Partial Stay of Open Internet Rules Would Undercut Them Entirely, FCC, Intervenors Say

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By Lydia Beyoud

May 22 — Telecom companies seeking a stay of the FCC net neutrality rules are using their tailored request to stay part of the rules as a way to undermine them entirely, the Federal Communications Commission and a group of intervenors said in separate May 22 filings.

“Petitioners’ stay motion is not what it seems,” the FCC said in its filing. “It asks the Court to halt the application of Title II of the Communications Act to broadband, while allowing three bright-line rules to go into effect. But those bright-line rules are precisely the kind of regulation this Court held could not be applied until and unless broadband was reclassified as a ‘telecommunications service,' ” the FCC said (United States Telecom v. FCC, D.C. Cir., No. 15-1063, oppositions to stay filed, 5/22/15).

The intervenors supporting the FCC rule made similar arguments, stating that the potential harms of a stay would be significantly greater to them than to the groups opposing the FCC rules. The intervenors include 22 online video and voice over Internet protocol (VoIP) telephone providers, competitive Internet service providers (ISPs), Internet backbone operators, venture capitalists and advocates for privacy, accessibility, consumers and social justice.

“Many Intervenors depend on the pipes controlled by Petitioners for their customers to access Intervenors’ services, even as they compete with Petitioners themselves in the provision of those services,” they said.

The intervenors also said examples of harm provided by smaller ISPs in the petitioners' motion for stay were a smokescreen for the “shrug with which the majority of the industry has greeted the Order.”

Intervenors added that petitioners' “litigation-driven rhetoric is belied by what many of their members have represented to the capital markets.” They and the FCC cited statements by Comcast Corp. and Cablevision Systems Corp. that indicated that Title II-based rules wouldn't significantly impact their businesses.

Petitioners Seek Status Quo 

A total of 12 broadband Internet service providers, their trade associations, state regulators and others asked the U.S. Court of Appeals for the District of Columbia Circuit May 14 to preserve the industry “status quo” by staying only the provisions of the Open Internet order related to Title II of the Communications Act of 1934, as well as the FCC general conduct standard to address future issues on a case-by-case basis.

The ISPs have repeatedly said more stringent regulations would impair their investments in broadband deployment and other aspects of their businesses, with small and rural providers stating that they face particular harm due to compliance costs.

A stay, they said, would shield both consumers and the industry from a “twice-convulsive situation if a new and extraordinarily broad regulatory regime were imposed on broadband providers, only to be vacated” should the petitioners win their case.

Intervenors called the ISP requests “a tactical maneuver” that would result in large telecoms having “virtual carte blanche to circumvent the bright line prohibitions” against blocking, throttling and paid prioritization.

In a tactical maneuver, Petitioners say they do not request a stay of the three bright-line rules (no blocking, no throttling and no paid prioritization); rather, they request a stay “only” of the general conduct requirements and Title II rules—including the prohibitions on undue interference and unreasonable discrimination.

As Intervenors’ declarants testify, however, in the absence of the general conduct standards, ISPs would have virtual carte blanche to circumvent the bright-line prohibitions through techniques such as degrading their connections to the Internet to impede the flow of Internet content, and using discriminatory data caps to favor an ISP’s affiliated services over those of rivals.

Brand X Interpretations 

A key point of contention in the case will be the court's determination of how much discretion the FCC has to reclassify broadband providers. The FCC and intervenors said the case is controlled by the U.S. Supreme Court ruling in Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs.

“Brand X recognized that the Commission has the discretion, exercised in the Order, to divide broadband service into two components,” Title I information services and Title II telecommunications services, the FCC said. The decision further granted the FCC authority to set federal telecom policy “in this technical and complex area” and to “consider varying interpretations and the wisdom of its policy on a continuing basis,” the commission said.

The FCC and intervenors said for these reasons petitioners aren't likely to prevail in their suit, though Title II opponents have argued that the FCC reclassification order may not be covered under Brand X.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

Text of the FCC filing is at http://www.bloomberglaw.com/public/document/United_States_Telecom_Assoc_v_FCC_et_al_Docket_No_1501063_DC_Cir_/2.

Text of the intervenors' filing is at http://www.bloomberglaw.com/public/document/United_States_Telecom_Assoc_v_FCC_et_al_Docket_No_1501063_DC_Cir_/3.