Office of the Solicitor General Backs FCC in Brand X Case

September 1, 2004. The Department of Justice's (DOJ) Office of the Solicitor General (OSG), the DOJ's Antitrust Division, and the Federal Communications Commission (FCC) filed a Petition for Writ of Certiorari [37 pages in PDF] with the U.S. Supreme Court in FCC v. Brand X.

On March 14, 2002, the FCC adopted a Declaratory Ruling and Notice of Proposed Rulemaking [75 pages in PDF]. The Declaratory Ruling (DR) component of this item states that "we conclude that cable modem service, as it is currently offered, is properly classified as an interstate information service, not as a cable service, and that there is no separate offering of telecommunications service."

Brand X, EarthLink, the State of California, and the Consumer Federation of America filed petitions for review in which they argued that cable modem service is both an information service and a telecommunications service, and is therefore subject to regulation on a common carriage basis. That is, they argue that cable broadband providers must be required to let other internet service providers (ISPs) use their facilities.

On October 6, 2003 the U.S. Court of Appeals (9thCir) issued its opinion [39 pages in PDF] in Brand X Internet Services v. FCC, vacating the FCC's declaratory ruling that cable modem service is an information service, and that there is no separate offering as a telecommunications service. See also, story titled "9th Circuit Vacates FCC Declaratory Ruling That Cable Modem Service is an Information Service Without a Separate Offering of a Telecommunications Service" in TLJ Daily E-Mail Alert No. 754, October 7, 2003. This opinion is also reported at 345 F.3d 1120.

On April 1, 2004 the Appeals Court denied petitions for rehearing en banc. See, story titled "9th Circuit Denies Rehearing in Brand X v. FCC" in TLJ Daily E-Mail Alert No. 868, April 2, 2004. However, the Court of Appeals subsequently issued a stay of its mandate on April 9.

FCC Chairman Michael Powell issued a statement [PDF] about the present cert petition. "This is about ensuring that high-speed Internet connections aren't treated like what they're not: telephones. A successful appeal of this case would ultimately mean lower prices and better service for American consumers. Applying taxes, regulations and concepts from a century ago to today's cutting-edge services will only stifle innovation and competition."

The petition states that the issue is "Whether the court of appeals erred in holding that the Federal Communications Commission had impermissibly concluded that cable modem service is an ``information service,´´ without a separately regulated telecommunications service component, under the Communications Act of 1934, 47 U.S.C. 151 et seq."

The petition states that "This case is likely to determine the regulatory classification under the Communications Act that will apply to broadband (i.e., “high-speed”) Internet access services in the United States. The Federal Communications Commission concluded that broadband service provided over cable television facilities, known as “cable modem” service, should be classified as an “information service” under the Communications Act, a classification that would presumptively keep cable modem providers free from regulation as telecommunications common carriers under the Act."

The petition continues that "the Ninth Circuit, acting in a series of cases that had been filed in various circuits but consolidated and by lottery assigned to that court, rejected the FCC's conclusion without evaluating the substance of the agency’s decision or applying the standards for administrative deference set forth in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984). Instead, the court held that stare decisis compelled adherence to its own circuit precedent -- dating from before the FCC had reached its conclusion on the issue -- that classified cable modem service as partly an information service and partly a telecommunications service. See AT&T Corp. v. City of Portland, 216 F.3d 871 (9th Cir. 2000). Absent this Court's review, therefore, a vastly important aspect of national telecommunications policy will have been settled in the Ninth Circuit, and for all practical purposes throughout the country, without any evaluation whatever of the FCC’s contrary interpretation of the statute it is charged with administering."

The petition argues that "The Ninth Circuit has incorrectly overridden the expert agency responsible for administering and interpreting the Communications Act with respect to a communications policy issue of immediate and compelling national importance: the regulatory framework under the Act that will apply to, and thus either promote or retard, the timely and universal deployment of broadband Internet access services in the United States. If the court of appeals’ decision stands, the FCC will be required to regulate cable modem service -- and likely other forms of broadband Internet access service -- as a telecommunications service under the Communications Act, even though the Commission has concluded that such regulation is inconsistent with, and would directly threaten, the important federal policy of promoting access to those services."