Changing Nature of Internet Access Central to FCC Arguments for Reclassification

The argument is “important” to the agency’s explaining why it's changing course and is “quite strong,” Tejas Narechania, a Columbia University Law School research scholar and former FCC special counsel who worked on open Internet rules from 2012 to 2013, told us on Friday. Some Telecom attorneys disagreed the agency will be able to show things have changed that much, or that Justice Antonin Scalia’s views on pizza delivery in the Supreme Court’s Brand X decision will be as important as the order says it will. Even if courts agree with the agency on the changing nature of Internet access, Title II critics said the order is still vulnerable on other grounds, including questions about whether there was adequate notice about a Title II path.

The new order said the commission’s 2002 order to classify cable broadband as a Title I information service was “based largely on a factual record compiled more than a decade ago, during an earlier time when, for example, many consumers would use homepages supplied by their broadband provider.” It said “times and usage patterns have changed and it is clear that broadband providers are offering both consumers and edge providers straightforward transmission capabilities that the Communications Act defines as a ‘telecommunications service." The order bifurcated ISP functions, saying it also provides other services that are separately an information service.

The order cited Justice Antonin Scalia’s dissent in Brand X, which classified cable as an information service. Scalia, disagreed with the notion that broadband cable was a bundle of content and the ability for consumers to access it. He likened cable broadband to a pizzeria that offered pizza, but also delivered.

The FCC is correct “that the world as we know it is quite different from the facts” used in classifying cable as Title I,” Narechania said. In saying that cable was an information service, the agency at the time “emphasized the fact that subscribers could get email service, chat room access, instant messaging, news, and content, among other things, all from their internet service provider. The consumer value, from the FCC's perspective, was in that bundle, and in the fact that it all came through a single provider that also sold the internet access itself,” he said. “That's no longer true."

Deference courts give to expert agencies will be “critical,” said Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman, predicting the agency’s rationale will pass muster. Brand X held that the commission“is the expert agency and when a statute is ambiguous, the Court will defer to the agency's analysis,” Schwartzman emailed. “As long as the agency clearly says it is changing its mind (which it has) and gives a good enough reason for doing so, the Court will defer to the new analysis,” he said. “Ten years ago, it was much more common that people used their ISPs' mail server and address. Today, many more people use GMail and similar web-based services for email.” The order also cited deference given to agencies, saying it was “exercising our delegated authority to interpret ambiguous terms in the Communications Act” in reclassifying broadband.

There’s “some possible merit to this claim” based on deference, said Geoffrey Manne, executive director of the International Center for Law and Economics, which opposed reclassification. But the FCC has the burden to show the “changed interpretation is the result of changed circumstances,” he said. “ISPs are now MORE involved in managing traffic flow than they were before,” Manne emailed. “Consumers may not see this directly but that doesn’t make it any less true. It’s awfully hard to imply that networks are just dumb pipes compared to before when they have only gotten smarter.”

AT&T addressed Scalia’s dissent in a Feb. 2 letter to the agency, saying that those pointing to the dissent as rationale for reclassification are “misreading it.” Scalia was talking about the “point-to-point transmission path connecting an end user to an ISP,” the letter said. Scalia wasn't talking about the ability for end users to reach other users or content providers, and those are the functions that “create the potential for a provider to prioritize traffic or to engage in the other activities” causing concern, the letter said.

"Nothing has changed fundamentally since Justice Scalia penned his dissent, Free State Foundation President Randolph May said, adding that a significant number of subscribers "still think of Internet providers as offering much more than a basic transmission service.” ISPs offer various types of data “from stock quotes to emails," he said: President Barack Obama’s "intervention in the proceeding will lead to a less deferential review standard on appeal." Commissioners Ajit Pai and Mike O’Rielly in their dissents against the order, said that the 2014 NPRM didn't envision reclassification. By taking the Title II route, the agency violated Administrative Procedure Act notice and comment requirements, they argued.

The order responded to APA concerns, saying the notice and comment requirements are intended to give people an opportunity to participate and educate expert agencies. “Congress could not have imagined when it enacted the APA almost seventy years ago that the day would come when nearly 4 million Americans would exercise their right to comment on a proposed rulemaking,” the order said. “That is what has happened in this proceeding. ... The Commission has listened and it has learned. Its expertise has been strengthened.” A senior FCC official also told reporters the NPRM mentioned Title II as an option. Narechania echoed that, saying the order will “easily meet” the APA standard that the final product be a “logical outgrowth” of the proposed rule. The NPRM “explicitly flagged” the possibility of a Title II approach, he said. “The number of comments regarding Title II suggests that interested parties knew all along that this was a possibility,” he said.