National Cable & Telecommunications Assocation v. Brand X Internet Services

PETITIONER:National Cable & Telecommunications Association, et al.
RESPONDENT:Brand X Internet Services, et al.
LOCATION:Meramec River

DOCKET NO.: 04-277
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 545 US 967 (2005)
GRANTED: Dec 03, 2004
ARGUED: Mar 29, 2005
DECIDED: Jun 27, 2005

Paul T. Cappuccio – argued the cause for Petitioners in 04-277
Thomas C. Goldstein – argued the cause for Respondents
Thomas G. Hungar – argued the cause for Petitioners in 04-281

Facts of the case

Title II of the Communications Act of 1934, which was amended in 1996, subjected providers of “telecommunications service” to mandatory common- carrier regulation. The FCC concluded that this did not include broadband cable companies. The Ninth Circuit reversed and cited its own previous opinion that had held that cable modem service was a “telecommunications service.”


Did the FCC lawfully interpret the Communications Act of 1934 by deciding that broadband cable companies did not provide a “telecommunications service?”

Media for National Cable & Telecommunications Assocation v. Brand X Internet Services

Audio Transcription for Oral Argument – March 29, 2005 in National Cable & Telecommunications Assocation v. Brand X Internet Services

Audio Transcription for Opinion Announcement – June 27, 2005 in National Cable & Telecommunications Assocation v. Brand X Internet Services

William H. Rehnquist:

The opinion of the Court in National Cable and Telecommunications Association versus Brand X will be announced by Justice Thomas.

Clarence Thomas:

These consolidated cases come to us on a writ of certiorari to the United States Court of Appeal for the Ninth Circuit.

They concern how the Federal Communications Commission must regulate cable modem service.

Cable modem service consists of the use of cable television lines to provide consumers with high speed internet access.

The issue these cases present is whether cable modem service is telecommunication service under the Communications Act.

If so, the Commission presumptively must pursuant to the Act regulate as common carriers cable companies that provide cable modem service.

Common carriers must fulfill a variety of regulatory duties under the Act.

For example, common carriers must charge just reasonable and nondiscriminatory rates.

Through notice-and-comment rulemaking, the Commission concluded that cable modem service was not telecommunications service and therefore, it was not subject to presumptively mandatory common carrier regulations.

The Court of Appeals for the Ninth Circuit overturned the Commission’s ruling.

Based on Ninth Circuit precedent, it held that the Commission could not consistent with the Act exempt cable modem service for mandatory common carrier regulation.

We disagree and in an opinion filed with the Clerk today, reverse the Ninth Circuit judgment and remand for the further proceedings.

The Commission’s ruling was based on a permissible reading of the Communications Act.

Under Chevron U. S. A. Inc. versus Natural Resources Defense Council, Inc., if a statute’s plain terms admit to two or more plausible constructions, we must accept the Commission’s choice of one of them if the Commission’s choice is reasonable.

The Commission’s construction was permissible under Chevron.

The Act is ambiguous about whether cable modem service is telecommunication service and therefore common carriage.

The Commission’s interpretation that cable modem service is not telecommunication service within the meaning of the Act is reasonable.

The Act defines telecommunication service in relevant part as the offering of telecommunications for a fee directly to the public.

This definition does not unambiguously classify cable modem service as telecommunications service.

Cable companies used telecommunications in other words data transmission to provide cable modem service but it does not necessarily follow that they offer telecommunications along with cable modem service.

The high speed transmission used to provide cable modem service, the Commission reasonably concluded, is simply one integrated component of a single finished offering.

Here, internet access.

Functionally integrated components of finished products need not be described as being offered along with the product.

For example, one would not normally say that a car dealer offers engines when it offers cars.

Moreover, the question here, whether the transmission is sufficiently integrated with the finished product so as not to constitute a separate offering depends on the particulars of internet and telecommunications technology which the Commission is in a far better position to evaluate than we are.

Because the statute does not address whether the transmission component of cable modem service is sufficiently integrated, we should defer to the Commission’s expert judgment on whether it is especially under the given dynamic technical and complex nature of the subject matter.

For these reasons and others discussed in more detail in our opinion, the Commission’s interpretation is a lawful construction of the Act.

Justice Stevens has filed a concurring opinion; Justice Breyer has filed a concurring opinion; Justice Scalia has filed a dissenting opinion in which Justices Souter and Ginsburg join as to part one.