Not long after the Appeals Court’s decision was announced yesterday, MoffettNathanson chief analyst Craig E. Moffett offered his take on the ruling and what he thinks it means to the wireless industry. While it “had been widely expected that the U.S. Court of Appeals for the DC Circuit would broadly uphold the FCC’s reclassification of broadband as a Title II service,” wrote Moffitt, “we doubt if even the FCC itself had expected the victory to be so sweeping.”
“No one could have expected an FCC victory as thorough as this one,” Moffitt said in his full-page response. The analyst said Justices David S. Tatel and Sri Srinivasan, writing for the majority, “affirmed the FCC’s broad discretion to reclassify wired broadband service as a Title II ‘telecommunications’ service, citing the Supreme Court’s 2005 Brand X decision (a decision that, ironically, upheld the FCC’s discretion in asserting at the time that broadband was not a Title II service but instead was an ‘information service’). While that part of the ruling, at least, was widely expected, the analyst said he seemed more impressed that the panel “found that none of the challenges raised to FCC authority had merit. Even in his dissenting opinion, Judge Stephen Williams concurred on the merits. His opposition came on process, where he argued that the FCC’s change of position was ‘arbitrary and capricious.’”
“More surprising was the panel’s decision to uphold the FCC’s authority to treat wireless the same way. Our informal view of consensus was that here, at least, the expectation was that the FCC would be overturned. The FCC’s discretion to reclassify wired broadband stemmed from Congress’s silence on the matter in the 1996 Act. The strongest argument for wireless being viewed differently was that here Congress was not silent. The panel rejected that argument, calling the FCC’s decision to reclassify ‘reasonable.’”
Moffitt added that he finds it “similarly surprising” that the panel concurred with the FCC on the matter of interconnection. “The Court’s panel agreed that interconnection is simply a necessary part of the broadband market. In short, the FCC won in a clean sweep, with the panel of judges upholding the FCC in both the broad strokes and all of the important particulars.”
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