JURIST Guest Columnist Allen Hammond of the Santa Clara Law School discusses a recent net neutrality ruling and what it means for the future of the internet…

After three tries before the US Court of Appeals for the DC Circuit, the Federal Communications Commission (FCC) has succeeded in applying net neutrality rules to Internet Service Providers (ISPs). In a 2 to 1 decision [PDF], the circuit court panel upheld the FCC’s most recent decision to apply common carrier regulations to broadband internet access networks. On the two prior occasions, the FCC had been rebuffed by the court.

In the first case, Comcast Corp. v FCC [PDF], the court held that the FCC had failed to cite any statutory authority that would justify its order requiring a broadband provider (Comcast) to comply with open internet practices.

In the second case, Verizon v. FCC [PDF], the court held that the FCC could rely on section 706 of the Telecommunications Act for statutory authority to promulgate open internet rules. However, the FCC had earlier determined that broadband providers were information service providers and not predominantly telecommunications service providers. Consequently, the FCC’s anti-blocking and anti-discrimination rules violated the Telecommunications Act, which prohibits the application of common carrier regulation to services other than telecommunications.

In the third case, USTA v. FCC, the court concluded the FCC acted within the scope of its congressionally delegated statutory authority when it interpreted an ambiguity in the Telecommunications Act of 1996 to allow reclassification. In addition, based on an extensive record, the FCC’s decision to reclassify wireline and wireless broadband internet networks as common carriers was reasonable. As a consequence, the FCC is legally entitled to issue and enforce rules that prohibit ISPs from blocking, degrading or impairing user internet access to lawful sites, content, applications, services and non-harmful devices. After three tries, the FCC finally got it right.

Deja Vu

This is not the first time the country has had to address the economic power that accrues to network service providers whose facilities connect virtually all segments of the market and the democracy and face little or no competition. Nor is it likely to be the last. After all, we’ve done this three times before.

Both Western Union (in the 1850s) and its technological offspring, the former American Telephone and Telegraph Company (AT&T) (in the 1930s), sought to monopolize telecommunications by refusing network interconnection to competitors and engaging in predatory pricing. Congress enacted the Communications Act of 1934 with its common carrier provisions in response.

By 1976-1984, the former AT&T was leveraging its network position to unfairly disadvantage its network competitors and threatening to enter some of its customers’ markets. Major corporations including Boeing (airlines/aerospace); IBM and EDS (computers and data processing); MCI and Satellite Business Systems (telecommunications), ITT (equipment manufacturers), the Washington Post (electronic publishing), Data Communications (enhanced services) and Exxon (energy) faced the sobering prospect of competing against their network service provider, AT&T, then, the largest corporation in the world, and the one upon which they were totally dependent. Their political push back in congress along with a major political miscalculation by AT&T counterbalanced AT&T’s full court press to legislate its way out of the antitrust suit and common carrier status.

This is the third time. Concerns expressed to the President and the FCC by Fortune 100 and Fortune 500 companies including Bank of America, Ford, UPS and Visa, as well as nearly 200 major tech companies including Google, Microsoft and Amazon, and venture capitalists, are reminiscent of those expressed by earlier captains of industry to congress in 1981. They all lobbied for rules that would ensure an open network fairly accessible to all. Otherwise ISPs would have too much power over what content flows over the internet, which could be potentially damaging to all companies that engage in commerce in one form or another online.

But, “It Ain’t Over Till It’s Over”

The judicial decision has been hailed as a triumph for the FCC, vindication for the public interest, a major win for Silicon Valley and a major loss for telephone and cable companies. However, it is important not to get caught up in the current storyline of the euphoric victory or the rancorous defeat. Neither narrative is accurate as nothing is settled. The circuit court opinion is likely to be appealed, a dysfunctional congress will be intensely lobbied to undo the FCC decision, and presidential, senate and congressional candidates will be asked to take positions even though they may be out of step with their constituencies.

The Network is an Essential Facility Regardless of the Technological Form It Takes

If the circuit court’s decision stands, however, the court and the FCC will have upheld the return to a central tenet of our relentlessly technologically evolving society: the network is an essential facility regardless of the technological form it takes. It does not matter if the switching is electromechanical, digital or some future technology. It does not matter if the transport is coaxial, fiber optic or spectrum based. If it connects each to all and is essential to the economic, cultural and democratic life of the nation, it is a common carrier and must be treated as such. If we do not remember this truth, we will place the economy and the democracy in jeopardy again. How do we know? Well, because we’ve done it three times before.

Professor Allen Hammond IV holds the Phil and Bobbie Sanfilippo Chair at Santa Clara University and is director of the BroadBand Institute of California. He is the author along with Professors Leonard Baynes and Catherine Sandoval of a forthcoming casebook (Aspen/Wolters-Kluwer, Pub.) on Regulation of Broadband Communications. He is the editor, with Barbara S. Cherry and Stephen S. Wildman, of Making Universal Service Policy: Enhancing the Process Through Multidisciplinary Evaluation (Lawrence Erlbaum Associates, 1999).

Suggested citation:Allen Hammond, The Third Time’s the Charm?, JURIST – Forum, June 21, 2016, http://jurist.org/forum/2016/07/allen-hammond-third-times.php