FCC Goes Toe to Toe With Tech Firms, Consumer Groups in Net Neutrality Case

When the Federal Communications Commission repealed net neutrality protections in 2017, it set the stage for a legal stand-off in federal court.

Oral arguments on Mozilla v FCC took place Friday before a three-judge panel in Washington, D.C. It might have been too early in the morning and the stakes too high for beer and popcorn, but partisans on both sides of the case live streamed the event.

On the FCC’s side: AT&T, Verizon and other telecom giants happy with the agency’s rollback of Obama-era regulation. On the plaintiffs’ side: more than 20 states, consumer groups, and companies worried those in control of Internet access will inevitably pick favorites based on how much money changes hands.

"In 18 and a half of the last 20 years, the FCC had in place rules or principles against misconduct by ISPs [Internet Service Providers]," said Pantelis Michalopoulos, representing Mozilla and the other companies in the case, in the arguments.

Michalopoulos argued the FCC wrongly classified the Internet as an information service rather than a telecommunication service, using that as a rationale for not cracking down on misconduct by big Internet providers. “This is like a surrealist painting that shows a pipe and says ‘this is not a pipe,” he said.

Thomas Johnson, the FCC’s general counsel, defended the agency’s “light-touch” regulatory approach. "The petitioners second-guess the commission's reasonable policies and predictive judgments about how best to promote broadband deployment to all parts of the country and to protect an open Internet," Johnson said in oral arguments.

At the heart of the case: whether the FCC acted properly when it overturned its own Open Internet Order. The 2015 order established rules against broadband providers from setting up "fast lanes" for some while blocking or throttling others.

Mozilla, developer of the Firefox web browser, joined a number of other companies and organizations to file a legal challenge shortly after the repeal took effect. In the oral arguments, Michalopoulos called the FCC's repeal “a stab in the heart of the Communications Act,” the law that established the federal agency.

Ryan Singel, a fellow at Stanford Law School’s Center for Internet and Society was among those paying close attention to Friday's proceedings. 

"The government's argument was the FCC is the expert agency. They took a look and said, 'We can't see any harms that the ISPs are doing and if we just got rid of all the regulations then the ISPs are going to invest all this money and expand broadband into rural areas and speed everything up and become much more innovative," Singel said.

Two of the judges on the panel were appointed by the Obama administration, the other by the Reagan administration. Many expected the questioning and the eventual decision to reflect a 2-1 split.

But Stanford's Singel says it seemed to him all three judges were skeptical about the arguments put forward in defense of the FCC.

"There was a fun little moment, watching the judges maybe starting to see that the FCC had decided on the policy before they figured out the rationale for the policy," Singel said. "That's not how an expert agency is supposed to work. It seems like this FCC was just dead set on 'Let's get rid of all the rules and protections and then we'll figure out how to justify it later.'"

"One of the most notable issues that came up [in the oral arguments] was public safety in California," said Electronic Frontier Foundation Legislative Counsel Ernesto Falcon.

"We had the situation where Verizon was throttling firefighters during an emergency," said Falcon. "The fact is, the FCC  had no good answers for that."

In the wake of the FCC's rollback, California passed the nation's strongest state net neutrality legislation, and a question for both sides was how the FCC can argue it has no power to regulate but can prohibit states from regulating. "They are not going to be able to convince every single state legislature to simply lay their arms down and do nothing to protect consumers here," Falcon said.

Whatever the judges decide is expected to affect the Trump Administration’s efforts to block California from enforcing its own net neutrality rules.

"This case is basically about whether the court should give the FCC’s decision deference," wrote Gigi Sohn, a fellow at the Institute for Technology Law & Policy, in an email. (Sohn was also counselor to former FCC Chairman Tom Wheeler from November 2013 to December 2016.)

Sohn explained, "Courts normally give agencies deference unless those decisions are contrary to the plain language of their organic law (in this case the Communications Act of 1934) or their decisions are unsupported by the record. The DC Circuit is well-known for striking down agency decisions (and especially the FCC’s) as arbitrary and capricious."

What happens next? The judges could decide to send the repeal back to the FCC for revisions, or overturn it entirely. If it's the latter, expect the telecom industry to appeal.