In the Matter of Preserving the Open Internet, Broadband Industry Practices

Citation: Federal Comms. Comm'n, In the Matter of Preserving the Open Internet, Broadband Industry Practices (FCC 09-93 Oct. 22, 2009)(full-text).

Overview
On October 22, 2009, the FCC issued a notice of proposed rulemaking that would codify the four network management principles into regulations and would add two additional principles. The fifth principle would be one of non-discrimination and the sixth principle would be one of transparency. The period for public comment was open until January 14, 2010, with reply comments due in March of 2010.

Following the D.C. Circuit’s decision in Comcast v. FCC, the FCC may not rely solely on the statements of policy in Title II and rulemaking authority in Title I to exercise jurisdiction over cable Internet services. Therefore, the FCC may not rely on the reasoning in its order against Comcast to justify its authority to promulgate the regulations the agency is proposing. Notably, the arguments the FCC has made for asserting ancillary authority in the notice of proposed rulemaking were somewhat different than those advanced in the Comcast order.

The FCC placed more emphasis on grounding its ancillary authority to promulgate Internet network management rules in statutory provisions that granted the agency some specific authority to regulate, and that the FCC argues are "reasonably ancillary to the effective performance" of the statutory obligations identified. Rather than relying solely on the policy statement in Section 230(b), for its ancillary authority to regulate cable Internet management, the FCC placed more emphasis on Section 201(b) of the act as a source of authority.

Section 201(b), according to the FCC, gives the FCC specific authority "to prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of [the] Act." The grant of rulemaking authority in Section 201(b) has been interpreted broadly by the U.S. Court of Appeals for the Sixth Circuit. In Alliance for Community Media, the Sixth Circuit held that the FCC had authority under Section 201(b) to promulgate rules under Section 621 of the Telecommunications Act of 1996, which addresses franchising requirements for cable companies. Section 201(b) was part of the Communications Act of 1934. Section 621 was added to the Communications Act by the Telecommunications Act of 1996 and no grant of regulatory authority is mentioned within Section 621. Despite the lack of explicit authority to promulgate regulations under Section 621, the court found that Section 201(b) provided the agency with the requisite authority. The U.S. Supreme Court has also adopted a rather expansive reading of the authority granted by Section 201(b), saying "We think that the grant in §201(b) means what it says: The FCC has rulemaking authority to carry out the 'provisions of this Act.'"

Section 201(b), while it may grant the FCC broad authority to promulgate regulations to implement the provisions of the Communications Act, does not appear to grant the FCC the authority to regulate services that are not specifically regulated by the Communications Act. In order to assert ancillary jurisdiction, the FCC must show that the proposed regulations are reasonably ancillary to the FCC’s effective performance of its statutorily-mandated responsibilities.

It is unclear whether a broad authorization to create regulations to implement the Communications Act, such as the authorization contained in Section 201(b), would be the equivalent of a statutorily-mandated responsibility. The D.C. Circuit in Comcast v. FCC emphasized that ancillary jurisdiction, in that court’s opinion, requires that the regulations be closely tied to the FCC’s ability to achieve a specific statutory directive. For example, when the FCC successfully asserted ancillary jurisdiction over cable services, the assertion of jurisdiction was closely tied to the FCC’s Title III "'obligation of providing a widely dispersed radio and television service,' with a 'fair, efficient, and equitable distribution' of service among the several states and communities."

It remains to be seen whether the FCC can advance a satisfactory jurisdictional argument for exercising ancillary authority over the provision of cable Internet services. The FCC may craft its argument for ancillary authority to regulate in its current rulemaking in a similar fashion to those outlined by the D.C. Circuit in its opinion in Comcast v. FCC. It is conceivable that, when the FCC releases its final order in this rulemaking procedure, the agency’s arguments for asserting ancillary authority over cable Internet services may change significantly.

The FCC asserts a different statutory basis for asserting ancillary authority over Internet access via spectrum-based facilities. The FCC has authority under Title III of the Communications Act to allocate spectrum and to license spectrum. The agency also has broad rulemaking authority related to spectrum management. The FCC argues that the agency may use this authority to regulate services provided by wireless carriers, and seems to seek to add wireless Internet services to the list of services provided by wireless carriers that the agency can regulate in this fashion. Federal Comms. Comm'n, In the Matter of Preserving the Open Internet, Broadband Industry Practices, FCC 09-93, para. 86 (Oct. 22, 2009)(full-text).