Today, Verizon and the Federal Communications Commission
(FCC) had an oral argument before the D.C. Circuit Court debating the network neutrality rules. The argument
took place before Judge Rogers, Judge Tatel, and Senior Judge Silberman
(“senior” means “technically retired but still hearing cases when I feel like
it”). You can listen to the 2+ hour oral argument I sat through this morning here.
Short version: three judges, three opinions. Judge Rogers
seemed most likely to affirm the FCC and the rule. Judge Tatel wanted to
eliminate the non-discrimination rule but keep the no blocking rule. Judge
Silberman wanted to get rid of both the no blocking rule and the no
discrimination rule – although would be happy to get rid of all the rules
because the FCC did not make an explicit finding of “market power.”
Mind you, interpreting an oral argument is always a chancy
business. But assuming my read out is correct, how did 3 judges reviewing the
same rules and the same record come out in such different places?
Last week, I
pointed out that the court would look at two things:
the FCC have authority to create and enforce the net neutrality rules?
if the FCC has the authority to make the rule, is there something that prevents
the FCC from having a network neutrality rule?
Everyone expected the court to focus on the first question,
whether the FCC had authority to regulate broadband access services in the
first place. But all three judges seemed comfortable with the idea that
Congress has delegated the FCC authority to do some kind of regulation of
broadband access under some set of circumstances, although Silberman was not happy
that the FCC did not make an explicit finding of “market power” (even if
everyone agreed the point of the rule is that, market power or not, Verizon is
a potential bottleneck). No one else wanted to play amateur economist with
Silberman, so the court seems likely to affirm the FCC’s overall authority to
regulate broadband access providers to promote broadband deployment.
The panel then moved on to the second question: assuming the
FCC has general authority to make some kind of rule under some conditions, does
something prevent the FCC from adopting these particular rules? As noted last
week, there were two basic arguments. First, Verizon argued it had a first amendment
right to block content on its network. This got some modest attention from Judge Silberman; but again,
neither of the other judges seemed interested.
The “Common Carriage”
Verizon’s other argument, that
the statute prevents the FCC from regulating it as a “common carrier” when it
provides broadband service, got the bulk of the attention. Verizon argued
that the “no blocking other people’s websites or applications” and “no
(unreasonable) discrimination against other services or content” treated
Verizon’s internet service as if it were a phone service – something Verizon
says the Communications Act prohibits.
The FCC argued that edge providers (sites and services that Verizon’s subscribers access) were not customers of
Verizon, and that Verizon was not selling them any service. Verizon’s customers
are end users (e.g., individual customers and businesses buying broadband
access service). The customer requests Verizon get the specific information or
runs a specific service, which Verizon then can do however it wants (provided
it does not block the service outright, demand some kind of second payment from
the content provider/edge service, or otherwise discriminate).
Judge Rogers appeared to be most sympathetic to the FCC’s
argument that because the edge providers are not Verizon’s customers, the “no
common carriage rule” does not apply. Judge Tatel and Judge Silberman clearly
agreed with Verizon that if Verizon had to give users access to someone else’s
website or service, than that third party was getting a “free ride” on
Verizon’s network. Where Judge Tatel and Judge Silberman disagreed, however,
was whether the “no common carrier rule” allowed the FCC to require some kind
of basic free transport, but could not prevent Verizon from negotiating
separately with Google to give Google better service than, say, Bing.
Judge Tatel seemed to say that as long as Verizon was free
to offer Google better service than Bing, that the FCC could prevent Verizon
from blocking Bing altogether. Judge Silberman seemed to think that if the
Communications Act requires that Verizon has to be able to offer better service
to Google, then it also requires that Verizon be free to block Bing (or any
other search engine) altogether.
What Happens Now?
The three judges now have to come to a decision where at
least two of the three of them agree on a result. That could take some time,
and they have no deadline for when to decide. The consensus of people is that
Judge Tatel will eventually convince Judge Silberman, in which case we would have a “no
blocking but discrimination/prioritizing applications or content is O.K.” rule. Or Judge Silberman will eventually convince Judge Tatel, and we have a “blocking, degrading or prioritization
are totally O.K.” rule (Judge Silberman seemed to think the FCC could do notice of how
badly you are being screwed by your ISP.)
But it is also possible that Judge Rogers will convince Judge Tatel that
the question isn’t really ripe yet. That’s because this is a generic challenge
to the rules (a “prima facie”
challenge) and not in the context of a specific set of facts (an “as applied”
challenge). Therefore, the court can affirm the FCC’s general authority and
decide the “no discrimination” question when presented with actual facts that
would say whether this was “common carriage” or not.
As a middle ground, the judges might remand the rules for
more explanation from the FCC about where the line is on “common carriage” and
whether or not the no blocking can stand on its own without no discrimination.
Whatever the court decides, it will have broad implications
beyond network neutrality. But until the court makes a decision, it is hard to
guess how things will play out.