National Cable & Telecommunications Ass'n v. Brand X Internet Services

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National Cable & Telecommunications Association v. Brand X Internet Services
Seal of the United States Supreme Court.svg
Argued March 29, 2005
Decided June 27, 2005
Full case nameNational Cable & Telecommunications Association, et al. v. Brand X Internet Services, et al.
Docket no. 04-277
Citations545 U.S. 967 ( more )
125 S. Ct. 2688; 162 L. Ed. 2d 820; 2005 U.S. LEXIS 5018; 18 Fla. L. Weekly Fed. S 482
Case history
PriorFCC order affirmed in part, vacated in part, remanded, Brand X Internet Servs. v. FCC, 345 F.3d 1120 (9th Cir. 2003); rehearing, rehearing en banc denied, 2004 U.S. App. LEXIS 8023 (9th Cir. Mar. 31, 2004); cert . granted, sub nom. Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 543 U.S. 1018(2004).
SubsequentOn remand, sub nom. Brand X Internet Servs. v. FCC, 435 F.3d 1053 (9th Cir. 2006).
Holding
The FCC properly decided that cable service is an information service.
Court membership
Chief Justice
William Rehnquist
Associate Justices
John P. Stevens  · Sandra Day O'Connor
Antonin Scalia  · Anthony Kennedy
David Souter  · Clarence Thomas
Ruth Bader Ginsburg  · Stephen Breyer
Case opinions
MajorityThomas, joined by Rehnquist, Stevens, O'Connor, Kennedy, Breyer
ConcurrenceStevens
ConcurrenceBreyer
DissentScalia, joined by Souter, Ginsburg (part I)
Laws applied
Telecommunications Act of 1996

National Cable & Telecommunications Association v. Brand X Internet Services, 545 U.S. 967 (2005), is a United States Supreme Court case in which the Court declared in a 6–3 decision that the administrative law principle of Chevron deference to statutory interpretations by administrative agencies tasked with executing the statute trumped the precedents of the United States Courts of Appeals unless the Court of Appeals had held that the statute was "unambiguous" under the Chevron deference. [1] The Supreme Court therefore upheld the Federal Communications Commission's determination that a cable Internet provider is an "information service", and not a "telecommunications service" and as such competing internet service providers (ISPs) like Brand X Internet were denied access to the cable and phone wires to provide home users with competing internet service.

Contents

This case was important in the battle over network neutrality in the United States.

Background

In the United States, modern telecommunications law began in 1934 with the passage of the first Telecommunications Act. This act created the Federal Communications Commission and charged said agency to regulate telegraph and telephone providers "regardless of whether they had monopoly power." The Commission also was to place common carrier restrictions on such providers. A "common carrier" designation has been historically applied to "private entities which [have] served the public in the performance of public functions similar to those performed by the government...." In addition, under common carrier status these entities were charged with "certain obligations." [2]

With the increased adoption of cable television in the 1970s, the courts were tasked with deciding whether the new medium should be classified according to common carrier stipulations. The first test came in 1972 with United States v. Midwest Video Corp. In the case, the FCC created a rule which forced cable providers with 3,500 or more subscribers to broadcast or otherwise make their facilities available for local public-access programming. A Court of Appeals vacated the decision, ruling that the Commission had no right to issue it. The Supreme Court reversed, stating that the FCC could indeed regulate cable providers through its so-called ancillary jurisdiction. Furthermore, the Court stated that '"until Congress acts to deal with the problems brought about by the emergence of CATV, the FCC should be allowed wide latitude."' [3] Seven years later another case dealing with cable and common carrier came before the Court. FCC v. Midwest Video II involved another FCC decree, this time requiring cable providers with 4,500 or more subscribers and twenty or more channels to provide some of their channel space for publicly-minded programming. [4] This time, the Supreme Court sided with the cable company, reversing the Appeals Court ruling and stating that the FCC overstepped its bounds in passing the regulations. In its opinion, the Court wrote that "with its access rules, the Commission has transferred control of the content of access cable channels from cable operators to members of the public who wish to communicate by the cable medium. Effectively, the Commission has relegated cable systems, pro tanto, to common-carrier status.'" This was the first time the Supreme Court distinguished between entities that were subject to common carrier restrictions and those that were not. [5]

In 1996, Congress passed the Telecommunications Act of 1996, which regulated telecommunications services in light of the breakup of AT&T's monopoly. Providers of telecommunication services were required to sell access to their networks to the public. [6]

Small Internet service providers, in the era of dial-up service, had equal access to home users because the first services were provided over plain old telephone services (POTS) which were regulated as common carriers.

When Cable and Telephone operators wished to have themselves exempted from the competitive requirements of the Telecommunications Act, they pressured the FCC to declare that Internet access was not a telecommunications service, which it did in 2002. [7] With this ruling, Telephone companies could give their own in-house operations pricing advantages over outside competitors, who frequently would be offered line access at double the rate for high speed internet access services on the same line. Telephone companies such as AT&T also require that customers of third party ISPs purchase AT&T-branded landline services in order to provide DSL. Cable companies, on the other hand, offered no access at all to their data lines. These policies would be illegal if Internet were ruled a Telecommunications Service, and telephone companies were forced to act as Common Carriers.

Predatory pricing and unfair service conditions, such as the above-mentioned bundling requirement, led Brand X and a number of other Internet Service Providers to dispute the FCC ruling defining Internet not to be a Telecommunications Service.

Small ISPs like Brand X hoped that common carrier treatment would open up Internet services to wider competition, benefiting the public with lower prices and better services. A petition was made by Brand X and others to review the FCC's order in 2003. [8] The FCC's ruling that cable internet service was not a "cable service" was affirmed, but the ruling that it was strictly an "information service" was vacated by the three judge panel, citing the Circuit's June, 2000 decision in AT&T v. City of Portland and the case was remanded for further action.

Arguments

Brand X

Brand X argued that when the agency argument is clearly in error, Chevron deference ought not apply; substantively, Brand X argued that internet services should be classified as a telecommunications services, because the word telecommunications means communication at a distance, and includes services such as telegraph, telephone, and television, all of which are essentially digital telecommunications services. If Internet were to be considered a telecommunications service, then telephone companies would be required to act as common carriers, with a published price list and other competitive requirements. This would allow rivals like Brand X Internet, AOL and EarthLink to offer faster internet connections. [6]

National Cable and Telecommunications Association

The National Cable and Telecommunications Association (NCTA) argued first that the Telecommunications Act defined information services as "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications, and includes electronic publishing". [9]

NCTA argued that telephone and cable high speed data services were information services not subject to the same regulations as telecommunications services.

NCTA then argued that the FCC's determination ought to be entitled to Chevron deference. They also argued that because they offered more than just telecommunication services but other information services as well, they should be classified as an information service and therefore not fall under the regulations imposed upon telecommunication services.

Opinion of the Court

The Court ruled 6–3 that because the Ninth Circuit precedent had held the Telecommunications Act provisions "vague", that case was not entitled to preference over the decisions of the agency. Moreover, the Supreme Court agreed that the provisions were vague and ambiguous; since under Chevron an administrative agency's interpretations of statutes it is responsible for are entitled to deference, the FCC (charged with enforcement of the Telecommunications Act) was entitled to deference in its determination. [1] More generally, the Court ruled that in matters of interpreting a statute the execution of which an administrative agency is charged, the agency's interpretation will be applied even in the face of circuit precedent, unless that precedent had held the statute "unambiguous" under Chevron rules (i.e., analysis under the traditional canons of statutory interpretation made clear the statute's meaning). The decision of the Court of Appeals was therefore reversed. In his dissent, Justice Scalia disputed the Court's contention that '"cable company does not offe[r] its customers high-speed Internet access because it offers that access only in conjunction with particular applications and functions, rather than ‘separately, ‘as a stand alone offering.’”

Impact on Net Neutrality

Brand X is considered key case law in the debate of net neutrality in the United States, as it established that the FCC had the authority to classify Internet service as either an information service or a telecommunications service, if the facts were muddy and even if its decision didn't best suit the facts.

Challenges to the FCC's interpretation from technical and economic standpoints have generally been overridden by the case law precedent set by Brand X.

The FCC created net neutrality protections three for Internet service providers three, each time resulting in legal battles resolved at the court, with the decision bound by Brand X:

Again this was challenged in court, but in the 2016 case United States Telecom Ass'n v. FCC , the court determined that the FCC's authority to reclassify ISPs was still valid from the Brand X ruling. [11]

In 2020, Thomas wrote a lone dissent in the Supreme Court's rejection to hear Baldwin v. United States, a case involving the Internal Revenue Service (IRS) and its interpretation of policies. Lower courts had ruled in favor of the IRS in light of Brand X. Thomas, who had authored the original Brand X majority opinion, wrote in the dissent that "Regrettably, Brand X has taken this Court to the precipice of administrative absolutism. Under its rule of deference, agencies are free to invent new (purported) interpretations of statutes and then require courts to reject their own prior interpretations." and had suggested that the Court should revisit Brand X as he sees it now "to be inconsistent with the Constitution, the Administrative Procedure Act (APA), and traditional tools of statutory interpretation." [13]

Related Research Articles

A common carrier in common law countries is a person or company that transports goods or people for any person or company and is responsible for any possible loss of the goods during transport. A common carrier offers its services to the general public under license or authority provided by a regulatory body, which has usually been granted "ministerial authority" by the legislation that created it. The regulatory body may create, interpret, and enforce its regulations upon the common carrier with independence and finality as long as it acts within the bounds of the enabling legislation.

Federal Communications Commission Independent agency of the United States government

The Federal Communications Commission (FCC) is an independent agency of the United States government that regulates communications by radio, television, wire, satellite, and cable across the United States. The FCC maintains jurisdiction over the areas of broadband access, fair competition, radio frequency use, media responsibility, public safety, and homeland security.

Communications Act of 1934 1934 U.S. federal law creating the Federal Communications Commission (FCC)

The Communications Act of 1934 is a United States federal law signed by President Franklin D. Roosevelt on June 19, 1934 and codified as Chapter 5 of Title 47 of the United States Code, 47 U.S.C. § 151 et seq. The Act replaced the Federal Radio Commission with the Federal Communications Commission (FCC). It also transferred regulation of interstate telephone services from the Interstate Commerce Commission to the FCC.

Internet service provider Organization that provides access to the Internet

An Internet service provider (ISP) is an organization that provides many different services for accessing, using, or participating in the Internet. Internet service providers can be organized in various forms, such as commercial, community-owned, non-profit, or otherwise privately owned.

Telecommunications Act of 1996

The Telecommunications Act of 1996 was the first significant overhaul of telecommunications law in more than sixty years, amending the Communications Act of 1934. The Act, signed by President Bill Clinton, represented a major change in American telecommunication law, since it was the first time that the Internet was included in broadcasting and spectrum allotment.

Telecommunications policy of the United States

The Telecommunications policy in the US is a framework of law directed by government and the Regulatory Commissions, most notably the Federal Communications Commission. Two landmark acts prevail today, the Communications Act of 1934 and the Telecommunications Act of 1996. The latter was intended to revise the first act and specifically to foster competition in the telecommunications industry.

A competitive local exchange carrier (CLEC), in the United States and Canada, is a telecommunications provider company competing with other, already established carriers, generally the incumbent local exchange carrier (ILEC).

Net neutrality Principle that Internet service providers should treat all data equally

Network neutrality, most commonly called net neutrality, is the principle that Internet service providers (ISPs) must treat all Internet communications equally, and not discriminate or charge differently based on user, content, website, platform, application, type of equipment, source address, destination address, or method of communication.

NCTA (association)

NCTA – The Internet & Television Association is the principal trade association for the U.S. broadband and pay television industries, representing more than 90% of the U.S. cable market, more than 200 cable networks, and equipment suppliers and providers of other services to the cable industry.

In the United States, net neutrality, the principle that Internet service providers (ISPs) treat all data on the Internet the same, and not discriminate, has been an issue of contention between network users and access providers since the 1990s. With net neutrality, ISPs may not intentionally block, slow down, or charge money for specific online content. Without net neutrality, ISPs may prioritize certain types of traffic, meter others, or potentially block traffic from specific services, while charging consumers for various tiers of service.

Internet in the United States Overview of the Internet in the United States of America

The Internet in the United States grew out of the ARPANET, a network sponsored by the Advanced Research Projects Agency of the U.S. Department of Defense during the 1960s. The Internet in the United States in turn provided the foundation for the worldwide Internet of today.

Comcast Corp. v. FCC, 600 F.3d 642, is a 2010 United States Court of Appeals for the District of Columbia case holding that the Federal Communications Commission (FCC) does not have ancillary jurisdiction over Comcast's Internet service under the language of the Communications Act of 1934. In so holding, the Court vacated a 2008 order issued by the FCC that asserted jurisdiction over Comcast's network management policies and censured Comcast from interfering with its subscribers' use of peer-to-peer software.

Net bias is the counter-principle to net neutrality, which indicates differentiation or discrimination of price and the quality of content or applications on the Internet by ISPs. Similar terms include data discrimination, digital redlining, and network management.

Communications law refers to the regulation of electronic communications by wire or radio. It encompasses regulations governing broadcasting, telephone and telecommunications service, cable television, satellite communications, wireless telecommunications, and the Internet.

Verizon Communications Inc. v. Federal Communications Commission was a 2014 U.S. Court of Appeals for the D.C. Circuit case vacating portions of the FCC Open Internet Order 2010 that the court determined could only be applied to common carriers. The court ruled that the FCC did not have the authority to impose the order in its entirety. Because the FCC had previously classified broadband providers under Title I of the Communications Act of 1934, the court ruled that the FCC had relinquished its right to regulate them like common carriers. The case was largely viewed as a loss for network neutrality supporters and a victory for the cable broadband industry. Of the three orders that make up the FCC Open Internet Order 2010, two were vacated and one was upheld (transparency). Judge David S. Tatel wrote the opinion with Judge Judith Ann Wilson Rogers joining. Judge Laurence H. Silberman wrote a separate decision concurring in part and dissenting in part.

Net neutrality law refers to laws and regulations which enforce the principle of net neutrality.

<i>United States Telecom Assn v. FCC</i> (2016)

USTA v. FCC is the 2016 court case in which the Court of Appeals for the D.C. Circuit upheld the Federal Communication Commission's reclassification of broadband services as telecommunications services subject to common carrier regulation under Title II of the Communications Act of 1934. This decision was a major victory for net neutrality, the principle of non-discrimination by Internet Service Providers (ISPs) with regards to data that they carry.

"Net Neutrality" is the first segment of the HBO news satire television series Last Week Tonight with John Oliver devoted to net neutrality in the United States. It aired for 13 minutes on June 1, 2014, as part of the fifth episode of Last Week Tonight's first season.

Net neutrality is the principle that governments should mandate Internet service providers to treat all data on the Internet the same, and not discriminate or charge differently by user, content, website, platform, application, type of attached equipment, or method of communication. For instance, under these principles, internet service providers are unable to intentionally block, slow down or charge money for specific websites and online content.

Mozilla v. FCC was a legal case heard in the United States Court of Appeals for the District of Columbia Circuit in 2019 related to net neutrality in the United States. The case centered on the Federal Communications Commission (FCC)'s decision in 2017 to rollback its prior 2015 Open Internet Order, reclassifying Internet services as an information service rather than as a common carrier, deregulating principles of net neutrality that had been put in place with the 2015 order. The proposed rollback had been publicly criticized during the open period of discussion, and following the FCC's issuing of the rollback, several states and Internet companies sued the FCC. These cases were consolidated into the one led by the Mozilla Corporation.

References

  1. 1 2 National Cable & Telecommunications Ass'n v. Brand X Internet Services, 545 U.S. 967 (2005).
  2. Nunziato, Dawn C. (2009). Virtual Freedom. Stanford University Press. p. 67. ISBN   978-0-8047-5574-0.
  3. "United States v. Midwest Video Corp". Justia. Retrieved December 10, 2016.
  4. FCC v. Midwest Video Corp., 440 U.S. 689 (1979).
  5. Deacon, Daniel T. (2015). "Common Carrier Essentialism And The Emerging Common Law of Internet Regulation". Administrative Law Review. 67: 140–141.
  6. 1 2 Hansell, S. (June 28, 2005). Cable Wins Internet-Access Ruling. Retrieved May 29, 2008
  7. "FCC Classifies Cable Modem Service as "Information Service"last=". FCC. March 14, 2002. Retrieved December 2, 2017.
  8. "On Petition for Review of an Order of the Federal Communications Commission" (PDF). FindLaw. October 6, 2003. Retrieved December 2, 2017.
  9. [Telecommunications Act of 1996, Pub. L. 104-104, 110 Stat. 56 (codified in scattered sections of 47 U.S.C. §§ 151-170)]
  10. Lohr, Steve (February 4, 2015). "F.C.C. Plans Strong Hand to Regulate the Internet". New York Times . Retrieved February 5, 2015.
  11. United States Telecom Association, Et al., v. Federal Communications Commission, No. 15-1063 slip op. at 7-24, 106-115 (United States Court of Appeals for The District of Columbia Circuit June 16, 2016).
  12. Patel, Nilay (October 4, 2019). "The Court Allowed The FCC To Kill Net Neutrality Because Washing Machines Can't Make Phone Calls". The Verge . Retrieved October 4, 2019.
  13. Brodkin, Jon (February 26, 2020). "Clarence Thomas regrets ruling that Ajit Pai used to kill net neutrality". Ars Technica . Retrieved February 27, 2020.