Agency Deference or Strict Statutory Construction—Conflicting Case Precedent

Many observers expect the D.C. Circuit Court of Appeals to vacate the FCC’s attempt at fashioning federal Internet policy when it reprimanded Comcast for the company’s violation of the 4 Internet Freedoms. The Commission did not use a notice and comment rulemaking confident that it has both direct and ancillary jurisdiction to impose a policy statement that it subsequently construes as establishing enforceable rules.

In many reviews of bold and creative interpretations of the Commission’s statutory authority, courts seem to go out of their way to defer to agency expertise. But in other cases reviewing courts are sticklers for explicit statutory authority. How can one predict which model applies?

A good example of the deference model is Justice Thomas’ majority opinion in National Cable & Telecommunications Ass’n v. Brand X Internet Services, 545 U.S. 967 (2005) where the Supreme Court affirmed the FCC’s classification of cable modem broadband access as an information service. A good example of the strict construction model are the several cases where the FCC sought to allow long distance carriers to withdraw tariffs even in the absence of legislative repeal of the explicit requirement that carriers file tariffs; see MCI Telecommunications Corp. v. FCC, 765 F.2d 1186 (D.C. Cir. 1985); American Tel. & Tel. Co. v. FCC, 978 F.2d 727 (D.C. Cir. 1992); MCI Telecommunications Corp. v. American Tel. & Tel. Co., 512 U.S. 218 (1994).

It’s easy for an uncertain court to defer to agency expertise: what better way to avoid claims that the court has legislated from the bench. But it’s also easy and enticing for a court to rebuke an agency’s bold attempt to expand its regulatory wingspan. The FCC will claim that the Communications Act requires flexibility in light of technological innovation. But it’s predictable that a regulator can perceive the need to protect the public by interpreting a public interest mandate and broad authority to regulate wire and radio services to include the Internet, which we know is an amalgam of networks, but also content, applications and software.

How can a court hold a line or draw one between regulated Internet subjects and unregulated ones? The Commission, with approval by Justice Thomas, creates a sometimes metaphysical difference between carrier offering of telecommunications capabilities as a subordinate aspect of an information service and providing telecommunications services. Justice Thomas got into a war of competing analogies with his usual soul mate Justice Scalia who offered this skeptical assessment of the FCC’s jurisdictional claim: an “experienced agency can (with some assistance from credulous courts) turn statutory constraints into bureaucratic discretions,” reserving, for example, the option of regulating Internet content based on statutes offering absolutely no basis for anything beyond promoting Internet access.

Making a Mark in Telecom Policy: The 3PI Rule

With over thirty years experience in trying to influence U.S. federal telecommunications policy making, I can offer insights about the process that have passed the test of time. The 3PI Rule applies equally regardless of presidential administration and political party notwithstanding the wishful thinking of some about a “brand new day.” While I am using trite phrases, I might as well add this one about the rules: “the more things change, the more they remain the same.”

I have found first hand that individuals and groups, embracing and applying the following rules, achieve a comparatively greater impact.

1) Be Provocative!

In the policy making process—and in particular, framing the debate in Congress, the FCC, and in the trade and general circulation press—being provocative matters. Your quotes have a better zing, regardless whether they make sense and have empirical support. You may develop a reputation as a loose cannon, loonie, or true believer, but important decision makers will know about you and your message, partly because of your media quotes.

People like Scott Cleland, Richard Bennett, and Scott Wallsten understand this. They have to develop a thick skin to handle often personal and nasty criticism. Fairly or not, their provocations trigger such reactions. Scott Cleland is a major “go to” guy for insights and juicy quotes on the perils of network neutrality and other current issues. See his blog: http://precursorblog.com/. He recently vilified Google and a prominent economics professor, on leave for a job with the company: “antitrust’s modern day Pinocchio claimed that competition is just ‘one click away,’ now Google is claiming that the notion that scale is important to search competition is ‘bogus.’ Google’s Chief Economist, Hal Varian is pushing a preposterous, self-serving argument . . ..” See http://precursorblog.com/content/google-antitrusts-pinocchio

Richard Bennett offers helpful engineering insights about the Internet, but also meets the provocation test, for example, by claiming that public interest advocacy groups such as Free Press (http://www.freepress.net/) and Public Knowledge (http://www.publicknowledge.org/)
are “working the refs” when claiming that the FCC’s broadband workshops lack fair representation; see http://broadbandpolitics.com/?p=5714. Of course these groups work the refs just as companies like Verizon and AT&T who spend millions annually to do so. With comparatively more funds available, these companies have a much better shot at even influencing the selection of the refs.

Scott Wallsten offers helpful and insightful analysis which I may not always endorse. He too knows the value of provocation when coming up with titles for his work, e.g., Everything You Hear about Broadband in the U.S. is Wrong; see http://www.pff.org/issues-pubs/pops/pop14.13wallstenOECDbroadband.pdf. Scott attempts to show flaws in statistics showing comparatively mediocre broadband penetration in the U.S. However, he uses FCC-compiled data to make his point, despite the fact that many people, including me,
have challenged the FCC’s work product as quite flawed, e.g., using zip codes and a 200 kilobit per second threshold to define broadband; see http://www.vjolt.net/vol14/issue2/v14i2_100%20-%20Frieden.pdf.

2) Be Prolific

It pays to produce work early and often. I marvel at the productivity of people like Greg Sidak, http://www.law.georgetown.edu/faculty/facinfo/tab_faculty.cfm?Status=Faculty&ID=2128;
and Chris Yoo, http://www.law.upenn.edu/cf/faculty/csyoo/. I try to match their work ethic, but my primary job as undergraduate instructor gets in the way. I have needy students requiring lots of care and feeding, and the same applies to the administrative work in a College of Communications. Lacking any research assistant help, I “hand craft” everything.

3) Find a Prestigious Affiliation

This rule follows from rule 2: an affiliation with a law school, or major think tank offers both credibility and greater likelihood for staff support. I know the former matters, because my Penn State affiliation sometimes gets replaced with the University of Pennsylvania. Also it helps when a reporter thinks I am a law professor as occurs in today’s Parade magazine: http://www.parade.com/news/intelligence-report/archive/090830-more-choice-for-cellphone-users.html.

When the FCC sought to secure outside analysis for broadband development, two of the first appointments when to researchers at Harvard and Columbia: see http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-291986A1.pdf; http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-292598A1.pdf.

4) Incumbents Matter Most

Recognize that regardless of who runs the executive branch and which party has a majority in the legislature, incumbents have money, clout, and staying power. During the course of one’s career few incumbents fail, and only a few market entrants eventually acquire incumbency status. In the former category, Western Union did manage to lose its text market dominance and now generates most revenues from money transfers. In the latter category, the Internet has made incumbents of Google, Amazon, and e-Bay. But year in and year out, incumbents such as Verizon, AT&T, Comcast and Time Warner have the resources to sponsor research, appeal unfavorable regulatory decisions, and work the refs better than everyone else.

Global Best Practices in Telecom Policy

Papers presented at the 35th annual Telecommunications Policy Research Conference http://www.tprc.org/ held last weekend offered more evidence that the United States no longer offers other nations forward looking policy and regulatory models. I dare say the preoccupation with lobbying and litigation has generated an unanticipated extra liability: loss of best practices leadership.

My proof:

Rather than acknowledge that the U.S. lags many other nations in broadband penetration and affordability (see http://www.speedmatters.org/; http://www.benton.org/), representatives of the U.S. government quibble over the veracity of the statistics.

The dominant incumbent telecomms service provider in the U.K., Italy and Australia volunteered to create an access subsidiary to simplify and largely eliminate regulation of corporate activity at higher layers. U.S. carriers and the FCC summarily reject this approach as eliminating synergies, mandating "dumb" pipes and relegating any physical connection operator to perpetually regulated status.

Korea joins the EU in embracing layers/horizontal regulation in lieu of silo-based, media specific vertical regulation. U.SA. carrier reject this model for the same reasonas above.

Canada has largely solved its universal service challenge while U.S. consumers subsidize carriers with most of an annual $7 billion windfall.

Some day soon we in the United States will begin to recognize that expensive, lackluster broadband access and a highly politicized regulator and policy making process knocks off a few tenths of a percent in national productivity.