The FCC's Net Neutrality Rules Will Be a Bonanza for Lawyers
The FCC released the full text of its long awaited open internet rules Thursday—and now it’s time for the lawyers to get paid.
Image: The Q Speaks/Flickr
The FCC's 400-page order, which is intended to protect net neutrality, will almost certainly be challenged in federal court, experts and even FCC officials say, providing a windfall for the telecom lawyers that will litigate the issue in what could be a multi-year legal battle.
The new rules, which were vehemently opposed by the nation's largest cable and telecom companies, also face stiff resistance from the industry's allies on Capitol Hill. Already, Rep. Marsha Blackburn, the Tennessee Republican who has received gobs of money from the industry giants, has introduced legislation to stop the FCC's new policy dead in its tracks.
In short, the battle over net neutrality, the principle that internet service providers should treat all data equally, is far from over. On the contrary, the fight has entered a new, intensely political and highly litigious phase.
Roger Entner, a telecom policy analyst at Recon Analytics in Boston, said he expects initial litigation over the new FCC policy to take years. And if the FCC prevails, the case could eventually wind up before the Supreme Court, he said. Possible plaintiffs include industry giants like Verizon or AT&T, or smaller carriers like Mediacom Communications.
"This is going to be full employment for the Federal Communications Bar Association," Entner said. "Right now, every telecom lawyer in DC is reading this order and billing someone for it. I would expect law teams from multiple companies and industry associations are preparing for litigation."
"A billable hour for these guys is anywhere from $350 to $2000 an hour," Entner added. "Multiply that by 1000 lawyers over an extended period of time, and, well, you do the math."
The National Cable and Telecommunications Association, the industry's main trade group, issued a statement warning that the new rules "will lead to years of litigation, serious collateral consequences for consumers, and ongoing market uncertainty that will slow America's quest to advance broadband deployment and adoption."
The new FCC rules, which were approved last month by a 3-2 vote along partisan lines, are the agency's attempt to reassert regulatory power over the internet service practices of cable and telecom companies, following a major legal defeat one year ago that threw out the FCC's previous authority.
"The courts will ultimately decide this order's fate"
The new policy reclassifies broadband internet access as a "telecommunications service" under Title II of the Communications Act, in order to prohibit internet service providers from blocking or throttling internet content and services, two concepts at the heart of net neutrality. The new rules also ban paid prioritization, which are commercial deals between service providers and deep-pocketed content companies for preferential treatment.
FCC Commissioner Ajit Pai, who was one of the two Republican commissioners to vote against the new rules, issued a blistering dissent in which he said the new policy replaces internet freedom with "government control," and warned that the new rules are built on a flawed legal foundation.
"The courts will ultimately decide this order's fate," Pai wrote. "And I doubt they will countenance this unlawful power grab. Litigants are already lawyering up to seek judicial review of these new rules. Given the order's many glaring legal flaws, they will have plenty of fodder."
Pai wrote that even if the new policy survives judicial review, "these will be the consequences: higher broadband prices, slower speeds, less broadband deployment, less innovation, and fewer options for American consumers. To paraphrase Ronald Reagan, President Obama's plan to regulate the Internet isn't the solution to a problem. His plan is the problem."
Pai argues that President Obama's strong declaration of support for Title II reclassification last fall essentially forced FCC Chairman Tom Wheeler to pursue heavy-handed new rules that will impose onerous new regulations on a flourishing industry that will harm innovation and investment.
Chris Lewis, vice president of government affairs at DC-based pro-net neutrality advocacy group Public Knowledge, called Pai's suggestion that Obama played the decisive role "truly insulting to the millions who commented at the agency" over the course of the last year.
"We appreciate President Obama's support for strong rules based on Title II, but I doubt the president and the majority of the FCC would have had the courage to make this decision without the legal reasoning and clear opinions filed by millions of Americans," Lewis said in a statement.
"This is not a government takeover of the internet or an onerous utility-style regulation"
FCC officials have emphasized that the new rules do not constitute "utility-style" regulation, despite the claims of industry critics and their allies on Capitol Hill. That's because the FCC is using its power to "forbear" from enforcing certain aspects of Title II, including rate regulation, taxes, fees, and other burdens.
"We can dismiss the ridiculous claims from the phone and cable companies and their fear-mongering mouthpieces," Matt Wood, policy director at Free Press, a DC-based public interest group, said in a statement. "This is not a government takeover of the internet or an onerous utility-style regulation."
But critics of the new policy—some of whom have taken to mocking it as "Obamanet," after Obamacare—are not swayed, and have unleashed a furious assault on the new rules.
"If you like your service plan, you will not be able to keep it," Rep. Blackburn, who has introduced a bill to kill the new rules, said in a statement. "The age of Obamanet is upon us and I hope the government proves better at running a network than a website, but logic would seem to dictate that I not hold my breath."
Blackburn's bill faces an uphill battle. Even if it reaches Obama's desk—which is unlikely because of significant support for the new rules among Senate Democrats—it faces an almost certain veto from a president who strongly advocated for the new policy.
As a result, critics of the new rules will most likely focus their efforts on overturning the policy in federal court. And that's something that even FCC Chairman Wheeler seems resigned to. "The big dogs are going to sue," he said earlier this month, referring to the nation's largest cable and telecom companies.
Needless to say, it's a good day to be a telecom lawyer in Washington, DC.