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Net Neutrality Suits: Only The Beginning?

Alan Breznick
3/24/2015

So much for the proverbial calm before the storm.

With the moves Monday by the United States Telecom Association (USTelecom) and a small Texas-based ISP, Alamo Broadband, to file lawsuits against the Federal Communications Commission (FCC) 's new Open Internet order, the eerie two-week silence over the Title II rules has been broken. Now the question is: How many other broadband players will pile on in the courts?

As Reuters has reported, the big trade associations representing the cable and wireless industries, National Cable & Telecommunications Association (NCTA) and CTIA , are expected to sue the FCC over the net neutrality rules as well. In one of the juiciest ironies of this saga, FCC Chairman Tom Wheeler spent a considerable amount of time running each group in his previous life as a top telecom lobbyist in Washington. So go figure.

The American Cable Association (ACA) , which represents smaller and independent cable operators, may join the legal action too. In fact, the ACA has already threatened to sue a couple of times because, like the other opponents, it fears the rules will subject broadband providers to common carrier regulations, including rate controls.

All three trade groups had little to say about their intentions today, noting that they are still evaluating their options. In the past, the two cable associations have merely declared that "all options are on the table," with the NCTA seeming to favor an appeal to the Republican-led Congress as its first choice. So it's not yet clear which, if any, of them will join USTelecom in taking legal action.

But what does seem clear is that it will be the various industry trade associations, not the individual broadband providers, that will lead the legal charge against Title II. Unlike the last time the FCC tried to impose net neutrality regulations on the Internet, it's not likely that a big provider like Verizon Communications Inc. (NYSE: VZ) will take on the feds directly in the courts this time despite some fiery rhetoric. (See AT&T, Verizon CFOs Predict Title II Litigation.)


For more on net neutrality, peruse the broadband content channel here on Light Reading.


Why is that? Why would the well-endowed US cable and telecom giants leave the policy battle of the century to their small, more obscure trade associations rather than take on the noble cause themselves when many have seemed so raring to fight? Have they lost their nerve?

Nah, not exactly. But they do have good reasons to back off from direct confrontation with the FCC. Most notably, three of the biggest players in the cable and telecom worlds -- Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC) and AT&T Inc. (NYSE: T) -- have major merger deals up for federal approval right now that they can't afford to jeopardize.

Comcast, the nation's largest broadband provider with nearly 22 million high-speed data subscribers particularly has much at stake as it keeps trying to steer its proposed $45 billion purchase of TWC through the federal regulatory thickets. With the FCC's review of the more than one-year-old deal already dragging on longer than anticipated and industry analysts increasingly down on its prospects, Comcast can't afford to raise any more hackles in DC by waging battles over the Commission's rules. (See FCC Stops Clock on Merger Madness.)

That might well explain Comcast Chairman and CEO Brian Roberts's rather tepid public comments about Title II. Discussing the issue on the company's fourth-quarter earnings call last month, Roberts said Comcast will have to "adjust to the specific details" of the rules, He even tried to put a somewhat positive spin on the long-dreaded Title II regs, saying company executives were "heartened there's at least a desire to forbear" from rate regulations by the FCC. (See Comcast Sweats Title II Rules.)

As a result, look for the titanic Title II legal battles of the next couple of years to be waged by industry trade groups, not the big MSOs and telcos. That is, at least until the FCC finally decides on Comcast's proposed takeover of Time Warner Cable and AT&T's parallel purchase of DirecTV Group Inc. (NYSE: DTV). Then, who knows what might break loose?

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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Phil_Britt
Phil_Britt
3/30/2015 | 9:25:21 AM
Where Lawyers Exist, There Are Lawsuits
Even if the decision had gone the other way, there would be lawsuits aplenty, that's what some law firms specialize in. A year or two before Y2K, lawyers started hanging around banking conference, taking note about any advice given in anticipation of filing lawsuits if advice was wrong. A presenter at a Faulkner & Gray conference was the first I heard bring this up, and from then on, heard nothing but "this is what some companies are doing" and other such wording to avoid potential lawsuits.
cnwedit
cnwedit
3/26/2015 | 11:21:45 AM
Re: Front?
The problem is that for some of us, Net Neutrality conjecture has been going on for more than a decade, whereas the Bush v Clinton speculation is new...oh wait.
Mitch Wagner
Mitch Wagner
3/26/2015 | 10:48:00 AM
Re: Front?
Carol, conjecturing is the BEST PART of following politics. 

Next you're going to tell me it's too early to start conjecturing about next year's Presidential election. 
brooks7
brooks7
3/25/2015 | 10:22:32 AM
Re: Front?
Welcome to Net Neutrality Carol "Sleeping Beuty" Wilson or is it more likely to be "Rip Van Winkle"?

:)

seven

 
cnwedit
cnwedit
3/25/2015 | 9:47:51 AM
Re: Front?
Wake me up when it's over - everything between  now and then is posturing. These are important issues to  the industry, to be sure, but until it reaches some definitive stage, the conjuncture is going to make us all nuts. 
MikeP688
MikeP688
3/25/2015 | 1:33:19 AM
Re: Front?
When I saw this during my morning reviews, I was frankly shocked that it took the industry lobbysts that long to file the lawsuits as they did.    I won't be surprised if it ends up in the Supreme Court.    
brooks7
brooks7
3/24/2015 | 8:33:48 PM
Re: Front?
Mitch,

Having Trade Associations do it will not impact the Commissioners unless they want it to.  Essentially they are politicians who know how their bread is buttered.  They will be upset with anyone that sues them.  When I was with AFC we had to change legal councils (aka our lobbyists) that dealt with the FCC because the ones we had represented BellSouth and had won in court.
Mitch Wagner
Mitch Wagner
3/24/2015 | 7:47:00 PM
Front?
I wonder whether being fronted by a trade association will really reduce emnity from the FCC? Surely that's pretty transparent. 
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