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Tuesday, March 29, 2005

Brand X: Whither FCC Deference?
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Today's Supreme Court argument in the Brand X case raises an important question: why did the Justices downplay the idea that courts should defer to the FCC when it comes to interpreting the Communications Act? By all accounts, the Court said almost nothing about this issue. The answer may say less about the Court or the parties' arguments than about the conflicting policy goals surrounding the FCC's efforts to promote investment in broadband networks.

Of course, the way parties argue a case does impact how judges discuss it. In that regard, it is worth noting that the "deference" argument dwindled in importance in the FCC's filings over the course of the Brand X litigation. The argument figured prominently in the FCC's last major filing with the 9th Circuit and, to a lesser extent, in the agency's request that the Supreme Court take the case. But in preparing the Supreme Court for oral argument, the FCC relegated the deference argument to 7 pages at the end of a 45-page brief. Although the cable industry briefed the issue extensively, the Court may not accord those arguments much weight given the FCC itself did not.

One can only speculate on why the FCC, in essence, would have buried an argument that directly implicates the scope of its authority to implement its organizing statute. It seems doubtful that the agency would have adopted this approach based solely on an effort to improve its chances of winning the court case. The alternative to arguing that courts should defer to the FCC's decision as a matter of principle was arguing that the FCC correctly classified cable modem service under the Act. But winning the case on that point would require taking the Court down the rabbit hole of convoluted statutory langauge that does not apply easily to newer digital technologies such as cable modem service. The result: an invitation to the Court to pepper counsel with skeptical questions and to substitute its own interpretations for the FCC's.

Nor does it seem likely that the FCC would de-emphasize deference solely for reasons of promoting broadband. The FCC has attempted to promote investment in broadband networks by shielding them from regulation. The Supreme Court can assist this effort greatly if it formally endorses the FCC's decision that cable modem service is an unregulated "information service." If, however, the Supreme Court concludes that cable modem service should be treated like highly-regulated telephone service, it could do so in a way that precludes the agency from considering other alternatives, such as using its authority to "forbear" from telephone regulation.

A more likely hypothesis may involve policy concerns other than promoting broadband deployment. For example, the Justice Department -- the FCC's attorney in this case -- has expressed concerns publicly about whether classifying cable modem and other broadband services as "information services" could undermine its ability to conduct lawful surveillance as communications services migrate from telephone networks to broadband networks. That is because the statute providing for wiretapping generally does not apply to information services. Although Justice agreed to represent the FCC in Brand X, it may have wanted the Supreme Court to resolve the classification of cable modem service once and for all, rather than sending the case back so the 9th Circuit could show more deference to the agency.

It will remain unclear whether this explanation or some other underlies the FCC's apparent reluctance to argue that its classification of cable modem service deserved deference. What is clear is that the agency has incurred some risk by pursuing this approach. And it will only discover whether this risk was worth taking when the Supreme Court ends speculation over what it was thinking during argument today by issuing an opinion later this year.

posted by Kyle Dixon @ 6:11 PM | Broadband , Cable , Communications , Supreme Court , The FCC

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