D.C. Circuit Court Hears Arguments on FCC "Internet Access is a Common Carrier Service" Ruling

The D.C. Circuit has held oral arguments about the legality of the Federal Communications Commission's  Open Internet Order.

As always, observers try to infer what justices are thinking by their line of questioning. And, predictably, both supporters and detractors heard questioning they believe supports their favored outcomes.

The justices “generally agreed that they are governed by the Supreme Court's holding in Brand X,” said Phoenix Center President Lawrence J. Spiwak, though granting that the FCC has wide latitude to interpret how Brand X should apply, Spiwak said.

That said, the court appeared skeptical of the FCC's reclassification of wireless broadband as a Title II common carrier service due to FCC's gerrymandering of the definition of the term "public switched telephone network," Spiwak said.

The court also seemed concerned over the lack of public notice of the legal theory the Commission used to reclassify mobile broadband. “As such, there is a better chance of the court overturning FCC on this issue,” said Spiwak. 

Others believe common carrier regulation will be upheld.  

Assuming the court upholds the FCC's decision to reclassify broadband as a Title II common carrier service, the court did not appear convinced that the FCC's application of Title II was entirely legitimate, Spiwak said.

The court seemed to have two significant concerns with the Commission's actions.

First, while the FCC stated that it was not classifying terminating access as a Title II service, the Commission nonetheless was regulating terminating access as a common carrier service. As such, this outcome runs directly contrary to the court's holding in Verizon.

Second, assuming terminating access is a Title II service, then the FCC's paid prioritization rule violates basic principles of ratemaking because it both requires a confiscatory price of "zero" under Section 201 (even though edge providers impose a cost on the network) and prevents "reasonable" discrimination as expressly permitted by Section 202."

Either way, one might argue, there is room for the Title II rules to be overturned.