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.

Net Neutrality Briefing Schedule Set By D.C. Circuit

By J. Bradford Currier and Marc Martin

The United States Court of Appeals for the D.C. Circuit released an order today establishing the briefing schedule in MetroPCS and Verizon’s joint appeal of the net neutrality rules adopted by the Federal Communications Commission in late 2010.  Opening briefs from the appellants are due in early July, with the FCC scheduled to respond in September.  Final briefs will be due in late November and a final decision from the court may not come until 2013.



Net Neutrality Rules Approved by OMB; Stage Set For Litigation and Legislative Challenges

In a major step forward for what one telecom observer called “the defining saga” of Federal Communications Commission Chairman Julius Genachowski's tenure, the Office of Management and Budget approved the information collection requirements of the controversial 2010 Open Internet Order. The approved provisions concern new network management disclosures required from broadband service providers and formal complaint procedures under the net neutrality rules. The new rules are expected to be published in the Federal Register in one to three weeks and will go into effect 60 days later.

While the OMB’s approval marks the final regulatory hurdle before implementing the Open Internet Order, the publication of the rules is expected to set off a flurry of long-awaited legal and legislative challenges to the net neutrality rules. Both Verizon and MetroPCS are expected to refile their appeals of the Open Internet Order challenging the FCC’s authority, which were dismissed without prejudice by the D.C. Circuit earlier this year because they were filed before publication of the rules in the Federal Register. The net neutrality rules would prohibit Verizon and other fixed broadband providers from slowing or discriminating against the delivery of content (a process known as “throttling”) from third-party content websites such as Netflix. Reports indicate that online video issues will become more heated over the next few years as more viewers forgo traditional cable and satellite television services.

On the legislative side, opposition to the Open Internet Order reached its peak last April, when the House of Representatives passed a Resolution of Disapproval under the Congressional Review Act seeking to invalidate the net neutrality rules while also attempting to limit the federal funds available to enforce the new regulations. The disapproval resolution followed months of hearings and criticism regarding the initial delay in publishing the net neutrality rules. Republican opponents of the net neutrality rules on the House Energy and Commerce Committee, led by Chairman Rep. Fred Upton (R-MI), are expected to continue questioning the FCC’s jurisdiction to regulate broadband traffic.

While opposition to the net neutrality rules increases, the FCC has already taken steps to notify companies affected by the Open Internet Order of their compliance obligations, releasing draft guidance last July on the network management transparency disclosures required from broadband service providers once the rules become effective.

Verizon Challenges FCC Data Roaming Rules

In a move expected by many industry analysts, Verizon Wireless filed a notice of appeal last week in the U.S. Court of Appeals for the District of Columbia challenging the data roaming obligations imposed on wireless carriers adopted by the FCC last month. The FCC order required all wireless carriers to allow customers of competitors to roam on their data networks and mandated “commercially reasonable terms” for intercarrier roaming agreements. The Commission adopted the data roaming order through a close 3-2 vote, with Commissioners Robert McDowell and Meredith Baker questioning the FCC’s authority to impose common carriage-like requirements on an information service.

Verizon’s appeal echoes the dissenting Commissioners’ concerns, characterizing the data roaming order as an arbitrary and capricious exercise of the FCC’s power that unduly burdens major carriers such as itself and AT&T. The company further contends that the new regulations are unnecessary due to the many data roaming agreements the company has with small- and medium-sized wireless companies. Verizon stated that the company now has less incentive to expand its wireless infrastructure if it must share its network with outside users. Meanwhile, consumer watchdog groups hailed the order as necessary to sustain competition during a time when AT&T’s attempted purchase of T-Mobile may lead to further market consolidation.

The data roaming appeal marks Verizon’s most recent challenge to the FCC’s statutory authority at the D.C. Circuit. Just last month, the court dismissed suits brought by Verizon and another carrier against the FCC’s net neutrality regulations because the carriers filed their complaints prematurely.