The Federal Communications Commission's controversial net neutrality rules have been shot down in the U.S. Court of Appeals for the District of Columbia. In a closely watched case, the three-judge panel remanded the rules back to the FCC to be rewritten.
Passed in a party-line vote in December 2010, the FCC's rules prohibited Internet service providers from slowing down or blocking any legal content. But the FCC's rules also raised questions about the extent of the agency's statutory authority to regulate the Internet. A year later, Verizon filed suit challenging the FCC's authority to pass the rules and arguing that they were arbitrary and capricious. House Republicans passed a resolution decrying the FCC's rules.
In a complicated decision, the court dismissed the FCC's net neutrality order but left the door open by affirming the FCC can regulate the Internet.
"The FCC may have lost today's battle, but it just won the war over regulating the Internet," said Berin Szoka, president of Tech Freedom. "Because the court recognized the FCC's statutory authority ... and left room for the FCC to try again by writing new rules that do not impose common carriage, the FCC can try again by writing a more antitrust-like rule. It's hard to imagine why Wheeler wouldn't immediately start a rulemaking to do just that."
After oral arguments last September, most policy watchers believed the FCC's rules were on thin ice.
Public interest groups that championed the FCC's net neutrality rules were crushed by the court's decision, fearing that it will allow big telco to run amuck over consumers by slowing down or blocking any service or content they want or even charging higher prices for certain sites.
"We're disappointed that the court came to this conclusion. Its ruling means that Internet users will be pitted against the biggest phone and cable companies, and in the absence of any oversight, these companies can now block and discriminate against their customers' communications at will," said Free Press president and CEO Craig Aaron.
Verizon, which brought the case, said the court's favorable ruling won't change a thing about the Internet. Randal Milch, Verizon's evp of public policy and general counsel, said in a statement: "One thing is for sure: Today's decision will not change consumers' ability to access and use the Internet as they do. The court's decision will allow more room for innovation, and consumers will have more choices to determine for themselves how they access and experience the Internet. Verizon has been and remains committed to the open Internet which provides consumers with competitive choices and unblocked access to lawful websites and content when, where, and how they want."
The decision will force the FCC to go back to the drawing board, something FCC chairman Tom Wheeler is likely to do.
“The D.C. Circuit has correctly held that ‘Section 706 ... vests [the commission] with affirmative authority to enact measures encouraging the deployment of broadband infrastructure’ and therefore may ‘promulgate rules governing broadband providers’ treatment of Internet traffic,'" said Wheeler. "We will consider all available options, including those for appeal, to ensure that these networks on which the Internet depends continue to provide a free and open platform for innovation and expression, and operate in the interest of all Americans.”
Attorney Pantelis Michalopoulos, the Steptoe & Johnson attorney who defended the FCC's rules before the court, said that while the court disagreed with the specific net neutrality rules, it affirmed the agency's power to protect an open Internet. "The FCC has wide room and many tools at its disposal to use its power in order to safeguard the benefits of Internet openness and counter the harms of pay-for-priority demands," he said in a statement.
Sen. Ed Markey (D-Mass.), who introduced the first net neutrality bill in Congress and was one of the authors of the Telecommunications Act of 1996, said he plans to introduce a bill in the coming days to make it "crystal clear" that the FCC has all the authority it needs to ensure an open Internet.