National Cable & Telecommunications Ass’n v. Brand X Internet Services

Consumers traditionally access the Internet through “dial-up” connections provided via local telephone lines. Internet service providers (ISPs), in turn, link those calls to the Internet network, not only by providing a physical connection, but also by offering consumers the ability to translate raw data into information they may both view on their own computers and transmit to others connected to the Internet. Technological limitations of local telephone wires, however, retard the speed at which Internet data may be transmitted through such “narrowband” connections. “Broadband” Internet service, by contrast, transmits data at much higher speeds. There are two principal kinds of broadband service: cable modem service, which transmits data between the Internet and users’ computers via the network of television cable lines owned by cable companies, and Digital Subscriber Line (DSL) service, which uses high-speed wires owned by local telephone companies. Other ways of transmitting high-speed Internet data, including terrestrial- and satellite-based wireless networks, are also emerging.

      The Communications Act of 1934, as amended by the Telecommunications Act of 1996, defines two categories of entities relevant here. “Information service” providers—those “offering … a capability for [processing] information via telecommunications,” 47 U. S. C. §153(20)—are subject to mandatory regulation by the Federal Communications Commission as common carriers under Title II of the Act. Conversely, telecommunications carriers—i.e., those “offering … telecommunications for a fee directly to the public … regardless of the facilities used,” §153(46)—are not subject to mandatory Title II regulation. These two classifications originated in the late 1970’s, as the Commission developed rules to regulate data-processing services offered over telephone wires. Regulated “telecommunications service” under the 1996 Act is the analog to “basic service” under the prior regime, the Computer II rules. Those rules defined such service as a “pure” or “transparent” transmission capability over a communications path enabling the consumer to transmit an ordinary-language message to another point without computer processing or storage of the information, such as via a telephone or a facsimile. Under the 1996 Act, “[i]nformation service” is the analog to “enhanced” service, defined by the Computer II rules as computer-processing applications that act on the subscriber’s information, such as voice and data storage services, as well as “protocol conversion,” i.e., the ability to communicate between networks that employ different data-transmission formats.

      In the Declaratory Ruling under review, the Commission classified broadband cable modem service as an “information service” but not a “telecommunications service” under the 1996 Act, so that it is not subject to mandatory Title II common-carrier regulation. The Commission relied heavily on its Universal Service Report, which earlier classified “non-facilities-based” ISPs—those that do not own the transmission facilities they use to connect the end user to the Internet—solely as information-service providers. Because Internet access is a capability for manipulating and storing information, the Commission concluded, it was an “information service.” However, the integrated nature of such access and the high-speed wire used to provide it led the Commission to conclude that cable companies providing it are not “telecommunications service” providers. Adopting the Universal Service Report’s reasoning, the Commission held that cable companies offering broadband Internet access, like non-facilities-based ISPs, do not offer the end user telecommunications service, but merely use telecommunications to provide end users with cable modem service.

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