Op Ed: Open Internet Order And The Need For Robust FCC Common Law
Law360, New York (June 17, 2015, 10:25 AM ET) —
By Brita Strandberg and Danielle Piñeres
The U.S. Federal Communications Commission recently adopted new open Internet rules in a sweeping 300-plus page order. The heart of the Open Internet Order is the commission’s decision that broadband Internet access service is a telecommunications service and not, as the commission had previously held, an information service. This dramatic change in course means that providers must consider such fundamental questions as whether services they view as information services are now, under the FCC’s new reasoning, telecommunications services subject to additional regulatory obligations.
The questions do not end there, of course. In some areas, such as customer privacy, the commission has recognized that the order raised difficult new questions and promised further action. In others, the commission has significantly changed existing definitions, such as the definition of “public switched network,” in ways that may have unintended consequences. Dissenting Commissioner Ajit Pai argued that the order undermines certainty, instead creating “a thick regulatory haze.”
While the order undoubtedly provides definitive guidance in some areas, it simply cannot resolve all of the questions it raises. Of course, this problem is neither novel nor unsolvable. No rule of law, however carefully written, can anticipate all circumstances. In the United States, we rely on our common law system to address this challenge. Our common law approach allows law to evolve over time as it is constantly applied to new facts to generate new precedent.
The FCC should consider a similar approach. Chairman Tom Wheeler has recognized that “pro-innovation and investment” regulation will provide “certainty about the rules of the road” for the communications industry. The FCC has the tools it needs to provide certainty — it can act in any number of ways, including by issuing advisory opinions, declaratory rulings and responses to petitions for clarification. Indeed, the industry has frequently asked the FCC to resolve ambiguities or outstanding questions using these methods. Unfortunately, the FCC has too often left these requests unanswered.
While some have suggested abolishing the FCC altogether in favor of a purely common law model of regulation, such an approach would risk throwing the baby out with the bathwater. Notice and comment rule-making permits the FCC’s expert policymakers to implement statutory mandates in an open, transparent way that allows all stakeholders an opportunity to participate. But as others have pointed out, a rule “will never get it right for all time; we always need the escape hatch and the learning laboratory that individual cases give us.”
The FCC can establish a new standard by rule, “then flesh out and enforce the standard via adjudication on a case-by-case basis. Over time the decisions collectively would form an evolving body of opinion defining the meaning and reach of the standard, in keeping with ongoing market and technology changes. This approach would combine the authority and simplicity of a single standard, with the organic, dynamic processes of the common law.” In short, a rule is a good start, but the FCC must also constantly apply its rules to new facts so that it can provide the industry with needed certainty.
The Open Internet Order recognizes the need for an adjudicatory approach to many of the open issues, but does not explicitly go far enough. The order built in an advisory opinion process to “provide clarity, guidance, and predictability concerning the open Internet rules” and “enable companies to seek guidance on the propriety of certain open Internet practices before implementing them.” The FCC delegated authority to the Enforcement Bureau to consider and respond to such requests for advisory opinions. But this process may be too constrained to offer the practical help providers will need.
The FCC made clear that the Enforcement Bureau will have discretion whether to respond to a request for an advisory opinion. With certiorari-type powers and no set timeline within which it must act, it will be altogether too easy for the Enforcement Bureau to decline to provide advice, or to provide it so long after the fact as to be outdated and ultimately unhelpful. Moreover, the FCC indicated that the advisory opinions may address only “prospective or proposed conduct,” not ongoing or prior conduct. While this could be helpful for a company contemplating entry into a new line of business, it will do little to answer clients’ most pressing question — how does this law apply to my business today?
The commission should consider replicating its approach to data roaming complaints. In its 2011 order on data roaming, the commission “provide[d] that parties may file a petition for declaratory ruling under Section 1.2 of the Commission’s rules” to resolve disputes arising under a new mobile data roaming rule. T-Mobile filed such a petition in May 2014, which the FCC timely addressed in December 2014, after providing an opportunity for interested parties to comment.
In its declaratory ruling, the FCC provided helpful clarification for the industry regarding how the commission will evaluate whether a data roaming agreement meets the requirements of the commission’s rules. The FCC provided guidance on what kinds of evidence it will consider in determining whether a data roaming agreement is reasonable and described how certain presumptions adopted in the data roaming order will apply. This serves as a good example of the process working as it should: the FCC adopts a broad rule with some inherent lack of precision — in this case with a 17-factor test for how to evaluate data roaming agreements — the industry requests guidance, and the FCC responds in a timely manner to clarify the issues.
Regrettably, the mobile roaming context is the exception, not the rule. The FCC should be taking more opportunities to make common law in response to requests from the industry. For instance, in the area of universal service, companies need more guidance in response to even basic questions like, “with my business model, am I required to contribute?” Neither the relevant statute, the FCC’s regulations, nor the Form 499A — which is supposed to provide guidance to the industry about how to calculate Universal Service Fund contributions — is a model of clarity. When presented with petitions for declaratory rulings or for clarification, therefore, the FCC should seize those opportunities to provide timely guidance. Not only would this approach provide immediate clarification and resolve uncertainties for an individual petitioner, but over time, it will build up a body of common law that others in the industry can rely upon for direction.
Similarly, in the Telephone Consumer Protection Act context, the FCC should be making more and smaller decisions to guide the industry. There are presently 32 pending petitions filed at the FCC requesting clarification of certain aspects of the commission’s TCPA rules, including in the areas of: (1) defining “prior express written consent” of the consumer needed to opt in to certain kinds of telephone calls; (2) defining what constitutes an “autodialer” under the FCC’s rules, especially in the context of text messaging; and (3) aspects of the commission’s junk-faxing rules.
While the commission is working on an omnibus order to resolve these matters, to be considered this week at its June open meeting, it would have been better advised to tackle them expeditiously, one at a time, as they arose. As FCC Commissioner Michael O’Rielly has recognized, the FCC must act on this backlog of petitions in order to “help restore certainty and reduce the need to file additional petitions.” In addition to certainty for the industry, making a series of smaller decisions rapidly allows the FCC to quickly correct midstream in the case of unanticipated downstream consequences. A common law approach recognizes that decision makers will sometimes act in error, but allows for both incremental clarification and correction.
Additional guidance is important not just for the industry — which needs to know how to comply — but also for the courts. In the absence of decisions by the FCC as the expert regulator, the federal courts must step in to fill the void as they adjudicate actions brought by consumers under the TCPA and in other contexts. It would be wise for the courts to seek FCC guidance on these issues using a “primary jurisdiction referral.” This procedural doctrine “applies where enforcement of a claim originally cognizable in a court requires the resolution of issues which, under a regulatory scheme, have been placed within the special expertise and competence of an administrative agency.”
But litigants and courts are often hesitant to seek FCC guidance, perhaps because the FCC has no set timeline within which it must respond to pleadings filed by the parties after a referral. One TCPA case referred to the FCC as the agency of primary jurisdiction languished for over two years before the FCC acted, while the FCC never acts on others. Some have estimated that the delay from referring a case to the FCC is between two and five years. This not only fails to provide timely guidance for the industry, it also throws a wrench in the judicial system.
Notice and comment rule-making serves a useful purpose. Congress and the public rely on the FCC to give meaning to vague statutory frameworks in a way that involves all stakeholders and creates a record that enables adequate judicial review. But no agency can ever anticipate all the potential consequences of a new rule, or be able to use the rule-making process to respond in a flexible and agile way to new technological developments and business models. As the regulator of an industry that is incredibly prone to reinvention at a rapid pace, the FCC should make more, smaller and faster common law-like decisions. Over time, such decisions will create a body of law that both attorneys and their clients can rely upon for guidance and clarification in the highly technical areas subject to FCC regulation.
—By Brita D. Strandberg and Danielle J. Pineres, Harris, Wiltshire & Grannis LLP
Brita Strandberg is a partner at Harris, Wiltshire & Grannis in Washington, D.C., where she co-chairs the firm’s audits and enforcement practice, representing communications and technology clients before the Federal Communications Commission and federal courts.
Danielle Pineres is an associate at Harris,Wiltshire & Grannis in Washington, where she practices in the areas of telecommunications regulation, spectrum policy, and international trade and investment.
Harris, Wiltshire and Grannis represents a variety of clients in telecommunications regulatory matters, including regarding the FCC’s open Internet proceeding and related appeals, Universal Service, TCPA and mobile data roaming matters.
This article is not intended to convey legal advice. It is circulated to HWG clients and friends as a convenience and is not intended to reflect or create an attorney-client relationship as to its subject matter. The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates.