DOJ Appeals Important Broadband Case to Supreme Court

by on August 30, 2004 · 4 comments

The Justice Department’s Office of the Solicitor General announced today that it would be seeking Supreme Court review of an case with important ramifications for the future of broadband Internet regulation in America. The decision in question, Brand X Internet Services vs. the Federal Communications Commission, was handed down by the Ninth Circuit Court of Appeals late last year.

In the Brand X case, the Ninth Circuit foolishly decided that high-speed Internet services provided by cable companies could be considered a “telecommunications service” and regulated accordingly. In other words, all the silly damn laws that apply to telcos–including misguided infrastructure sharing rules–could be rolled over onto cable operators. Thus, regulators–including state and local regulators–would be allowed to regulate rates and terms of service for nationwide Internet services under the logic of Brand X.


Needless to say, that would be a disaster. The idea that telecom and especially broadband markets can be neatly carved into geographical units and regulated differently has always been based on a fundamental misunderstanding of the nature of the beast in question. After all, at the very heart of telecommunications is the notion of transcending boundaries and making geography and distance irrelevant. And from an economic viewpoint, the marginal cost of placing a call a mile away is about the same as placing one 1,000 miles away. Obviously the same goes for Internet connections. So it seems that if ever there was a good case to be made for an activity being considered interstate commerce, this is it. And yet, America’s telecom and broadband market remains riddled with a patchwork of policies that actually thwart that goal and seek to divide the indivisible and place boundaries on the boundless.

This is why the Brand X precedent is so dangerous and must be overturned. Hopefully the Supreme Court will make the right call and do so when it takes up the case. If they fail to do so, Congress will need to pass legislation formally preempting state and local regulation of Internet / broadband services.

  • http://cei.org Braden

    Brand X is less about telecom and is more of a case concerning the doctrine of stare decisis, or the practice of following precedent.

    Sometimes a judicial outcome can be summed up by the aphorism “hard cases make bad law.” At other times, perhaps, it is bad law that makes hard cases. Brand X Internet Services v. FCC is an example of an easy case making bad policy.

    Here we’re talking about horizontal stare decisis. Simply put, the Court ruled that cable modem service is a form of telecommunications service to be consistent with its own ruling in a prior case. The previous case involved a suit against the city of Portland, Oregon, whereby the city had placed forced access conditions on the sale of a cable franchise. The court held that cable modem service had telecommunications service components. As such, the city of Portland could not regulate the cable modem services — only the FCC had the legal authority to do so.

    So should a court remain consistent for consistency-sake, recognizing that there is a value to predictability in the law? Or should the court be more policy results-oriented? See my comments from last October at http://cei.org/gencon/016,03716.cfm

  • http://cei.org Braden

    Brand X is less about telecom and is more of a case concerning the doctrine of stare decisis, or the practice of following precedent.

    Sometimes a judicial outcome can be summed up by the aphorism “hard cases make bad law.” At other times, perhaps, it is bad law that makes hard cases. Brand X Internet Services v. FCC is an example of an easy case making bad policy.

    Here we’re talking about horizontal stare decisis. Simply put, the Court ruled that cable modem service is a form of telecommunications service to be consistent with its own ruling in a prior case. The previous case involved a suit against the city of Portland, Oregon, whereby the city had placed forced access conditions on the sale of a cable franchise. The court held that cable modem service had telecommunications service components. As such, the city of Portland could not regulate the cable modem services — only the FCC had the legal authority to do so.

    So should a court remain consistent for consistency-sake, recognizing that there is a value to predictability in the law? Or should the court be more policy results-oriented? See my comments from last October at http://cei.org/gencon/016,03716.cfm

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