D.C. Circuit Decision in US Telecom v. FCC a Win for Preserving an Open Internet

Written by Gabe Rottman

CDT Summer 2016 Intern Clinton Oxford also contributed to this post.

In a resounding victory for net neutrality advocates and consumers alike, the D.C. Circuit issued its decision in US Telecom v. FCC, a landmark ruling ensuring that government regulators maintain the authority necessary for preserving an open internet. The court’s decision upholds the Federal Communications Commission’s 2015 Open Internet Order, a set of rules and standards that aim to preserve the basic principle that broadband providers should permit access to the internet without discriminating or blocking content based on its source. Notably, the FCC’s Order reclassified both fixed and wireless broadband providers as telecommunications services subject to regulation as “common carriers” under Title II of the Communications Act much like basic phone service (where one’s landline provider likewise can’t discriminate against callers or block certain calls).

The Order requires enhanced transparency among operators, sets forth standards against unreasonable interference with a user’s lawful access of content, and promulgates bright-line rules ensuring all content travels along broadband networks in an unimpaired and nondiscriminatory manner. The FCC argued, and the court agreed, that such rules promote the “virtuous cycle” where innovation on the “edge” (among content and application providers) drives demand for broadband service, which then drives broadband deployment and adoption. The FCC has the power, by law, to promote competition and infrastructure investment in broadband.

Following the Commission’s adoption of the Order, a number of broadband providers challenged the rules on statutory, procedural, and First Amendment grounds. In response to petitioner’s claims, Tuesday’s decision upheld the FCC’s statutory authority to reclassify broadband under Title II.

In a 2-1 decision, Judges Tatel and Srinivasan held that the Commission’s decision to reclassify broadband was reasonable in light of a careful and complete consideration of the record. They noted that “…Congress expressly delegated to the Commission the authority to define — and hence necessarily update and revise — those categories’ key definitional components.” The majority opinion also provided extensive coverage of the FCC’s decision to forbear from applying certain Title II provisions to broadband operators, noting that the Commission provided adequate support to justify its forbearance.

The FCC’s 2015 Order will ensure that the internet remains a neutral platform fostering competition and innovation among all content providers. This week’s affirmation of the commission’s open internet rules means that, in the absence of gatekeepers blocking access to or promoting certain affiliated content, the costs of market entry for innovators on the edge will remain low, thus driving demand for broadband services among consumers.

The court’s opinion accords with the positions advocated by the Center for Democracy & Technology (CDT) and its fellow intervenors. CDT formally joined the case as an intervenor in support of the FCC’s authority to reclassify broadband as a telecommunications service. The opinion also marks a resolution to a decades-long debate about the proper scope of the FCC’s authority to implement open internet policies and positions the agency to flexibly address future issues. (There may be an appeal to the full court or directly to the Supreme Court, so the story is not entirely over—though the decision is still a huge and conclusive victory for net neutrality advocates.)

The FCC has long recognized that preserving and protecting an open internet propels innovation among edge providers and protects consumer choice and free expression online. One year prior to the FCC’s 2015 Order, the D.C. Circuit vacated the Commission’s previous attempt at promulgating open internet rules in Verizon v. FCC. The court noted that although the Commission maintained the authority to issue open internet rules, their statutory classification of broadband as an “information service” (i.e., not a common carrier) prevented them from imposing common carrier rules.

Although the FCC’s prior open internet rules were struck down in Verizon, the D.C. Circuit’s opinion affirmed the FCC’s key findings that an open internet promotes a “virtuous cycle” of innovation. The 2015 decision also recognized that the lack of competition among broadband providers creates an incentive for them to charge edge providers for access to a “fast lane” or to discriminate against potential competitors.

The Commission’s open internet rules also allow them the flexibility to deal with new issues emerging among broadband providers. The FCC’s Order contains flexible standards for consideration of various pricing arrangements employed by providers, allowing the Commission to examine other provider conduct on a case-by-case basis.

Bottom line, the D.C. Circuit’s decision truly is an unqualified win for net neutrality advocates, consumers, and for innovation on the internet. The court clearly upheld the FCC’s authority to classify broadband as a Title II common carrier, which will prevent broadband providers from leveraging their market power to discriminate against or block lawful content. We’ll be monitoring any appeal to the full court or to the Supreme Court, but yesterday’s decision will remain a watershed in the fight to protect the open internet.

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