Court Decision Supports FCC Proposal to Define Title I Internet Service

June 2, 2017

by Seth L. Cooper
The Free State Foundation

At its May 18 public meeting, the FCC voted to propose rolling back public utility regulation of broadband Internet access services. The FCC’s Restoring Internet Freedom proposal argues that broadband Internet access service fits within the statutory definition of a lightly-regulated Title I “information service.” A May 8 U.S. District Court decision in Charter Advanced Services v. League (2017) supports the legal rationale for the FCC to define Internet access service as an “information service.”

The most egregious aspect of the FCC’s Title II Order (2015) is that it imposed public utility regulation on Internet access service providers. It did this by force-fitting Internet access into the Telecommunications Act of 1996’s definition of a Title II “telecommunications service.” To achieve that strained result, the order excluded Internet access service from the 1996 Act’s definition of a Title I “information service.

By reclassifying broadband service under Title I, the Restoring Internet Freedom proposal would return to an accurate reading of the 1996 Act. Quoting Title I’s definition of an information service, the FCC’s proposal states:

We believe that Internet service providers offer the “capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications.” Whether posting on social media or drafting a blog, a broadband Internet user is able to generate and make available information online. Whether reading a newspaper’s website or browsing the results from a search engine, a broadband Internet user is able to acquire and retrieve information online. Whether it’s an address book or a grocery list, a broadband Internet user is able to store and utilize information online. Whether uploading filtered photographs or translating text into a foreign language, a broadband Internet user is able to transform and process information online. In short, broadband Internet access service appears to offer its users the “capability” to perform each and every one of the functions listed in the definition-and accordingly appears to be an information service by definition.

The Charter Advanced Services v. League decision is important because it supports the FCC’s reasoning that broadband Internet access service fits within the definition of a Title I information service in at least two key respects.

First, the U.S. District Court’s decision recognized that an offering’s performance of one function listed under Title I – transforming – sufficed to render it an “information service.”Judge Susan Richard Nelson of the U.S. District Court for the District of Minnesota ruled that Charter’s Spectrum Voice offering “engages in net protocol conversion, and that this feature renders it an ‘information service’ under applicable legal and administrative precedent.” According to Judge Nelson:”In this specific factual context, the touchstone of the information services inquiry is whether Spectrum Voice acts on the customer’s information – here a phone call – in such a way as to ‘transform’ that information… By altering the protocol in which that information is transmitted, Charter Advanced’s service clearly does so.”

The District Court’s decision thus supports the Restoring Internet Freedom proposal’s rationale insofar as “transforming” functionalities bring an offering within the scope of Title I’s information services definition. Of course, broadband Internet access service offerings transform the form or content of users’ information in many ways beyond voice offerings. As the Restoring Internet Freedom proposal observes, ISPs “routinely change the form or content of information sent over their networks – for example, by using firewalls to block harmful content or using protocol processing to interweave IPv4 and IPv6 networks.” Indeed, broadband services generate, acquire, store, transform, process, retrieve, utilize, and make information available to users in myriad ways beyond those briefly identified in the FCC’s proposal.

Second, the U.S. District Court’s decision emphasized that the information service definition is keyed to the provision of the “capability” of performing certain functions – regardless of whether those functions are actually performed in every instance.So, in Charter Advanced Services v. League, it was “the capability to convert calls” between Internet Protocol (IP) and Time Division Mutiplexing (TDM) that brought Charter Advanced within the meaning of Title I. As Judge Nelson explained:

[T]he mere fact that Spectrum Voice does not always involve protocol transformation does not render the service any less of an ‘offering’ of information services. At no point does the Telecommunications Act suggest or require that a customer use an information service’s transformative features all the time. Indeed, the very language of the definition of an ‘information service,’-which merely mandates that there be an ‘offering of a capability‘ to, inter alia, transform information-belies such a conclusion.

Similarly, the Restoring Internet Freedom proposal emphasizes that “[t]he definition of “information service” speaks to the ‘capability’ to perform certain functions.” That is, an information service need not actually transform or perform other delineated Title I functions for broadband Internet access users in every instance. Rather, the proposal recognizes that “offering Internet access is precisely what makes the service capable of ‘generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information’ to consumers.”

The Restoring Internet Freedom proposal follows the FCC’s Cable Modem Order (2002), which “recognized that broadband Internet users often used services from third parties.” The Cable Modem Order – which declared cable modem service an information service “regardless of whether subscribers use all of the functions provided as part of a service” – was affirmed by the U.S. Supreme Court in NCTA v. Brand X (2005).

Conversely, the Restoring Internet Freedom proposal rejects the Title II Order’s effective disregard of functional “capability” as part of the definition of an “information service.” The Title II Order concluded that consumers use broadband service “primarily as a conduit” for accessing third-party content, applications, and services. This is not a conclusion on which there is anything like universal agreement. But, in any event, even if true, it is by virtue of being an Internet “conduit” that broadband Internet access service is capable of ‘generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information’ to consumers” – in an offering in which the conduit and information processing elements are inextricably linked.

The holding in Charter Advanced Services v. League is specific to IP-to-TDM voice offerings. Of course, the District Court’s decision does not alter the Title II Order or compel the FCC to make a Title I reclassification decision. Nonetheless, the court’s focus on the functional capabilities in the “information service” definition in the 1996 Act supports the argument for Title I classification of broadband Internet access service in the Restoring Internet Freedomproposal.

Classifying broadband Internet access service as an “information service” under Title I will restore a proper understanding of the statute and reflect its intent that Internet service providers be subject to light-touch regulatory treatment.

Social Heading