National Cable & Telecommunications Ass'n v. Brand X Internet Services
|National Cable & Telecommunications Association v. Brand X Internet Services|
|Argued March 29, 2005
Decided June 27, 2005
|Full case name||National Cable & Telecommunications Association, et al. v. Brand X Internet Services, et al.|
|Citations||545 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
|Prior history||FCC 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)|
|Subsequent history||On remand, sub nom. Brand X Internet Servs. v. FCC, 2006 U.S. App. LEXIS 1573 (9th Cir., Jan. 23, 2006)|
|The Court held that the FCC properly decided that cable service is an information service.|
|Majority||Thomas, joined by Rehnquist, Stevens, O'Connor, Kennedy, Breyer|
|Dissent||Scalia, joined by Souter, Ginsburg (part I only)|
|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 Chevron. 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.
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."
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."' 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. 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.
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.
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, which broke up AT&T, they pressured the FCC to declare that Internet was not a telecommunications service. 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 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 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.
The FCC lost in the three judge panel in the Ninth Circuit, which held that prior precedent of the Ninth Circuit interpreting the sections in questions bound it.
This case was important in the battle over network neutrality in the United States.
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.
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".
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. 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 ‘separate[ly], ‘as a stand alone offering.’”
Subsequent FCC action
The FCC decided after the Supreme Court's decision that cable companies were information services and did not have to allow their competitors access to their faster connections. However, in 2015, the FCC, under heavy public pressure to protect net neutrality, reversed itself in part, ruling that broadband internet service was a telecommunications service and subject to the rules applicable to a common carrier. The FCC's 2015 Open Internet Order prompted the regulation of broadband internet providers as common carriers. Blocking and throttling - in which broadband providers bar or impair their customers from seeing '"lawful content, applications, services or non-harmful devices...''" - and paid prioritization- in which providers favor some traffic of other traffic in exchange for monetary or other favors'" were also prohibited under the Order. U.S. Telecom and other respondents challenged the Order, and In a 2-1 decision, the Court of Appeals for the District of Columbia ruled in favor of the Open Internet Order and of the reclassification of broadband providers as common carriers. In its opinion that court opined: "Because the rules[i.e. those rules detailed in the Open Internet Order] impose on broadband providers the kind of nondiscrimination and equal access obligations that courts have never considered to raise a First Amendment concern-i.e., the rules require broadband providers to allow 'all members of the public who choose to employ such facilities [to] communicate or transmit intelligence of their own design and choosing......' they are permissible."
- Nunziato, Dawn C. (2009). Virtual Freedom. Stanford University Press. p. 67. ISBN 978-0-8047-5574-0.
- "United States v. Midwest Video Corp.". Justia. Retrieved December 10, 2016.
- "FCC v. Midwest Video Corp. 1979". Justia. Retrieved December 10, 2016.
- Deacon, Daniel T. (2015). "Common Carrier Essentialism And The Emerging Common Law of Internet Regulation". Administrative Law Review. 67: 140–141 – via JSTOR.
- Hansell, S. (June 28, 2005). Cable Wins Internet-Access Ruling. Retrieved May 29, 2008
- [Telecommunications Act of 1996, Pub. L. 104-104, 110 Stat. 56 (codified in scattered sections of 47 U.S.C. §§ 151-170)]
- Supreme Court of the United States. National Cable & Telecommunications Association v. Brand X Internet Services et al. No. 04-277.
- Wigfield, M. (August 5, 2005). FCC Eliminates Mandated Sharing Requirement on Incumbents Wireline Broadband Internet Access Services. Retrieved May 29, 2008
- Lohr, Steve (February 4, 2015). "F.C.C. Plans Strong Hand to Regulate the Internet". New York Times. Retrieved February 5, 2015.
- 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).
- Text of National Cable & Telecommunications Association v. Brand X Internet Services, 545 U.S. 967 (2005) is available from: Findlaw Cornell LII
- NY Times--Cable Wins Internet-Access Ruling
- Cybertelecom:: Internet over DSL
- Slashdot.org discussion of the decision
- Article discussing the decision as applied to the Board of Immigration Appeals