As Net Neutrality Fight Nears, FCC Chairman Ajit Pai Trumpets Ruling

The Federal Communications Commission is trumpeting a federal appeals court ruling in Minnesota as offering a preview of the coming battle with states over net neutrality — and whether federal regulations pre-empt state laws.

The Eighth Circuit Court of Appeals weighed in on a relatively obscure battle between Minnesota state regulators and Charter Communications over attempts to regulate its voice over internet protocol phone service.

Charter intentionally separated its Spectrum Voice service from its regulated wholesale telecommunications business, dubbing it an “information service.” This act led the Minnesota Department of Commerce to lodge a complaint with the state’s Public Utilities Commission, accusing Charter of violating various state laws.

The dispute landed in federal district court, where the judge agreed with Charter. It found that Spectrum Voice isn’t really an old-fashioned phone service that simply completes a call, but rather an information service whose technology (a device in the home) “transforms” voice into packets of information transmitted via the internet.

That’s an important distinction, because states and the federal government share the authority to regulate telecommunications services. The federal government’s rules pre-empt state laws when it comes to information services. The Appeals Court agreed with the district court’s ruling.

FCC Commissioner Ajit Pai did a victory lap, saying the ruling affirms his view that federal law pre-empts state regulation when it comes to information services. (It’s worth noting, as the court did, that the FCC has failed to classify VoIP services, despite repeated opportunities to do so over the last 15 years.)

Pai argues this appeals court ruling has implications for the brewing dispute over net neutrality, a conflict that California’s legislature set up last week when it restored Obama-era regulations over internet providers.

“A patchwork quilt of 50 state laws harms investment and innovation in advanced communications services. That’s why federal law for decades has recognized that states may not regulate information services,” Pai said in a statement.

Not so fast, says Andrew Schwartzman of the Communications and Technology Law Clinic at the Georgetown’s Institute for Public Representation.

“This is NOT a case where the FCC issued a decision purporting to preempt Minnesota’s decision,” Schwartzman writes. “Thus, today’s decision isn’t a ruling on anything the FCC did, because the FCC didn’t do anything.”

In the case of the Restoring Internet Freedom Order, the FCC eliminated the utility designation that allowed the commission to regulate internet traffic, and left the Federal Trade Commission to police ISPs on consumer issues like throttling traffic.

Schwartzman said net neutrality opponents are likely to echo the arguments made by California’s Public Utilities Commission in challenging the FCC’s net neutrality rollback. Attorneys argued that the commission’s decision to deregulate an industry doesn’t give it the authority to prevent states from imposing their own regulations.

“Having said we have no authority to regulate broadband service, it would seem to have a disclaimed authority to prevent any state to do so,” Schwartzman said.