Federal Circuit Court Reboots FCC’s Net Neutrality Plans
Last month, the Sixth Circuit Court of Appeals struck down the latest attempt by the Federal Communications Commission (FCC) to impose net neutrality rules. Specifically, the court ruled that “the FCC lacks the statutory authority to impose its desired net-neutrality policies through the ‘telecommunications service’ provision of the Communications Act.” The decision winds down a decades-long debate over internet regulation—unsurprising, given that net neutrality has been described as “a solution in search of a hypothetical problem.” It also halts the wild policy oscillations brought on by political transitions and the controlling party at the FCC.
Net neutrality first emerged as an issue at the turn of the century, when concerns were raised about open internet access and the potential dangers of internet service providers blocking, throttling, or prioritizing content. Yet few of these anticipated problems have emerged as the internet has grown. In fact, not only did the internet survive the stress test of more communications moving online during the COVID-19 pandemic, but it has also experienced continued growth and innovation—even without heavy-handed regulation.
Perhaps most notable about the decision was the court’s reliance on last year’s Supreme Court decision in Loper Bright Enterprises v. Raimondo, which ended the practice of Chevron deference (where courts would defer to a federal agency’s expertise when interpreting legislative ambiguity). Without deference, the FCC can no longer reinterpret the definition of “internet service” to suit its regulatory ambitions. Defined early on as a telecommunication service, internet service falls under Title I of the Federal Communications Act of 1934 and is subject to relatively light-touch regulation. This is distinct from the Title II regulations created to cover traditional telephone services in the 1930s, which represent a much heavier mandate that includes everything from terms of service to rate regulation.
The net neutrality debate boils down to defining internet service. The George W. Bush administration viewed the internet as a telecommunication service subject only to light regulation under Title I, but the push for net neutrality regulations continued to grow. The FCC issued its Open Internet Order during President Barack Obama’s administration, redefining internet service to fall under Title II and subjecting it to much heavier regulation (although the FCC promised to “forbear” from imposing price controls). This rule was promptly reversed at the start of President Donald J. Trump’s first term via the FCC’s Restoring Internet Freedom Order. Finally, just last year, President Joe Biden’s administration reversed policy again with the Safeguarding and Securing the Open Internet Order. This is the order recently overturned by the Sixth Circuit.
These policy gyrations can hamper incentives to invest in internet services because they create regulatory uncertainty and hinder innovation and network management. The dramatic swings between classifying internet service as Title I or Title II exemplify the problems that agency deference can create. The fact that such divergent regulatory regimes are plausible under the same statute demonstrates why the Loper Bright decision is important: It overturns the previous deference that granted the FCC sweeping rulemaking authority and the ability to exploit legislative ambiguities.
Observers of the net neutrality dispute have long held that a legislative solution is the only way to stop the game of regulatory ping-pong that has gone on at the FCC over the last decade. A workable and stable framework is necessary to ensure the future of dynamic and innovative internet service. If the Telecommunications Act of 1996 allows the FCC too much latitude in regulatory discretion, then the Sixth Circuit made the right call. And if the law is too vague to define internet service exclusively as a Title I service, then perhaps it is time for Congress to clarify that point.