DOJ, FCC Defend Net Neutrality, Title II as Targeted Regulation

Monday's filing said the Title II reclassification was tempered by the agency's forbearance decision keeping broadband free of most rules, contrary to the regulatory alarms sounded by USTelecom and others. “This is Title II tailored for the 21st century, without any requirement of prior approval of rates, need to file tariffs, mandated unbundling of networks, need to ask permission before introducing new products or government-mandated rate of return,” the brief said. “The Order expressly disavows a majority of Title II’s statutory provisions (and hundreds of accompanying regulations). This is not ‘heavy-handed, utility-style regulation.’ It is the Order -- not USTelecom’s rhetoric -- that is before this Court.” (For more on the arguments of petitioners and supporters, see 1507310042, 1508070058 and 1509080020.)

The question is whether the commission has the authority to ensure the Internet, the “central means” of modern communications, “remains open to all Americans,” the DOJ/FCC said. They cited the D.C. Circuit’s 2014 Verizon ruling as affirming the FCC’s previous finding that, absent rules, broadband providers could threaten the Internet's openness and its virtuous cycle of innovation, consumer demand and broadband deployment. The court said the commission had “convincingly detailed” how broadband providers could use their “gatekeeper power” to “restrict edge-provider traffic,” the brief said.

Rules, Authority, Roots

The 2015 FCC order protects the open Internet with three bright-line rules, barring broadband providers from blocking or degrading consumer Internet access, or engaging in paid prioritization that favors certain services, applications or devices, the brief said. The rules are backed by a general prohibition against unreasonable interference with the ability of consumers and edge providers to reach each other, and by interconnection standards to prevent the same prohibited ends, the brief said.

The FCC reclassified broadband Internet access -- used by consumers “to transmit traffic to and from Internet endpoints” -- as a Title II telecom service, which the Supreme Court held was an ambiguous statutory term in its 2005 Brand X ruling and thus deserved court deference, particularly given congressional delegation of authority, the government said. But the agency adopted a “light-touch” Title II focused on broadband access providers and only to the extent they offer telecom services, not online content services, the brief said.

Constrained by previous D.C. Circuit rulings, the commission applied Title II to broadband rather than jettison the paid prioritization and blocking restrictions that were vacated by the Verizon court panel as common carriage regulation that was barred without Title II, the DOJ/FCC said. Citing the FCC’s history, its 2014 NPRM’s express contemplation of possible Title II use and the subsequent record, the brief disputed petitioners’ argument that the order upended a “settled understanding” that broadband would stay free from Title II.

“The Order concludes that the Internet ‘must remain open: open for commerce, innovation and speech; open for consumers and for the innovation created by applications developers and content companies; and open for expansion and investment by America’s broadband providers,’” the DOJ/FCC said. “The Order is well within the statutory authority that Congress has vested in the Commission and rests on a factual record reflecting an ‘overwhelming consensus’ that ‘carefully tailored rules to protect Internet openness will allow investment and innovation to continue to flourish.’”

The DOJ/FCC said net neutrality protections were rooted in the commission’s 1980 Computer II decision distinguishing between regulated “basic” services (such as phone service) that transmitted information, and unregulated “enhanced” services (such as voicemail) that processed information. They said the commission then classified telco DSL as a Title II telecom service under the 1996 Telecom Act, which defined telecom service as “the offering of telecommunications for a fee directly to the public.” The Act defined (less-regulated) Title I information service as “the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications.” But the Act also created an exception to clarify that information services don’t include “the management, control or operation” of a telecom system or the management of a telecom service, and vested the FCC with authority to interpret the definitional contours, the brief said.

The government noted the commission classified cable modem service as an integrated Title I information service that didn't offer a separate telecom service to the public. The Supreme Court upheld that finding in Brand X, citing the FCC's expertise on Internet technology specifics, and the agency then reclassified wireline telecom as an information service. The commission’s attempt to regulate broadband under Title I was overturned in the D.C. Circuit’s 2010 Comcast ruling and its attempt to impose net neutrality rules under the Telecom Act’s Section 706 was partially overturned in the Verizon ruling, though the D.C. Circuit recognized some agency arguments as valid.

Title II Arguments

On remand, the commission in its 2014 NPRM proposed to “rely on section 706” but said it would “seriously consider” Title II broadband reclassification, asking questions about the possible use of Title II “in nearly every substantive section,” including on mobile broadband, the DOJ/FCC said. After hearing from millions of commenters and considering the Verizon ruling’s common carrier restrictions, the commission adopted net neutrality safeguards and reclassified both wireline and mobile broadband under Title II, and cited its authority under Section 706 and Title III, the brief said.

The order defined “broadband Internet access service” (BIAS) as a “mass market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints.” BIAS includes a telecom offering that fits the telecom service definition, the DOJ/FCC said. The service actually consists of two things, both high-speed Internet access and other applications/functions, and the FCC “reclassified ‘only the transmission component,’” the brief said. The agency also said mass-market mobile broadband didn’t fit under a private mobile service exemption from common carrier regulation that was more appropriate for limited offerings such as taxi dispatch services, the brief said.

The DOJ/FCC dismissed USTelecom arguments that BIAS can only be an information service as an attempt to relitigate Brand X. Reclassification of the BIAS transmission component is “amply supported by the record,” the brief said. “The ability to transmit data to and from Internet endpoints has become the 'one indispensable function’ that broadband Internet access uniquely provides,” the government said, citing the order. Consumers view BIAS primarily as a conduit to reach third-party applications, services and content, said the brief, noting "dramatic changes" since 2002.

Petitioners attempt to re-read Brand X too narrowly, mischaracterize the order and invoke materials outside statutory definitions, said the DOJ/FCC: “These efforts fail.” The brief attempts to knock down petitioner arguments one by one.

The DOJ/FCC said the commission considered investment implications, contrary to petitioner allegations, but found its “light touch” approach would promote the virtuous cycle of investment in both broadband networks and Internet applications/content. They disputed arguments the FCC ignored the “reliance interests” of broadband providers making investments because such interests don’t include future investments nor preclude commission policy changes, particularly given its decade-long desire to “find legal authority to protect the Open Internet.”

The agencies also detailed the FCC defense against various other challenges: to its mobile broadband reclassification, specific net neutrality rules, forbearance decisions (challenged separately by Full Service Network), and its adherence to Administration Procedure Act notice requirements, First Amendment speech rights and the Regulatory Flexibility Act.