Comcast and the Information Service/Common Carrier Classification

Yesterday, in an already widely discussed decision, the US Court of Appeals for the DC Circuit ruled that the FCC does not have the authority to regulate network management practices under its ancillary jurisdiction. Comcast Corp. v. Federal Communications Comm’n.
Because control over Internet access is such an important and personal issue, this ruling made the front page o the New York Times and Washington Post today. Time Magazine’s television critic wrote a long blog post about this ruling.
The Communications Act grants the Commission authority to regulate broadcast and telecommunications with specific enumerated powers. And more than a decision on network management practices, the crux of the Comcast ruling is more to do with how the Commission decided to approach regulating broadband back at the beginning of this century. And this decision highlights some of the tensions between letting the Internet itself develop as a forum without too much government regulation and the need to regulate internet access providers in order to ensure that individual users have open access to the Internet itself.
The FCC has the authority to regulate common carrier communications under Title II of the Communications Act. These regulations are meant to ensure that telephone carriers act as common carriers. In a very broad and crude definition, common carriers are required to transmit exactly what they are asked to pass on. Title II requires that carriers not discriminate against or give any unreasonable preference to particular users of its telecommunications services.

It shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.

Title II places other restrictions on common carriers, such as the requirements to charge only set rates, to contribute to the costs of rural telephone systems, and to allow interconnection with the facilities and exchanges of all other telecommunications providers. In order to allow the then-nascent broadband internet access market to develop in a competitive fashion, the Commission decided to classify cable modems as an information service, rather than a telecommunications service, so that they wouldn’t be subject to all of the regulations on Title II services.
Information services are outside the scope of Title II regulation.

The term ‘information service’ means the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications, and includes electronic publishing, but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service.

A simple way to think about the distinction between common carriers and information services is to think back deep into the past and consider accessing a BBS using a computer and dialing in using a modem. The phone line you use to place the call is a common carrier, but the computer that hosts the BBS at the other end is an information service provider. Even though it’s accessed over the phone line, the BBS is not providing telephone communications services. All the telephone line is doing in this case is transmitting the data.
In 2002, the FCC ruled that cable modem service is properly classified as an information service rather than cable service or telecommunications service offering and therefore is not subject to common carrier regulation, but merely to regulation under the Commission’s ancillary jurisdiction to regulation communications under Title I of the Act. In re: Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities.
The Supreme Court affirmed the Commission’s ability to make that regulatory classification in National Cable & Telecommunications Assn. v. Brand X Internet Services, 545 U.S. 967 (2005). In a 6-3 opinion delivered by Justice Thomas, the Court overturned the Ninth Circuit and ruled that the Commission acted within the scope of its power to make such a regulatory classification and that the classification should be afforded judicial deference. (Previously: Brand X)
In 2008, the FCC issued a ruling that Comcast’s selective treatment of the BitTorrent protocol was a “discriminatory and arbitrary practice unduly [that] squelches the dynamic benefits of an open and accessible Internet and does not constitute reasonable network management.” In re: Formal Complaint of Free Press and Public Knowledge Against Comcast Corporation for Secretly Degrading Peer-to-Peer Application No. 08-183.
The FCC’s authority to regulate information services stems from its ancillary jurisdiction in Title I of the Communications Act; it gives the FCC authority to perform acts not contemplated in the statute that might be necessary to carry out the goals enumerated in the statute:

The Commission may 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. 47 USC §154(i)

In Comcast, the cable operator challenged the Commission’s order, on theory that the FCC can not regulate a cable modem information service under its ancillary jurisdiction of Title I. The Commission argued that these regulations are necessary in order to promote the policy goals of §230(b), “It is the policy of the United States… to promote the continued development of the Internet and other interactive computer services and other interactive media.”
The DC Circuit examines at whether the use of ancillary jurisdiction is permissible using a two-part test, “The Commission . . . may exercise ancillary jurisdiction only when two conditions are satisfied: (1) the Commission’s general jurisdictional grant under Title I [of the Communications Act] covers the regulated subject and (2) the regulations are reasonably ancillary to the Commission’s effective performance of its statutorily mandated responsibilities.”
The DC Circuit ruled that the authority in ancillary jurisdiction was not sufficient to be the sole authority for the FCC Order. “the Commission is seeking to use its ancillary authority to pursue a stand-alone policy objective, rather than to support its exercise of a specifically delegated power.” Ancillary jurisdiction can be exercised for reasons stemming from other parts of the Telecommunications Act, but does not provide justification in and of itself for agency action.
By specifically exempting cable modem service from Title II classification in 2002, is the Commission now prevented from enacting network neutrality regulations? What does this mean for network neutrality? One view is that the FCC lacks the authority to regulate broadband providers to protect the free flow of information across the internet. Or, it could be that the FCC’s decision to classify cable modem service as an information service should be reconsidered — the information service aspects of internet access can be distinguished from the common carriage aspects. Because what is network neutrality, if not a form of common carriage?
Perhaps the reason that so many people are concerned about this ruling and the issue of network neutrality in general, is because the internet is used more for communications than for accessing information. Like the dial tone for the 20th century, access to the internet is the fundamental baseline for communications in the 21st century.
Links with better analysis:
Susan Crawford, “Ancillary jurisdiction” has to be ancillary to something, “The next time the FCC wants to issue an Order or otherwise exercise power over high-speed Internet access providers, it had better be very clear about the source of its power, and it can’t rely on just its ‘necessary and proper’ clause in Title I.”
Jack Balkin, What’s Next For Network Neutrality?, “It’s possible that the FCC will simply see if it can get a reversal in the Supreme Court. That will take many more years of litigation. But the FCC might decide that the better solution is to retrace its steps, correct the mistake it made in 2002, and reassert Title II authority over broadband. Doing this would give the FCC the tools it needs to deal with the regulatory problems of the future.”
Law Librarian Blog, FCC Loses Comcast Appeal on Net Regulation “The most likely scenario is for Congress to specifically grant authority to the FCC when it considers legislation to implement the National Broadband Plan. Members of Congress have spoken out on the issue of network neutrality. Nonetheless, it’s going to take an intense lobbying effort by consumer and public interest groups to match the deep pockets of the ISPs and content providers who are against Internet regulation. It should be interesting to see how the players line up after this development.”
Public Knowledge: Public Knowledge Explains: The Comcast-Bittorrent Decision, “The real tragedy of today’s ruling is that this entire issue is a self-inflicted wound by the FCC. When it decided not to regulate broadband Internet under Title II (by placing cable broadband into Title I and moving DSL broadband from Title II to Title I), it turned its back on a specific delegation of powers from Congress. There would be no debate about ancillary authority if the FCC were to recognize that broadband Internet is a Title II ‘telecommunications’ service. The FCC has the statutory power it needs if it chooses to use it.”
Jenna Greene, National Law Journal, Uncertainty for FCC’s ‘Net Neutrality’ in Wake of Comcast Ruling, “In the wake of a stinging defeat in court, the Federal Communications Commission finds its ability to regulate the Internet in question, its signature ‘net neutrality’ initiative hanging by a thread. Now, the agency faces several unpalatable options.”
Economist Democracy in America Blog, Hey internet entrepreneurs, nuts to you “Ah, the joys of rent-seeking behaviour. The most likely result of allowing connectivity companies to charge discriminatory fees for different packets is what internet entrepreneur Alok Bhardwaj calls ‘extortionary pseudo-services”: fees to allow some of your packets to arrive ahead of others, or to allow your packets to arrive ahead of your neighbour’s. Another likely result is simple profit-seeking control over content delivery.”
Mehan Jayasuriya, Public Knowledge, The FCC Lacks the Authority to Protect Internet Users–Now What? “The roots of this problem can be traced back to 2001, when the FCC began a process that would effectively deregulate broadband Internet services, reclassifying broadband service as an ‘information service’ (Title I of the Communications Act), rather than a ‘telecommunications service’ (Title II). Though this may seem like a fine distinction it’s not: in reclassifying broadband services, the FCC lost the ability to take action against broadband ISPs that engage in ‘unjust’ or ‘unreasonable’ practices.”
Ryan Singel, Wired, Court Drives FCC Towards Nuclear Option to Regulate Broadband “A federal appeals court all but told the FCC Tuesday that it has no power to regulate the internet, putting large chunks of the much-lauded national broadband plan at risk. And the FCC has only itself to blame.”