A Wide Range of Possible Outcomes In Net Neutrality Case.

The Tea Party/Libertarian/Generally Anti-Net Neutrality Crowd were dancing in the streets after the network neutrality oral argument and declaring total victory! This seems not only premature, but short-sighted. Until the oral argument, the anti-net neutrality crowd had predicted that the court would utterly reject the FCC’s efforts to extend its authority to broadband access on either statutory or First Amendment grounds. But, as I noted previously, the entire panel seemed comfortable with Section 706 providing some level of authority over broadband access. Also, no one seemed terribly interested in the First Amendment argument except Judge Silberman. So – given the usual caveats that one can never really know how things will come out after oral argument – it seems the FCC will come out of this with some authority after all.

 

OTOH, it is certainly fair to say that two of the three judges on the panel indicated the “Common Carrier Prohibition” (aka, the thing Tatel made up in the Data Roaming Case) applied to at least the “no discrimination” rule and possibly the “no blocking rule.” As the two together constitute the heart of network neutrality protections, getting those struck down would certainly constitute a big win for anti-net neutrality folks. It would also create a fine muddle of confusion around the scope of the FCC’s overall authority.

 

There are, however, a range of possible options and outcomes that could still happen, ranging from the unlikely extreme of total affirmance for the FCC (if Rogers persuades one of her colleagues) to total reversal on some other grounds (if Silberman persuades one of his colleagues on First Amendment or Administrative Procedure Act (APA) grounds). I explore these (and what they might mean for the long term) below . . . .

 

 

For those interested, I have a much more abbreviated version of this at the end of my PK Blog post here. Combined with my boss Gigi Sohn’s blog post here, you get a shorter and much less snarky version of what I’m about to say.

 

 

Roads To FCC Getting Affirmed.

 

Since no one seems to think this likely, I’ll point out a couple of ways the FCC ends up getting fully affirmed, although some of these may still produce a fine muddle for the future.

 

It’s important to understand how judges write opinion – especially if the judges do not have an initial agreement on who will write a majority opinion. They will circulate drafts and corrections to each other, outline where they stand on the various arguments and the reasons why. Given a case like this, where there appears wide divergence among the judges with regard to what they would hold as part of an opinion (not merely on the outcome, but on key points of law where they agree on the outcome), it seems likely they will have a lot of arguing and internal negotiation. When I was clerking, I saw a determined judge flip the other two judges over time – or sometimes see the judges opt for an entirely different path than what they had in mind at oral argument because they could not come to any kind of agreement.

 

So, based on my own experience clerking, I take nothing for granted. I also note that despite spending most of the time in the Comcast/BitTorrent Case arguing about procedure, the court ended up deciding on authority. So it pays to keep an open mind when playing through the possibilities, even if some seem rather unlikely.

 

 

Least Likely: Rogers Convinces The Panel

 

This assumes Judge Rogers – if writing on her own – would affirm the FCC. She seemed inclined in this direction at oral argument, although she did not say much. But none of her questions indicated any kind of trouble for the FCC. To the contrary, her questions to both Verizon’s counsel and FCC counsel seemed to indicate that the FCC’s authority fell within the bounds of its claims of statutory authority, and that given that statutory authority the court should defer to the FCC’s determinations on the need for the rules and the determination that this does not constitute common carriage.

 

Rogers strongest argument here is the huge body of case law saying that on technical matters like this, the court owes maximum deference to the expert agency. This includes deference to the agency’s determinations about the meaning of its own statutes, as the Supreme Court recently made clear in City of Arlington.  While Tatel may not agree with the FCC on how to characterize what happens when data hits Verizon’s network, is it really so ridiculous that two judges will hold as a matter of law that the FCC canot take note of the fact that most edge providers use their own ISP, like Cogent or Level 3, to haul traffic to Verizon, and that Verizon makes its own deals with these providers (or not) on its own terms?

 

Tatel was dismissive of this in argument, but he was also initially dismissive of any distinction between no blocking and non-discrimination until FCC Counsel explained it. While unlikely, it is certainly possible he may change his mind as the judges go back and forth on what level of deference to apply to the FCC’s findings of fact and law.

 

I assign this possibility about 5% chance. Statistically non-trivial but still very low.

 

 

More Likely But Still Very Unlikely: Rogers Convinces The Panel On Prima Facie Challenge.

 

Somewhat more likely, but still rather unlikely, is that Rogers convinces at least one other judge (probably Tatel) that the panel should avoid making a decision on the common carrier question because this is a prima facie rather than an “as applied” challenge. A prima facie challenge means that there are no circumstances in which the rule could stand – as opposed to saying that the FCC screwed up by applying the rule in a particular case. FCC Counsel tried to make this point a few times  — especially when noting that the FCC had very few definitive rules in the actual rules (particularly with regard to discrimination).

 

If Tatel thinks the “no blocking” rule is O.K. (which appeared to be the case at the end of oral argument), then Rogers may persuade him to affirm the rule with lots of admonitions to the FCC that it would need to allow “pay for prioritization” in most circumstances unless it found some additional reason (e.g., the beloved ‘market power’ or clear anti-competitive conduct) to prohibit discrimination. The advantage to Tatel is that such an outcome would have pretty much the same result (curbing the FCC’s ability to limit an ISP’s capacity to sell “premium” delivery from edge providers to end users) while making it much harder for the FCC or net neutrality supporters to appeal.

 

Indeed, from my perspective, such an outcome might prove more problematic than a straight-up loss that could be appealed. It would certainly create this huge, chilling cloud of uncertainty over any effort to enforce the FCC rules with regard to any form of paid prioritization that did not involve an ISP’s own product. On the flip side, Verizon might not be happy, because they would have no idea how far they could push the envelop either. Still, the fact that such an opinion would make clear that the FCC must allow some kind of paid prioritization under some set of circumstances would constitute a serious set back for net neutrality supporters.

 

Since the FCC will technically have “won,” and since some forms of discrimination could still, in theory, be prohibited, pro-net neutrality parties would have difficulty either appealing or mobilizing Congress to act. On the other hand, because Verizon got a partial win, it is difficult for Verizon or net neutrality opponents to appeal until the FCC actually says no to some kind of particular deal.

 

This sort of ‘technically affirm the agency while stressing that the agency has limits on its ability to enforce the rule’ that gives Tatel (and the rest of the D.C. Circuit) a leash on the FCC but cuts off appeal rights is classic D.C. Circuit (life tenure gives you lots of patience). I therefore assign this a somewhat higher probability than others tend to, although I do not think it is the most likely outcome. I assign it a 15% chance.

 

If the FCC wins, even if they are not happy with how they won, then the FCC cannot appeal. Verizon could appeal either of these outcomes to the full D.C. Circuit (rehearing en banc) and up to the Supreme Court.

 

 

Not All Reversals Are Created Equal.

 

 

As you can see, while I am more optimistic than many, I still think the most likely outcome by a wide margin is some sort of reversal for the FCC. Nevertheless, not all reversals are the same. Some would have huge impact on the FCC’s ability to regulate in the broadband access space, others less so. Depending on the outcome, Verizon might still appeal (if it does not get a full win), the FCC might appeal, or both might appeal.

 

 

Reversed and Remanded But Not Vacated or Stayed.

 

Under this scenario, the FCC wins on its overall question of authority but the court decides that the FCC still has some questions to answer on how it exercised its authority.

 

 

For example, the court might say “well, this looks like common carriage, so we would normally prohibit. But the FCC didn’t really address the common carrier question because they concluded that the prohibition wasn’t triggered (since the Open Internet Order was decided before we established this ‘common carrier prohibition’ thing in the Data Roaming Case.) Rather than decide on the briefs and arguments, we will send this back to the agency to explain why the Common Carrier Prohibition should or shouldn’t apply. We also ask them to address severability (i.e., whether the rules can survive independently if one is struck down or whether they hang or fall together), oh, and while you’re at it, take a crack at Silberman’s market power stuff.”

 

This scenario again relies on Rogers influencing her colleagues that they owe deference to the agency, and that the agency ought to have a chance to address these questions rather than relying on the briefs. The advantage to Tatel and Silberman is that they get another chance to push the FCC in the direction they want it to go, and an appeal from this sort of a remand is less likely. (If confronted with this choice, the FCC – based on past behavior – is more likely to try to address the issues raised by the court than to try to appeal for rehearing or up to the Supremes.)

 

Again, I give this a low probability, but higher than most folks would probably give it. Call it a 20% chance.

 

 

 

Tatel and Silberman Agree On The Scope of the Common Carrier Prohibition.

 

By far the most likely scenario, based on the oral argument, is that Tatel and Silberman come up with a common position on what gets prohibited under the Common Carrier Rule and vacate one or more rules based on their common agreement. This could take a couple of flavors. Worst for the FCC is Silberman convinces Tatel that no blocking violates common carriage. Best for the FCC is that Silberman concurs with Tatel, at even if he indicates he would have gone further. But there are other flavors. For example, the two might agree with Verizon that the rules are non-severable, and therefore strike both rules while potentially allowing the FCC to resurrect no blocking.

 

Given the number of ways this could go down, it’s hard to predict how either the FCC or Verizon respond. It is entirely possible that we get a result where Verizon appeals the ruling that the FCC has authority to do anything, whereas the FCC appeals because the scope of the “Common Carrier Prohibition.”

 

Again, because this is already waaay to long, I’m going to defer talking about this whole “Common Carrier Prohibition/Rule/Whatever” that Tatel made up in the Data Roaming Case and the problems of applying it broadly here. Suffice it to say that, among other things, it makes it extremely difficult, if not impossible, for the FCC to do anything on IP interconnection or rural call completion without at least reclassifying VOIP as Title II.

 

All in all, I give some variation of this scenario about a 40%-50% chance.

 

 

Other Low Probability Outcome

 

There are a bunch of very low probability outcomes that make out the balance of possible outcomes, no one of which seems very plausible. The three judges may not come to an agreement on an opinion, creating a judgment with no opinion. This would be even more of a mess than some combination of Section 706 authority and Common Carrier Prohibition. Or Silberman may persuade Tatel on either the APA grounds or the First Amendment grounds. Or some other possibility that I haven’t even imagined may occur.

 

 

We can have so many varying outcomes because this is a very complicated case with a bunch of different decision points for the reviewing judges. Because law works on precedent how the court reaches an outcome is just as important (sometimes more important) than the outcome reached.

 

The bottom line is that the smart money would bet on the FCC having some authority going forward on broadband access, limited by this “Common Carrier Thingy.” But unlike in Comcast/BitTorrent, where the court made it pretty clear at oral argument it wanted to reverse, it’s a little early to start planning for what happens next.

 

Stay tuned . . . .