Tech & Telecom Law News

2019 Outlook: Net Neutrality ‘Ping Pong’ Battle to Rage On

Dec. 27, 2018, 10:45 AM

The net neutrality fight will continue playing out in federal court and the states in 2019, against the backdrop of a divided Congress that’s unlikely to settle the debate.

The Federal Communications Commission, internet service providers such as AT&T Inc. and Comcast Corp., and congressional Republicans are lined up against tech companies such as Amazon.com Inc. and Facebook Inc., Democratic lawmakers, and a raft of states including California and New York.

At issue is whether and how internet service providers (ISPs) should be prevented from blocking or slowing data traffic flowing across their networks, and whether they should be allowed to charge content providers more for faster data speeds. There’s also a fundamental policy debate over whether the FCC can pre-empt states from regulating net neutrality.

“Ultimately, the long-term answer has to be bipartisan legislation,” Daniel Lyons, a telecom professor at Boston College Law School, told Bloomberg Law. “As long as that’s missing, we’re going to keep seeing this ping-pong cycle.”

Tech companies including Mozilla Corp. and Vimeo Inc., joined by consumer groups and the attorneys general of 22 states and the District Columbia, are suing to block the FCC’s repeal of net neutrality rules in the U.S. Court of Appeals for the District of Columbia Circuit.

The D.C. Circuit is likely to rule in Mozilla Corp. v. FCC in late spring or summer. The court may decide the fate of the repeal of Obama-era rules, and whether states can enact net neutrality laws in defiance of the FCC, telecom attorneys involved in the case told Bloomberg Law. Four states have enacted laws reinstating net neutrality protections since the FCC’s repeal. FCC Chairman Ajit Pai says the state laws are illegal.

The ruling is likely to set in motion a new round of appeals and lawsuits that could drag on for years, renewing pressure on Congress to settle the net neutrality question for good, telecom attorneys said. But Republicans and Democrats on Capitol Hill disagree about how heavily to regulate ISPs.

Court Contest

Obama-era net neutrality rules would go back on the books if the D.C. Circuit overturns the FCC’s 2017 repeal. Oral argument on Mozilla is set to begin Feb. 1.

Pai’s opponents say the repeal of net neutrality rules allows broadband providers such as AT&T, which owns WarnerMedia and HBO, to favor their own content and charge competitors like Netflix Inc. to get faster access to users. Pai, ISPs, and Republican lawmakers say the Obama-era rules hampered broadband investment and the expansion of internet access in the U.S.

Mozilla, joined by other tech companies and consumer groups, argued in a brief that the FCC can’t revoke the 2015 rules simply because the FCC changed hands from Democratic to Republican control after the 2016 elections. Mozilla notes that the D.C. Circuit upheld the Obama-era rules in U.S. Telecom Assn. v. FCC.

The GOP-led FCC argues that its repeal is consistent with the U.S. Supreme Court’s 2005 ruling in Natl. Cable & Telecommunications Assn. v. Brand X Internet Servs. The court ruled in Brand X that cable internet services should be regulated as an information service, which is how the 2017 repeal order classifies broadband.

States Act

The lawsuit also challenges whether the FCC can block states from reinstating net neutrality protections.

California, Washington, Oregon, and Vermont enacted net neutrality laws in 2018. Democratic lawmakers in other states, including New York and Colorado, hope to move net neutrality legislation in 2019.

Twenty-three attorneys general, in a separate brief, say the FCC can’t block state net neutrality laws because the repeal order handed over enforcement of ISPs’ conduct to the Federal Trade Commission. The FCC argues that state net neutrality laws are illegal because the internet is an interstate service, and states only have jurisdiction over intrastate services.

How the D.C. Circuit rules on the FCC’s preemption authority may shape arguments in separate lawsuits filed by the Justice Department and ISPs to block net neutrality laws in California and Vermont.

A ruling affirming the FCC’s preemption authority would put state net neutrality protections in legal jeopardy, and could quell momentum in other states to enact similar laws. If the court rules that the FCC can’t preempt states on net neutrality, it would clear the legal path for more states to move forward to restore net neutrality protections.

Some state net neutrality laws are at greater legal risk than others, telecom attorneys said.

The Justice Department quickly challenged the California law, which restores the Obama-era rules and bans ISPs from exempting certain content, usually their own, from counting toward a subscriber’s data cap. California has since agreed not to enforce its new law until after the D.C. Circuit rules in Mozilla.

The federal government hasn’t challenged Oregon’s net neutrality law, which just prevents the state and local governments from contracting with ISPs that block or slow data traffic.

The losing side in the Mozilla case is all but certain to appeal to the Supreme Court and put more pressure on Congress to pass a net neutrality bill.

Capitol Gridlock

Supporters and opponents of net neutrality rules have called on Congress to pass legislation to settle the question. But there’s little appetite for compromise among Democrats and Republicans heading into the new Congress.

Democrats plan to use their House majority to intensify scrutiny of the FCC’s repeal through oversight hearings with FCC commissioners, rather than seeking a legislative compromise.

GOP lawmakers, including Sen. John Thune (R-S.D.), have drafted their own proposals on net neutrality. But Democrats say they don’t go far enough to curtail the potential for ISPs to manipulate internet traffic on their networks.

“I see our side insisting on strong net neutrality protections,” Rep. Jerry McNerney (D-Calif.), a member of the House Energy and Commerce Committee, told Bloomberg Law. “That’s the bottom line.”

The impasse is likely to persist throughout 2019, leaving the net neutrality battle to play out in court and in the states. The only way the battle will finally end, telecom watchers say, is with a new law.

“This is something not only that activists want, even companies want to have one framework for addressing net neutrality—the unpredictability is not good for business,” Rep. Ro Khanna (D-Calif.) said.

To contact the reporter on this story: Jon Reid in Washington at jreid@bloomberglaw.com

To contact the editor on this story: Keith Perine at kperine@bloomberglaw.com