Winning and Losing in the Net Neutrality Decision

There is lots to chew on in the D.C. Circuit’s net neutrality opinion issued today. (Full disclosure: I worked on the order and legal defense when I was at the FCC, so apply whatever filters you deem appropriate.)  There are a ton of interesting administrative law issues, which I plan to write about later.

But right now I will take a longer view. I am reasonably confident that if I were a member of Verizon’s board of directors and someone could have accurately predicted the content of today’s opinion before Verizon filed its lawsuit, as a director I would have said, “Then let’s not file the suit and let’s hope no one else does, either.”

What? You say.  Didn’t Verizon win? Yes, but there are three caveats.  First, and least importantly, the nondiscrimination rule applies to wireline Internet broadband providers but never applied to mobile Internet providers, so vacating that rule doesn’t affect mobile providers (like Verizon Wireless). Second, and more importantly, as co-blogger Jonathan notes, the D.C. Circuit opinion suggests the permissibility of a different form of “no-blocking” rule (one that the FCC’s general counsel at oral argument endorsed and claimed was the no-blocking rule the FCC in fact promulgated, but the D.C. Circuit read the rule differently).  But third, and most importantly, the D.C. Circuit majority reads section 706 of the Telecommunications Act of 1996 as providing significant regulatory authority to the FCC.  This is the most significant aspect of the opinion, in my view.  And the authority seems pretty broad.  Here is what Judge Silbermann said in dissent about the interpretation of section 706’s authority:

[The FCC] claims it must regulate broadly, so as to “protect[] consumer choice, free expression, end-user control, and the ability to innovate without permission,” 25 F.C.C.R. at 17949 ¶ 78, which certainly indicates a Commission objective that exceeds the statutory authority granted in § 706.

The majority takes the statutory language even further; it states that the Commission’s

authority to promulgate regulations that promote broadband deployment encompasses the power to regulate broadband providers’ economic relationships with edge providers if, in fact, the nature of those relationships influences the rate and extent to which broadband providers develop and expand services for end users.

Majority Op. at 33. So much for the terms [in section 706] “promote competition in the local telecommunications market” or “remove barriers to infrastructure investment.” Presto, we have a new statute granting the FCC virtually unlimited power to regulate the Internet. This reading of § 706, as we said in Comcast Corp. v. FCC, “would virtually free the Commission from its congressional tether.” 600 F.3d 642, 655 (D.C. Cir. 2010). The limiting principles the majority relies on are illusory.

I think “virtually unlimited” and “illusory” are overstatements, but Silbermann’s larger point is correct: this decision establishes fairly broad FCC regulatory authority over broadband providers.

Of course, all this leaves aside an entirely different path for the Commission: Insofar as the FCC really wants to promulgate its existing net neutrality rules, it could classify broadband Internet providers as common carriers under Title II (as it had initially announced it would do back in 2010) and implement the net neutrality regulations that way. And of course Congress could change everything by passing new legislation.  But I’m not holding my breath.