FCC Heads to Court to Defend Net Neutrality Rules

Does the FCC have the authority to regulate the Internet?

Whether or not the Federal Communications Commission has the authority to regulate the Internet comes back in the spotlight on Monday when the D.C. Circuit Court of Appeals hears oral arguments in Verizon v. FCC.

How the court decides could have profound implications for the Internet: whether ISPs like cable systems or telecommunications companies like Verizon will be subject to the FCC's so-called "open Internet" rules that prohibit services from slowing down or blocking legal content. 

"The case is ostensibly about net neutrality, but what is really at stake is the FCC's jurisdiction over all things broadband. Longer term, the case has the potential to open up a Pandora's box of cable and telecom issues, from who pays what to whom for transport to whether it is or isn't anticompetitive for cable operators to impose usage caps and charge for usage," wrote Craig Moffett, senior analyst with MoffettNathanson Research.

The FCC's rules passed in a party-line vote in December 2010, were controversial from the get-go. Former FCC commissioner Robert McDowell, who argued that the FCC didn't have the authority to pass the rules in the first place, called the vote "one of the darkest days in recent FCC history." The House-controlled GOP passed a resolution opposing the rules. Verizon sued

Dems argue the rules are necessary to preserve the same environment that made the Internet such a vital part of the U.S. economy. Because of the rules, proponents argue, Internet innovation has continued to grow and prosper.

There have been only two instances since the rules were passed that could be classified as net neutrality cases. The first was when AT&T Wireless announced a year ago it wouldn't deploy Apple's Face Time video conferencing app across all their tiers. After public interest group Public Knowledge approached the company and threatened to file a complaint, AT&T changed its policy and agreed to deploy the feature to all rate tiers.

The second case is the Google Fiber subscriber in Kansas City who was told by Google he couldn't host a server under its terms of service. In a letter to the FCC, Google said it was not in violation of the rules because it falls under "reasonable network management" and wasn't blocking or discriminating against any content.

These instances and the lack of other complaints means the rules are working, said Harold Feld, svp for Public Knowledge.

"If there were no rules, it would just be a screaming match. One of the advantages of rules like this is there is a process for resolving conflicts," Feld said. "Without this rule, we will start to see all kinds of little games creeping in. It's very likely we will see a lot more companies pushing the boundaries."

Free market proponents, such as Tech Freedom, the Free State Foundation, and Cato Institute, which filed an amicus brief in the case, take issue with the need for the regulation in the first place because there is nothing to regulate.

"The government identifies no compelling interest. The evidence simply does not show discriminatory practices requiring new regulatory remedies," the brief said. "To the extent broadband providers abuse market power to block access to competitors, rather than infringe on providers' editorial discretion, such actions can be addressed through existing antitrust law."

Verizon will argue Monday that the FCC doesn't have the authority to regulate the Internet; Congress must give that authority to the FCC and it hasn't done that. It will also argue that the rules violate the company's First Amendment rights because the rules deny Verizon its "editorial discretion" and its property rights, allowing content providers to occupy the networks.

The FCC has already been slapped down once by the same court for trying to assert authority to regulate the Internet in the Comcast/BitTorrent case that concluded the FCC did not have jurisdiction to rule that Comcast interfered with BitTorrent traffic.

One of the three judges on Monday, Judge David Tatel, a Democrat, wrote the 2010 opinion that said the FCC could not regulate the Internet under the specific law the FCC cited in making its decision. (For the net neutrality rules, the FCC is using a different legal justification.) The other two judges are Judith Rogers (D) and senior Judge Laurence Silberman (R).

Though most in Washington believe the Comcast/BitTorrent case gives Verizon an edge, that's still no guarantee that the court won't rule in favor of the FCC.

With two Democrats on the panel, that could be favorable for the FCC.

If the court strikes down the rules, the FCC would have to either appeal or bank on Congress giving it new authority. The court could also just send the FCC back to the drawing boards to craft better rules.

One way or another, Congress may ultimately get involved. There's been a lot of talk on the Hill about revisiting the nation's communications laws, which are gathering mold as technology races ahead. Even if Congress does, it won't happen quickly.

The court's decision could come as soon as two months.


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