Absent an act of Congress, the fate of “net neutrality” could be settled soon—or at least for the time being. Legal challenges to the Federal Communication Commission’s 2015 “Open Internet Order,” which required broadband Internet service providers to treat all Internet traffic the same regardless of its source, would vacate the regulations if the Supreme Court grants cert and reverses the unanimous Court of Appeals opinion below. The open internet order is also under attack from the FCC itself. Now controlled by a majority of Republican appointees, the FCC has proposed to reverse the open internet order by effectively rescinding its own authority to regulated ISPs under Title II of the Telecommunications Act. Wherever the Commission ultimately lands on net neutrality, this intra-agency back-and-forth and the accompanying trail of litigation represents yet another stage in a regulatory saga going back more than a decade about the proper classification and corresponding level of regulatory authority over broadband ISPs.

From a legal standpoint, the crux of the issue is whether broadband ISPs are information-service providers, who primarily process information, or telecommunications providers, who primarily transmit information. If the latter, they are subject to regulation as common carriers. As common carriers, telecommunications service providers “must charge just and reasonable, nondiscriminatory rates to their customers, design their systems so that other carriers can interconnect with their communications networks, and contribute to the federal ‘universal service’ fund.” This was the stance adopted by the FCC during the Obama administration and the basis for the open internet order. If the former, they are subject to significantly less oversight and have fewer obligations to the public and competitors. This is the FCC’s current stance and the basis for the proposed deregulatory rule.

The FCC has struggled to settle on an interpretation that sticks for broadband ISPs. Since the Brand X decision in 2005, the FCC has had Chevron-level deference afforded to its interpretation of ambiguous terms in the Telecommunications Act. In Brand X, telephone companies offering DSL Internet service challenged the FCC decision to exempt broadband ISPs from common carrier regulation. The Court upheld the exemption, reasoning that while broadband Internet service contain a component of telecommunication service, that component was integrated into a single “offering” of an information service.

When the FCC changed its stance on the issue under the Obama administration, the Commission was twice turned back by legal challenges brought by ISPs. The open internet order was precipitated by two D.C. Circuit opinions reversing the FCC’s attempts to regulate broadband ISPs’ networks.  In the first, the Court of Appeals held that the FCC had not cited any statutory authority to regulate ISPs’ network practices. In the second case, relying on Section 706 of the Telecommunications Act, the Court of Appeals vacated two open Internet regulations because the FCC continued to classify broadband ISPs as information-service providers.

According to the FCC during Obama administration and the Court of Appeals for the D.C. circuit, the FCC can regulate ISPs like other public utilities based on its combined authority under Title II of the Communications Act of 1934 and section 706 of the Telecommunications Act. The open internet order codified net neutrality through three regulations: (1) a “no blocking” regulation which required ISPs to permit users to access all lawful content online, “subject to reasonable network management;” (2) a “no throttling” regulation, which prevented ISPs from limiting consumers’ bandwidth and thereby slowing Internet traffic, “subject to reasonable network management;” and (3) a “no paid prioritization” regulation, which prohibited ISPs from charging content providers like Netflix or YouTube more in order to ensure that consumers can access their content at the same speed as other content.

Video-streaming services were singled out by the FCC in the 2015 order because, by 2015, this form of content had become the “dominant form of traffic” online. The no paid prioritization rule reflected the concerns of net neutrality proponents who feared that the ISPs would throttle certain internet traffic like video streaming and force video-content providers  to pay higher prices for priority lanes (the costs of which would presumably be passed on to consumers of said content) in order to stifle competitors to the ISPs’ own cable television services.

The FCC reversed course in 2017 and issued notice for a proposed rule, the colorfully named “Restoring Internet Freedom” rule, that would rescind the 2015 order. If adopted, it would reclassify ISPs as “information providers” once again, thereby removing them from Title II regulation as common carriers. The 2017 rule would, according to its supporters, eliminate the blocking, throttling, and prioritization regulations in order to encourage innovation and investment by ISPs. As a technical and legal matter, Ajit Pai, Chairman of the FCC, contends that while ISPs may provide certain services typical of telecommunications carriers, such as email and online storage, the “core” services are not telecommunications services at all because “routing decisions are based on the architecture of the network, not on consumers’ instructions, and consumers are often unaware of where online content is stored.”

Two factors caution against the Court granting cert and preempting the FCC proposed rule. First, Court watchers predict that the Justices would prefer for the FCC to take the lead on the issue since the new rule would effectively moot the old controversy. Second, the importance of the Internet to commerce, education, politics, and more heightens the stakes significantly, with opponents and proponents of net neutrality each contending that their position best protects the system which allowed for such developments. Understandably, the Court may prefer to defer to FCC expertise on such a hot-button issue.

In any case, if the proposed rule is adopted, another chain of legal challenges are sure to follow such a quick reversal by the Commission. And, if the White House changes hands in 2020, a new (old) interpretation on the FCC’s authority will probably follow shortly thereafter.

Alexander Peyton



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