federal agencies with national security expertise," they said.

The petitioners also noted that the Communications Act "forecloses" the FCC from reclassifying mobile broadband as a common-carrier service. "After all, mobile broadband cannot be both subject to and immune from Title II at the same time."

Assuming congressional authorization to regulate broadband as a public utility, the groups argued that the order is "arbitrary and capricious" under the Administrative Procedure Act. "The order is the paradigmatic solution in search of a problem," and the FCC "has no good explanation" as to why the "heavy costs of Title II for growth and innovation vastly outweigh any meager benefits of reclassification."

"Because the standard is so vague, it will inflict high compliance costs, undermine investment incentives, and deter innovation," the petitioners said: "Yet the commission never explains why those costs are warranted in light of the bright-line rules that the order already imposes."

The groups also emphasized the strain the FCC's rules would place on smaller providers. "Because the standard is so open-ended, ISPs will have to spend significant resources analyzing existing business practices and new offerings for compliance." The agency "effectively ignored these costs."