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Court: Net Neutrality Rules Have No Basis in Fed. Law; FCC May Appeal

15 Jan, 2014 By: Doug McPherson


WASHINGTON – An appeals court ruled Tuesday that the Federal Communications Commission (FCC) cannot impose so-called “net neutrality rules” – a move analysts say will have massive repercussions for content providers, consumers and the Internet’s future.

The FCC rule required companies that provide businesses and consumers high-speed Internet service over wires to treat all traffic equally. Verizon Communications Inc. challenged the rules as excessive, and now the U.S. Court of Appeals for the District of Columbia Circuit sided with Verizon and ruled that the FCC did not have the legal authority to enact the 2011 regulations.

With the regulation voided, companies such as Google Inc. and Amazon.com Inc. could face new charges for fast connections.

In its 81-page ruling, the appeals court said the FCC’s restrictions have no basis in federal law and sent the rules back to the agency, which may attempt to rewrite the regulations that bar companies from slowing or blocking some Internet traffic.

A key passage of the court’s ruling reads:

“… even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates. Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the Commission from nonetheless regulating them as such. Because the Commission has failed to establish that the anti-discrimination and anti-blocking rules do not impose per se common carrier obligations, we vacate those portions of the Open Internet Order.”

Insiders say the court’s ruling upsets the FCC’s current practice of requiring broadband Internet providers to act akin to “common carriers” or that they have had to act similarly to phone companies and not give special preference to one type of call (or traffic) over another.

Jeff John Roberts, a reporter with Gigaom.com, says that going into the case, the FCC’s ability to regulate broadband was not clear cut and some speculated the court would reject the Open Internet Order, which defined the FCC’s network neutrality rules, entirely. Instead, the court decided the case on technical grounds, ruling the agency had to go back and implement formal common carrier standards if it wanted to make ISPs act like common carriers – meaning the rules are dead for now but could return in the future.

The ruling did keep the FCC’s current power to require Verizon and other broadband providers to reveal how they are managing traffic. “Verizon does argue that the disclosure rules are not severable, insisting that if the anti-discrimination and anti-blocking rules fall so too must the disclosure requirements. We disagree [...] we are satisfied that the Commission would have adopted the disclosure rules absent the rules we now vacate, which, we agree, operate independently,” the ruling reads.

Analysts say the ruling could open the door for Internet giants like Verizon and Time Warner to cut deals with large content providers such as Disney or Netflix to ensure that their Web content was delivered faster and more reliably than other sites. This could not only restrict consumers’ choice but also provide a threat to smaller websites who do not have the resources to pay for any “express lanes” that the broadband providers but choose to create.

The ruling could also give latitude for the FCC to reassert its authority over the broadband providers by rewriting the rules once again. FCC Chairman Tom Wheeler has suggested the agency may appeal and in a statement, said, “I am committed to maintaining our networks as engines for economic growth, test beds for innovative services and products, and channels for all forms of speech protected by the First Amendment. 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.”

In a statement, the Internet Association said, “The Internet creates new jobs, new technologies, and new ways of communicating around the globe. Its ‘innovation without permission; ecosystem flows from a decentralized, open architecture that has few barriers to entry. Yet, the continued success of this amazing platform should not be taken for granted.”

Verizon says a statement is forthcoming.


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