Industry Groups Challenge Statutory Authority of FCC's Title II Reclassification

A coalition of industry groups on Friday challenged the FCC's net neutrality order and declaratory ruling reclassifying broadband as a Communications Act Title II telecom service (see 2405310074). The coalition asked the FCC to stay the effective date of its order and declaratory ruling pending judicial review. Coalition members included USTelecom, NCTA, CTIA, ACA Connects and several state broadband associations.

The Ohio Telecom Association and USTelecom filed a joint petition for review of the FCC order at the 6th U.S. Circuit Appeals Court. CTIA filed a petition for review at the D.C. Circuit U.S. Court of Appeals. The Benton Institute for Broadband & Society also sought partial review of the order at the D.C. Circuit. Various state broadband associations also filed challenges. The FCC didn't comment.

The framework is "unlawful under both the major-questions doctrine and ordinary principles of statutory interpretation," the industry groups said in the petition filed with the FCC Friday. The groups warned that its members will "immediately be required to reevaluate, put on hold, and potentially scrap new offerings and business initiatives" if the order takes effect. Moreover, the public "would suffer minimal harm from putting the Commission’s rule on hold," the groups said.

The reclassification of broadband as a Title II service, "along with its divided 3-2 vote here, make clear that the lawfulness of the order is subject to serious doubt," the coalition said. The groups argued that the order "primarily rests on unfounded fears of unmaterialized risks" that can't "justify saddling a critical sector of the economy with substantial new costs" until judicial review is complete.

Allowing the rules' July 22 effective date to continue as planned will "impose significant, unrecoverable costs," the coalition warned. ISPs "will be forced to delay or scrap offerings, slow investment, and shoulder substantial new compliance and capital costs," the groups said: "None of these costs will be recoverable in the event petitioners prevail in their challenges to the order."

In its challenge last week in the D.C. Circuit, CTIA questioned whether the FCC has the statutory authority to impose Title II common-carrier regulation on wireless broadband. Congress has made clear in the Communications Act that a service offering “'a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications’ -- such as broadband Internet access service -- is not subject to Title II common-carrier regulatory authority," CTIA said: “Mobile broadband is further insulated from common-carrier regulation because it is a ‘private mobile service’ that Congress expressly provided ‘shall not ... be treated as a common carrier for any purpose.’”

The FCC regulated wireless as a Title II service in 2015, but retrenched in 2018, CTIA said. “Americans’ broadband Internet experience is already fast, open, and fair, due in significant part to the FCC’s longstanding light-touch regulatory framework,” the group said. “By imposing even more regulatory obligations than the FCC’s 2015 approach, including on emerging wireless technologies, the Order further undermines broadband investment,” CTIA said. Helgi Walker of Gibson Dunn is representing CTIA. Walker represented Verizon in its challenge of the 2010 net neutrality order.

In the 6th Circuit, OTA and USTelecom told the court that the order is "in excess of the commission's statutory authority, unconstitutional, and otherwise contrary to law." In the D.C. Circuit, the Benton Institute for Broadband & Society sought in its petition a reversal of the order's decision to grant ISPs forbearance from USF contributions under Communications Act Section 254(d). "By limiting one of the most promising revenue sources from consecration as a mechanism to expend the USF base, the commission’s action will make it far harder to develop solutions to the USF constitution dilemma," Benton said.