National Cable & Telecommunications Ass'n v. Brand X Internet Services

National Cable & Telecommunications Association v. Brand X Internet Services

Argued March 29, 2005
Decided June 27, 2005
Full case name National Cable & Telecommunications Association, et al. v. Brand X Internet Services, et al.
Docket nos. 04-277
Citations

545 U.S. 967 (more)

125 S. Ct. 2688; 162 L. Ed. 2d 820; 2005 U.S. LEXIS 5018; 18 Fla. L. Weekly Fed. S 482
Prior history FCC order affirmed in part, vacated in part, remanded, Brand X Internet Servs. v. FCC, 345 F.3d 1120 (9th Cir. 2003); rehearing, rehearing en banc denied, 2004 U.S. App. LEXIS 8023 (9th Cir. Mar. 31, 2004); cert. granted, sub nom. Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 543 U.S. 1018 (2004)
Subsequent history On remand, sub nom. Brand X Internet Servs. v. FCC, 2006 U.S. App. LEXIS 1573 (9th Cir., Jan. 23, 2006)
Holding
The Court held that the FCC properly decided that cable service is an information service.
Court membership
Chief Justice
William Rehnquist
Case opinions
Majority Thomas, joined by Rehnquist, Stevens, O'Connor, Kennedy, Breyer
Concurrence Stevens
Concurrence Breyer
Dissent Scalia, joined by Souter, Ginsburg (only Part I)
Laws applied
Telecommunications Act of 1996

National Cable & Telecommunications Association v. Brand X Internet Services, 545 U.S. 967 (2005), is a United States Supreme Court case in which the Court declared in a 6–3 decision that the administrative law principle of Chevron deference to statutory interpretations by administrative agencies tasked with executing the statute trumped the precedents of the United States Courts of Appeals unless the Court of Appeals had held that the statute was "unambiguous" under Chevron. The Supreme Court therefore upheld the Federal Communications Commission's determination that a cable Internet provider is an "information service", and not a "telecommunications service" and as such competing internet service providers (ISPs) like Brand X Internet were denied access to the cable and phone wires to provide home users with competing internet service.

Background

In 1996, Congress passed the Telecommunications Act of 1996, which regulated telecommunications services in light of the breakup of AT&T's monopoly. Providers of telecommunication services were required to sell access to their networks to the public.[1]

Small Internet service providers, in the era of dial-up service, had equal access to home users because the first services were provided over plain old telephone services (POTS) which were regulated as common carriers.

When Cable and Telephone operators wished to have themselves exempted from the competitive requirements of the Telecommunications Act, which broke up AT&T, they pressured the FCC to declare that Internet was not a telecommunications service. With this ruling, Telephone companies could give their own in-house operations pricing advantages over outside competitors, who frequently would be offered line access at double the rate for high speed internet services on the same line. Telephone companies such as AT&T also require that customers of third party ISPs purchase AT&T branded landline services in order to provide DSL. Cable companies, on the other hand, offered no access at all to their data lines. These policies would be illegal if Internet were ruled a Telecommunications Service, and telephone companies were forced to act as Common Carriers.

Predatory pricing and unfair service conditions, such as the above-mentioned bundling requirement, led Brand X and a number of other Internet Service to dispute the FCC ruling defining Internet not to be a Telecommunications Service.

Small ISPs like Brand X hoped that common carrier treatment would open up Internet services to wider competition, benefiting the public with lower prices and better services.

The FCC lost in the three judge panel in the Ninth Circuit, which held that prior precedent of the Ninth Circuit interpreting the sections in questions bound it.

This case was important in the battle over network neutrality in the United States.

Arguments

Brand X

Brand X argued that when the agency argument is clearly in error, Chevron deference ought not apply; substantively, Brand X argued that internet services should be classified as a telecommunications services, because the word telecommunications means communication at a distance, and includes services such as telegraph, telephone, and television, all of which are essentially digital telecommunications services. If Internet were to be considered a telecommunications service, then telephone companies would be required to act as common carriers, with a published price list and other competitive requirements. This would allow rivals like Brand X Internet, AOL and EarthLink to offer faster internet connections.[1]

National Cable and Telecommunications Association

The National Cable and Telecommunications Association (NCTA) argued first that the Telecommunications Act defined information services as "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications, and includes electronic publishing".[2]

NCTA argued that telephone and cable high speed data services were information services not subject to the same regulations as telecommunications services.

NCTA then argued that the FCC's determination ought to be entitled to Chevron deference. They also argued that because they offered more than just telecommunication services but other information services as well, they should be classified as an information service and therefore not fall under the regulations imposed upon telecommunication services.

Opinion of the Court

The Court ruled 6–3 that because the Ninth Circuit precedent had held the Telecommunications Act provisions "vague", that case was not entitled to preference over the decisions of the agency. Moreover, the Supreme Court agreed that the provisions were vague and ambiguous; since under Chevron an administrative agency's interpretations of statutes it is responsible for are entitled to deference, the FCC (charged with enforcement of the Telecommunications Act) was entitled to deference in its determination.[3] More generally, the Court ruled that in matters of interpreting a statute the execution of which an administrative agency is charged, the agency's interpretation will be applied even in the face of circuit precedent, unless that precedent had held the statute "unambiguous" under Chevron rules (i.e., analysis under the traditional canons of statutory interpretation made clear the statute's meaning). The decision of the Court of Appeals was therefore reversed.

Subsequent FCC action

The FCC decided after the Supreme Court's decision that cable companies were information services and did not have to allow their competitors access to their faster connections.[4] However, in 2015, the FCC, under heavy public pressure to protect net neutrality, reversed itself in part, ruling that broadband internet service was a telecommunications service and subject to the rules applicable to a common carrier.[5]

References

  1. 1 2 Hansell, S. (June 28, 2005). Cable Wins Internet-Access Ruling. Retrieved May 29, 2008
  2. ↑ [Telecommunications Act of 1996, Pub. L. 104-104, 110 Stat. 56 (codified in scattered sections of 47 U.S.C. §§ 151-170)]
  3. ↑ Supreme Court of the United States. National Cable & Telecommunications Association v. Brand X Internet Services et al. No. 04-277.
  4. ↑ Wigfield, M. (August 5, 2005). FCC Eliminates Mandated Sharing Requirement on Incumbents Wireline Broadband Internet Access Services. Retrieved May 29, 2008
  5. ↑ Lohr, Steve (February 4, 2015). "F.C.C. Plans Strong Hand to Regulate the Internet". New York Times. Retrieved February 5, 2015.

External links

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