Verizon Sues FCC for Violating Company’s Free Speech Rights

Last Monday Verizon Communications Inc. (NYSE: VZ) filed a brief in federal court arguing against the Federal Communications Commission’s (FCC) proposed net neutrality rules. Verizon, which together with Vodafone Group plc (NASDAQ: VOD) owns Verizon Wireless, was joined in the filing by MetroPCS Communications Inc. (NYSE: PCS), which claims that the new rules exceed the FCC’s regulatory authority and that the new rules violates Verizon’s First Amendment free speech rights as well as its Fifth Amendment property rights.

There’s a lot at stake here, not just for Verizon, but for AT&T Inc. (NYSE: T), Sprint Nextel Corp. (NYSE: S), Comcast Corp. (NASDAQ: CMCSA), Time Warner Cable Inc. (NYSE: TWC), and other broadband ISPs.

From the brief:

[The proposed rule] violates the First Amendment by stripping them of control over the transmission of speech on their networks. And it takes network owners’ property without compensation by mandating that they turn over those networks for the occupation and use of others at a regulated rate of zero, undermining owners’ multi-billion dollar-backed expectations that they would be able to decide how best to employ their networks to serve consumers and deterring network investment. …

Broadband networks are the modern day microphone by which their owners engage in First Amendment speech. The FCC thus must identify an actual problem, and narrowly tailor its solution to solve that problem. … The Fifth Amendment likewise protects broadband network owners from government compulsion to turn over their private property for use by others without compensation, especially in light of their multi-billion-dollar investment-backed expectations.

Verizon’s argument is, essentially, that “transmission” of speech is speech itself:

Broadband providers engage in and transmit speech, and the [new FCC] rules—which limit broadband providers’ own speech and compel carriage of others’ speech—cannot survive scrutiny. Broadband providers transmit their own speech both by developing their own content and by partnering with other content providers and adopting that speech as their own.

At issue, of course is money. Verizon, and other providers, want to charge usage fees for broadband service — the more a customer uses, the more that customer pays. The FCC chairman said in May that he backs usage-based fees.

Opponents have rallied under the flag of ‘net neutrality,’ which seeks to preserve broadband internet service as it currently exists. Or, at least mostly as it currently exists. Comcast has already announced a usage-based fee plan.

Verizon’s constitutional arguments are really ingenious. After all, if a corporation can provide unlimited funding to a political action group under the rubric of free speech, it’s not much of stretch for a corporation to claim free speech rights for itself in all its actions.

The full filing is available here, courtesy of Gigaom.

Paul Ausick