On Tuesday, the FCC scored one of its most important legal victories in years as a three-judge panel of the DC Circuit Court of Appeals upheld the Commission’s Open Internet rules reclassifying broadband network access offerings as Title II telecommunications services.  Adopted in February 2015, the Open Internet order brought about a sea change in the FCC’s treatment of Internet access, which the agency had previously classified as a Title I information service that is exempt from pricing, access, and other requirements that apply to Title II common carriers.  In addition to restoring anti-blocking, anti-discrimination and other rules that had been struck down by the DC Circuit in 2014, the Open Internet order extended those and other rules to wireless Internet service providers (ISPs).  The order also prohibits paid prioritization arrangements between ISPs and websites that could lead to the establishment of Internet “fast lanes.”  The FCC, however, adopted a tailored approach to Title II reclassification through which the agency pledged to use its forbearance authority to refrain from imposing pricing and other rules on fixed and wireless ISPs that apply to wireline phone networks. 

A host of petitioners led by USTelecom and including AT&T and wireless association CTIA challenged the Open Internet rules before the DC Circuit, charging that the FCC had provided insufficient opportunity for public comment on Title II reclassification and that the FCC’s decision was “arbitrary, capricious, and an abuse of discretion” within the meaning of the Administrative Procedure Act.  Rejecting these and other arguments, the court affirmed the Open Internet order in its entirety.  The court’s majority—Circuit Judges David Tatel and Sri Srinivasan—concluded that consumer perceptions about broadband access “as a standalone offering and as providing telecommunications . . . justify the Commission’s decision to reclassify broadband as a telecommunications service.”  Lending further support to Title II classification, the majority also cited the U.S. Supreme Court’s 2005 ruling in NCTA v. Brand X, in which the high court decreed that the FCC eventually “would need to conclude that the telecommunications component of broadband was ‘functionally separate’ from the information services component.” 

Striking down claims that the FCC provided insufficient notice of its plan to reclassify broadband Internet access services, the majority declared that the FCC had “expressly asked for comments”  in its underlying rulemaking notice “on whether the Commission should reclassify broadband” under Title II.  Nevertheless, in a dissenting statement, Senior Judge Stephen Williams countered that the Open Internet order lacks “reasoned decision-making” and is not justified by the laws which the FCC cites as its grounds for authority.  Williams also argued that the FCC’s decision to forbear from applying many Title II common carrier regulations to broadband networks is “based on premises inconsistent with [the FCC’s] reclassification of broadband.” 

As executives of USTelecom, CTIA and the National Cable & Telecommunications Association informed press sources that they are reviewing the DC Circuit ruling and are considering their legal options, AT&T confirmed its plan to pursue Supreme Court action, admitting: “we have always expected this issue to be decided by the Supreme Court, and we look forward to participating in that appeal.”  Meanwhile, FCC Chairman Tom Wheeler joined Democrats in Congress and public interest groups in applauding the court’s decision.  As Wheeler hailed the ruling as “a victory for consumers and innovators who deserve unfettered access to the entire web,” Senator Ed Markey (D-MA) proclaimed that the court’s order “makes clear that net neutrality is here to stay.”