Tech Freedom Vows High Court Appeal if Its Broadband Title II Challenge Denied

Pantelis Michalopoulos, a Steptoe & Johnson attorney who at oral argument represented intervenors backing the FCC, took issue with previously reported predictions (see 1512070054) that the commission would likely lose on its mobile broadband reclassification and some other decisions. It's “dangerous and somewhat simplistic to jump to predictions” that the D.C. Circuit will issue a “Solomonic baby-splitting” ruling, he said, suggesting the court would try to harmonize the policy conflicts under the law. He also rejected arguments the FCC needs to win on everything or its whole framework will fall apart. Some issues are more important than others, and “it’s better to win on the important issues than the less-important ones,” he said. “It is impossible to predict what the court will do,” he added. “We ought to give ourselves the luxury of some suspense.”

There were few predictions but many opinions at Tuesday’s discussion. Fred Campbell, Center for Boundless Innovation in Technology executive director, said the FCC mistakenly believed it was laying a strong legal foundation by reclassifying broadband, including mobile service, under Title II of the Communications Act. He said the many questions asked by the D.C. Circuit judges at oral argument pointed to all the complex issues raised by reclassification.

Title II broadband reclassification “opened a Pandora’s box” of issues, agreed Szoka. He said broadband providers now are subject to requirements to make their networks “wiretap ready” and to turn content over to law enforcement. Unless reined in, the commission could use its broad discretion to subject other Internet services and providers to Title II, he said.

Markham Erickson, another Steptoe & Johnson attorney who backed the order, said it wasn't “unusual” for the FCC to reclassify broadband Internet access service as a Title II telecom service subject to common-carrier regulation, rather than as a Title I information service subject to few regulatory mandates. He said the FCC had been making such distinctions -- between “basic” transmission services and “enhanced” computer services -- even before the 1996 Telecom Act codified them into the law.

Erickson said the Supreme Court’s 2005 Brand X decision found broadband classification turned on the Internet "particulars" that the FCC had discretion to resolve as long as it goes through proper fact finding and reasoned analysis. He said the commission has a “strong argument” its 2015 order is “well within” that construct. He also said he was encouraged by D.C. Circuit Judge David Tatel’s focus on consumers and what service they perceived they were being offered. Consumers want broadband access to reach Internet end points without changing content, which Erickson said fits within the definition of a Title II telecom service.

Szoka said FCC didn’t deserve judicial deference because it basically rewrote the statute and engaged in ends-justify-the-means regulation after being prodded by President Barack Obama to use its strongest legal authority to uphold net neutrality. “With an angry mob outside his gates,” Obama had “interfered with” an independent agency, Szoka said. The result was a “badly lawyered, badly researched” order that engaged in no serious cost-benefit analysis, he said.

Brantley Webb, a Mayer Brown attorney, noted Tatel pushed the FCC general counsel to justify the agency’s decision to switch from a broadband approach based on Section 706 to a Title II reclassification. She said Judge Stephen Williams, in questioning the ban on paid prioritization, focused on whether the commission had found any actual market harm, and not just that ISPs had incentive and ability to do such harm. She also noted questions about whether the FCC had given parties sufficient notice to reclassify mobile broadband. Campbell said judges seemed concerned about how the FCC’s IP interconnection regime would work as a practical matter.

But Szoka wasn't optimistic the D.C. Circuit would properly analyze the case, particularly on the question of FCC discretion: “I think it’s very likely we're not going to get a clear answer here.” He said the concerns of Tech Freedom and other intervenors weren’t even raised by petitioners’ counsel at oral argument because other issues took up all the time. Among their key arguments is that the FCC order doesn’t deserve Chevron deference under recent Supreme Court precedent in a King v. Burwell ruling on IRS regulation of the healthcare sector. Michalopoulos pushed back, saying the high court found the IRS had no healthcare expertise, which wasn’t the case with the FCC and communications. But Szoka called that finding just the “icing on the cake” and said the bigger reason the court didn’t apply traditional Chevron deference was because healthcare, like communications, affected a huge sector of the economy, sparking “fundamental” questions that raise the bar to agency discretion.

Szoka vowed to file a cert petition asking for Supreme Court review if Tech Freedom loses on its issues, and he believed other petitioners would as well, including Alamo Broadband and Daniel Berninger if they lose on their First Amendment free-speech challenge. He said justices on both sides of the aisle are concerned about speech rights. It's “deeply disturbing” the FCC could have the authority to decide whether broadband ISPs and other providers have speech rights, he said. Eva Reed, a Wiley Rein attorney, agreed, saying the commission had adopted an “extreme position” of effectively deciding who has First Amendment rights that “makes me uncomfortable.” She said First Amendment issues aren't subject to judicial deference.

Michalopoulos said parties that lose at the D.C. Circuit will have to weigh the “allure” of filing a cert petition versus the fear of suffering a negative ruling from the highest court in the land. He also said some may first seek en banc rehearing before the full slate of active D.C. Circuit judges.

Szoka said the best solution would be a legislative compromise that protects net neutrality in a targeted way, without giving the FCC overly broad discretion. He said the only thing blocking such a compromise was Democratic opposition stoked by “the same angry mob” that pressed Obama to push the commission toward Title II.

Erickson said 4 million people filed FCC comments during the net neutrality rulemaking. That shows consumers take the issues personally and have “strongly held views” on broadband Internet access, he said. “If you question that, try to take away a smartphone from a teenager.” Whenever their Internet experience is threatened, consumers react, said Erickson. “I don’t expect the passion to subside.”