FCC v. Brand X

There have been two court cases recently heard by the supreme court that are very important to the future of the internet. I’ve been wanting to write an entry on them since oral arguments were made but never got around to it. The first was the FCC v. Brand X, the second the all famous MGM v. Grokster case. Due to my laziness the great Lawrence Lessig beat me to the punch in noting how relevant these cases are to the stewards of end to end internet. Now that the oral argument transcripts have been posted, I have no excuse not to comment. The law is however, a very interlinked and complicated thing, so bear with me.

FCC v. Brand X in a really large nutshell with a bit of the vine attached. It begins with the Telecommunications Act of 1996. Congress decided to overhall telecommunications and clarify a bunch of stuff for the internet age, as the previous laws predated the internet, and the definitions made everyone confused. So they basically split information transport services into three classifications: telecommunications services, broadcast services, and cable services.

A telecommunication service is roughly defined as offering to the public the transmission of user chosen information between user chosen two points without change in the format or content. The thing to stress here is that it’s user data going from A to B, and the carrier isn’t really changing what’s going through. Because of AT&T breakup anti-trust stuff, telecommunications services are regulated in such a way that force providers to allow competitors access to telecommunications lines.

A cable service is the one-way transmission to subscribers of “programming” and the interaction requried for the selection of such use. 47 USC § 522(6). The cable guys were pretty much given localized monopolies because we wanted to give them more incentive to lay out cable or some such thing that I still have trouble understanding.

A broadcast service is pretty much broadcasting stuff like TV and radio. You can ignore these for now.

The Telecommunications Act of 1996 also defines “Information Services” to something like “guys who provide content over a telecommunications service” like google or the associated press. These are specifically less regulated due to free speech concerns.

Okay enough background! What happened was Michael Powell over at the FCC decided the best way to promote broadband over cable was to grant localized monopolies to the cable companies so they’d invest the money in building the infrastructure for two way communications along cable lines, as a lot of it was only designed for minimal “interaction required” to change channels and such. The phone companies however, should let other internet service providers provide DSL. He did this by classifying internet over cable as an information service, and DSL over telephone lines as a telecommunication service.

You may be thinking to yourself, hold the phone. Shouldn’t cable internet be classified as a cable service, because it goes over cable? Well if you check the definition, cable service is defined as pretty much one way communication of programming provided by the cable provider. The internet is not like this. Internet service works end to end; you pick an IP address and you send packets there and vice versa. They come out of your computer pretty much exactly the way they arrive at the other computer if everything works properly.

So now you may be thinking, “Okay, looking at it like that, it must be a telecommunications service!” And in a rational world, it probably would be. But the FCC decided for phone companies it’s a telecommunications service and for cable companies it’s not. Their reasoning was apparently, “Because the cable companies provide stuff like DNS, email, caching, and webspace, it’s an information service!” Phone companies provide access to the DSL capabilities of lines to ISPs and people and as such, are a telecommunications service.

If this doesn’t make sense to you, you’re not alone. I’m sitting here trying to figure out a simple way to explain this, but it’s so retarded I’m having difficulty. Essentially, phone companies provide raw access to their DSL lines to ISPs who provide internet over them. Because they have done this in the past, this makes it a telecommunications service. Under the FCC argument, if the phone companies had never offered DSL service to ISPs, and instead only offered internet access directly to the users, it would not be a telecommunications service, it would be an information service. So since the cable companies do not offer to other ISPs access to the lines, it’s not a telecommunications service. It’s interesting to note that information service has as a requirement, transmission over a telecommunications service. This would presumably prove that there’s a telecommunications service in use, but not offered seperately.

So the FCC did this bit of mental logic and the cable companies rolled out broadband happy as can be. Then an ISP Brand X decided they wanted to be able to use the cable lines. They couldn’t figure out why phone companies were required to let them use their lines and cable companies weren’t so they sued and in a series of court cases, eventually won.

So the FCC took it to the Supreme Court and made it’s arguments. In the end, the case seems to come down to the word “offer”. If it is reasonable for the FCC to intepret the phrase “offering telecommunications service” as “offering seperately telecommunications service” then because of Chevron v. NRDC, the court would have to defer to the FCC on this issue.

So the crux of the FCC argument is “cable companies add email to this telecommunications service and sell it as a whole, they’re actually selling an information service and don’t sell a telecommunications service.” The FCC interprets the statue as giving themselves the discretion to decide whether or not to force a company to unbundle it’s telecommunications service, which would be regulated.

The Brand X argument is essentially, “That’s retarded.” If you interpreted “offering” as “offering seperately” then you would be avoiding the intent of congress altogether by providing a loophole the size of the empire state building. With that sort of interpretation, liquor stores could avoid regulation by selling “smoking services” to children by bundling lighters with cigarettes. *Poof* regulation gone.

The question is whether or not the statute is vague and if the FCC’s interpretation is reasonable. If both of these are true, then due to Chevron, the court must defer to the FCC, and Brand X loses. If either is false, the FCC loses.

It’s 3am, and I’m going to post this without any proofing. If there are any errors or omissions, please leave a comment and I’ll try my best to fix it. Here’s a link to the oral arguments.

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