FCC Authority In VZ/SpectrumCo, or “Real Lawyers Read The Footnotes.”

Many years ago, I taught a semester of law school as an adjunct. I assigned the students to read the FCC’s 2005 Internet Policy Statement. I was dismayed to discover that, after doing the reading, none of them had even heard of the concept of “reasonable network management.” How was that possible? Reasonable network management is not mentioned in the main text, but in footnote 15 which says that the principles are “subject to reasonable network management.” Given the centrality of the “reasonable network management” concept to the net neutrality debate, I was rather irritated. “Understand this before you graduate,” I warned them. “Real lawyers read the footnotes!”

I thought of that after reading Geoffery Manne’s and Berin Szoka’s piece about VZ/SpectrumCo over on CNET.

Manne and Szoka are particularly incensed that the FCC asserted authority over the side agreements in Verizon/SpectrumCo (you can refresh your memory with my Insanely Long Field Guide here). According to Manne and Szoka:

“Here’s the agency’s own legal analysis — in full: ‘The Commission has authority to review the Commercial Agreements and to impose conditions to protect the public interest.’ There’s not even an accompanying footnote.”

I’m not sure what happened here, but somehow Manne and Szoka appear to have missed Par. 145 footnote 349, where the FCC actually asserts that it will continue to monitor the agreements. (You can find the Order here.) To quote the FCC’s actual analysis of its authority:

” Aside from Section 310(d), 47 U.S.C. § 310(d), the Commission’s authority is provided by several sections of the Communications Act, including, but not limited to, Section 2, providing the Commission with jurisdiction over all interstate communications by wire or radio, 47 U.S.C. §152; Section 201(b), requiring all charges and practices relating to communication services to be just and reasonable, 47 U.S.C. §201(b); Section 316, permitting the Commission to modify a license at any time during its term if doing so “will promote the public interest, convenience, and necessity or the provisions of this Act”, 47 U.S.C. §316; and Section 628(b), making it illegal for a cable operator to engage in unfair methods of competition or other unfair practices that hinder significantly or prevent any video operator from providing programming to its subscribers, such as by entering into exclusive arrangements, 47 U.S.C. §458(b). “

I like these guys and I recognize these mistakes can happen to anyone, but someday has to point these mistakes out before they spread. Real lawyers read the footnotes. All of them. Especially the footnotes in the section where the FCC actually asserts authority.

Now perhaps you’re thinking, “hah! If they were really acting under their Section 201 and Section 628 authority, they would have opened a separate docket rather than hold this under the Section 310(d) docket. Oh wait, it turns out that’s actually what the FCC did. Different Docket Number, different bureau, and the stated purpose of monitoring for market impacts and anticompetitive conduct that violates either the conditions of the transfer “or otherwise violates the Act and Commission rules.” I will add that it would be quite a shock to find that the  FCC does not have jurisdiction over the resale of Title II CMRS services under its Section 201 authority. The FCC has exercised jurisdiction over resellers of Title II services since forever, and no one has suggested that Congress somehow removed jurisdiction over Title II resellers. Nor has anyone disputed that VZ Wireless is not a Title II CMRS carrier, or that the Verizon Wireless services the cable operators seek to resell do not include Title II CMRS services.

By the same token, while the Commission ultimately rejected arguments that the agreements violated Section 628(b) (anticompetitive conduct by MVPDs, such as the cable operators and Verizon Communications) and Section 652 (prohibited deals between incumbent cable operators and local exchange carriers),  it recognized that the agreements as described and as originally written gave rise to legitimate concerns that the agreements violated those provisions. Section 310(d) required the Commission to examine the agreements. Having found stuff it thinks bear on other statutes under its authority, Section 403, as well as the general public interest standard under Section 310(d), clearly give the FCC both the authority and the responsibility to open a new docket to continue ongoing monitoring — especially after the Department of Justice’s analysis confirmed the risk of collusive behavior in just about every possible area of jurisdiction.

Given all this, it is rather difficult to understand why both Commissioner McDowell and Commissioner Pai likewise question the FCC’s authority to engage in ongoing monitoring in the wake of the agreements.  Given that this transfer involved spectrum, cable, broadband, and even broadcasters (shout out to my NBC peeps! What it is O & Os!), the only way this could implicate more FCC jurisdictions would be if one of the parties owned a maritime radio service. But we are supposed to be troubled that the Commission decided under its Section 310(d) authority to open a new docket for further monitoring of possible impacts and potential violation of the Act or Commission rules? Given that the Commission would have jurisdiction to entertain complaints that conduct under the agreements (or the agreements themselves) violated provisions of the Act, or could even have launched a separate inquiry under Section 402, how can the Commission not have jurisdiction under Section 310(d) to open up a docket for monitoring purposes? I would think that “we’ll keep an eye on things, anyone with complaints can file over here” would be applauded as the lightest touch possible rather than condemned as regulatory overreach.

Which requires me to point out one of the more unfortunate problems in telecom policy (and regulatory) policy these days. There is a huge difference between “it’s bad policy, don’t do it” and “you don’t have authority.” It is unfortunate that those who agree with the FCC on matters of policy increasingly seek to cast their arguments as arguments of regulatory authority. I get that if you don’t like the policy, you would prefer the FCC not have authority to implement it. But just as real lawyers read the footnotes, real lawyers (and non-lawyers) ought to be honest about the difference between policy and authority. Certainly there are times when authority is genuinely contestable, and I will never blame a litigant for making the traditional Hail Mary pass at jurisdiction. But where, as here, the authority of the FCC over reseller agreements is well established, attacks on authority can only be the interpreted as careless or disingenuous.


Stay tuned . . .

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