HOW THE OPEN INTERNET RULING IMPACTS CALEA

Earlier this month the D.C. Court of Appeals upheld the Open Internet Order, a rulemaking by the Federal Communications Commission that imposed non-discrimination standards on broadband Internet access providers (“ISPs”). Some of the more prominent ISPs are Comcast, Earthlink, and Verizon. The Court’s ruling did not address the CALEA lawful surveillance statute, but indirectly it made CALEA’s legal coverage of ISPs more secure.

How the FCC Made CALEA Cover ISPs

When enacted in 1994, CALEA was designed to facilitate lawful surveillance on traditional “telecommunications carriers” such as telephone companies and wireless operators. Examples of telephone companies subject to CALEA include rural telephone cooperatives, Cincinnati Bell, and AT&T. CALEA-covered wireless operators include Illinois Valley Cellular and T-Mobile.

The statute required the service providers to install technical solutions in their networks so that if one of them were presented with a valid court order to intercept the communications of a named suspect, it could deliver the suspect traffic to the authorized law enforcement agency. In contrast, CALEA exempted from its scope of coverage “information service” providers, a deregulatory classification intended for Internet services such as email, text messaging, and web browsing.

In the early 2000s, as more criminal suspects came to communicate on ISP networks, the Department of Justice wanted the CALEA mandate to cover ISPs. At the time, the FCC had not yet assigned ISPs a regulatory classification. But the DOJ’s timing was bad. The FCC Chairman in those days was Republican Michael Powell, a free trade advocate determined to place all ISPs in the unregulated “information services” category. The FCC issued highly-analytical rulemaking orders finding that ISPs were information service providers. Consequently, it appeared that ISPs were exempt from CALEA.

But not so fast. Chairman Powell at the same time decided to accommodate the DOJ’s CALEA agenda. His staff theorized that because the FCC classification of ISPs was rooted in the Communications Act, and that act was a separate statute from CALEA, terms such as “telecommunications service” and “information service” could have separate definitions under the two different laws. Under this rationale the FCC issued an order in 2005 defining ISPs as “CALEA telecommunications carriers.”

The telecom/Internet industry cried foul. In a lawsuit filed before the D.C. Circuit Court they questioned how a carrier could possibly fall into one regulatory class for purposes of the Communications Act and still land in the opposite group for purposes of a related federal statute like CALEA. One of the judges on the three-judge panel ridiculed the FCC’s legal construct as “gobbledygook.” To industry’s surprise, however, the other two judges voted in favor of the FCC.

The DOJ celebrated its CALEA victory with muted applause. It knew that if it tried to enforce CALEA against an ISP in some other federal court jurisdiction it risked losing the case on definitional grounds. Specifically, another court could call the FCC’s CALEA coverage theory gobbledygook and strike down its application to ISPs.

How the Open Internet Ruling Impacts CALEA Coverage of ISPs

With the election of a Democratic administration in 2008 came a 180-degree turn in the FCC’s regulatory policies. The new FCC thinking was willing to reverse the classification of ISPs as a means of establishing the Open Internet rules. Legally, the Internet rules were a better fit for ISPs if they could be relabeled as telecommunications carriers.

In 2015 the FCC, under Chairman Tom Wheeler, adopted the Open Internet Order. The highly-analytical proceeding found that ISPs were really telecommunications carriers. Earlier this month a three-judge panel of the D.C. Court upheld the Order, including the classification switch.

The judicial fight is not over; industry has vowed to appeal the Court’s ruling.

At least for now the DOJ can relax about CALEA’s coverage of ISPs. As long as ISPs remain designated as telecommunications carriers under the Communications Act they are certainly subject to CALEA. No more fear of a gobbledygook ruling from another federal court.

Implications for CALEA Coverage of Future ISP Services

If ISPs are permanently branded telecommunications carriers, what are the implications for new ISP services? Let’s say an ISP launches a social networking service (similar to Facebook, Twitter, or LinkedIn) integrated with its broadband access service. The ISP would remain categorized as a CALEA telecommunications carrier but its new social media service would not. Social networking services are currently classified as information services, which are exempt from CALEA. How to resolve this conundrum?

Most likely, a reclassification of the social networking service as a telecommunications service subject to CALEA coverage would hinge on whether the social network service is a “substantial replacement” for local exchange telephone service. The substantial replacement clause of CALEA is the only way a communication service can jump from the information services category to the telecommunications service group. In fact, that’s how the FCC made ISPs subject to CALEA in the first place. Just remember the danger of such category-hopping. A judicial review may laugh it away as gobbledygook.