Special Legal Challenges in Reclassifying Wireless Broadband As a “Telecommunications Service”

by Davis Wright Tremaine LLP
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As noted in the main text, the Order’s analysis of wireless broadband proceeds in two steps. First, as noted there, the Order reviews the technical and market characteristics of broadband Internet access service (BIAS) in general—both wired and wireless. Based on that review, it concludes that in light of changes in technology and the marketplace, as well as changes in how it interprets the definition of “information services,” the Commission will reverse its earlier interpretations and classify BIAS as a telecommunications service, rather than an information service.

For wired service, that’s all the Commission needed to do to reclassify. For wireless services, however, an additional step is needed: the Commission had to find a way to classify mobile/wireless BIAS as a “commercial mobile service” within the meaning of Section 332(c) of the Act.

Section 332(c) divides mobile services into “private mobile service” and “commercial mobile service.” Providers of commercial mobile service are subject to regulation under Title II. However, Section 332(c)(2) flatly prohibits treating providers of private mobile services as common carriers (i.e., as Title II telecommunications carriers). For the Commission to reclassify mobile BIAS in a manner consistent with the statute, the definition of “commercial mobile service” presents a challenge. It requires the service to be “interconnected” in nature, and defines “interconnected” service as “service that is interconnected with the public switched network (as such terms are defined by regulation by the Commission).” In contrast, Section 332(d) defines “private mobile service” as mobile service that is neither commercial mobile service nor “the functional equivalent of a commercial mobile service, as specified by regulation by the Commission.”

Historically, the Commission and the industry have viewed the term “interconnected service” to mean a normal telephone service that can make calls to, and receive calls from, normal telephone numbers. Consistent with this view, the Commission had previously promulgated a regulation defining the “public switched network” as the “public switched telephone network” (specifically, a service that used the North American Numbering Plan). Given that definition, the FCC’s specific ruling classifying mobile BIAS as an information service in 2007 concluded that mobile/wireless BIAS was not interconnected and therefore was not subject to Title II regulation.

Having now concluded in the Order that all BIAS (mobile or not) is a telecommunications service rather than an information service, the Commission’s earlier conclusion that mobile/wireless BIAS was not interconnected service presented a “statutory contradiction.” That is, the service is now deemed to meet the definition of “telecommunications service,” which requires application of Title II; but if the service remained classified as a “private mobile service” under Section 332, application of Title II is forbidden.

To resolve this contradiction in a manner consistent with its overall purpose in the Order, the Commission concludes that mobile broadband Internet access service is an “interconnected service.” To accomplish that, the Commission relies on the fact that Section 332 explicitly leaves the definition of “interconnected service” and “public switched network” to regulations adopted by the Commission, and, based on that statutory authorization, redefines the term “public switched network.”

As noted above, the Commission had previously defined the “public switched network” as synonymous with the public switched telephone network, and defined it as a service that used the North American Numbering Plan (which assigns normal 10-digit telephone numbers to services) in connection with a switched service. In the Order, the Commission redefines the term “public switched network” to include “public IP addresses,” saying that this change reflects the emergence and growth of packet switched Internet Protocol-based networks. It asserts that broadband networks use IP addresses to give users a universally recognized format for sending and receiving messages across the country and worldwide (essentially parallel to what traditional telephone numbers do for traditional phone calls). At the same time, likely in order to avoid charges that the Order reflects a Commission effort to “regulate the Internet,” the Commission assures that its “definitional change to our regulations in no way asserts Commission jurisdiction over the assignment or management of IP addressing by the Internet Numbers Registry System.”

The Order asserts that the new “public switched network” definition is justified by changes in technology since the definition was first adopted in 1994. The Order also states that it is more consistent with Congressional intent to recognize as an “interconnected service” today’s broadly available mobile BIAS, and attempts to distinguish the 2007 decision based on the “nascent stage” of the wireless broadband industry at that time. However, the Order does not identify why the technological changes it now cites to justify changing the older, 1994-era definition were not equally present in 2007.

Having concluded (based on its definitional changes) that mobile BIAS is not a “private mobile service,” the Order uses that conclusion to bolster its conclusion that the service is a “commercial mobile service.” Specifically, the Order states that even if the service is not literally a commercial mobile service, it is “functionally equivalent” to a commercial mobile service—and therefore not a private mobile service as to which Title II regulation is barred. The Order asserts that this “functionally equivalency” exists because, “like commercial mobile service, it is a widely available, for profit mobile service that offers mobile subscribers the capability to send and receive communications on their mobile device to and from the public.”

Finally, the Order clearly anticipates a challenge to its conclusions about mobile BIAS on the ground that the public notice for this matter did not indicate that the agency was contemplating modifying the regulatory definition of “public switched network.” The Order does not dispute that this specific issue was not raised in the notice, but argues that its action is a “logical outgrowth” of the issues for which it did provide notice. Specifically, the Order points to the fact that the Commission sought comment on “the option of revising the classification of mobile broadband Internet access service and on whether it would fit within the definition of commercial mobile service under section 332 of the Act and the Commission’s rules implementing that section.” As with other challenges to this Order, the courts will eventually determine the validity of this argument.

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