Public Policy and the Brand X Decision

The following was written for my Political Analysis class, and it concerns a Supreme Court case that has important implications for telecommunications policy in general and the future of net neutrality in particular. I would love to hear any comments or feedback.

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In National Cable and Telecommunications Association, et al. v. Brand X Internet Services, et al. (2005), the Supreme Court ruled 6 to 3 that cable companies providing broadband Internet access are not subject to the common-carrier provisions of the Communications Act. The case determined whether cable companies, like telephone companies, are required to share their networks with third-party Internet Service Providers (ISPs). The plaintiffs (NCTA, et al.) were appealing a ruling by the Ninth Circuit Court of Appeals overturning a decision by the Federal Communications Commission which classified cable modem service as an "information service," i.e., exempt from common-carrier regulation. Writing for the Court, and joined by Justices Anthony Kennedy, Sandra Day O'Connor, and Chief Justice William Rehnquist, Justice Clarence Thomas argued that the FCC was within its rights to make that classification, citing precedent in the case Chevron v. Natural Resources Defense Council (1984). Justices John Paul Stevens and Stephen Breyer each wrote concurrent opinions offering minor addenda to the Court's opinion. The dissenting opinion, written by Justice Antonin Scalia and joined in part by Justices Ruth Bader Ginsburg and David Souter, found fault with the way both the Court and the FCC determined cable modem service to be an "information service," rather than a "telecommunications service," which would make it subject to common-carrier regulation.

In the Court's opinion, Justice Thomas adopted what might be called a "hands-off" approach to judicial regulation of cable modem service. He spends the first part of the opinion showing that Chevron v. NRDC provides the proper framework for considering the case. That ruling held that ambiguities in statutes are to be resolved by the appropriate regulatory body and not the courts, unless the court's interpretation "follows from the unambiguous terms of the statute and thus leaves no room for agency discretion." He also criticized the Ninth Circuit for failing to follow the Chevron precedent, preferring instead to go with one of its previous rulings, AT&T Corp. v. Portland (2000), in which the Appeals Court declared cable modem service to be a "telecommunications service" subject to common-carrier regulation. In sum, Justice Thomas contended that the complicated issues surrounding public policy are best handled with the expertise found in specialized agencies like the FCC and not by generalist bodies like the judicial branch.

Nevertheless, Justice Thomas went on to determine that the FCC's conclusions were a permissible interpretation of the Communications Act. He agreed with the FCC that the Act is unclear about whether cable modem service qualifies as an "information service," which entails using telecommunications (e.g., cable wire) to transmit and manipulate information (e.g., access the Internet), rather than a "telecommunications service," which entails the direct usage of telecommunications (e.g., the telephone). Moreover, he found that the FCC's conclusion that cable modem service is an "information service" was also reasonable. As for concerns that this decision would put providers of digital subscriber line (DSL) service, or broadband Internet over telephone lines, at a disadvantage, Justice Thomas answered that the FCC was following its historic treatment of cable and telephone service, respectively, given the different market conditions under which they arose. Again, deferral to the FCC's judgment was, in Thomas' opinion, paramount.

In the dissenting opinion, Justice Scalia criticized the Court and the FCC's line of reasoning. He found it illogical that the two bodies regarded the various components of cable modem service to be its primary characteristic, rather than what it provides: Internet access. A proper understanding of the matter, Scalia said, would suggest classifying cable modem service as a "telecommunications service." He also was not persuaded by the Court's concern that applying common-carrier regulation to cable modem service would lead to an unnecessary expansion of regulation of the Internet. Ultimately, he chastened both the FCC and the Court for failing to use their authority: The FCC because they used the ambiguous wording of the Communications Act to justify not properly regulating cable modem service, and the Court because they seemed to grant the executive branch the ability to ignore judicial rulings. In other words, Justice Scalia regarded Justice Thomas' "hands-off" approach to be antithetical to good adjudication, and to good regulation.

The consequences of the Brand X decision proved to be swift. In August 2005, five weeks after the Court handed down its ruling, the FCC reclassified DSL as an "information service," acceding to appeals from the major telephone companies that the Court's decision gave the cable companies an unfair advantage in the Internet access market. Soon after, Congress took up legislation that would have amended the Communications Act to include provisions for broadband Internet phone and video service, among other things. However, the newly deregulated state of cable and phone companies provoked fears among many, from consumer groups to major Internet companies, that it would lead to cable and phone companies having "gatekeeper" status over the Internet, and thus place restrictions on both competition and free expression online. Supporters of codifying the latter principles into law, or network neutrality, launched a successful lobbying campaign to ensure that no telecommunications legislation would pass without neutrality provisions. While a bill without neutrality provisions passed the House in June 2006, a similar bill stalled in the Senate, and the debate over the future of the Internet remains at an impasse.