National Cable & Telecommunications Assn v. Brand X Internet Services

545 U.S. 967 (2005)

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Nature of the Case

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Facts

Title II of the Communications Act of 1934, 48 Stat. 1064, as amended, 47 U. S. C. §151 et seq., subjects all providers of 'telecommunications service' to mandatory common-carrier regulation, §153(44). At issue in these cases is the proper regulatory classification under the Communications Act of broadband cable Internet service. The Act, as amended by the Telecommunications Act of 1996, 110 Stat. 56, defines telecommunications carriers and information-service providers. The Act regulates telecommunications carriers, but not information-service providers, as common carriers. These two statutory classifications originated in the late 1970s, as the Commission developed rules to regulate data-processing services offered over telephone wires. In September 2000, the Commission initiated a rulemaking proceeding to, among other things, apply these classifications to cable companies that offer broadband Internet service directly to consumers. The Commission concluded that broadband Internet service provided by cable companies is an 'information service' but not a 'telecommunications service' under the Act, and therefore not subject to mandatory Title II common-carrier regulation. The Commission relied heavily on its Universal Service Report. The Commission found no basis in the statutory definitions for treating cable companies differently from non-facilities-based ISPs: Both offer 'a single, integrated service that enables the subscriber to utilize Internet access service ... and to realize the benefits of a comprehensive service offering.' Because Internet access provides a capability for manipulating and storing information, the Commission concluded that it was an information service. The Commission concluded that cable companies providing Internet access are not telecommunications providers. It reasoned that cable companies do not 'offer telecommunications service to the end user, but rather ... merely use telecommunications to provide end users with cable modem service.' Numerous parties petitioned for judicial review, challenging the Commission's conclusion that cable modem service was not telecommunications service. By judicial lottery, the Court of Appeals for the Ninth Circuit was selected as the venue for the challenge. The Court of Appeals vacated the ruling to the extent it concluded that cable modem service was not 'telecommunications service' under the Communications Act. It held that the Commission could not permissibly construe the Communications Act to exempt cable companies providing Internet service from Title II regulation. The appeals court did not employ the deferential framework of Chevron, 467 U. S. 837. It based its holding on AT&T Corp. v. Portland, 216 F. 3d 871 (9th Cir. 2000). Portland held that cable modem service was a 'telecommunications service,' though the court, in that case, was not reviewing an administrative proceeding and the Commission was not a party to the case. The Supreme Court granted certiorari to settle the important questions of federal law that these cases present.