A Novel Approach to Internet Regulation

When the subject of “network neutrality” or “open internet” come up, most people glaze over (or run quickly in the other direction). However, there is a case currently before the D.C. Circuit, brought by Verizon against the FCC, whose outcome could affect many beyond the original parties. In the case, Verizon has made a novel and risky constitutional argument that challenges the Federal Communications Commission’s Open Internet rules in Verizon Communications Inc. v. Federal Communications Commission, D.C. Circ., No. 11-1355, argued 9/30/11. The most interesting—if not critical--legal question posed by the plaintiff is whether, in its role as a provider of internet access, Verizon is eligible for First Amendment protection. Are the FCC rules that require Verizon to carry content generated by others a restriction on Verizon’s First Amendment rights?  Are the existing rules that prevent Verizon from treating content created by others to a lesser level of service (placing some restrictions on delivery, whether it be capacity, price, speed or some other limitation) or treating its own web content better than those of its rivals who rely on Verizon as a delivery mechanism only, a violation of Verizon’s First Amendment rights? At least from my (possibly warped) perspective, this makes interesting cocktail chatter.

However, in order to really understand the issue, it’s important to understand the historical background. Don’t glaze over. It really is interesting.

The Open Internet rules, which are synonymous with the “network neutrality” discussion that’s been going on for years, are a derivative from the rules of common carriage which were originally enacted when there was a single telephone company. Raise your hand if you remember those days. The rationale was that without obligations to provide connectivity to all customers and with like services, a single phone company (AT&T), could use its monopoly power to both stifle its competitors and harm consumers.

In a similar vein, the “must carry” rules were created by the FCC in the 1970s to require cable companies to carry content created by local broadcasters within a 60-mile (later changed to 50-mile) radius of the cable company's service area. In 2010, the FCC logically extended these rules designed for telephone usage and expanded them to cover the carriage of internet traffic (see http://www.fcc.gov/guides/open-internet).
 
But in the current case, it’s Supreme Court language from the “must carry” rule cases regarding cable television that are playing a significant role in Verizon’s position. In Turner Broadcasting et al v. FCC (512 U.S. 622 (1994) and Turner II, the court reviewed the “must carry” rules. Turner and the other cable providers’ argument was that by being forced to carry local programming, they were denied the free speech protections guaranteed by the First Amendment.  The issue was Turner’s right to transmit only that content that it created rather than that provided by smaller and less powerful broadcasters (read: local television stations). In Turner, the Supreme Court identified three substantial government interests that outweighed what it deemed to be the negligible impact of carrying such programming on the existing cable providers:

1. the preservation of free local broadcast television;
2. the promotion of widespread dissemination of information from multiple sources; and
3. promotion of fair competition.

A respected authority, Professor Jonathan Askin of Brooklyn Law School (and former FCC attorney) recently told BNA that Verizon wants it both ways. “The company argues, on one hand, that it is a speaker when it transmits communications across its network, and therefore [Open Internet/Net Neutrality] rules violate its First Amendment rights. On the other hand, Verizon argues that it provides a neutral platform that has no control content and therefore is guaranteed the protections of both the Communications Decency Act of 1996 and the Digital Millennium Copyright Act of 1998.”

In this context, Verizon is relying on two disparate sections of the U.S. Code. Section 230 of the Communications Decency Act (47 U.S.C. Section 230) grants a certain degree of immunity from prosecution for content created by others. While defamation, privacy claims, negligence and other tort claims associated with publication are covered by this statute, claims of copyright infringement and intellectual property claims are not covered.

Section 512 of the Digital Millennium Copyright Act (17 U.S.C. Section 512(c)) places limitations on an entity’s liability for “storage, at the direction of a user, of copyrighted material residing on a system or network controlled or operated by or for the service provider… Is Verizon providing content or delivery services or some combination of both? How Verizon’s internet service offering(s) are regulated is a direct function of this question.

Currently, a three-judge panel of the U.S. District Court for the District of Columbia Circuit is contemplating its next move. If it sides with Verizon, Open Internet rules will be gone (no doubt after protracted litigation), and any company that provides access to the “Information Superhighway” will be able to act as its own traffic cop, allowing some favored content providers (read: themselves) to pass and denying others (read: competitors) access—either at full or limited speed. Potentially more devastating is the thought that if Verizon prevails, it will open the way for any internet service provider to challenge any FCC regulation on the grounds of the First Amendment. And that’s, at minimum, both a lot of work for a lot of lawyers, but a bad deal for consumers any way it’s viewed.

Verizon has made a very interesting and creative argument. It’s novel to be sure, but the ramifications if it wins are nothing short of profound. However, by making the argument—and conceivably winning on it—Verizon must be prepared to live with the potentially costly consequences.   To borrow from an ancient Saturday Night Live skit, “dessert topping or floor wax.  You decide.”  In this case, that decision rests with the D.C. Circuit.