Watching the industry’s battle over net neutrality unfold after the FCC’s March 12, 2015 Order is like watching the plucky heroine enter the deserted house in a horror movie. We know nothing good is going to happen. Unlike our heroine, however, who can usually make quick work of the demons hiding inside the house, the net neutrality dispute is only the beginning of a horror movie that will continue for years. Here are the latest developments:

The Net Neutrality Order was published in the Federal Register on April 13. That means the effective date of the Order is June 12. It also means that the clock started for opponents of the Order to file their appeals. And there are many opponents. 

Previously USTelecom and Alamo Broadband filed appeals in March to protect their legal standing in the case (see our discussion of these appeals). These lawsuits will probably need to be filed again now that the Order has been published in the Federal Register.

New lawsuits were filed by AT&T, the CTIA mobile trade association, the National Cable & Telecommunications Association (NCTA) and by the American Cable Association, which represents smaller independent cable companies. All of the appeals claim that the FCC’s decision to reclassify broadband Internet access service as a Title II telecommunications service is “arbitrary and capricious,” violates the US Constitution and is an illegal taking of their property. The appealing parties argue that the new rules will stifle investment and innovation, and add burdensome new costs to comply with Title II requirements. The new lawsuits do not include actual detailed arguments against the Order. Those will be included in the legal briefs that will be filed once the Court consolidates the multiple lawsuits into a single case and issues a schedule.

It is interesting that the new lawsuits were all filed with the DC Circuit Court. That means it is likely that the Court that rejected the FCC’s two previous attempts to regulate the Internet will once again litigate the FCC’’s newest attempt. Moreover, there was no attempt to move the case to a more conservative court.  That is clear evidence that the opponents of the Order are very confident of their case. And they should be confident! After reading the Order and much of the endless commentary about it, here is my best guess for what will happen next:

At least some of the parties filing lawsuits will request that the Order be stayed (not permitted to take effect) until the merits of the case are heard. There is at least a 50 percent chance a stay request will be granted.

More importantly, in my opinion, the Court will never hear the merits of this case because it will reject the Order due to its procedural deficiencies. The Court will find that the Commission violated the Administrative Procedure Act (APA) because it never provided the industry with the proper notice before deciding on reclassification. The FCC’s 2014 Notice of Proposed Rulemaking (NPRM) did not seriously consider reclassification of broadband Internet access service except for a short two paragraph discussion. In addition, the Commission did not even mention in the NPRM that it intended to change the definition of the public switched network to include access to Internet websites to enable it to reclassify mobile broadband Internet access as a telecommunications service. These Commission missteps clearly violate the notice requirements of the APA which require agencies to lay out in detail each option under consideration in their rulemaking filings.

Thus, the DC Circuit is likely to require the Commission to begin another round of rulemaking. That would require the Commission to adopt and release a new NPRM and seek industry comments and reply comments. If the Commission follows through, it would add months if not years to the uncertainty now enveloping the industry, and sadly, all so preventable.

Our plucky heroine can easily avoid the danger awaiting her if she simply chooses not to enter the deserted house. Likewise, the FCC could avoid the multi-year net neutrality battle brewing if it simply turns to Congress and asks for help in constructing a regulatory plan to preserve Internet openness without the regulatory burdens of Title II. This is not as far-fetched as it may sound.

There is already almost 100 percent agreement among all segments of the industry and both Democrats and Republicans about some important aspects of Internet regulation. No party believes blocking or throttling of Internet traffic should be permitted. Moreover, most parties now favor banning priority agreements even if they supported them previously. The real disagreements today are regarding how the Internet is regulated rather than in the regulations themselves. The proof of this is in the lawsuits. None of the opponents protest the FCC’s Internet rules, such as no blocking or throttling, instead they protest the type of regulation – Title II.

With so much industry agreement, the FCC Chairman should swallow his pride and request Congress to work with the Commission to craft a set of Internet rules. That invitation would hopefully provide Congress with the impetus to cast aside its petty partisan concerns and work together.

If Mr. Wheeler does not turn to Congress, lawmakers there will continue to act in partisan ways and solve nothing. For example, Republican Representative Doug Collins of Georgia released a meaningless Resolution this week stating that Congress disapproves of the Net Neutrality Order, and the Order “should have no force or effect.” The Resolution would legally cancel the Order if it received the votes of a Senate majority under special procedural voting rules. However, even if it did so, President Obama would quickly veto it.  What a waste of time!

Clearly, left to its own devices, Congress will never reach an agreement on Internet regulation. That’s why it is up to Mr. Wheeler to take the initiative and seek Congressional help. 

The net neutrality debate has reached the door to the deserted house of our horror movie, and unfortunately, unless the plot changes, we all know what waits inside.

By Andy Regitsky, CCMI