VERIZON vs. FEDERAL COMMUNICATIONS COMMISSION which covers public utilities like gas, electricity etc.
vers public utilities like gas, electricity etc. They also rejected the
(US COURT OF APPEALS No. 11-1355 – DECEMBER 14, 2014)
FACTS
1. The Federal Communications Commission (FCC) of the US, by virtue of its
power under Section 706 of the Telecommunications Act of 1996,
promulgated the Open Internet Order in 2010. The Open Internet Order
adopted three general rules that the FCC tried to enforce on the broadband
industry: (1) “transparency”, (2) “no blocking,” and (3) “no unreasonable
discrimination.”
NOTE: Transparency means broadband providers should disclose business practices
and the terms and conditions of their services. No Blocking forbids broadband
providers from blocking content generated by opposing broadband providers. No
Unreasonable Discrimination forbids broadband providers from unreasonably
discriminating against the lawful content being transmitted on the internet.
2. Verizon, a broadband provider, filed a case against the FCC, challenging their
Open Internet Order claiming that the order was exceeding the FCC's
authority as authorized by Congress, violated the company's constitutional
rights, and created uncertainty for the communications industry.
3. Basically, Verizon claims that the FCC had no right to regulate their industry.
In 2014, under the Communications Act of 1934, broadband providers were
classified under Title I of said act as an enhanced “information service” and
not under Title II as a “common carrier” (which governs public utilities). The
FCC has the authority to regulate only common carriers under Title II, which
is why Verizon claims the Open Internet Order Is beyond their authority.
4. Being classified as Title I would mean more relaxed regulations as to what
the broadband providers must disclose (in relation to the transparency, no
blocking, and unreasonable discrimination mentioned earlier), as opposed to
a Title II classification which allowed the FCC to regulate their operations.
ISSUE
WON the internet is a public utility and is this covered under Title II of the
Communications Act as a “common carrier”? NO.
HELD
 The US Court of Appeals ruled in favor of Verizon. The FCC had previously
categorized internet or broadband providers under Title I and not Title II
“no blocking” and “no unreasonable discrimination” parts of the Open
Internet Order but retained the “transparency” rule.
 The Communications Act, expressly prohibits the FCC from regulating
broadband providers because the FCC had previously classified broadband
providers as being under Title I. The Open Internet Order in its entirety
contains regulations that the FCC may only enforce on Title II entities as per
their authority.
 The court ruled that although the FCC had authority under Section 706 of the
Telecommunications Act to implement the regulation on transparency, the
other two regulations cannot be enforced because the Commission has failed
to establish that the anti-discrimination and anti-blocking rules did not
impose per se common carrier obligations, and so the court vacated those
portions of the Open Internet Order.
 In summary, since the FCC had categorized broadband providers as Title I
(which means the internet is NOT a public utility), they cannot impose rules
and regulations that would interfere with the operations of broadband
providers.
WHO WON? VERIZON
NOTE:
Section 706(a) provides:
The Commission and each State commission with regulatory jurisdiction over telecommunications services
shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability
to all Americans (including, in particular, elementary and secondary schools and classrooms) by utilizing,
in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory
forbearance, measures that promote competition in the local telecommunications market, or other regulating
methods that remove barriers to
infrastructure investment.
Section 706(b), in turn, requires the Commission to conduct a regular inquiry “concerning the availability
of advanced telecommunications capability.”. It further provides that should the Commission find that
“advanced telecommunications capability is [not] being deployed to all Americans in a reasonable and
timely fashion,” it “shall take immediate action to accelerate deployment of such capability by removing
barriers to infrastructure investment and by promoting competition in the telecommunications market.”. The
statute defines “advanced telecommunications capability” to include “broadband telecommunications
capability.”