Viewpoints
By: Steven S. Ross, Broadband Communities
In the past few months, courts and politicians well-placed to start court battles have gained at agencies’ expense. On July 24, the Fifth Circuit Court of Appeals ruled the Universal Service Fund unconstitutional.
Think that means you’ll have to deal with less red tape from FCC, NTIA, USDA and others? Think again. Big companies will get their needs written into law. Most deployers can’t afford that. Here’s what to do.
A battle has raged for years, mainly out of public view, over federal regulation. The battle’s intensity has increased greatly in the past few months, due to Supreme Court actions and everyday political warfare. It’s time for the broadband industry – one of the nation’s most highly regulated — to take a closer look, and to plan for a roller-coaster future that could reward major internet service providers while choking smaller deployers.
This has been framed by the lay press as a Democrat (administrative state) versus Republican (open government) philosophical battle. It is not.
It is a “big money versus small business” battle.
If smaller operators want even a small chance of getting a seat at the table, they must revitalize state and regional broadband organizations and get closer to local, state, and federal politicians, even if they cannot afford to make big campaign donations.
Over the past month …
In June, in a 6-3 vote on fisheries issues, the Supreme Court overturned a 40-year-old decision that had become known as the Chevron doctrine. Under the old decision, courts deferred to agencies’ “reasonable” interpretation of Congress’s intent if the law itself was unclear. Generally, this meant looking at the record of all testimony and evidence that went into drafting it.
After the 1984 ruling, laws got longer and more detailed, and thus more brittle. The Telecommunications Act of 1996 is a good example. Admittedly, Chevron has rarely been invoked in the past decade, even though it had been cited almost 20,000 times before then. But our industry’s rapid evolution, both in broadband technology and in uses for it, has pushed broadband regulators to justify many rules that now may not survive.
Although conservatives had generally approved of the Chevron doctrine in 1984 — it upheld easing Clean Air Act rules — conservatives over the past decade turned against it as giving too much power to the “deep state.” They want the courts and politicians, not administrative experts, to exert more power.
This is good for big operators, who can afford to “help” politicians write new laws with loopholes favoring big corporations, or who can afford to endlessly litigate until they find a judge who “understands their needs.” But it is not that simple.
Often, that judge is in the Fifth Circuit Court of Appeals based in New Orleans. This week, that court ruled “Congress delegated its taxing power to the Federal Communications Commission” in the Telecommunications Act of 1996.
The wording of their ruling continues.
“(The) FCC then subdelegated the taxing power to a private corporation (the Universal Service Administrative Company). That private corporation, in turn, relied on for-profit telecommunications companies to determine how much American citizens would be forced to pay for the ‘universal service’ tax that appears on cell phone bills across the nation. We hold this misbegotten tax violates Article I, § 1 of the Constitution.”
The 9-7 decision, by the full panel of judges in the circuit, is contrary to that court’s ruling by a three-judge panel, along with earlier ones in the sixth and eleventh circuits, both of which upheld the USF. This makes it likely the FCC will ask the US Supreme Court to step in, which had previously refused to review the earlier decisions.
The USF was challenged by Consumers’ Research, a conservative group that had previously asked the high court to review the other circuit decisions, but the justices declined in June.
A little history
The US Constitution says the three branches of government are separate and equal. The legislative branch writes the laws, the executive branch enforces them, and the judicial branch checks them both, offering recourse.
There was no consistent concept of a “regulation” when the Constitution was approved in 1789. In 1887, Congress passed the Interstate Commerce Act. The law created an Interstate Commerce Commission inside the executive branch to oversee the railroad industry, which was strangling farmers trying to ship perishable food to market. The greedy railroads became the first industry subject to federal regulation. Essentially, bureaucrats, who knew the industry best, became “law setters” and judges.
Other agencies were soon born. The Federal Communications Commission (FCC) apportioned spectrum to commercial radio, the military, police, and other parties. The Federal Aviation Administration regulated airline safety. The Securities and Exchange Commission helped prevent financial fraud and helped avoid another Great Depression.
Hundreds of other agencies followed. It was not until after World War II that the Administrative Procedure Act (APA) attempted to clarify how these agencies handled their power. It’s the law that formalized the Federal Register and set rules for proposing and finalizing… well, rules. APA applied to executive agencies such as the Department of Commerce (DOC), as well as to regulatory agencies like the Federal Communications Commission (FCC).
In overturning Chevron, the majority decision noted that the APA directs courts to “decide legal questions by applying their own judgment” and therefore “makes clear that agency interpretations of statutes — like agency interpretations of the Constitution — are not entitled to deference. Thus, it is “the responsibility of the court to decide whether the law means what the agency says.”
Last month’s decision thus specifically rejects the idea that agencies, rather than courts, are better suited to determine what ambiguities – even complex technical or scientific questions — in a law might mean. Even worse, the majority decision says, “Congress expects courts to handle technical statutory questions” itself or with the help of briefs submitted by “friends of the court.”
Battles in progress
On July 18, the FCC voted to allow schools and libraries to use E-Rate funds for Wi-Fi hotspots in surrounding areas. Last October, the FCC voted to use E-Rate for hotspots on school buses. A battle looms. The larger wireless carriers support it, while some broadband providers do not. But most larger carriers support the USF itself and have been lobbying in Congress to broaden the services being taxed and to clarify how it is collected.
It seems logical to use E-Rate this way, especially to help children do homework. But the source of the money is the $8.1 billion Universal Service Fund, funded by a steep tax on the sharply shrinking universe of voice customers. Also, some carriers complain the hotspots compete, in a small way, with commercial-rate providers. Can you guess how the three Democrats and the two Republicans on the commission voted?
The public draft of the FCC’s order cited Communications Act language requiring USF money be spent on schools and libraries for “educational purposes,” and argued that off-campus hotspots met that purpose.
FCC Chairwoman Jessica Rosenworcel also says none of this requires extra Universal Service funds, and that user access will be restricted to appropriate material.
The National Telecommunications and Information Administration (NTIA) is criticized in Congress and by some broadband providers because it is pressuring states to allocate federal funding only to providers offering a low-cost option. Republicans have called this requirement a form of rate regulation, which is prohibited under the Infrastructure Investment and Jobs Act of 2021.
The NTIA claims the low-cost option requirement is not rate regulation because providers voluntarily join the Broadband Equity, Access, and Deployment (BEAD) program and because states can offer price ranges, reflecting NTIA’s flexible approach. But if the voluntary nature is obvious, why did Congress include language prohibiting rate regulation?
On July 9, the US Court of Appeals for the Sixth Circuit stayed the FCC’s net neutrality rules adopted in April. They had been challenged by national and regional trade associations, and big providers like Comcast, Charter, AT&T, and Verizon.
The same day, the federal district court in Washington, DC, affirmed the FCC’s 2022 decision to allow Starlink to deploy 7,500 satellites. It rejected light pollution claims by the International Dark-Sky Association. Also, Dish, which operates geosynchronous satellites for TV service to 6.3 million subscribers, says FCC did not really evaluate Dish’s data on possible interference that conflicted with Starlink data, certified by the International Telecommunications Union. The court rejected that, too.
Again … advice
So many court battles happening so fast!
Here’s the checklist to evaluate whether state and regional broadband trade associations, nonprofits and others are worthy of your time and resources.
Ideally, they:
- Should not be dominated by one type of provider.
- Should not be dominated by one size of provider.
- Should be transparent in their own decision making. This applies especially to foundations, academic researchers, and other nonprofits.
- Should be nonpartisan.
Good luck. You’ll need it.
Contact the Bandwidth Hawk at steve@bbcmag.com.
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