Ancillary to What? The FCC's Mixed Record in Expanding Its Regulatory Reach Without Explicit Statutory Authority
Posted: 22 Mar 2014
Date Written: March 21, 2014
For Internet-based services, such as retail broadband, the Federal Communications Commission (“FCC”) has evidenced great ambivalence over the scope of its jurisdiction and the need for its regulatory intervention. On one hand, the Commission decided to apply the information service statutory classification that triggers little if any regulatory authority. Whether by credible empirical evidence, or flawed assumptions and projections about marketplace competition, the Commission initially expressed confidence that self-regulation could remedy most anticompetitive practices.
The FCC subsequently regretted its broad sweeping deregulatory initiative in light of complaints about discriminatory practices of some Internet Service Providers (“ISPs”) and new found concerns about the viability of broadband access competition. Having exempted Internet access technologies from any of the requirements established in Title II of the Communications Act, the FCC subsequently 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 when explicit statutory authority does not exist. 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 United States v. Southwestern Cable Co., 392 U.S. 157 (1968), 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.
Recently the FCC convinced an appellate court that it could and should apply duties to deal between information service providers of mobile wireless data services, so long as the requirements do not constitute common carriage. The FCC also has achieved success in applying ancillary jurisdiction to Voice over the Internet Protocol (“VoIP”) companies and now imposes 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 claims largely based on the sense that VoIP competes with, and constitutes a technological alternative to, dial up telephone service.
On the other hand, a reviewing court in Comcast Corp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010) refused to accept the FCC’s assertion that it could lawfully stretch ancillary jurisdiction to include ventures that it previously had classified as ISPs. In this instance the 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 ISPs 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 the FCC can toggle between two categories.
However consumers increasingly rely on Internet access as the primary or exclusive medium for access to both telecommunications and information services. Disputes over what ISPs must do to serve the public interest likely will increase and the FCC will not abandon efforts to provide solutions. The paper will consider what direct or ancillary authority the Commission can muster in light of Verizon v. FCC, __ F.3d __, No. 11-1355 (D.C. Cir. 2014) which validated the lawfulness of some oversight derived from Section 706 of the Communications Act that authorizes the FCC to promote broadband access.
Keywords: ancillary jurisdiction, limits to FCC jurisdiction, ISP regulatory status, information service, next generation networks
JEL Classification: K23, L82, L96, L98
Suggested Citation: Suggested Citation