Should the FCC Actually Want Review of the Net Neutrality Opinion?

Let me go beyond yesterday’s post to ask a related question. The Commission may well file a petition for rehearing and/or certiorari in yesterday’s net neutrality decision.  But if I were the FCC’s general counsel, would I actually want review of that decision? I think the answer is probably no.

Here is how I would analyze it. The opinion interprets the Commission’s section 706 authority broadly.  The Court found (and Judge Silberman bemoaned in dissent) that section 706 gives the FCC authority to promote broadband deployment via regulation, and that the FCC can construe such authority to “encompass[] the power to regulate broadband providers’ economic relationships with edge providers if, in fact, the nature of those relationships influences the rate and extent to which broadband providers develop and expand their services for end users.” As Judge Silberman noted, that is very broad authority.  And, as Geoffrey Manne and Berin Szoka from Tech Freedom discussed yesterday in decrying the majority opinion, section 706 applies to “advanced telecommunications,” which covers a wide range of services. With a single opinion, the FCC’s regulatory authority to implement a wide range of regulations has been placed on strong footing. That is a big deal. The FCC has relied on 706 in other Internet-related contexts, such as its order restructuring the universal service fund to support broadband-capable networks, and it will assuredly rely on it more in the future. On the assumption that I as the FCC general counsel would prefer the Commission to have authority (whether or not it chose to exercise it), this interpretation would make me very happy. (I could imagine being a general counsel to an FCC chair who wanted the FCC to have less regulatory authority and therefore might not like this interpretation of section 706, but I have no reason to believe that would apply to the current FCC.)

Meanwhile, as to net neutrality: the transparency rules can go into effect.  The FCC can issue an NPRM proposing the no-blocking rules that the D.C. Circuit indicated would stand on stronger footing and that the general counsel said the Commission wants.  That is, it looks like the no-blocking rules that Commission seems to want would have a good chance of being permitted in light of yesterday’s ruling. As to the nondiscrimination rules (which only applied to wireline Internet access), and insofar as the Commission wanted greater confidence on no-blocking rules, the Commission would have two options (in addition to abandoning them, of course): most obviously, the Commission could classify broadband Internet access as common carriage under Title II and have all the authority it wanted (and then some). Alternatively, the Commission could craft more flexible standards, akin to the “commercially reasonable” standard it adopted with respect to data roaming that the D.C. Circuit (again with Judge Tatel writing) found not to be common carriage regulations a year ago in Cellco Partnership v. FCC, and then enforce those standards via agency adjudications.

What might happen if review was granted? From the FCC’s perspective, a better outcome in the D.C. Circuit seems unlikely. The D.C. Circuit’s jurisprudence is sufficiently against the FCC that I wouldn’t expect the full D.C. Circuit to reach a more favorable result with respect to the nondiscrimination rule.  If the FCC could win over none of the three judges in yesterday’s panel (two of whom are Clinton appointees), it seems unlikely that will win over a majority of the D.C. Circuit on the nondiscrimination rules, even with its recent change of composition. I think there is a much greater chance of the full D.C. Circuit (if it agreed to review the opinion) disagreeing with the panel on its interpretation of section 706, and finding it too capacious.  There is a reasonable argument that section 706 grants the FCC much less regulatory authority than yesterday’s opinion finds, and a majority of the D.C. Circuit might well end up closer to Judge Silberman’s position on this issue. The Supreme Court is a harder to handicap. It does not of course have the D.C. Circuit’s precedents to deal with, but its composition seems less promising to the FCC than the D.C. Circuit’s composition is. I think the Supreme Court nets out in basically the same place: I think it is significantly more likely that the Court would adopt a significantly narrower interpretation of section 706 than that it would find the net neutrality rules valid.

So here’s what I think I would say to the FCC Chairman if I were the general counsel:

If the net neutrality rules (and in particular the nondiscrimination rule applicable to wireline Internet access) is your top priority, then classify broadband Internet access providers as common carriers.  The Internet access providers consider this to the be the nuclear option and will fight it tooth and nail, but you can state that net neutrality rules are a priority and the only way to safely implement them is through Title II.  Going this route is the same heavy political lift that it would have been in 2010, but one thing has changed: Before yesterday, some people had believed that Title I was sufficient, but that no longer seems tenable. The House might well attempt to pass legislation that would block reclassification, but the Senate and President would have to acquiesce to such legislation, and if net neutrality rules are that important I would not expect such acquiescence.

If having confidence that you have broad regulatory authority over advanced telecommunications is important to you (and certainly if such authority is more important to you than the nondiscrimination rules), then you do not want review of this ruling. It seems very unlikely that such review would produce broader regulatory authority.

Under what circumstances do you actually want en banc or Supreme Court review of this decision?  Only, I think, if all three of the following are true:

A) broad regulatory authority over advanced telecommunications is not really important to you;

B) net neutrality is too important to you for you to be comfortable implementing a new no-blocking rule (hoping that it would be upheld) and responding to discriminatory behavior via flexible standards;

C) but net neutrality is not sufficiently important to justify a political fight for reclassification.

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