On October 1, 2019, the U.S. Court of Appeals for the DC Circuit released its opinions in Mozilla v. FCC . The court generally upholds, with two exceptions noted below, the FCC’s 2018 Restoring Internet Freedom Order (the “Order”).

By way of background, as the political party in control of the FCC has changed, the pendulum has been swinging back and forth on the nature and extent of the FCC’s so-called “Net Neutrality Rules” which govern the regulation of fixed and mobile broadband Internet access services (“Internet Service”). The FCC’s latest Order, adopted by the Republican-controlled FCC led by Chairman Pai, effectively reversed the earlier decision of the Democratically-controlled FCC led by Chairman Wheeler to subject Internet Service to more rigorous utility-style regulation under Title II of the Communications Act. The Order accomplished this by returning to classifying Internet Service as an “information service” and subjecting it to “light touch” regulation. Here is a high-level summary of the major and relevant holdings of the court’s opinion.

The Court Upholds the FCC’s Removal of Internet Services from Title II Regulation and Accepts its Section 706 Analysis:

  • The court rejects Petitioners’ claims that Internet Service must be deemed to be a standalone offering of telecommunications requiring regulation under Title II. Applying reasoning from the Supreme Court decision in Brand X, the court concludes that that FCC permissibly classified broadband Internet access as an “information service” by virtue of the functionalities afforded by DNS and caching.
  • The court upholds the classification of mobile broadband as a “private mobile service,” which is not subject to Title II regulation, by granting deference to the agency as required by the Supreme Court decision in Chevron. The court finds that the “Commission has compelling policy grounds to ensure consistent treatment of the two varieties of broadband Internet access, fixed and mobile, subjecting both, or neither, to Title II.” (46).
  • The court agrees with the FCC that the language of Section 706 is ambiguous meaning that the FCC’s interpretation of the provision is entitled to deference, and finds the Commission’s reading of Section 706 to be reasonable. The court further determines that the Commission properly relied on Section 257 to issue the transparency rule.

The Court Vacates the Preemption Directive: The court determines that the Commission has not shown legal authority to issue its Preemption Directive, which bars states from imposing any rule or requirement that the Commission “repealed or decided to refrain from imposing” in the 2018 Order or that is “more stringent” than the Order. The court concludes that the Preemption Directive exceeds the Commission’s statutory authority, and therefore vacates this portion of the Order that expressly preempts “any state or local requirements that are inconsistent with [its] deregulatory approach.” (2018 Order ¶ 194).

The Court Remands Issues Involving Public Safety, Pole Attachments and Lifeline:

  • The court finds that the FCC did not adequately consider the implications of its decisions in the Order on public safety. Specifically, allowing broadband providers to prioritize Internet traffic could hinder the ability of first responders, providers of critical infrastructure, and members of the public to communicate during a time of crisis. Accordingly, the court holds that the FCC failed to undertake the statutorily mandated analysis of the Order’s effect on public safety, which renders its decision arbitrary and capricious, and remands this portion of the decision for further consideration by the FCC.
  • The court determines that the Commission did not adequately address how the reclassification of broadband as an information service would affect the regulation of pole attachments. The court explains that Section 224 of the Communications Act provides certain protections for cable television systems and telecommunications providers with respect to nondiscriminatory access to pole attachments, and “simply does not speak to information services” and therefore, “no longer speaks to broadband.” (106). The court recognizes that the Order offers contradicting views on whether Section 224 will continue to govern reclassified broadband and did not ultimately “grapple with the lapse in legal safeguards that [the Commission’s] reversal of policy triggered.” (109). Therefore, the Order was arbitrary and capacious in this respect and the court remands for the Commission “to confront the problem in a reasoned manner.” (109).
  • The court finds that the Commission “brushed off” concerns that reclassification would eliminate the statutory basis for broadband’s inclusion in the Lifeline program. Specifically, although the Commission stated that its authority under Section 254(e) could extend to broadband, it failed to explain how that would be achieved now that broadband is no longer considered to be a common carrier service. The court determines that the Commission’s failure to adequately address this issue “was straightforward legal error which requires remand.” (109).

Miscellaneous:

  • NTCH Data Roaming. The court rejects concerns raised by Petitioner NTCH, Inc. that the Order failed to address data roaming rates charged by broadband providers. NTCH argued that the FCC disregarded its comments that stressed the need for Title II regulation due to (allegedly) high data roaming rates. The court recognizes that the Order classified mobile broadband, of which data roaming is a service, as an information service, thus making Title II regulation inapplicable. Accordingly, the court concludes that “the classification of mobile broadband as an information service was reasonable, [thus] the Commission had no obligation to consider NTCH’s comments urging for Title II regulations for mobile broadband providers’ data roaming agreements. (120).

FCC Statements

Chairman Pai released a statement explaining that this decision was a “victory for consumers, broadband deployment, and the free and open Internet.” The Chairman was pleased with the decision and stated that the Commission looks forward to addressing the additional issues remanded by the court.

Commissioner Rosenworcel also issued a statement reiterating her opposition to the Order and focusing on the court’s decision to vacate and remand parts of the Order, stating that the agency “got it wrong on the law.” Additionally, she expressed her support for the American public’s fight to provide an open Internet.

Commissioner O’Rielly issued a statement noting that he is pleased that the court “[got] most of the decision correct” and “the main tenants of the Commission’s action are thankfully affirmed.” However, he expresses his disappointment in the court’s decision to vacate the preemption provisions and states this will lead to “Commission case-by-case preemption efforts and more litigation.”

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