Wireless Data Roaming Rules Upheld by D.C. Circuit

By J. Bradford Currier, Marc Martin, and Marty Stern

Mobile wireless data providers must offer roaming agreements to competing carriers on “commercially reasonable” terms following the D.C. Circuit Court’s decision to uphold rules first adopted by the Federal Communications Commission in 2011. The FCC’s data roaming requirements were designed to supplement existing roaming obligations on mobile carriers that only applied to voice services by facilitating access to data services when customers travel outside of their providers’ networks. As we reported previously, the data roaming rules were adopted by a closely-divided FCC and were subsequently challenged by Cellco Partnership, more commonly known as Verizon Wireless.

Verizon Wireless challenged the data roaming obligations on three grounds, arguing that: (1) the FCC lacked statutory authority to impose “common carrier” type rules on mobile data providers; (2) new rules were unnecessary because mobile data providers were already entering into voluntary roaming agreements with competing carriers; and (3) roaming obligations would reduce incentives to expand wireless infrastructure if providers must share their networks with competitors.  Verizon Wireless alleged that the roaming requirements would unfairly benefit smaller carriers with limited networks at the expense of larger providers. In response, the FCC stated that the new rules did not impose common carrier type regulations on mobile data providers and the requirements were necessary in order to prevent larger carriers from excluding smaller providers from their networks. 

The D.C. Circuit began by noting that the FCC may not impose common carrier type obligations on providers of “information services,” including mobile data providers. However, the court found that the data roaming rules allow providers to negotiate the terms of their roaming arrangements on an individualized basis and do not require providers to serve other carriers indiscriminately on standardized terms. While the court recognized that the data roaming requirements “plainly bear[] some marks of common carriage,” the court deferred to the FCC’s determination that the new rules did not amount to common carriage regulation because providers can negotiate flexible terms and conditions. The court further concluded that the data roaming rules did not constitute an unconstitutional taking of Verizon Wireless’s data network or represent arbitrary and capricious rulemaking. Although supporters of the roaming rules also suggested that the court’s decision supports the FCC’s net neutrality rules currently subject to a separate appeal, the court in the data roaming case found that the FCC has explicit jurisdiction over wireless carriers under its broad authority over radio communications under Title III of the Communications Act.

Opening Brief Filed by Net Neutrality Challengers

By J. Bradford Currier and Marc Martin

Verizon and MetroPCS filed their initial brief with the D.C. Circuit in their joint appeal of the net neutrality rules adopted by the Federal Communications Commission in its 2010 Open Internet Order. The briefs kick off the first legal challenge to the net neutrality rules which became effective in late 2011. The FCC is scheduled to respond in September, with final briefs due from the parties in November. The D.C. Circuit is not expected to rule on the appeal until 2013.

As we reported previously, the Open Internet Order focuses on three goals: (1) network transparency; (2) no blocking; and (3) no unreasonable discrimination. Under the rules, both fixed and mobile broadband Internet access providers must disclose the network management practices, performance, and commercial terms of their services.  Fixed providers are prohibited from blocking access to all lawful content and services, while mobile providers must not block lawful websites and applications that compete with their services. The “no unreasonable discrimination” provision applies solely to fixed providers, leaving mobile operators free to favor or disfavor certain types of network traffic.

The brief challenges the net neutrality rules on four grounds:

  • First, the brief alleges that the rules conflict with the Communications Act by imposing nondiscrimination requirements on fixed broadband Internet access providers. The brief emphasizes the Communication Act’s distinction between traditional “common carriers,” that must provide service to all customers on an equal basis, and private “information services,” such as broadband Internet access, that are normally outside of the FCC’s jurisdiction. The brief notes that the FCC previously refused to impose common carrier-type regulations on information services in order to foster developing technologies. 
  • Second, the brief alleges that the FCC lacked the statutory authority to adopt the net neutrality rules. The brief highlights the D.C. Circuit’s 2010 decision in Comcast v. FCC, which ruled that the FCC could not rely on its “ancillary” authority under the Communications Act to regulate broadband Internet access providers. The brief argues that the FCC failed to articulate any specific source of authority supporting the net neutrality rules, instead relying on “speculative inferences” rejected in the Comcast decision in support of the rules. 
  • Third, the brief alleges that the net neutrality rules violate the free speech rights contained in the First Amendment and the property protections set forth in the Fifth Amendment. The brief states that the net neutrality rules eliminate the “editorial discretion” held by Internet access providers to decide the types of speech they will transmit and how they will transmit it as part of their services. Under this view, Internet access providers should enjoy the same level of discretion as newspapers to feature specific content and the FCC should not impose uniform restrictions when customers have numerous outlets to access content on the Internet. The brief also contends that the rules constitute a “per se taking” of broadband Internet access providers’ property by allowing providers of content, applications, and devices to access private broadband networks for free.
  • Fourth, the brief alleges that the net neutrality rules are arbitrary and capricious. The brief suggests that the FCC failed to identify any competitive issues in the broadband Internet access market that necessitated industry-wide regulation. The brief argues that the FCC’s concerns of discrimination in Internet access service remain hypothetical and that the net neutrality rules will stifle innovation and harm the public interest.

While Verizon and MetroPCS moved forward with their challenge of the net neutrality order, public interest group Free Press voluntarily withdrew its petition to review the new rules. Free Press previously challenged the exemption for mobile wireless providers from the nondiscrimination provisions of the net neutrality rules.