Net neutrality goes to court - CNET

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The fate of the Obama-era net neutrality rules could come down to whether the FCC followed proper procedure when it wrote and implemented its repeal of the controversial regulations.

That's the takeaway from nearly 5-hours of oral arguments where the agency defended its "Restoring Internet Freedom" order in the US Court of Appeals for the District of Columbia Circuit Friday morning.  The case pits Mozilla and several other internet companies, like Etsy and Reddit, as well as 22 state attorneys general, against the Republican-led FCC.

It's hard to say exactly how the the three judges on the panel -- Robert Wilkins, Patricia Millett and Stephen Williams --will decide the case. Legal experts following the case are quick to point out that anything can happen and that the oral arguments are just one piece of the process, which involves thousands of pages of briefs arguing for and against the FCC's repeal.

While the judges spent a lot of time questioning the lawyers challenging the FCC's repeal of the rules, it's likely that the arguments that win the day will involve whether or not the agency adequately considered concerns from the public safety community or whether the agency should have delayed implementation of its deregulation because Congress had changed a key part of the law between the time when the FCC adopted its repeal and when it went into effect.  

Now playing: Watch this: Net neutrality could be saved by a technicality

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"It's hard to come away with much certainty about who will be the big winner," said Matt Schettenhelm, a legal analyst with Bloomberg Intelligence. "But the FCC should be encouraged on the question of whether it had authority to deregulate."

Where the FCC may be more vulnerable is in its process, Schettenhelm added.

"If the court rules against the FCC, it's likely to be because it doesn't think it did it in the proper way," he added. "Did they dot all their i's and cross all their t's."

The case

The net neutrality proponents are suing the government claiming that the agency, led by FCC Chairman Ajit Pai, overstepped its bounds when it voted in December 2017 to roll back the Obama-era net neutrality protections, which banned broadband providers from slowing or blocking access to the internet or charging companies higher fees for faster access.

While little has happened yet, net neutrality supporters fear that the lack of protections ultimately could mean higher prices and fewer choices for consumers. Internet service providers, however, argue the rules make it harder to invest in their network and improve their ability to serve you.

Though the vote to repeal the regulations happened more than a year ago, they didn't officially come off the books until June.  The backlash among supporters was immediate. Democrats in Congress unsuccessfully tried to undo the repeal through the Congressional Review Act. While the measure passed the Senate, it failed in the House.

Several states -- including California, Oregon and Washington -- have also been pushing through legislation to protect these principles. Governors in other states, like New York and Montana, have already signed executive orders banning the states from doing business with companies that don't comply with net neutrality.

Then there are the lawsuits, which are getting their day in court tomorrow.

Behind the clash: The former, Democrat-led FCC reclassified broadband networks to make them subject to the same strict regulations that govern telephone networks. Supporters claim the reclassification was needed to give the rules an underlying legal basis.

The stricter definition provoked a backlash from Republicans, who said the move was clumsy and blunt.

Pai, who was appointed by President Donald Trump, called the 2015 rules "heavy-handed" and "a mistake." He argued the rules deterred innovation because internet service providers had little incentive to improve the broadband network infrastructure. (You can read Pai's op-ed on CNET here.) Pai took the FCC back to a "light" regulatory approach, pleasing both Republicans and internet service providers.

But net neutrality supporters say there are several things wrong with Pai's analysis and the repeal order, which also abdicated the FCC's authority to oversee broadband networks altogether. The FCC's order also tries to prevent states from passing their own net neutrality regulations. Net neutrality proponents say the rollback and its pre-emption of state authority is unlawful. And they're asking the federal appeals court to throw out the FCC's repeal.

What's at stake, net neutrality proponents claim, is the future of the internet. They fear that without rules of the road to protect the internet as we know it may not exist much longer without the protections.

"Today we fought for an open and free internet that puts consumers first," said Dennelle Dixon, COO of Mozilla. "We believe the FCC needs to follow the rules like everyone else. We argued before the Court that the FCC simply cannot renounce its responsibility to protect consumers on a whim. It's not permitted by law, and it's not permitted by sound reasoning."

FCC Authority

The big argument in the case is whether the FCC had the right to change its mind and repeal the rules. This is a question that could be difficult for net neutrality supporters to win, because the courts have generally given discretion to expert agencies, like the FCC, when it comes to technical aspects of regulation.  

At issue in this case is whether the FCC should have the latitude to decide whether broadband is a lightly regulated "information service" or whether it's a highly regulated "telecommunications service." The distinction is at the heart of the conflict in the net neutrality debate.

But on this particular issue, the US Supreme Court decided in 2005 in the Brand X case that it was too complicated for the court to decide how to classify broadband. Instead, it deferred to the the expertise of the FCC. It is this deference to decide how broadband should be classified that helped the agency win its battle in the same DC Circuit appeals court, which upheld the 2015 rules three years ago.

Still, the attorney representing Mozilla, Pantelis Michalopoulos, tried to argue during oral arguments that the FCC's reasoning in how it classified broadband was flawed in 2005 and is flawed even more now, because many of the services like web hosting, which the FCC used to justify its classification of broadband as an information service, no longer exist.

He said that it was as though the FCC was looking at a "surrealist painting that shows a pipe and captions it, 'This is not a pipe.'"  

He resurrected the late US Supreme Court Justice Antonin Scalia's the-internet-is-like-a-pizzeria-delivery-service  analogy from his dissent in the Brand X case. Scalia argued then that the FCC not classifying broadband as a telecom service was like a pizzeria saying it bakes a pizza and can drive it to your home, but it does not offer pizza delivery.

Michalopoulos updated the analogy stating that now the pizza shop no longer bakes pizzas, and instead only offers an Uber Eats delivery service. But because it doesn't offer "pizza delivery" the cars in which it transports that pizza to your home isn't subject to traffic laws.

Judge Williams, who was appointed to the DC Circuit in 1986 by President Ronald Reagan, pushed back with his own pizza analogy.

While the arguments made for interesting thought exercises and brought some laughter to the proceeding, Schettenhelm said that from a legal perspective, it didn't seem to move the needle much.

"I'm not sure the challengers to the FCC made much progress in their argument about how to interpret the statute," he said. "It seems it could still go both ways, and the court has been clear that the FCC gets to decide."

Randolph May, president of the conservative think tank, The Free State Foundation said the discussion parsing the technology and function of internet access "devolved into the metaphysical." 

"That being so, I see no reason why the court will not again defer to the FCC's classification decision under Chevron, because the judges, not having been confirmed as metaphysicians, are likely to follow the Brand X legal precedent," he said. "And if the D.C.Circuit doesn't adhere to the Brand X precedent granting the agency deference in interpreting the definitions, I think the Supreme Court will."  

Procedural issues

Instead, he said that the court may agree with the FCC that the agency was reasonable in how it  classifies broadband, but it may have a problem with the way the agency got to this conclusion.

The first issue has to do with whether or not the FCC considered the effects of the repeal on public safety organizations, which the FCC by law must consider. This is an argument that was brought up by firefighters from Santa Clara, Calif. They joined the lawsuit against the FCC after Verizon throttled their service last summer, at the height of the wildfires in California,  jeopardizing the lives of first responders and the public.

The Santa Clara firefighters have conceded that Verizon likely didn't violate net neutrality principles, because the carrier mistakenly implemented a commercial service agreement between the company and the fire department.  But the firefighters argue that since the FCC's repeal there is no "cop on the beat" to hear their concerns. This is because as part of its order to repeal, the FCC abdicated its authority to police broadband providers to the Federal Trade Commission.

Stephanie Weiner, who represented the firefighters in the oral arguments, argued that the FCC should have made provisions for public safety in its order.

"There's nothing stopping companies from putting first responders at the back of the line especially if they offer a commercial paid priority service," she said.

Millett dug into this issue of paid priority when questioning the FCC's lawyer Tom Johnson. She pushed Johnson to explain how paid priority works.

"Is it a different line or they just go first? I have no idea how it works,"  she said.

Johnson explained that paid prioritization would not hurt "best effort" internet traffic. And he explained it actually could be beneficial to niche providers like public safety, who could subscribe to a better quality service. But Millett questioned what would happen to a municipality that could not afford such a service.

"To make someone go fast, don't you have to slow down or delay someone else?" she asked.

At one point she said she did not understand the FCC's explanation of how public safety would be unaffected.

Schettenhelm said this exchange might be significant if Millett decides the FCC did not give enough consideration to the public safety concerns.

Change in the law

Another area where the FCC may be vulnerable has to do with its transparency rule. This is the one aspect of the 2015 net neutrality rules the FCC kept as part of its repeal. This rule requires internet service providers to disclose how they manage traffic and if they are going to throttle or block access or offer paid priority. This is a key piece of the FCC's light touch approach, because these disclosures are what the FTC can use to hold internet service providers accountable to their customers.

But the section of the Communications Act that the FCC uses to justify this authority was changed in May 2018 when Congress passed the Ray Baum Act. While petitioners challenging the FCC's repeal argue that the change stripped the FCC of its authority to have a transparency rule, the FCC maintains that its authority was left in tact.

But one thing is clear, the FCC never officially examined or opened public comment on what these changes to the law would mean to its repeal. And the timing of the changes, could be problematic, since the law was actually changed between the time the FCC voted to repeal the net neutrality rules in 2017 and when they took effect in June 2018.

"The fact is that the statute doesn't exist anymore," Schettenhelm said. "The FCC could have shown that they were considering what the changes meant to the order before it took effect, and they didn't."

Updated 4:30 p.m. PT: This story was updated with news and analysis from the oral arguments.

Originally published January 31, 2019 at 4:29 p.m. PT

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