Reclassification of the Internet won’t stand the legal test

As a practical matter, attempting to shoehorn the 21st Century Internet into statutory language rooted in a 19th Century communications technology simply would not work well.  Not only would doing so exceed the FCC’s jurisdiction; it would quite possibly put the financial and economic brakes on the entire broadband ecosystem.

Courts have ruled that, in spite of the introductory language in the Communications Act giving the FCC the authority to “perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this chapter, as may be necessary in the execution of its functions,” thissection does not confer a freestanding or unlimited grant of authority to the FCC.  Any exercise of this ancillary authority must be asserted in connection with some explicit grant of regulatory authority appearing in Titles II, III, or VI.

Indeed, a 1979 U.S. Supreme Court opinion states that allowing the FCC to exercise its ancillary authority “without reference to the provisions of the Act” would give it “unbounded” authority.  For this reason, the courts have carefully scrutinized all FCC assertions of ancillary authority, approving some, while invalidating others.  A 2005 U.S. Supreme Court opinion specifically rejected arguments that the statute required that the broadband Internet be classified as a telecommunications service.

The most recent curb on the FCC’s ancillary authority came in the 2010 Comcast decision, in which the Court of Appeals ruled that the FCC overstepped its bounds in its decision to sanction Comcast for interfering with BitTorrent traffic.

In a statement following the Comcast decision, the FCC wrote, “The Commission can still accomplish many of its most important broadband-related goals without changing its classification of broadband Internet service as a unitary information service.”

As far back as 1980 – before the Internet as we understand it today even existed – the FCC recognized that services like the Internet are far different from telecommunications services and should not be subject to Title II.  This has continued to be the controlling view of the FCC over the past three decades through the chairmanships of both Republican and Democrat appointees.  The FCC has reaffirmed this position with respect to the broadband Internet on no fewer than six occasions.

Chairman Genachowski, looking for an alternative basis for the regulatory authority he was denied in the Comcast/BitTorrrent affair, may attempt to circumvent thecourt decisions and previous FCC findings by reclassifying the transmissioncomponent as a standalone telecommunications service. As a general matter, broadband access providers currently offer transmission only on an integrated basis combined with other functionalities.  Reclassification would require providers to make transmission available to all comers as a standalone service, in essence requiring them to break up their current offerings and create new products that they never contemplated offering to the public.

In 1996, Congress did authorize the FCC to order providers to unbundle their networks in this manner, but subjected the FCC’s authority to strict statutory requirements.  Courts rejected the FCC’s first three attempts to implement unbundling for failure to comply with Congress’s wishes.  Reclassifying broadband access as a Title II service threatens to allow the FCC to evade the limitations built into statute and the courts’ orders insisting that they be honored.

This is not the first time that a new technology has arisen that fell outside the existing regulatory classifications.  When previously faced with an emerging technology that had not been contemplated in the original Act, the FCC initially employed its ancillary authority to regulate cable television only to see many of those efforts rejected by the courts.  Congress ended further controversy by adding a substantive title (known as Title VI) to govern cable television.

History has shown that Congress is the appropriate venue for determining how much regulatory authority the FCC should have over latest emerging technology – the Internet.  It is not at all beyond question or reason that Congress will decide to add yet another Title to the Act to guide the FCC in deciding how much, if any, additional regulations are necessary.

Christopher S. Yoo is professor of law, communication, and computer & information science and founding director of the Center for Technology, Innovation and Competition at the University of Pennsylvania.