National Cable & Telecommunications v. Brand X Internet Services & Federal Communications Commission v. Brand X Internet Services (consolidated)
This case addresses the appropriate classification of cable modem service providers (high-speed Internet access over cable television systems) for the purposes of the Communications Act of 1934 and the Telecommunications Act of 1996. The specific portions of the acts that apply to a company depend on whether the company provides “telecommunications services” or “information services.” Under the Telecommunications Act, for example, providers of “information services” are subject to much less stringent regulations than their “telecommunication service” providing counterparts.
Initially, the Federal Communications Commission (FCC) failed to address the status of cable modem service providers. The silence of the FCC, however, did not stop litigation from occurring in the area of high-speed Internet access. In AT&T v. City of Portland, the Court of Appeals for the Ninth Circuit was forced to determine the status of cable modem service providers for the purposes of interpreting the Communications Act. According to the Ninth Circuit, cable modem service companies provide a combination of “telecommunications services” and “information services” and, therefore, are subject to the regulations imposed by both classifications.
Following the Ninth Circuit decision, the FCC attempted to clarify the status of cable modem service providers in a declaratory ruling. The FCC, contrary to the holding of the Ninth Circuit, determined that a cable modem service was an “information service” and not a “telecommunications service.” Internet Service Providers (ISPs), like Brand X and Earthlink, objected to the FCC ruling, complaining that such lax regulations would allow cable modem service providers to prevent competing ISPs from accessing customers through high-speed cable connections. In response to the FCC ruling, seven different petitions for review were filed in the Third, Ninth and District of Columbia Circuits. The Judicial Panel on Multidistrict Litigation transferred all the related petitions for review to the Ninth Circuit.
Before the Ninth Circuit, Brand X argued that the court was bound by its previous decision in AT&T v. City of Portland, while the FCC argued that it was not, particularly in light of the subsequent FCC declaratory ruling. The court began its analysis by noting that in the federal courts of appeals, three-judge panels are typically bound by the holdings of earlier three-judge panels. The Ninth Circuit, however, provides an exception to this rule when the precedent conflicts with a subsequent agency interpretation. According to the court, if a panel finds that an agency interpretation of its statute is reasonable and consistent with the law, the panel may adopt that interpretation even if circuit precedent is to the contrary. But in order for the court to disregard the earlier panel decision in favor of the agency interpretation, the precedent must have been based on deferential review of agency decisionmaking (Chevron deference) . In this particular case, the earlier precedent of the Ninth Circuit was not based on deferential review of FCC decisionmaking because the FCC had failed to make any decisions regarding cable modem services prior to AT&T v. City of Portland. Therefore, the court was bound by its previous decision in AT&T v. City of Portland that cable modem service companies provide a combination of “telecommunications services” and “information services.”
Questions Presented:
National Cable & Telecommunications v. Brand X Internet Services:
Whether, under the framework set out in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), the FCC was entitled to decide that, for purposes of
regulation under the Communications Act, cable operators offering so-called "cable modem service" (high-speed Internet access over cable television systems) provide only an "information service"
and not a "telecommunications service."
FCC v. Brand X Internet Services:
Whether the court of appeals erred in holding that the Federal Communications Commission had impermissibly concluded that cable modem service is an
"information service," without a separately regulated telecommunications service component, under the Communications Act of 1934, 47 U.S.C. ยง 151 et seq.
