Challenges Ahead for FCC Over Internet Rules
D.C. Circuit strikes down 'Open Internet' regulations.
Powell's scenario was perhaps overly dire — the FCC has the power to forebear imposition of specific regulations. But it captures how vehemently broadband providers oppose reclassification.
"In some ways, this is the worst possible outcome for the FCC," said Samuel Feder, chairman of Jenner & Block's communications practice and FCC general counsel from 2005 to 2008. "They got such a win on their authority to regulate aspects of the Internet, but such a loss in terms of what they can do on issues such as paid prioritization. Going for an appeal has real risk, trying to enact new regulations has real risk, and the decision is not bad enough to justify the nuclear option of reclassification."
But former FCC commissioner and acting chairman Michael Copps has no such reservations. In testimony before the subcommittee, Copps, a Democrat who's now a special adviser at Common Cause, bluntly urged the FCC to proceed with reclassification — and "to do it quickly, do it promptly."
"We don't need now to get into months of third ways and fourth ways and fifth ways to thread this needle," Copps said. "We need some clarity."
The FCC first tried to regulate broadband in 2008, going after Comcast Corp. for interfering with its subscribers' use of peer-to-peer networking applications, which consume large chunks of bandwidth. But Tatel, writing for the D.C. Circuit in 2010, ruled the agency lacked the authority to oversee Internet service providers based on its theory of ancillary jurisdiction.
The FCC tried again later that year, this time asserting the authority to issue rules under Section 706(a) and 706(b) of the Telecommunications Act of 1996. The provisions direct the agency to "encourage the development…of advanced telecommunications" services and empower the agency to take steps to accelerate broadband deployment.
In 2011, Verizon sued the FCC, arguing that Section 706 did not confer authority and that the rules ran afoul of the FCC's decision to classify broadband providers as information services.
Gibson, Dunn & Crutcher partner Helgi Walker, who also represented Comcast in its FCC challenge, argued in the appeal that decisions about the regulation of broadband service providers are up to Congress. "It is not up to the FCC to decide those important and hotly debated questions entirely on its own," Walker told the D.C. Circuit panel.
The company's general counsel, Randal Milch, said in a written statement that "Verizon has been and remains committed to the open Internet. This will not change in light of the court's decision."
While Tatel and Rogers concluded it was "quite reasonable to believe that Congress contemplated that the Commission would regulate this industry," Silberman found that the FCC lacked "affirmative statutory authority" to move forward with the Open Internet rule in the first place.
His 18-page dissent shows why an appeal could be risky for the FCC. Section 706 of the federal Telecommunications Act, he wrote, "doesn't come close to sanctioning the Commission's regulation," which he described as "aggressive," "prophylactic" and "unwarranted government interference in a functioning market."