Can FCC’s new net neutrality order win court ruling this time?


The Open Internet Order of the U.S. Federal Communications Commission, to be effective on November  20, 2011, will face a tough court battle with Verizon’s lawyers questioning the authority of the agency to regulate Internet service providers. Both sides have wild cards to play, but the agency is under more pressure to harmonize the net neutrality order with its broad statutory mandate.

The FCC lost a similar case against Comcast a year ago, but that court ruling actually expounded rather than settled the jurisdiction debate. Under the Open Internet Order, fixed ISPs will be forbidden from blocking legal content and unfairly manipulating Internet speed, while mobile ISPs will be required to calibrate Internet speed only to ensure the efficiency  of bandwidth utilization to avoid bandwidth congestion. ISPs that deliberately slow down access to competing services like VoIP sites will be penalized under the Open Internet Order.

Verizon to Follow Comcast’s Footsteps

Michael Glover, Verizon’s general counsel, said the that the net neutral policy is inconsistent with the Communications Act and “will create uncertainty for the communications industry, innovators, investors and consumers.”  Legal analysts expect Verizon to raise the deadly question of jurisdiction during the trial. In Comcast vs FCC case, the court found no strong justification to classify Internet service regulation as an ancillary function of the agency. No matter how noble the ideal is, any FCC-mandated net neutrality order is considered non-binding by the court.

There is nothing in the Communications Act that mentions ISP regulation as FCC’s rightful area of jurisdiction. Ironically, it is the FCC that also decided that an Internet service is neither a telecommunications service nor a cable service, thus creating a loophole in its own net neutrality scheme.

Because of the lack of expressed statutory mandate relating to ISP regulation, the FCC has to prove to the court that its Internet service regulations can satisfy Section 4(i) of the Act.

Section 4(i) of the Communications Act

The fate of the Open Internet Order lies on Section 4(i) of the Communications Act and previous Supreme Court rulings which grant the FCC the right to perform ancillary functions that are not expressed in the Act, as long as these functions are aimed at enforcing the “statutory mandated responsibilities” of the agency. But in the Comcast vs FCC case, the the agency’s alleged jurisdiction is deemed unsubstantiated pursuant to this provision.

What Verizon Can Learn From Comcast

The Comcast case is a classic example of how  legal technicalities can result into debatable outcomes. Some may think that the Comcast case was ruled not within the will of the Communications Act but of cold legal jargon. All parties in the case agreed that forbidding an ISP from throttling peer-to-peer network access is not a statutorily mandated function of the agency, but the decisive issue is whether or not there is a statutorily mandated responsibility upon which this ancillary function can be considered as an integral part of. In the end, the court refused to acknowledge congressional policy statements as sources of “statutorily mandated authority.” The court ruled that unlike law, congressional statements of policy cannot be used as a basis in determining areas of jurisdiction that may justify FCC’s regulation of the ISP’s network management practices. This was a big blow to the agency for there is nothing in the Communications Act that grants the FCC the jurisdiction over  ISP regulation.

Legal Technicalities Result Into Unexpected Outcomes

The lack of expressed provisions on FCC’s authority over ISPs’ network management practices creates ample rooms for excessive deductive reasoning for two sides, with each party citing preceding court rulings to build its case. Building a rule out of previous court decisions and putting them together to support the “jurisdiction” theory results into seemingly self-contradictory but not necessarily wrong ruling. Comcast consented that its Internet service can be considered as an “interstate and foreign communication by wire” within the meaning of Title I of the Communications  Act, yet the court decided that preventing the ISP from slowing down BitTorrent access does not support any statutorily mandated responsibilities of the FCC.

However, the FCC has won a number of cases which involved the use of ancillary authority over areas not expressed in the Act. Moreover, the  Open Internet Order has a broader aim than FCC’s anti-Comcast policy.  The Order sets the conditions under which arbitrary Internet speed throttling should be prohibited, with the goal of  balancing consumer protection and the business interests of providers.