There was a government push during the Bush administration to protect the newly burgeoning broadband industry. The FCC, and federal politicians all thought correctly that broadband was going to become a huge economic driver of the economy. This story was pushed by the lobbyists of both the cable companies and the big telcos, because at that time the broadband from both telcos and cable companies was functionally equivalent with similar speeds. At that time, the US was in front of the rest of the world in broadband adoption and the unified story out of Washington DC was that overregulation might squelch the new broadband industry.
The primary fear in Washington DC (and among lobbyists) was that states were going to regulate broadband. At the time there were already investigations by many state regulatory commissions about regulating broadband in the same manner that telephone service was already regulated. Since broadband was regulated under FCC Title II, state regulators felt they had the full authority to also regulate broadband prices and the actions of ISPs.
The Brand X decision was the culmination of early FCC rulings and ensuing court cases. In 2000 the US Court of Appeals for the Ninth Circuit had ruled in AT&T Corp versus the City of Portland that broadband services are subject to Title II common carrier regulation, including tariff, interconnection and wholesale access obligations. The FCC reacted to the City of Portland ruling by declaring that cable modem service is an ‘information service’ exempt from Title II regulation. The Ninth Circuit reversed the FCC’s ruling based upon the City of Portland Ruling, thus leading to the appeal to the Supreme Court that resulted in Brand X.
Brand X was an interesting decision. The Supreme Court said that the FCC was free to classify broadband as either an information service or as a telecommunications service that would be regulated under Title II. The FCC only had to provide a rationale for any decision they reached.
Brand X has been the source of the mess that we’ve had at the FCC since then. Each subsequent FCC can invent a new rationale and reclassify broadband. The Wheeler FCC used Brand X to reclassify broadband under Title II and the Pai FCC used Brand X to go in the opposite direction.
What Justice Thomas realized is that the ruling gives federal agencies regulatory powers separate from Congress. An agency like the FCC needs to only concoct a good story and can then ignore laws passed by Congress. In the case of broadband, Congress has clearly conveyed that they want the FCC to monitor and regulate broadband, and yet Brand X gave the agency cover to do otherwise. Brand X is now being cited by other federal agencies defending decisions they make and is now the law of the land.
As Brodkin points out in his article, Brand X also ties the hands of courts, giving even more power to federal agencies to do whatever they want. The courts upheld the appeal of the FCC’s decision to kill net neutrality. In that decision Circuit Judge Patricia Millett said that the FCC’s rationale for killing Title II regulation was “unhinged from the realities of modern broadband service”, and yet she felt unable to rule against the FCC due to Brand X.
Justice Thomas’s change of heart doesn’t change anything for now. At best it means that if another case hits the Supreme Court testing the ability of a federal agency to hide behind Brand X that he might be ready to vote against it.
The other message that comes from the misuse of Brand X is that Congress has a responsibility to provide its intentions to agencies like the FCC. It’s somewhat unbelievable that Congress hasn’t taken any action concerning broadband since the days when we all were using dial-up. We’re long overdue for an update the Telecommunications Act of 1996, and Congress could reset the meter on many of the decisions the FCC is making. Unfortunately, that doesn’t look to be coming any time soon.