Ancillary to What? The FCC’s Mixed Record in Expanding its Regulatory Reach Without Explicit Statutory Authority
Pennsylvania State University - College of Communications; Pennsylvania State University - Dickinson School of Law
March 19, 2012
Technological and marketplace convergence challenge the ability of Congress to craft definitions that specify the scope of Federal Communications Commission (“FCC”) jurisdiction. This has created uncertainty about whether and how the FCC can resolve conflicts particularly for ventures that offer a bundle of services that combine regulated telecommunications services and unregulated information services. While not explicitly required by Congress, the FCC has determined that it must apply only one regulatory classification to any single service. Additionally the Commission has opted to apply the statutory classification that triggers the least or no regulation.
Whether by credible empirical evidence, or flawed assumptions and projections about marketplace competition, the Commission grows increasingly confident that marketplace self-regulation can remedy most anticompetitive practices. If the FCC has overconfidently projected the future sustainability of competition, its policy decisions and statutory interpretations make it quite difficult for the Commission to re-regulate, even if it acknowledges mistakes and identifies how changed circumstances necessitate renewed government oversight.
Because the FCC largely considers its regulatory reforms moving in one direction toward deregulation, the Commission rarely acknowledges the potential need to re-regulate, particularly when it makes initial determinations of what statutory service classification applies, e.g., broadband Internet access constitutes and information service, or when it decides to reclassify a service leading to less regulatory oversight, e.g., converting Digital Subscriber Line broadband access from a telecommunications service to an information service.. An FCC determination that a carrier provides an information service means that the Commission has abdicated direct statutory authority to intervene and remedy problems. Even facing evidence of anticompetitive behavior, such as Comcast’s deliberate obstruction of subscribers’ Internet traffic in the absence of congestion, the Commission lacks direct statutory authority as would exist had the Commission made a conditional or partial determination that Internet access includes a telecommunications service component.
Having exempted Internet access technologies from any of the requirements established in Title II of the Communications Act, the FCC attempted to invoke necessary statutory authority based on Title I of the Communications Act. This strategy of establishing “ancillary jurisdiction” uses an indirect method whereby the FCC extrapolates statutory authority in the absence of explicit language. The Commission has generated a mixed record in convincing courts that such indirect authority exists.
This paper will examine cases where the FCC has successfully convinced appellate courts that ancillary jurisdiction exists and cases where the Commission has failed. In the former the FCC lawfully extended its jurisdiction to include cable television, even in the absence of enabling legislation, based on an analogy. The Commission argued successfully in the Midwest Video cases (406 U. S. 649 (1972) and 440 U. S. 689 (1979)) that because it had direct statutory authority to regulate broadcast television under Title III of the Act, and because cable television had the potential to impact the viability of “free” advertiser supported broadcast television, the Commission had ancillary jurisdiction to establish rules and regulations to curb the market fragmenting impact of cable television.
The FCC also has achieved success in applying ancillary jurisdiction to Voice over the Internet Protocol (“VoIP”) companies and imposing many regulatory requirements previously applied solely to telecommunications service providers. Having refrained from specifying whether VoIP providers offer telecommunications services, or information services, the Commission nevertheless invoked ancillary jurisdiction authority. Reviewing courts have affirmed the FCC’s jurisdictional claim largely based on the sense that VoIP competes with and constitutes a technological alternative to dial up telephone service.
On the other hand, the FCC has failed to stretch ancillary jurisdiction to include ventures that it previously had classified as information service providers. In this instance the reviewing court did not accept that because the FCC has general statutory authority over “wire and radio” in Title I of the Communications Act, the Commission can extend its regulatory reach to include information services simply because Internet Service Providers use wire and radio to provide service. The FCC similarly failed in American Library Association v. FCC, 406 F.3d 689 (D.C. Cir. 2005), to convince a reviewing court that broadcast television jurisdiction included authorization to require television set manufacturers to construct sets capable of processing copyright protection instructions.
This paper will identify what circumstances favor and disfavor the FCC’s attempt to invoke ancillary jurisdiction. The paper concludes that the Commission will have greater difficulty in securing judicial approval of Title I ancillary jurisdiction for instances where it previously made a determination that it lacked direct statutory authority to act. Even though the perceived need to intervene shows that the FCC miscalculated the sufficiency of marketplace self-regulation, the Commission cannot easily convince courts that statutory definitions are so pliable that it can toggle between two categories. The paper also concludes that the FCC can readily invoke ancillary jurisdiction when the need for oversight combines public interest concerns with matters of regulatory parity.
Keywords: FCC, jurisdiction, Title I, Title II, ancillary jurisdiction, convergence
JEL Classification: K23, L86, L96working papers series
Date posted: March 23, 2012
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