Industry opposition to FCC Title II rules could lead to state-based regulation

Advanced telecommunications providers favor a federal regulatory scheme over disparate state by state regulation, correctly arguing that telecommunications is essentially interstate. But in opposing the U.S. Federal Communication’s Commission’s adoption of its Open Internet rulemaking classifying Internet protocol telecommunications as common carrier utilities under Title II of the federal Communications Act, they are potentially setting themselves up for state-based regulation in the unlikely event they prevail in their judicial challenge to overturn the rules.

States could respond by enacting their own statutes treating advanced telecommunications as a common carrier utility, imposing universal service mandates barring neighborhood redlining and imposing rate regulation in order to ensure access and affordability and promote digital equity. While providers would claim universal service mandates impose cost burdens they cannot bear, states could point to state and federal subsidies they’ve received to build infrastructure in support of these goals.

Uncertainty and delay could also prompt states to act since litigation over the FCC Title II rules could take several years to be fully adjudicated up to the U.S. Supreme Court. The case would require the high court to review its 2005 ruling in Brand X Internet Services, et al. 545 US 967 (2005) wherein the court upheld the FCC's regulatory authority under the Chevron doctrine of judicial deference to administrative agency interpretation of statutory law. Brand X, however, could be undermined if the Supreme Court discards the Chevron doctrine in a case argued earlier this year, Loper Bright Enterprises v. Raimondo, bolstering the claim by providers that a Title II regulatory scheme making advanced telecommunications a common carrier utility is a major public policy issue within the purview of Congress and not administrative agencies.