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Court of Appeals Upholds FCC’s Open Internet Order

22 June 2016
In a major victory for the Federal Communications Commission’s democratic majority, the U.S. Court of Appeals for the D.C. Circuit upheld the FCC’s 2015 Open Internet Order on June 14, 2016.  The 2-1 decision by the D.C. Circuit Court of Appeals likely is not the last word on net neutrality because broadband service providers will very likely pursue rehearing from the full D.C. Circuit court or the Supreme Court.  The ruling has also renewed calls for congressional action on net neutrality.  For now, the court’s decision paves the way for the Commission to take additional actions to regulate broadband, such as adopting privacy rules for broadband providers.

In the 2015 Open Internet Order that the D.C. Circuit Court of Appeals reviewed, the FCC reclassified broadband Internet access service as a telecommunications service, subject to common carrier regulation under Title II of the Communications Act.  The FCC imposed three “bright-line” rules:  (1) no blocking, (2) no throttling, and (3) no paid prioritization.  The FCC also imposed a forward-looking “general conduct” standard that prohibits broadband providers from “unreasonably interfer[ing] with or unreasonably disadvantag[ing] (i) end users’ ability to select, access, and use broadband Internet access service or the lawful Internet content, applications, services, or devices of their choice, or (ii) edge providers’ ability to make lawful content, applications, services, or devices available to end users.’”  Finally, the FCC enhanced the disclosure and transparency requirements that apply to service providers.

The D.C. Circuit’s opinion upheld the FCC’s order in all respects.  The circuit court majority opinion held that the FCC had statutory authority to reclassify broadband Internet access service as a “telecommunications service” subject to Title II.  It ruled that the FCC’s actions were reasonable and supported by the record.  It upheld the FCC’s decision to subject mobile broadband to its new regime.  It also upheld the FCC’s decision to forbear from many common carrier requirements.  And it denied several constitutional and other statutory challenges to the FCC’s order.

Judge Williams, in partial dissent, stated that he agreed with “much of the majority opinion,” and largely agreed with the majority’s holding that the FCC had statutory authority to reclassify broadband.  But Judge Williams would have held that the FCC’s decision to reclassify broadband was arbitrary and not the product of reasoned decisionmaking.  According to Judge Williams, the record did not support the FCC’s action and the FCC had not undertaken the kind of economic assessment of market conditions to support its order.  Judge Williams said he found it impossible to reconcile the FCC’s decision to reclassify broadband as a common carrier service, which is premised on a finding of market power, with the agency’s decision to forbear from applying many common carrier decisions, which is premised on a finding of a competitive market.

One or more of the nation’s broadband service providers will seek further review, either from the court of appeals sitting en banc, or from the Supreme Court.  For now, however, the court’s order gives the FCC the authority necessary to press forward with expanded oversight of the broadband internet access services market, including the adoption of new privacy rules for broadband service providers.

Hogan Lovells

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