Appeals Court Upholds Net Neutrality Rules

Telecoms lose a closely watched battle objecting to the FCC's reclassification of the internet as a utility needing strong regulation.
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FCC chairman Tom Wheeler

On Tuesday, the DC Circuit Court of Appeals denied a petition brought by telecoms challenging the FCC's recently enacted net neutrality rules.

The decision was eagerly awaited for its potential to shape the way that consumers access content on the internet. Without strong net neutrality rules, content providers like Netflix, Facebook and Twitter fear that telecoms would charge for "fast lanes" resulting in high prices while many in the creative community worry it would propagate a cable television-like power structure. Big broadband providers like Verizon on the other hand argue they need latitude to make investments in infrastructure and capacity. Hollywood studios have been careful on taking a position on this controversial topic that generated more than four million comments before the FCC voted to adopt its rules.

At issue in the case was the FCC's authority. The regulatory agency has twice before promulgated "open internet" rules only to have an appeals court sympathize with the goals but express the opinion that the FCC overstepped its boundaries. After the DC Circuit last ruled in early 2014, the FCC chose to move forward with bans on paid prioritization, blocking and throttling by reclassifying internet service as a utility rather than an information service under Title II of the Telecommunications Act.

On appeal, various telecoms again asserted the FCC exceeded its authority, provided insufficient rationale for the new rules and violated First Amendment rights.

The opinion of the DC Court was written by Judge David Tatel and Sri Srinivasan.

"Petitioners assert numerous challenges to the Commission’s decision to reclassify broadband," they write in a lengthy opinion. "Finding that none has merit, we uphold the classification."

They also state that "nothing in the Telecommunications Act suggests that Congress intended to freeze in place the Commission’s existing classifications of various services" and that "the Supreme Court expressly recognized that Congress, by leaving a statutory ambiguity, had delegated to the Commission the power to regulate broadband service."

The majority opinion also rejects the argument that because many broadband providers offer information services such as email, this makes internet service outside regulation as a utility. They also dismiss the contention that the FCC failed to adequately explain why it was changing its classification and that the changes would undermine investment in broadband.

The judges write, "In any event, the Commission found that the virtuous cycle — spurred by the open internet rules — provides an ample counterweight, in that any harmful effects on broadband investment 'are far outweighed by positive effects on innovation and investment in other areas of the ecosystem that [its] core broadband polices will promote.'”

A partial dissent from Judge Stephen Williams disagreed with the conclusion that the FCC had good reasons to reclassify and that the media regulatory agency failed to seriously assess the impact of broadband providers relying on the now-abandoned classification. 

But its proponents of net neutrality who today prevail as the DC Circuit upholds the FCC's classification of both fixed and mobile broadband services as a utility beholden to the sorts of regulations imposed on telephone companies, railroads and postal services. Tatel and Srinivasan reject the constitutional arguments against the blocking and throttling rules, writing, "Nothing about affording indiscriminate access to internet content suggests that the broadband provider agrees with the content an end user happens to access. Because a broadband provider does not — and is not understood by users to — 'speak' when providing neutral access to internet content as common carriage, the First Amendment poses no bar to the open internet rules."

Here's all 184 pages of the majority opinion and dissent.

Tuesday's decision will likely trigger an attempt for a rehearing before a fuller panel at the DC Circuit, which will likely be closely divided thanks in part to the absence of Merrick Garland, who has been inclined to defer to agency authority and awaits a confirmation hearing at the U.S. Supreme Court. The case could ultimately be brought to the high court, though the potential for legislation exists depending on the outcome of an election where many Republicans have voiced regulatory doubts while Democrats led by President Barack Obama have largely rallied behind net neutrality. As the latest decision comes, the European Union is itself set to introduce its own net neutrality rules. 

In reaction to Tuesday's ruling, FCC chairman Tom Wheeler said, "Today’s ruling is a victory for consumers and innovators who deserve unfettered access to the entire web, and it ensures the internet remains a platform for unparalleled innovation, free expression and economic growth. After a decade of debate and legal battles, today’s ruling affirms the Commission’s ability to enforce the strongest possible internet protections — both on fixed and mobile networks — that will ensure the internet remains open, now and in the future.”

 

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