Unlike most monthly Commission meetings, none of the items on the October agenda initiate new proceedings or propose new rules. Instead, the items focus on implementation of a number of policies prioritized under Chairman Pai. FCC regulatory activity will likely slow in the aftermath of the election. As a result, the October agenda may represent the FCC’s final push for any major reforms in the near-term. However, on October 15, Chairman Pai did announce his intention to move forward with a rulemaking to interpret the meaning of Section 230 of the Communications Decency Act. You will find more details on the significant October meeting items after the break:

Restoring Internet Freedom Order Remand: The draft Order on Remand would respond to the remand from the D.C. Circuit in Mozilla Corp v. FCC, which upheld a majority of the FCC’s decisions on broadband Internet access service regulation and classification in the 2017 Restoring Internet Freedom Order, but remanded three issues back to the agency for further consideration. The FCC would address each issue and find that its initial conclusions in the 2017 order promote public safety communications, facilitate broadband infrastructure deployment through pole attachment rights, and allow the Commission to continue to provide Lifeline support conditioned on providing broadband internet access service. The agency would find there is no basis for departing from these original conclusions and that any negative effects on these sectors resulting from its classification of broadband Internet access service in the 2017 order would be limited or otherwise outweighed by the benefits of the “light-touch” regulatory framework for broadband.

Establishing a 5G Fund for Rural America: The draft Report and Order would adopt the 5G Fund using a two-phase reverse auction targeting support for deploying 5G networks in areas without an unsubsidized provider of either 4G LTE or 5G mobile broadband. Proposed in an April 2020 Notice of Proposed Rulemaking (“NPRM”), the draft Order would adopt a 10-year term of support and an overall budget of $9 billion for the 5G Fund. Phase I of the auction would make available up to $8 billion, with $680 million set aside for bidders offering to serve Tribal lands, and Phase II would make at least $1 billion available to target deployment facilitating adoption of precision agriculture technologies. The FCC would adopt its proposal to determine which areas would be eligible for 5G Fund support from data collected through the upcoming Digital Opportunity Data Collection, and would impose performance requirements on carriers continuing to receive legacy mobile high-cost support.

Unlicensed Wireless Opportunities in TV White Spaces: The draft Report and Order would adopt changes to the Part 15 unlicensed device rules, as proposed in the Commission’s February 2020 NPRM, to expand the ability of white spaces devices to deliver wireless broadband services in rural areas. The Order would increase the maximum permissible power for fixed white space devices operating on TV channels 2-35 in “less congested areas” and allow higher-power mobile operations within defined geographic areas. The FCC would also adopt rule changes to facilitate the development of narrowband Internet of Things devices and services in the TV bands.

Streamlining Approval of Wireless Infrastructure Modifications: The draft Report and Order would revise the Commission’s section 6409(a) rules to provide for streamlined state and local review of tower modifications that involve limited ground excavation or deployment beyond site boundaries. The rule revision would establish that, for towers not located in the public rights-of-way, a modification of an existing site needing ground excavation or deployment of up to 30 feet will not be disqualified from streamlined processing on that basis. The draft Order would also promote accelerated deployment of 5G and other advanced wireless services by facilitating the collocation of antennas and associated equipment on existing infrastructure, while preserving the ability of state and local governments to manage and protect local land-use interests.

Modernizing Unbundling and Resale Requirements: The draft Report and Order would eliminate and modernize unbundling and resale requirements for incumbent local exchange carriers (“LECs”). The FCC would eliminate certain unbundling requirements for specific broadband-capable loops, subject to reasonable transition periods, in more densely populated areas, but preserve unbundling requirements in less densely populated areas without sufficient evidence of competition. The draft Order would also forbear from the avoided-cost resale obligation for non-price cap carrier incumbent LECs, subject to a three-year transition period.

The most controversial aspects of the order are its interpretation of Section 230 of the Communications Decency Act ("CDA")—the statutory provision that shields online service providers from liability for user-generated content and the decisions they make about how to moderate that content—and its attempt to prompt the Federal Communications Commission ("FCC") to adopt regulations further interpreting the law. Reform of Section 230 has been under consideration in Congress for years, with Republicans and Democrats both offering different—and mostly contrary—critiques about how online platforms have failed to act in accordance with the statute while also benefitting from the liability protections.

Other directives in the EO attempt to elicit other parts of the federal government to discipline online platforms for their content moderation practices. Absent Congressional action, the EO’s directives appear to stand on shaky legal ground and are likely to have limited legal impact. However, the issuance of the EO alone may be unlawful, at least according to a complaint challenging the constitutionality of the EO filed with the U.S. District Court in D.C. by the Center for Democracy & Technology ("CDT"). According to the complaint, the EO violates the First Amendment, which strictly limits the government’s ability to abridge speech, by retaliating against Twitter for exercising its right to comment on the President’s statements and because it “seeks to curtail and chill the constitutionally protected speech of all online platforms and individuals” by demonstrating the government’s willingness to retaliate against those who criticize the government.

Seeks to “Clarify” the Scope of Section 230 Immunity Through FCC Regulations

Section 230 gives online service providers immunity from liability in two ways. First, Section 230(c)(1) says that online services are not the “publisher or speaker” of the user content they host. Publishers and speakers can be held liable for language that is, for example, libelous or defamatory. This clause prevents online services from being subject to lawsuits making such claims, while preserving the ability to bring direct suits against the users who actually generate the content. Second, Section 230(c)(2) says that online service providers cannot be held liable for “any action voluntarily taken in good faith to restrict access to or availability of material that [it] considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.” This clause is designed to prevent online services from being deemed publishers when they make decisions about what user-generated content to remove. Its intent originally was to remove disincentives for online service providers to employ blocking and filtering technologies to protect children from online pornography.

The EO purports to clarify the scope of the immunity available under Section 230. Specifically, the EO says that online providers are not acting in “good faith” when they claim to be forums for free and open speech but instead engage in “deceptive or pretextual actions (often contrary to their stated terms of service) to stifle viewpoints with which they disagree.” According to the EO, under these circumstances, the online services are editorializing and therefore acting as publishers, in which case, the EO says the online services should lose their immunity under Section 230(c)(2). This interpretation, which is largely contrary to more than two decades of court precedents, would effectively mean that online services could be held liable for all the content their users post if it is determined their content moderation practices are biased.

To effectuate this interpretation, the EO sets out two directives. First, it directs “all executive departments and agencies [to] ensure that their application of section 230(c) properly reflects the narrow purpose of the section.” This directive is unlikely to carry any weight as Section 230 is not applied by federal agencies, but by courts, which are not subject to presidential directives. Second, the EO directs the National Telecommunications Information Association ("NTIA") to, within 60 days, file a petition for rulemaking asking the FCC to propose regulations to further clarify the circumstances under which an online service can lose its liability protection when it “restricts access to content” in a manner not specifically protected by subparagraph (c)(2)(A),” and the conditions under which such restrictions are not made in “good faith.”

Absent additional authority delegated by Congress, the FCC is unlikely to actually implement such regulations. The Commission has been reluctant to extend regulation to edge providers, such as online platforms, and its legal authority to do so has been debated. While the CDA technically added Section 230 into the Communications Act—the FCC’s regulatory sandbox—the Communications Act does not have any legal hooks that allow the agency to regulate online platforms and Section 230 itself does not provide the agency with any such independent authority. Tellingly, the FCC did not implement Section 230 in 1996 when the provision was added to the Act and does not have any rules on its books that interpret Section 230. Even if the FCC does have such authority, current leadership has already made clear, in the Restoring Internet Freedom order, that it does not want the agency to be the arbiter of neutrality for Internet service providers, which it ostensibly has the authority to do, let alone the arbiter of neutrality by online platforms, over which it has no explicit authority. While all five Commissioners released statements after the EO, three Commissioners expressed opposition or strong skepticism of the “good faith” concept. Thus, even if NTIA were to file a petition for rulemaking, new rules appear unlikely.

Other Directives in the Executive Order

While the directives above have received the most attention, the EO includes four other directives designed to penalize online platforms that engage in alleged viewpoint discrimination.

• Review Government Spending to Online Platforms – The EO directs executive branch departments and agencies to, within 30 days, assess their advertising and marketing spending on online platforms and report their findings to the Office of Management and Budget, while also directing the Department of Justice to “review the viewpoint-based speech restrictions imposed by each online platform identified in the report[s]” and assess whether any “are problematic vehicles for government speech due to viewpoint discrimination, deception to consumers, or other bad practices.” Conspicuously absent is an actual directive for departments and agencies to limit federal spending to such online platforms.
• FTC Review of Content Moderation Practices – The EO directs the Federal Trade Commission ("FTC") to “consider taking action” using its authority under Section 5 of the FTC Act to determine whether online platforms have engaged in unfair or deceptive acts or practices by “restrict[ing] speech in ways that do not align with those entities’ public representations about those practices,” which is something the FTC was already permitted to do. The FTC is also required to consider whether to develop a report describing the apparent 16,000 complaints that the White House received through its “Tech Bias” reporting tool.
• State Review of Content Moderation Practices – The EO directs the Attorney General to establish a working group to assess potential enforcement of state statutes prohibiting unfair or deceptive acts or practices against online platforms, develop model legislation for states that do not have such authority, and collect information regarding various practices by online platforms that could amount to viewpoint discrimination.
• Federal Legislation – The EO directs the Attorney General to “develop a proposal for Federal legislation that would be useful to promote the policy objectives” of the EO.

The order has garnered substantial criticism from online industry advocates and civil liberties groups alike. Among the online platforms, Twitter seemed undeterred by the EO, calling it a “reactionary and politicized approach” and promptly labeling another Trump tweet for glorifying violence in violation of its terms and conditions. Meanwhile, Facebook CEO Mark Zuckerberg, while critical of the EO, also critiqued Twitter’s actions, saying that social media companies should not be the arbiters of truth.

Initial reactions from the FCC Commissioners have been mixed. Republican Commissioner Carr was most supportive of the move, saying he welcomed the EO and its call for guidance on the “good faith” limitation in Section 230. Democratic Commissioner Rosenworcel had a contrary take, saying the EO would turn the FCC into the “speech police.” Both Commissioner Starks (a Democrat) and Commissioner O’Rielly (a Republican) avoided any direct criticism of the EO but affirmed the First Amendment’s important role in the issue. Chairman Pai largely stayed out of the fray, saying that the agency would “carefully review any petition for rulemaking” filed by NTIA. NTIA has not commented on the Executive Order.

The FTC commissioners have been silent on the EO, but the agency’s spokesperson, Peter Kaplan, said that “[t]he FTC is committed to robust enforcement of consumer protection and competition laws, including with respect to social media platforms, and consistent with our jurisdictional authority and constitutional limitations.”

Any substantive action at the FCC is likely months away, at best. NTIA has until July 27, 2020, to file its petition with the FCC, on which the FCC has no obligation to act. If the agency does respond, it may seek comment on whether to initiate a rulemaking first, before initiating a Notice of Proposed Rulemaking. Given the constitutional implications, the FTC may also hesitate to act in accordance with the EO. Regardless, we don’t expect any substantive action in 2020, if at all, particularly in light of the pending legal challenge by CDT. In the meantime, the impact of the EO will largely be political, not legal, while the purpose, meaning and fate of Section 230 is almost certain to be debated in Congress for years to come.

The decision is notable because the last three appeals of previous FCC net neutrality orders were heard in the D.C. Circuit. The last time the Ninth Circuit heard a challenge of FCC net neutrality rules was nearly 15 years ago, in Brand X Internet Services v. FCC, which led to the Supreme Court’s seminal opinion on the FCC’s classification of cable modem service in 2004, National Cable & Telecommunications Association v. Brand X Internet Services. The Brand X decision in turn ushered in a decade of deregulatory policy in the broadband ecosystem.

The Ninth Circuit’s most recent foray into broadband policy came last month when an en banc panel held that the “common carrier exemption” in Section 5 of the Federal Trade Commission (FTC) Act—which prohibits unfair and deceptive trade practices—was “activity-based” and therefore that the FTC could bring a suit against AT&T Mobility for alleged violations of Section 5 related to the company’s non-common-carrier broadband service. A previous panel had held that AT&T Mobility was entirely exempt from Section 5 based on its “status” as a common carrier, raising significant questions about the boundaries of FTC and FCC jurisdiction. The en banc decision brings the Ninth Circuit back into harmony with other circuits that have addressed the issue.

We’re monitoring the appeal and will continue to update this blog with developments.

• Reclassify fixed and mobile BIAS as an information service. The most significant change in the draft Order to the regulatory classification of BIAS. We expect that the Commission will follow through with its plan to reverse the 2015 Open Internet Order’s classification of fixed and mobile BIAS as a common carrier telecommunications service under Title II of the Communications Act, reclassifying BIAS as an “information service” and reinstating the regulatory framework that was in place prior to March 2015.
• Vacate the bright-line rules and the general conduct standard. Having reclassified BIAS as an information service, we further expect the Commission will eliminate the conduct rules adopted in the 2015 Title II Order, including the “bright-line” prohibitions on paid prioritization, blocking and throttling and the 2015 Order’s general conduct rule. The general conduct rule, which raised particular concern from Republican commissioners when it was adopted, prohibited BIAS providers from unreasonably interfering with or disadvantaging the ability of consumers to select, access, and use lawful Internet content, applications, and services, and for edge providers to make such content, applications, and services available to end users.
• Retain, but refactor, the open Internet transparency rule. Contrary to early suggestions, the Restoring Internet Freedom Order likely will not scrap the open Internet transparency rule, which was first imposed in 2010 and later enhanced in 2015. Instead, we expect that the Order will rescind the 2015 Order’s enhancements to the 2010 rule and provide additional flexibility to providers, allowing them to either post the statement on their websites or to submit them to the FCC for posting on a publicly accessible website.
• Return consumer protection authority to the FTC (with caveats). By reclassifying BIAS as an information service, the Order cedes the FCC’s consumer protection authority over BIAS to its sister agency the Federal Trade Commission (FTC). Specifically, while the 2015 Open Internet Order applied core consumer protection provisions of the Communications Act to BIAS providers, including sections 201, 202, 222, and 255, BIAS will now be subject to Section 5 of the FTC Act, which prohibits unfair and deceptive trade practices. Importantly, although the FCC and FTC are actively working on a memorandum of understanding to promote coordination of enforcement efforts, it’s an open question whether the FTC is able to enforce Section 5 against BIAS providers who also provide regulated common carrier services. Specifically, in 2016 the Ninth Circuit ruled that Section 5’s exemption for “common carriers” applied not just to a company’s common carrier activities, but to all activities of a common carrier. As a result of this decision, any BIAS provider that also provides telecommunications services may be shielded from both FCC and FTC jurisdiction. The FTC has appealed the panel decision en banc and the court heard argument in September. How the Ninth Circuit resolves this question – or whether it reaches a result without addressing the jurisdictional question – may impact whether the FTC will be able to be the “cop on the beat” that the FCC Order expects.
• Addresses several procedural issues. The draft Restoring Internet Freedom Order also resolves several procedural issues, denying a request from trade group INCOMPAS to modify protective orders related to four recent major transactions involving BIAS providers, and denying a request from the National Hispanic Media Coalition to incorporate several informal complaint in a subsequent proceeding open for public comment.

Ultimately, we will be back in a familiar location – in appeals over the FCC’s classification of broadband. Three of the FCC’s previous attempts have been before the D.C. Circuit, with two reversals (at least in part) of the FCC’s action and (ironically) one decision sustaining the 2015 decision that this Order will reverse. Appellate courts give substantial deference to agency decisions, so long as the ultimate decision addresses the relevant facts and arguments and the outcome is within the zone of reasonable interpretations of the statute. It is possible, therefore, that both the FCC’s classification of BIAS as a Title II service and its expected reclassification of BIAS could be upheld, so long as the court determines that the decision falls within this traditional zone of deference. If that happens, then it will ultimately be up to Congress to prevent constant flip-flopping of the regulatory regime applicable to these services.

We are tracking and will provide a more complete client advisory when the final Order is released.

The MOU generally divides FCC and FTC jurisdiction over BIAS providers as follows:

FCC	FTC
Monitor the broadband market and identify market entry barriers by, among other activities, reviewing informal complaints filed by consumers. Take enforcement actions against ISPs that fail to comply with the Transparency Rule’s posting requirement. FCC enforcement would not address the adequacy of the disclosure, however.	Investigate and take enforcement action against ISPs for unfair, deceptive, or otherwise unlawful acts or practices, including but not limited to, actions pertaining to the accuracy of the disclosures required under the Transparency Rule, as well as their marketing, advertising, and promotional activities.

The agencies have made clear that they will coordinate their activities “to promote consistency in law enforcement and to prevent duplicative or conflicting actions.” They will also continue to share consumer complaints with each other and will collaborate on consumer and industry outreach and education efforts. FCC Chairman Ajit Pai said in a statement that the MOU “outlines the robust process by which the FCC and FTC will safeguard the public interest,” but Commissioner Mignon Clyburn (a Democrat) called the MOU “a smoke and mirrors PR stunt, distracting from the FCC’s planned destruction of net neutrality protections later this week.”

Despite the MOU and upcoming Restoring Internet Freedom Order, significant questions will remain about the appropriate jurisdiction of the FCC and FTC with respect to BIAS and ISPs. For example, less than three months ago, the Ninth Circuit received arguments in a rehearing en banc of the court’s earlier decision to dismiss an FTC case against AT&T Mobility over allegedly “unfair and deceptive” throttling practices in connection with wireless data services provided to AT&T’s customers with unlimited data plans. Implementation of the MOU may be impacted by how the Ninth Circuit resolves this jurisdictional dispute. If the Ninth Circuit finds the common carrier exemption to be activity-based, then the FCC’s expected decision to walk back from “common carrier” designation for BIAS will open the door for FTC oversight. On the other hand, if the Ninth Circuit finds that exemption to be status-based – or resolves the case without resolving the question – then the FTC’s ability to proceed under the MOU may be in question. Thus, even after the MOU is finalized, we may have to wait to see the final impact of the agreement.