Court Denies Title II Stay

ISPs will be reclassified as common carriers as of June 12
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A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit has denied a stay of the FCC's reclassification of ISPs as Title II telecommunications services subject to common carrier regulation.

The court said the petitioners had not met the "stringent requirements" for a stay pending court review of the underlying challenge. It did say it would expedite the case--both sides had supported that--and gave them 14 days to come up with a suggested briefing schedule.

That means the new open Internet rules under that reclassification take effect tomorrow (June 12), as does a case-by-case net neutrality complaint process for interconnection disputes and conduct unbecoming an open Internet.

Network services company Cogent has struck some interconnection deals, but has signaled it will complain to the FCC if it feels ISP's are doing anything to impede Internet openness--like congesting ports.There could also be rate complaints or usage-based pricing complaints or data cap complaints, and perhaps clas action suits--and that list is not exhaustive.

There could also be rate complaints or usage-based pricing complaints or data cap complaints, and perhaps class action suits--and that list is not exhaustive.

“This is a huge victory for Internet consumers and innovators! Starting Friday, there will be a referee on the field to keep the Internet fast, fair and open," said FCC Chairman Tom Wheeler of the court's decision. "Blocking, throttling, pay-for-priority fast lanes and other efforts to come between consumers and the Internet are now things of the past. The rules also give broadband providers the certainty and economic incentive to build fast and competitive broadband networks.”

“While being granted a stay is always a long shot, we are pleased that the Court has agreed to expedite the review of our appeal of the FCC’s misguided decision to impose utility-style regulation on Internet networks," the National Cable & Telecommunications Association said in a statement. "We are now ready to get to the merits of the case and are confident as ever that we will prevail.”

“Although ACA is disappointed the Court did not grant the stay, we are pleased it granted expedited review of the FCC’s decision," said American Cable Association President Matt Polka. "ACA looks forward to demonstrating to the Court why the FCC’s decision to reclassify broadband Internet and regulate providers under Title II as common carriers harms consumers, competition, and broadband deployment.”

"The Courts's stay denial was disappointing, but not unexpected. We drew a panel with two Obama administration appointees and it was unlikely the liberal majority was going to overturn one of this administration's signature policies," said VoIP pioneer Daniel Berninger, who also sought a stay. "The court said in summary, 'we plan to ignore the Order's impact on the entrepreneur, and the economy as a whole, as this case makes its way this courts.'"

Unlike ISPs challenging the FCC decision, Berninger is also challenging the bright-line rule again no paid prioritization, and pledged to fight the FCC "all the way to the Supreme Court."

Cable and telco ISPs had asked the court to stay reclassification, its application to interconnections, and a broad general Internet conduct standard, but had not challenged the bright-line rules against blocking, throttling of paid prioritization.

That means starting tomorrow anyone ready to complain about the potential Internet openness impact of Interconnection issues or broadband pricing or with a concern about broadband privacy protection can file a complaint, which the FCC's Enforcement Bureau will investigate.

The stay decision was rendered by a three-judge panel of the court--Judges Thomas Griffith, Sri Srinivasan and Cornelia Pillard. That decision can be appealed to the full court, but lawyers for the National Cable & Telecommunications Association signaled last week they did not plan to appeal and would proceed to a, hopefully, expedited hearing on the merits of their challenge. At that time, NCTA President agreed that was the likely approach, though he would not absolutely rule out an appeal. "We make legal decisions strategically when they happen."

Attorney Miguel Estrada pointed out in advance of the decision that the D.C. appeals court generally does not provide guidance for why it denied a stay. Attorney Ted Olson also said the court may have concluded that it can deal with the harm issue with a "highly expedited" hearing of the underlying case so that "whatever the harm is and however irreparable it is is outweighed by the fact that we can proceed to the merits."

Cable operators did not challenge the underlying bright-line rules against blocking and throttling of Internet access and paid prioritization, saying they don't do those things now and have no plans to. But they are strongly opposed to Title II reclassification, bringing interconnection issues between ISPs and network services companies like Cogent or edge providers like Netflix under Title II as a potential net neutrality issue, and the FCC's new, general, Internet conduct standard catch-all for complaints against conduct that does not fit neatly within the bright lines.

Estrada told reporters before the decision that if a stay were denied, it likely meant that the court could not be persuaded that the harm of the rules going into effect could not be undone, rather than the denial having bearing on the underlying merits of the challenge to the rules.

FCC Chairman Michael Powell, who also talked about the stay in advance of the decision, said that was an important point. "You have harm, but it's the irreparable nature that is problematic in a stay. They have to believe that you are going to incur pain or damage that can't be fixed even if you win. That is usually the hardest part. It is not that you don't have harm or that your merits aren't good."

Pantelis Michalopoulos, a partner at law firm Steptoe & Johnson who serves and counsel for the intervenors in support of the rules, disagreed.

"The Petitioners have been trying to manage expectations, saying to the press the Court could deny the stay even if it believed their case was strong," he said in a statement following the decision. "But the Court’s decision suggests the opposite--the Court does not believe the Petitioners’ case is strong.  Under the D.C. Circuit’s case law, the stronger the case on the merits, the less severe is the irreparable injury that the Petitioners must show.  The Petitioners have shown neither.”

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