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The FCC won a big legal victory today, when the DC Circuit denied a challenge by Verizon to its data roaming order. The data roaming order itself is important, since it updates the Commission's long-standing voice roaming rules to include wireless Internet access services. It allows smaller carriers to offer nationwide service, and it makes it so that all users can travel around the country without losing service or incurring high bills.
But many people immediately started thinking about what the implications of this decision are for the FCC's Open Internet rules. These rules are currently being challenged by (once again) Verizon, in the same court. (Like in the data roaming case, PK has filed a brief in that case as well.) Not only that, Verizon is using many of the same legal theories in the Open Internet case that got shot down in the data roaming case.
Some of these legal theories are not that interesting to recount--whether the order is a "regulatory taking," or whether it was "arbitrary and capricious." These arguments get trotted out in every challenge to an agency order, and sometimes they have merit, but they usually don't. This time is no exception, and I don't think these arguments will carry the day in the Open Internet order, either.
But there is one interesting parallel. There's a statute relevant to the data roaming rules which says that "A person engaged in the provision of a service that is a private mobile service shall not, insofar as such person is so engaged, be treated as a common carrier for any purpose under this chapter." 47 U.S.C. § 332(c)(2). Commissioner Meredith Baker, who dissented from the data roaming order, had argued that this statute meant "no uncertain terms" that this meant that the data roaming rules were illegal. We now know that she was wrong, but the argument is not crazy.
Leave aside whether data roaming actually is a "private mobile service." Assuming that it is, the Commission's requirement that carriers deal on "commercially reasonable terms" with each other over data roaming at least bears a family resemblance to common carriage. ("Common carriage" is a legal principle with a very old pedigree, which states that certain professions have an "implied engagement to entertain all persons" and generally must offer their services to the public in a nondiscriminatory way.)
As the court stated, "The rule plainly bears some marks of common carriage. The question is whether those marks so predominate as to 'relegate' mobile-internet providers 'to common-carrier status.'" It then went forward a deeper analysis, going through the legal history of common carriage and finally pointing out that
common carriage is not all or nothing--there is a gray area in which although a given regulation might be applied to common carriers, the obligations imposed are not common carriage per se. It is in this realm--the space between per se common carriage and per se private carriage--that the Commission's determination that a regulation does or does not confer common carrier status warrants deference.
This is relevant to the Open Internet case, because there too, Verizon is claiming that the Commission's rules amount to common carriage rules and are precluded by statute. Specifically, 47 U.S.C. § 153(51) states that "A telecommunications carrier shall be treated as a common carrier under this chapter only to the extent that it is engaged in providing telecommunications services[.]" Under the FCC's counterintuitive precedent, broadband service is not currently considered to be "telecommunications," so again there's a not-crazy argument that those rules are precluded by statute.
Here, the court's discussion is instructive. It writes that if a "carrier is forced to offer service indiscriminately and on general terms, then that carrier is being relegated to common carrier status" and specific FCC rules might precluded by statute. As many cases cited by the court today specify, what's matters is whether carriers are required to offer service to the public. For example, Midwest Video states that a particular rule "did not amount to a duty to hold out facilities indifferently for public use" and was therefore not a "common carriage" rule. In these cases, the Commission is not prohibited from enacting the rules it thinks are the best policy.
It would appear that the Open Internet rules pass this test. Like the data roaming rules, it's undeniable that they are similar in some ways to common carriage. But "similar" is not enough. The rules do not require broadband providers to offer service to the public indiscriminately, at set rates or on general terms. They do not require providers to serve every household, or every community. They do not prevent providers from offering different price plans, and different levels of service, and charging different rates. With regard to offering service to the public, the Open Internet rules are essentially silent.
What the rules do say, among a few other things, is that if a provider is offering broadband, it can't "block lawful content, applications, services, or non-harmful devices," that it "shall not unreasonably discriminate in transmitting lawful network traffic over a consumer's broadband Internet access service," but that "[r]easonable network management shall not constitute unreasonable discrimination." They do require some nondiscriminatory treatment of Internet traffic, but Internet content is not "the public," and in any event the rules do allow providers to offer "specialized services."
The "common carriage" discussion in the data roaming decision thus tends to show that the Open Internet rules are not "pure" common carriage rules and thus (assuming 47 U.S.C. § 153(51) applies) prohibited by statute.
That doesn't mean the Open Internet order has an easy road ahead. The Commission's fundamental basis for authority is different in the two cases. In the data roaming case the Commission's power to supervise the wireless industry under Title III of the Communications Act, which gives it authority over broadcasters, wireless carriers, and other entities that use the public airwaves, carried the day. The Commission, unfortunately, chose not to rely on such a clear basis for authority in the Open Internet rules, such as straightforwardly recognizing that broadband is a telecommunications service. While ultimately the Open Internet rules are legally sound the FCC's course of action has set it up for a number of legal attacks it could have avoided. However, given the language about common carriage in today's data roaming decision, that particular line of argument seems less likely to get traction.